EXHIBIT 4
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WHIRLPOOL CORPORATION
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
as Rights Agent
Rights Agreement
Dated as of April 21, 1998
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Table of Contents
Page
Recitals Recitals.......................................................1
Section 1. Certain Definitions............................................1
Section 2. Appointment of Rights Agent....................................8
Section 3. Issuance of Rights Certificates................................8
Section 4. Form of Rights Certificates...................................10
Section 5. Execution, Countersignature and Registration..................10
Section 6. Transfer, Division, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates..................................................11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights........................................................11
Section 8. Cancellation and Destruction of Rights Certificates...........13
Section 9. Reservation and Availability of Preferred Stock...............14
Section 10. Preferred Stock Record Date...................................15
Section 11. Adjustments to Purchase Price, Number of Shares or Number
of Rights.....................................................15
Section 12. Certification of Adjustments..................................25
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.................................................25
Section 14. Fractional Rights and Fractional Shares.......................28
Section 15. Rights of Action..............................................29
Section 16. Agreement of Rights Holders Concerning Transfer and
Ownership of Rights...........................................29
Section 17. Rights Holder Not Deemed a Stockholder........................29
Section 18. Concerning the Rights Agent...................................30
Section 19. Merger or Consolidation or Change of Name of Rights Agent.....30
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Section 20. Duties of Rights Agent........................................31
Section 21. Change of Rights Agent........................................32
Section 22. Issuance of New Rights Certificates...........................33
Section 23. Redemption and Termination....................................33
Section 24. Notice of Certain Events......................................34
Section 25. Notices.......................................................35
Section 26. Supplements and Amendments....................................36
Section 27. Successors....................................................37
Section 28. Benefits of this Agreement....................................37
Section 29. Severability..................................................37
Section 30. Governing Law.................................................37
Section 31. Counterparts..................................................37
Section 32. Descriptive Headings..........................................37
Section 33. Grammatical Construction......................................37
Exhibit A -- Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series B
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
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RIGHTS AGREEMENT
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THIS RIGHTS AGREEMENT, dated as of April 21, 1998, is made between
Whirlpool Corporation, a Delaware corporation (the "Company"), and First Chicago
Trust Company of New York, a New York corporation (the "Rights Agent").
RECITALS
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The Board of Directors of the Company has authorized and declared the
payment of a dividend of one preferred share purchase right (a "Right") for each
share of Common Stock (as defined in Section 1) outstanding on the Record Date
(as defined in Section 1) and has authorized the issuance of one Right for each
share of Common Stock issued after the Record Date and before the earliest of
the Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date (as such terms are defined in Section 1) and in certain cases following
the Distribution Date. Each Right will represent, as of the Record Date, the
right to purchase one one-thousandth of one share of Preferred Stock (as defined
in Section 1) upon the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who or which, together with
all Affiliates and Associates of such Person, is (or has previously been, at any
time after the date of this Agreement, whether or not such Person(s) continues
to be) the Beneficial Owner of 15% or more of the Common Stock then outstanding
(determined without taking into account any securities exercisable or
exchangeable for, or convertible into, Common Stock, other than any such
securities beneficially owned by the Acquiring Person and Affiliates and
Associates of such Person). However, "Acquiring Person" shall not include any
Exempt Person.
Notwithstanding the foregoing, a Person shall not become an "Acquiring
Person" solely as the result of (i) an acquisition of Common Stock by the
Company or any Subsidiary which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 15% or more of the Common Stock then outstanding as determined above, or (ii)
such Person becoming the Beneficial Owner of 15% or more of the Common Stock
then outstanding as determined above solely as a result of an Exempt Event;
provided, however, that if a Person becomes the Beneficial Owner of 15% or more
of the Common Stock then outstanding as determined above solely by reason of
such a share acquisition by the Company or the occurrence of such an Exempt
Event and such Person shall, after becoming the Beneficial Owner of such Common
Stock, become the Beneficial Owner of any additional shares of Common Stock by
any means whatsoever (other than as a result of the subsequent occurrence of
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an Exempt Event, a stock dividend or a subdivision of the Common Stock into a
larger number of shares or a similar transaction), then such Person shall be
deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if a majority of the Continuing
Directors (as defined below) determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this Section 1(a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1(a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement. The
determination of whether such Person's becoming an Acquiring Person shall have
been inadvertent and the determination of whether the divestment of sufficient
shares shall have been made as promptly as practicable shall be made by a
majority of the Continuing Directors.
(b) "Adjustment Number" has the meaning set forth in, and shall be
calculated in accordance with, the Certificate of Designation, Preferences and
Rights of Junior Participating Preferred Stock, Series B, attached as Exhibit A
hereto.
(c) "Affiliate" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement; provided that, for purposes of this Agreement, the term
"Affiliate" shall not include any Person that is an Exempt Person.
(d) "Associate" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement; provided that, for purposes of this Agreement, the term
"Associate" shall not include any Person that is an Exempt Person.
(e) Except as provided below, a Person shall be deemed to be the
"Beneficial Owner" of, and shall be deemed to "beneficially own," any
securities:
(i) which such Person or any Affiliate or Associate of such
Person beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right or obligation (whether
or not then exercisable or effective) to acquire pursuant to any
agreement, arrangement or understanding (whether or not in writing),
or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise;
provided, however, that a Person will 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
Affiliate or Associate of such Person until such tendered securities
are accepted for purchase or exchange; and provided further, that
prior to the occurrence of a Triggering Event, a Person will not be
deemed the Beneficial Owner of, or to beneficially own, securities
obtainable upon exercise of the Rights;
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(iii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right (whether or not then
exercisable) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security pursuant to this clause
(iii) if the agreement, arrangement or understanding to vote, or to
direct the voting of, such security (A) arises solely from a revocable
proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange
Act and applicable rules and regulations thereunder and (B) is not
also then reportable under Item 6 (or any comparable or successor
item) of Schedule 13D under the Exchange Act (or any comparable or
successor schedule or report);
(iv) which such Person or any Affiliate or Associate of such
Person has "beneficial ownership" of, as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act or
any successor provision; or
(v) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate or Associate of such other Person with
whom such Person or any Affiliate or Associate of such Person has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in clause (iii) of this Section 1(d)) or
disposing of any securities of the Company.
Nothing in the preceding sentence shall cause a Person engaged in
business as an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for
purposes of this Agreement, no Person shall be treated as the "Beneficial Owner"
of, or be deemed to "beneficially own," any securities solely by reason of the
ownership of those securities by any other Person that is an Exempt Person.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially under the preceding provisions in this
definition.
(f) "Business Combination" has the meaning set forth in Section 13 of
this Agreement.
(g) "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.
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(h) "Close of Business" on any given date means 5:00 p.m., New York,
New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m. New York, New York time, on the next
succeeding Business Day.
(i) "Common Equivalent Share" has the meaning set forth in Section
11(c)(2)(C) of this Agreement.
(j) "Common Share" has the meaning set forth in Section 11(c)(2)(C) of
this Agreement.
(k) "Common Stock" when used with reference to the Company means the
Common Stock, par value $1.00 per share, of the Company (as the same may be
changed by reason of any combination, subdivision or reclassification of the
Common Stock). "Common Stock" when used with reference to any Person (other
than the Company prior to a Business Combination) means shares of capital stock
of such Person (if such Person is a corporation) of any class or series, or
units of equity interests in such Person (if such Person is not a corporation)
of any class or series, the terms of which shares or units do not limit (as a
fixed amount and not merely in proportional terms) the amount of dividends or
income payable or distributable on such shares or units or the amount of assets
distributable on such shares or units upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such shares or units are subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; provided, however, that if at any
time there are more than one such class or series of capital stock of or equity
interests in such Person, "Common Stock" of such Person will include all such
classes and series substantially in the proportion of the total number of shares
or other units of each such class or series outstanding at such time.
(l) "Continuing Director" means (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board of
Directors of the Company, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person or a representative, designee or nominee of an
Acquiring Person or of any such Affiliate or Associate, and who was a member of
the Board of Directors of the Company on the date of this Agreement, and (ii)
any Person who becomes a member of the Board of Directors of the Company after
the date of this Agreement, while such Person is a member of the Board of
Directors of the Company, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative, designee or nominee of an
Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election, or election, to the Board of Directors of the Company
is recommended or approved by a majority of the Continuing Directors.
(m) "Current Market Price" per share of Common Stock, Common
Equivalent Share or any other security on any date is the average of the daily
closing prices per share of such Common Stock, Common Equivalent Share or any
other security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date for the purpose of any computation under
this Agreement; provided, however, that in the event that the Current Market
Price per share of Common Stock, Common Equivalent Share or any other security
is determined
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during a period following the announcement by the issuer of such Common Stock,
Common Equivalent Share or any other security of (i) a dividend or distribution
on such Common Stock, Common Equivalent Share or any other security other than a
regular quarterly cash dividend, or (ii) any subdivision, combination or
reclassification of such Common Stock, Common Equivalent Share or any other
security, and prior to the expiration of 30 Trading Days after the "ex-dividend"
date for such dividend or distribution or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "Current
Market Price" must be appropriately adjusted to take into account such dividend,
distribution, subdivision, combination or reclassification. The closing price
for each Trading Day shall be the last sale price, regular way, on such day, or,
in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, on such day, 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 ("NYSE") or, if the
Common Stock, Common Equivalent Share or any other security is not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
United States national securities exchange on which the Common Stock, Common
Equivalent Share or any other security is listed or admitted to trading or, if
the Common Stock, Common Equivalent Share or any other security is not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use, or, if on any such date the Common Stock, Common Equivalent Share or any
other security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the security selected by a majority of 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 no such market maker is making a
market, the fair market value of such shares on such day as determined in good
faith by a majority of 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 then no Continuing Directors, by a
nationally recognized investment banking firm selected by the Board of Directors
of the Company having no current or former relationship with an Acquiring
Person, or by the Board of Directors of the issuer of such Common Stock, Common
Equivalent Share or any other security shall be used, which determination shall
be described in a statement filed with the Rights Agent and shall be binding and
conclusive for all purposes. The term "Trading Day" means a day on which the
principal United States national securities exchange on which the Common Stock,
Common Equivalent Share or any other security is listed or admitted to trading
is open for the transaction of business or, if the Common Stock, Common
Equivalent Share or any other security is not listed or admitted to trading on
any United States national securities exchange, but is traded in the over-the-
counter market, then any day for which the high bid and low asked prices in the
over-the-counter market are reported, or if the Common Stock, Common Equivalent
Share or any other security is not traded in the over-the-counter market, then a
Business Day. If the Preferred Stock is not publicly traded, the "current per
share market price" of the Preferred Stock shall be conclusively deemed to be
the current per share market price of the Common Shares as determined pursuant
to this Section 1(m) (appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof), multiplied by
the Adjustment Number.
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(n) "Distribution Date" means the earlier of (i) the tenth day after
the Trigger Date and (ii) the tenth Business Day after commencement or public
disclosure of an intention to commence (including, without limitation, any such
commencement or public disclosure which occurs before or after the date of this
Agreement and prior to the issuance of the Rights) a tender offer or exchange
offer by a Person if, after acquiring the maximum number of securities sought
pursuant to such offer, such Person, or any Affiliate or Associate of such
Person, would be an Acquiring Person. A majority of the Board of Directors of
the Company may defer the date set forth in clause (ii) of the preceding
sentence to a specified later date or to an unspecified later date to be
determined by a subsequent action or event.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
(p) "Exchange Date" means the time at which Rights are exchanged
pursuant to Section 11(c)(3).
(q) "Exempt Event" means with respect to any Person, the acquisition
by such Person of Beneficial Ownership of Common Stock solely as a result of the
occurrence of a Triggering Event and the effect of such Triggering Event on the
last proviso of clause (ii) of the definition of Beneficial Owner, other than a
Triggering Event in which such Person becomes an Acquiring Person.
(r) "Exempt Person" means (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company and (iv) any Person holding Common Stock for any such employee
benefit plan or for employees of the Company or of any Subsidiary of the Company
pursuant to the terms of any such employee benefit plan.
(s) "Exercise Amount" means the amount payable by the holder as a
condition to the exercise of one Right. Until and unless it shall be adjusted
in accordance with this Agreement, the Exercise Amount shall be $300.
(t) "Expiration Date" means the Close of Business on May 22, 2008.
(u) "Person" means any individual, firm, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity, and shall include any "group" as
that term is used in Rule 13d-5(b) under the Exchange Act (or any successor
provision).
(v) "Preferred Stock" means the Company's Junior Participating
Preferred Stock, Series B, par value $1.00 per share, having the rights and
preferences set forth in the Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series B, attached hereto as Exhibit A.
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(w) "Principal Party" means (i) in the case of any Business
Combination described in clause (i), (ii) or (iii) of the first sentence of
Section 13(a), (A) the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted or for which they are
exchanged in such Business Combination or, if there is more than one such
issuer, the issuer of the Common Stock which has the greatest aggregate market
value or (B) if no securities are so issued, the Person that survives or results
from the Business Combination or, if there is more than one such Person, the
Person the Common Stock of which has the greatest aggregate market value, and
(ii) in the case of any Business Combination described in clause (iv) of the
first sentence in Section 13(a), the Person that receives the greatest portion
of the assets or earning power transferred pursuant to such Business Combination
or, if each Person that is a party to such Business Combination receives the
same portion of the assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power cannot reasonably
be determined, whichever of such Persons is the issuer of the Common Stock which
has the greatest aggregate market value; provided, however, that in any such
case, 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 one or
more other Persons, then (x) "Principal Party" refers to whichever of such other
Persons has Common Stock that is and has been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act; (y) if the
Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party" refers to whichever of such other Persons is the
issuer of the Common Stock which has the greatest aggregate market value; or (z)
if the Common Stock of none of such other Persons has been so registered,
"Principal Party" refers to whichever of such other Persons (other than an
individual) is the Person which has the equity securities with the greatest
aggregate market value. In case such Person is owned, directly or indirectly, by
a joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth above apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a Subsidiary of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in Section 13 in
the same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(x) "Purchase Price": Until the Trigger Date, the term Purchase Price
means the price at which one-one thousandth of a share of Preferred Stock shall
be purchasable with the Rights. The Purchase Price shall be $300 per one one-
thousandth of a share of Preferred Stock until and unless it shall be adjusted
pursuant to this Agreement. Immediately after the Trigger Date, the term
"Purchase Price" shall mean the price per Common Share for which Common Shares
shall be purchasable with the Rights. Thereafter, the term "Purchase Price" as
applied with respect to each kind of stock or other property purchasable with
the Rights as a result of adjustments prescribed by this Agreement shall mean
the price at which each share of such stock or the smallest available unit of
such other property is purchasable with the Rights.
(y) "Record Date" means the Close of Business on May 22, 1998.
(z) "Redemption Date" means the time at which the Rights are scheduled
to be redeemed as provided in Section 23.
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(aa) "Redemption Price" has the meaning given to such term in Section
23.
(bb) "Securities Act" means the Securities Act of 1933, as amended,
and any successor statute.
(cc) "Stock Acquisition Date" means the first date (including, without
limitation, any such date which is on or after the date of this Agreement and
prior to the issuance of the Rights) of public disclosure by the Company, an
Acquiring Person or otherwise that an Acquiring Person has become such.
(dd) "Subsidiary" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
(ee) "Trigger Date" means the first date upon which a Person becomes
an Acquiring Person.
(ff) "Triggering Event" shall mean a Person becoming an Acquiring
Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company 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.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date: (i) the Rights shall be issued in
respect of and shall be evidenced by the certificates representing the shares of
Common Stock issued and outstanding on the Record Date and shares of Common
Stock issued or which become outstanding after the Record Date and prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date (which certificates for Common Stock shall be deemed to also
be certificates evidencing the Rights), and not by separate certificates; (ii)
the registered holders of such shares of Common Stock shall also be the
registered holders of the Rights associated with such shares; and (iii) the
Rights shall be transferable only in connection with the transfer of shares of
Common Stock, and the surrender for transfer of any certificate for such shares
of Common Stock shall also constitute the surrender for transfer of the Rights
associated with such shares. As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the Distribution Date, the Rights
Agent shall (except as otherwise provided in Section 7(e)) mail, 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, as shown by the records of the
Company, at the address of such holder shown on such records, one or more
certificates evidencing the Rights ("Rights Certificates"), in substantially the
form of Exhibit B attached hereto, evidencing one Right (as adjusted from time
to time pursuant to this Agreement) for each share of Common Stock so held.
From and after the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) Rights shall be issued in respect of all shares of Common Stock
which are
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issued or sold by the Company after the Record Date but prior to the earliest of
the Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date. In addition, in connection with the issuance or sale of Common Stock by
the Company following the Distribution Date and prior to the earliest of the
Redemption Date, the Exchange Date and the Expiration Date, the Company shall,
with respect to Common Stock so issued or sold (i) pursuant to the exercise of
stock options issued prior to the Distribution Date or under any employee plan
or arrangement created prior to the Distribution Date, or (ii) upon the
exercise, conversion or exchange of securities issued by the Company prior to
the Distribution Date, issue Rights and Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (x) no such Rights and Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued and (y) no
such Rights and Rights Certificates shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof. Certificates issued after the Record Date representing shares of
Common Stock outstanding on the Record Date and shares of Common Stock issued
after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date, the Exchange Date and the Expiration Date shall have impressed,
printed, or written on, or otherwise affixed to them a legend substantially in
the following form:
"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Whirlpool Corporation and First Chicago Trust
Company of New York, as Rights Agent, dated as of April 21,
1998 (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 Whirlpool
Corporation. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by
this certificate. Whirlpool Corporation will mail to the
holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor.
Under certain circumstances, Rights that were, are or become
beneficially owned by Acquiring Persons or their Associates
or Affiliates (as such terms are defined in the Rights
Agreement) may become null and void and the holder of any of
such Rights (including any subsequent holder) shall not have
any right to exercise such Rights."
(c) Notwithstanding any other provision of this Agreement, neither the
Company, the Rights Agent nor anyone else shall have any obligation to issue any
Rights Certificate to an Acquiring Person or to anyone else in whose hands the
Rights nominally represented by such Certificate shall be null and void either
initially or in connection with a request to register a transfer of Rights
represented by a certificate previously issued. The Company shall be entitled
to require any person claiming the right to receive a Rights Certificate to
present such evidence as the Company shall require in good faith to establish to
the Company's satisfaction that the Rights represented by that Certificate have
not become null and void under the provisions in Section 7(e)
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or that the Company is not entitled to withhold such Certificate under the
provisions of the preceding sentence.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to purchase
shares and form of assignment to be printed on the reverse thereof) shall be in
substantially 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
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of this Agreement,
the Rights Certificates, whenever issued, shall be dated as of the Distribution
Date, and on their face shall entitle the holders thereof to purchase such
number of shares of Preferred Stock as shall be set forth therein at the
Purchase Price set forth therein, but the number and kind of such securities and
the Purchase Price shall be subject to adjustment as provided in this Agreement.
Section 5. Execution, Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the Company
by the Company's Chairman of the Board, any Vice Chairman, Chief Executive
Officer, President, Chief Operating Officer, Chief Financial Officer, Treasurer,
any Executive Vice 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 Company's Secretary or an
Assistant Secretary, either manually or by facsimile signature. Each Rights
Certificate shall be countersigned by the Rights Agent either manually or, if
permitted by the Company, by facsimile signature and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed a Rights Certificate shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by the
Company, such Rights Certificate nevertheless may be countersigned by the Rights
Agent and issued and delivered with the same force and effect as though the
Person who signed such Rights Certificate had not ceased to be such officer of
the Company; and any Rights Certificate may be signed on behalf of the Company
by any Person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Agreement any such
Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at its principal stock transfer office, books for registration
and transfer of the Rights Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Rights Certificates,
the number of Rights evidenced by each Rights Certificate, and the certificate
number and the date of issuance of each Rights Certificate.
-10-
Section 6. Transfer, Division, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 3(c) and Section 14, at any
time after the Close of Business on the Distribution Date and at or prior to the
Close of Business on the earliest of the Redemption Date, the Exchange Date and
the Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or following a Triggering Event or a Business
Combination, other securities, cash or other property, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide, combine
or exchange any Rights Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, divided, combined or exchanged at the principal
corporate office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. As a condition to
such transfer, division, combination or exchange, the Company may require
payment by the surrendering holder of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection therewith. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have duly completed and executed the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
such former or proposed Beneficial Owner) thereof or such Beneficial Owner's
Affiliates or Associates as the Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date and the Redemption Date, one one-thousandth (1/1000) of a share of
Preferred Stock, subject to adjustment from time to time as provided in Sections
11 and 13.
(b) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Agreement) in
whole or in part (except that no fraction of a Right may be exercised) at any
time after the Distribution Date and prior to the
-11-
earliest of the Expiration Date, the Exchange Date and the Redemption Date, by
surrendering the Rights Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the principal
stock transfer office of the Rights Agent, together with payment of the Exercise
Amount for each Right exercised.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Exercise Amount for each Right exercised and an amount equal to
any applicable transfer tax required to be paid by the surrendering holder
pursuant to Section 9(d), the Rights Agent shall, subject to the provisions of
this Agreement, thereupon promptly (i)(A) requisition from any transfer agent
for the Preferred Stock (or make available, if the Rights Agent is the transfer
agent for such shares) certificates for the Preferred Stock (or other
securities, as the case may be) 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 total number of shares of
Preferred Stock (or other securities, as the case may be) issuable upon exercise
of the Rights with a depositary agent, requisition from the depositary agent
depositary receipts representing such Preferred Stock (or other securities, as
the case may be) as are to be purchased (in which case certificates for the
Preferred Stock (or other securities, as the case may be) represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company shall direct the depositary agent to comply with such request; (ii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder; and (iii) if appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 of this Agreement and, promptly after receipt thereof, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue other
securities (including shares of Common Stock) of the Company, pay cash and/or
distribute other property pursuant to this Agreement, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 3(c) and Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are or were formerly beneficially owned on or after the earlier of
the Distribution Date and the Trigger Date by (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes or becomes entitled to be a transferee after the
Acquiring Person becomes such, or (iii) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a
direct or indirect transfer (whether or not for consideration) from the
Acquiring Person (or
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from an Associate or Affiliate of such Acquiring Person) to holders of equity
interests in such Acquiring Person (or to holders of equity interests in any
Associate or Affiliate of such Acquiring Person) or to any Person with whom the
Acquiring Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a direct or indirect transfer which a majority of the Continuing
Directors (or if no Continuing Directors are then in office, the Board of
Directors of the Company) determines is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall, immediately upon the occurrence of a Triggering Event and
without any further action, be null and void and no holder of such Rights shall
have any rights whatsoever with respect to such Rights whether under this
Agreement or otherwise, provided, however, that, in the case of transferees
under clause (ii) or clause (iii) above, any Rights beneficially owned by such
transferee shall be null and void only if and to the extent such Rights were
formerly beneficially owned by a Person who was, at the time such Person
beneficially owned such Rights, or who later became, an Acquiring Person or an
Affiliate or Associate of such Acquiring Person. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) are
complied with, but shall have no liability to any holder of a Rights Certificate
or to any other Person as a result of the Company's failure to make, or any
delay in making (including any such failure or delay by the Continuing Directors
and/or the Board of Directors of the Company) any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the registered holder of a Rights Certificate upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former or proposed
Beneficial Owner) thereof or the Affiliates or Associates of such Beneficial
Owner (or former or proposed Beneficial Owner) as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, division,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
the provisions of this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
-13-
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available at all times out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury (and, following the occurrence of a Triggering Event or a Business
Combination, out of its authorized and unissued shares of Common Stock and/or
other securities or out of its authorized and issued shares of Common Stock
and/or other securities held in its treasury) free from preemptive rights or any
right of first refusal, a sufficient number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, shares of Common Stock and/or
other securities) to permit the exercise in full of all Rights from time to time
outstanding.
(b) The Company further covenants and agrees, so long as the Preferred
Stock (and, following the occurrence of a Triggering Event or a Business
Combination, shares of Common Stock and/or other securities) issuable upon the
exercise of Rights may be listed on any United States national securities
exchange or quoted on any automated quotation system, to use its best efforts to
cause, from and after the time that the Rights become exercisable, all such
shares and/or other securities reserved for such issuance to be listed on such
exchange or quoted on such automated quotation system upon official notice of
issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following [the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) delivered upon the exercise of
Rights shall, at the time of delivery of the certificates for such shares and/or
such other securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued, fully paid, nonassessable, freely tradeable, not
subject to liens or encumbrances, and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof, of any kind or nature whatsoever.
(d) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the original issuance or delivery of the Rights
Certificates or of any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to (i) pay any transfer tax which
may be payable in respect of any transfer involved in the issuance or delivery
of any Rights Certificates or the issuance or delivery of any certificates for
shares of Preferred Stock (or Common Stock and/or other securities as the case
may be) to a Person other than, or in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
(ii) transfer or deliver any Rights Certificate or issue or deliver any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
-14-
(e) The Company shall (i) as soon as practicable following a
Triggering Event, (or such earlier time following the Distribution Date as may
be required by law) prepare and file a registration statement on an appropriate
form under the Securities Act with respect to the securities purchasable upon
exercise of the Rights, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which Rights are no longer exercisable for such securities and (B)
the Expiration Date. The Company shall also take such action as may be
necessary or appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the exercise of the
Rights. The Company may temporarily suspend, for a period of time not to exceed
90 days after the date of a Triggering Event, 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 make 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.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (and/or such other securities, as the
case may be) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
Section 11. Adjustments to Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kind of securities, cash and other
property obtainable upon exercise of each Right and the number of Rights
outstanding shall be subject to adjustment from time to time as provided in this
Section 11.
(a) Adjustments Prior to Trigger Date:
(1) In the event the Company shall at any time after the date of
this Agreement and prior to the Trigger Date (i) pay a
dividend or make a distribution on the Common Stock payable
in shares of Common Stock, (ii) subdivide (by a stock split
or otherwise) the outstanding Common Stock into a larger
number of shares, (iii) combine (by a reverse stock split or
otherwise) the outstanding Common Stock into a smaller number
of shares (and any of the actions described in clauses (i),
(ii) or (iii) are herein called a "stock split") then:
-15-
(A) The number of Rights outstanding shall be adjusted so
that after giving effect to such stock split the number
of Rights outstanding shall be exactly equal to the
number of shares of Common Stock outstanding (and so
that prior to the Distribution Date one Right shall be
associated with every share of Common Stock outstanding
after such stock split);
(B) The Exercise Amount shall be adjusted by multiplying the
Exercise Amount in effect immediately prior to such
stock split by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding
immediately prior to such stock split and the
denominator of which shall be the number of shares of
Common Stock outstanding immediately after such stock
split;
(C) The Purchase Price for each one one-thousandth of a
share of Preferred Stock shall not change; and
(D) The fraction of a share of Preferred Stock purchasable
with each Right immediately after such stock split shall
be equal to the product derived by multiplying the
fraction of a share of Preferred Stock purchasable with
each Right immediately prior to such stock split times
the fraction cited in clause (B) above.
The following example illustrates the intended operation of the
preceding provisions. Assume that initially, each Right would
(when and if it became exercisable) entitle its holder to
purchase one one-thousandth of a share of Preferred Stock for
$300 (and accordingly the initial Exercise Amount and the initial
Purchase Price per one one-thousandth of a share of Preferred
Stock are each $300). Assume further that prior to the
Distribution Date, the Company splits its Common Stock two for
one (thereby doubling the number of shares of Common Stock
outstanding). The intended operation of the preceding adjustment
provisions is that: (i) the number of Rights outstanding would
also double; (ii) one Right would be associated with each share
of Common Stock outstanding after the stock split; (iii) each
Right would have an Exercise Amount equal to $150; (iv) each
Right will entitle its holder (when and if the Right becomes
exercisable) to purchase one two-thousandth of one share of
Preferred Stock; and (v) the Purchase Price for each one one-
thousandth of a share of Preferred Stock would remain $300 so
that the price for each one two-thousandth of a share of
Preferred Stock purchasable with each Right would be $150.
-16-
(2) Adjustment in Rights Certificates: In the event the
Distribution Date shall occur and the Company shall issue
separate certificates to represent the Rights, the following
provisions shall thereafter apply:
(A) In the event the number of Rights outstanding are
increased pursuant to Section 11(a)(1), the Company
shall as promptly as reasonably possible distribute to
the record holders of the Rights on the record date for
the stock split giving rise to the increase in the
number of Rights certificates representing the
additional Rights issuable by reason of such stock
split.
(B) In the event the number of Rights outstanding are
reduced pursuant to Section 11(a) by reason of the
occurrence of a reverse stock split or its functional
equivalent, then each Rights certificate outstanding
prior to such reverse stock split shall thereafter
represent the reduced number of Rights into which the
Rights represented by such certificate immediately prior
to such reverse stock split shall have been converted by
reason of the occurrence of that reverse stock split.
(b) Basic Triggering Event Adjustments: Upon the first occurrence of
a Triggering Event (except as otherwise provided in this Agreement), each Right
shall be changed so that immediately after the Triggering Event:
(1) it shall no longer be exercisable for Preferred Stock but
rather shall be exercisable for Common Stock;
(2) the number of shares of Common Stock which may be acquired
upon exercise of each Right shall be equal to the result
obtained by dividing (x) 50% of the Current Market Price per
share of Common Stock on the date of the occurrence of the
Triggering Event into (y) the Exercise Amount in effect
immediately prior to the Triggering Event; and
(3) the Purchase Price per Common Share purchasable with each
Right shall be equal to 50% of the Current Market Price per
share of Common Stock on the date of the occurrence of the
Triggering Event.
(c) Other Post Triggering Event Adjustments.
(1) Use of Common Equivalent Shares: In the event that the
number of shares of Common Stock which are authorized by the
Company's certificate of incorporation, but which are not
outstanding or reserved for issuance for purposes other than
upon exercise of the Rights ("Available Common Stock") is not
sufficient to permit the exercise
-17-
in full of the Rights after the adjustment made in accordance
with Section 11(b), then:
(A) The Available Common Stock shall be allocated among the
outstanding Rights so that each Right shall entitle its
holder to purchase the same quantity of Available Common
Stock and (ii) a fraction of a share of Preferred Stock
which when multiplied times the Adjustment Number then
in effect under the terms of the Preferred Stock
produces a product equal to the remainder derived by
subtracting the number of shares of Common Stock
purchasable with each Right after the allocation
specified in clause (i) from the number of shares of
Common Stock which would have been purchasable with such
Right if the Corporation had a sufficient number of
shares of Common Stock to permit the Right to be
exercisable entirely for Common Stock.
(B) The fraction of a share of Preferred Stock equal to the
reciprocal of the Adjustment Number in effect at the
time the term shall be applied shall be deemed to be a
"Common Equivalent Share" for purposes of this
Agreement. The Company shall take all actions reasonably
necessary so that as nearly as possible each Common
Equivalent Share represents substantially the same
interest in the Company, has the same dividend rate, and
has other characteristics as similar as possible to one
share of Common Stock. The term "Common Share" whenever
it is used in this Agreement means both a share of
Common Stock and a Common Equivalent Share.
(C) If circumstances after the initial Trigger Date require
the use of Common Equivalent Shares, the Company shall
use its best efforts to obtain authorization to issue a
sufficient quantity of Common Stock to permit Common
Stock to be issued upon exercise of the Rights and/or
any exercise of the exchange right under the following
Section. Each time the Company's authorized Common Stock
shall be increased, the adjustment required under the
preceding paragraphs shall be redone to maximize the
amount of Common Stock issuable upon exercise of the
Rights. To the extent excess authorized Common Stock
remains after the readjustment required by the preceding
sentence, the holder of any outstanding Common
Equivalent Share shall have the right at any time to
require the Company to exchange that share for a share
of Common Stock.
-18-
(D) In no event, however, shall the Company be obligated to
reserve any Common Stock for issuance under the Rights
until and unless a Triggering Event actually occurs.
(E) In no event shall the Company issue any Preferred Stock
except for issuances caused by exercise of the Rights
and except for issuances required by this Section 11(c)
(2) or Section 11(d)(6).
(2) Exchange Option:
(A) At any time after the occurrence of a Triggering Event
and prior to (i) the time any Person (other than an
Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Stock then outstanding and
(ii) the occurrence of a Business Combination, the Board
of Directors may, at its option, cause the Company to
exchange for all or part of the then-outstanding and
exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section
7(e) hereof), shares of Common Stock. The number of
shares of Common Stock issuable for each Right in any
such exchange (the "Exchange Shares") shall be 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. Any partial exchange shall be effected on a pro
rata basis based on the number of Rights (other than
Rights which have become void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.
(B) Immediately upon the action of a majority of the
Continuing Directors ordering the exchange of any
particular Rights pursuant to this Section 11(c)(3) and
without any further action and without any notice, the
right to exercise those particular Rights shall
terminate and the only right a holder shall have
thereafter with respect to any of those particular
Rights shall be to receive the number of shares of
Common Stock issuable in exchange under the terms of the
preceding paragraph. The Company shall promptly give
public notice of any such exchange and in addition, the
Company shall promptly mail a notice of any such
exchange to all of the holders of such Rights in
accordance with Section 25 of this Agreement; provided,
however, that the failure to give, any delay in giving
or any defect in, such notice shall not affect
-19-
the validity of such exchange. Each such notice of
exchange will state the method by which the exchange of
the Common Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights
which will be exchanged. The Company shall not be
required to issue fractions of shares of Common Stock or
to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional
shares of Common Stock, the Company shall pay to the
registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to
the product derived by multiplying (x) the subject
fraction, by (y) the last sale price of the Company's
Common Stock on the fifth Trading Day following the
public announcement of the exchange by the Company, or,
in case no such sale takes place on such day, the
average of the closing bid and asked prices on such day,
in either case on a when issued basis (taking into
account the exchange), as reported in the principal
consolidated transaction reporting system with respect
to securities listed or admitted to trading on the NYSE
(or, if the Company's Common Stock is not so listed or
traded, then as determined in the manner provided under
the definition of "Current Market Price," adjusted to
take into account the exchange). In determining whether
any particular holder shall be obligated to receive cash
in lieu of a fractional share, the holder shall be
entitled to have all Rights beneficially owned by such
holder aggregated so that only one fractional share
shall be attributable to all the Rights so beneficially
owned.
(d) Antidilution Adjustments After the Trigger Date:
(1) In the event the Company shall at any time after the Trigger
Date effect any stock split with respect to its Common Stock,
then the Purchase Price to be in effect after such stock
split shall be determined by multiplying the Purchase Price
in effect immediately prior to such action by a fraction, the
numerator of which shall be the number of Common Shares
outstanding immediately prior to such stock split and the
denominator of which shall be the number of Common Shares
outstanding immediately after such stock split.
(2) In case the Company shall at any time after the Trigger Date
fix a record date for the making of a distribution to holders
of Common Stock (including any such distribution made in
connection with a reclassification of the Common Stock or a
consolidation or merger in
-20-
which the Company is the surviving corporation) of securities
(other than Common Stock and rights, options or warrants
referred to in Section 11(d)(3)), cash (other than a regular
periodic cash dividend at an annual rate not in excess of (x)
125% of the annual rate of the regular cash dividend paid on
the Common Stock during the immediately preceding fiscal year
or (y) in the event that a regular cash dividend was not paid
on the Common Stock during such preceding fiscal year, 5% of
the Current Market Price of the Common Stock on the date such
regular cash dividend was first declared), property,
evidences of indebtedness or assets, 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 per share of Common Stock on such
record date, less the fair market value (as determined in
good faith by a majority of the Board of Directors of the
Company, whose determination shall be described in a
statement filed with the Rights Agent) of such securities,
cash, property, evidences of indebtedness or assets to be so
distributed in respect of one share of Common Stock, and the
denominator of which shall be such Current Market Price per
share of Common Stock on such record date. Such adjustments
shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not made
following such adjustment, the Purchase Price shall be
readjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(3) If the Company shall at any time after the Trigger Date fix a
record date for the issuance of rights, options or warrants
to holders of Common Shares entitling them to subscribe for
or purchase Common Shares (or securities convertible into
Common Shares) at a price per Common Share (or, in the case
of a convertible security, having a conversion price per
Common Share) less than the Current Market Price per share of
Common Stock on such record date and requiring that the
conversion or purchase right be exercised within 45 calendar
days after such record date, the Purchase Price to be in
effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall
be the number of shares of Common Shares outstanding on such
record date, plus the number of Common Shares which the
aggregate exercise and/or conversion price for the total
number of Common Shares which are obtainable upon exercise
and/or conversion of such rights, options, warrants or
convertible securities would purchase at such Current Market
Price, and the denominator of which shall be the number of
shares of Common Shares outstanding on such record date, plus
the number of additional
-21-
Common Shares which may be obtained upon exercise and/or
conversion of such rights, options, warrants or convertible
securities. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as
determined in good faith by a majority of the Board of
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent. Common Shares owned by
or held for the account of the Company or any Subsidiary of
the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not issued
following such adjustment, the Purchase Price shall be
readjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(4) 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 combination or subdivision of the Common Stock,
issuance wholly for cash of any Common Stock at less than the
Current Market Price, issuance wholly for cash of Common
Stock or securities which by their terms are convertible into
or exchangeable or exercisable for Common Shares, stock
dividends or issuance of rights, options or warrants referred
to in this Section 11, hereafter made by the Company to
holders of its Common Shares, shall not be taxable to such
stockholders.
(5) After each adjustment of the Purchase Price pursuant to any
of subsections (1) - (4) immediately above, the number of
Common Shares purchasable with each Right shall be adjusted
to the quotient derived by dividing the Purchase Price as
constituted after giving effect to such adjustment into the
Exercise Amount.
(6) The Company shall not take any of the actions described in
any of subsections (1) - (3) above at a time when any Common
Equivalent Shares are outstanding unless the Company shall
take substantively identical actions with respect to the
outstanding Common Stock and outstanding Common Equivalent
Shares. Conversely, the Company shall not take any actions
with respect to outstanding Common Equivalent Shares
analogous to those described in any of subsections (1) - (3)
above unless the Company shall take substantively identical
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actions with respect to the outstanding Common Stock and
outstanding Common Equivalent Shares.
(e) Recapitalizations.
(1) In the event that after the Trigger Date, the Company shall
issue any securities in a reclassification of the Common
Stock or in any other recapitalization (including any such
reclassification in connection with a consolidation or merger
in which the Company is the surviving corporation), then in
each such event:
(A) the property purchasable with each Right shall be
adjusted to be whatever the owner of that Right would
have owned by reason of both (i) the exercise of that
Right immediately prior to such recapitalization or
reclassification and (ii) the effect of that
recapitalization or reclassification on the property
assumed to have been received in such exercise.
(B) The Exercise Amount shall be allocated among the shares
of stock and/or other units of property for which the
Right shall be exercisable after giving effect to the
adjustment cited in clause (A) based on the fair market
value of such property to determine the Purchase Price
for each such share and/or unit.
(2) To illustrate the intended operation of this provision,
assume that: (i) immediately prior to a reclassification,
each Right were exercisable for 10 Common Shares and the
Exercise Amount were $300 (resulting in a purchase price of
$30 per Common Share); (ii) as a result of the
Reclassification, each outstanding Common Share is
reclassified into two New Common Shares and one Series B
Share; and (iii) immediately after the reclassification, the
market value of each New Common Share was $20 and the market
value of each Series B share was $20. Immediately after the
assumed reclassification, each Right would be exercisable for
20 New Common Shares at a purchase price of $10 per share and
10 Series B Shares at a purchase price of $10 per share.
(f) In the event a Triggering Event shall occur, or in the event there
shall be a recapitalization or reclassification pursuant to Section 11(e), or in
the event there shall be any merger or other action which shall cause a change
in the property purchasable with the Rights under Section 13, or in the event
there shall be any other occurrence or development which shall cause the
property purchasable with the Rights to consist in whole or in part of anything
other than Preferred Stock, then and in any such event:
-23-
(1) The certificates representing the Rights shall automatically
be deemed to represent the adjusted terms of the Rights
without the need to replace such certificates. The Company
shall thereafter make arrangements for the production of
certificates representing the revised terms of the Rights
resulting from such adjustment and shall use such
certificates to represent Rights for which new certificates
shall be issuable by reason of a transfer of record ownership
or by reason of a request by the existing record owner for a
replacement certificate representing the revised terms of the
Rights.
(2) The principles underlying the adjustment provisions in this
Section 11 and elsewhere in this Agreement shall be applied
to fairly and proportionately adjust the shares or other
property purchasable with the Rights and the purchase price
for each share or other property unit purchasable with the
Rights after giving effect to the adjustments required by
reason of such event to reflect any subsequent capital
changes or other events. Without limiting by implication the
generality of the preceding sentence, the provisions of
Sections 7, 9, 10, 12, 13, 14 and 24 of this Agreement which
related to the Preferred Stock shall after the occurrence of
any such event apply in a substantively identical manner to
the shares or other property purchasable with the Rights
after giving effect to such event.
(g) Before taking any action that would cause an adjustment reducing
the Purchase Price per share at which shares are purchasable with the Rights
below the par value of those shares, 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 shares at
such adjusted Purchase Price.
(h) In any case in which this Section 11 shall require that an
adjustment 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 shares of Common
Stock and other securities, cash or property of the Company, if any, issuable
upon such exercise over and above the shares of Common Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or other securities, cash or property upon the
occurrence of the event requiring such adjustment.
(i) The Company covenants and agrees that on and after the Trigger
Date neither it nor any combination of it and its subsidiaries shall (i)
consolidate with any other Person, or (ii) merge with or into any other Person
or (iii) directly or indirectly sell, lease, or otherwise transfer or dispose of
(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
-24-
as a whole to any other Person if (A) at the time of or immediately after such
consolidation, merger, sale, lease, transfer, or disposition there are any
rights, warrants, securities or other instruments outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (B) prior to, simultaneously with or
immediately after such consolidation, merger, sale, lease, transfer, or
disposition the stockholders (or equity holders) of the Person who constitutes,
or would constitute, the Principal Party in such transaction shall have received
a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates or (C) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights. The
Company shall not consummate any such consolidation, merger, sale, lease,
transfer, or disposition unless prior thereto the Company and such other Person
shall have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this Section 11(i).
(j) The Company covenants and agrees that, after the Trigger Date it
will not, except as permitted by Section 11(c)(3) of this Agreement, 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, directly or indirectly,
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certification of Adjustments. 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 stock then purchasable with the Rights a copy of
such certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if no Rights Certificates have been issued, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment. Any adjustment to be made pursuant to Sections
11 and 13 of this Agreement shall be effective as of the date of the event
giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) A "Business Combination" shall be deemed to occur in the event
that, in or following a Triggering Event, (i) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(i) and Section 11(j) of this Agreement) in a transaction in which the Company
is not the continuing, resulting or surviving corporation of such merger or
consolidation, (ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(i) and Section 11(j) of this
Agreement) shall, directly or indirectly, consolidate with the Company, or shall
merge with and into the Company, in a transaction in which the Company is the
continuing, resulting or surviving corporation of such merger or consolidation
and, in connection with such merger or consolidation, all or part of the Common
Stock shall be changed (including, without limitation, any conversion into or
exchange for securities of the Company or of any other Person, cash or any other
property), (iii) the Company shall, directly or indirectly, effect a share
exchange in which all or part of the Common Stock shall be changed (including,
without limitation,
-25-
any conversion into or exchange for securities of any other Person, cash or any
other property) or (iv) the Company shall, directly or indirectly, sell, lease,
exchange, mortgage, pledge or otherwise transfer or dispose of (or one or more
of its Subsidiaries shall directly or indirectly sell, lease, exchange,
mortgage, pledge or otherwise transfer or dispose of), 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 (other than the Company or any of its Subsidiaries
in one or more transactions each and all of which comply with Section 11(i) and
Section 11(j) of this Agreement).
In the event of a Business Combination, proper provision shall be made
so that each holder of a Right (except as otherwise provided in this Agreement)
shall thereafter have the right to receive, upon the exercise of each Right,
such number of shares of Common Stock of the Principal Party as shall be equal
to the result obtained by dividing the Exercise Amount in effect prior to the
Business Combination by 50% of the Current Market Price per share of the Common
Stock of such Principal Party immediately prior to the consummation of such
Business Combination. All shares of Common Stock of any Person for which any
Right may be exercised after consummation of a Business Combination as provided
in this Section 13(a) shall, when issued upon exercise thereof in accordance
with this Agreement, be duly and validly authorized and issued, fully paid,
nonassessable, freely tradeable, not subject to liens or encumbrances, and free
of preemptive rights, rights of first refusal or any other restrictions or
limitations on the transfer or ownership thereof of any kind or nature
whatsoever. The Purchase Price per share for such Common Stock immediately
after such Business Combination shall be equal to 50% of the Current Market
Price per share of the Common Stock of such Principal Party immediately prior to
the consummation of such Business Combination.
(b) After consummation of any Business Combination, (i) the Principal
Party shall be liable for, and shall assume, by virtue of such Business
Combination and without the necessity of any further act, all the obligations
and duties of the Company pursuant to this Agreement, (ii) the term "Company" as
used in this Agreement shall thereafter be deemed to refer to such Principal
Party and (iii) such Principal Party shall take all steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9) in connection with such Business Combination as
necessary to ensure that the provisions of this Agreement 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.
(c) The Company shall not consummate any Business Combination unless
prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance (other than shares reserved for issuance pursuant to this Agreement to
the holders of Rights) to permit the exercise in full of the Rights in
accordance with this Section 13, (ii) the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the fulfillment of the Principal Party's obligations and the terms
as set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable on or after the date of such Business Combination,
the Principal Party, at its own expense, shall (A) prepare and file, if
necessary, a registration statement on an appropriate form under the Securities
Act with respect to the Rights and the securities
-26-
purchasable upon exercise of the Rights, (B) use its best efforts to cause such
registration statement to become effective as soon as practicable after such
filing and remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date, (C) 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 (or any successor form) under the Exchange Act, (D)
use its best efforts to qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the state securities or "blue sky"
laws of such jurisdictions as may be necessary or appropriate, (E) use its best
efforts to list the Rights and the securities purchasable upon exercise of the
Rights on a United States national securities exchange and (F) obtain waivers of
any rights of first refusal or preemptive rights in respect of the Common Stock
of the Principal Party subject to purchase upon exercise of outstanding Rights,
(iii) the Company and the Principal Party shall have furnished to the Rights
Agent an opinion of independent counsel stating that such supplemental agreement
is a legal, valid and binding agreement of the Principal Party enforceable
against the Principal Party in accordance with its terms, and (iv) the Company
and the Principal Party shall have filed with the Rights Agent a certificate of
a nationally recognized firm of independent accountants setting forth the number
of shares of Common Stock of such issuer which may be purchased upon the
exercise of each Right after the consummation of such Business Combination.
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall be
consummated at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable for
the consideration and in the manner described in Section 13(a). The provisions
of Section 11(b) of this Agreement shall be applicable to events which occur
after a Business Combination.
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number or kind of shares (or fractions of a share), cash or
other property for which a Right is exercisable or the number of Rights
outstanding or associated with each share of Common Stock or any similar or
other adjustment shall be made or be effective if such adjustment would have the
effect of reducing or limiting the benefits the holders of the Rights would have
had absent such adjustment, including, without limitation, the benefits under
Sections 11 and 13, unless the terms of this Agreement are amended so as to
preserve such benefits, provided that this paragraph shall not prevent any
change prior to the Trigger Date permitted by Section 26(a) and provided that
this Section 13(e) shall not be deemed to limit or impair the right to engage in
an exchange pursuant to Section 11(c)(2).
(f) The Company covenants and agrees that it shall not effect any
Business Combination if at the time of, or immediately after such Business
Combination, there are any rights, options, warrants or other instruments
outstanding which would diminish or otherwise eliminate the benefits intended to
be afforded by the Rights.
(g) Without limiting the generality of this Section 13, in the event
the nature of the organization of any Principal Party shall preclude or limit
the acquisition of Common Stock of such Principal Party upon exercise of the
Rights as required by Section 13(a) as a result of a
-27-
Business Combination, it shall be a condition to such Business Combination that
such Principal Party shall take such steps (including, but not limited to, a
reorganization) as may be necessary to ensure that the benefits intended to be
derived under this Section 13 upon the exercise of the Rights are assured to the
holders thereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional Rights or to
distribute Rights Certificates which evidence fractional Rights.
(b) The Company shall permit the issuance and trading of Preferred
Stock in fractional shares such that the smallest fractional share tradeable at
any particular time shall equal the reciprocal of the Adjustment Number in
effect at that particular time. The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of the reciprocal of the Adjustment Number) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of the
reciprocal of the Adjustment Number). Fractions of shares of Preferred Stock
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Stock. In lieu
of fractional shares of Preferred Stock that are not integral multiples of the
reciprocal of the Adjustment Number, the Company may at its option (i) issue
scrip or warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive the reciprocal of the Adjustment Number of one
share of Preferred Stock upon the surrender of such scrip or warrants
aggregating the reciprocal of the Adjustment Number of one share of Preferred
Stock, or (ii) pay to the registered holders of Rights Certificates at the time
such Rights Certificates are exercised as provided in this Agreement an amount
in cash equal to the same fraction of the relevant closing price of a share of
Preferred Stock. For purposes of this Section 14(b), the relevant closing price
of a share of Preferred Stock shall be the closing price of a share of Preferred
Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or Common Equivalent Shares or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the product derived by
multiplying (x) the subject fraction, by (y) the closing price of a share of
Common Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
-28-
(d) The holder of a Right by his acceptance thereof expressly waives
any right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as otherwise provided in this Agreement).
Section 15. Rights of Action. Except as otherwise provided, all rights
of action in respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, any
registered holders of associated Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, any share of associated
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right, may, on 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 rights pursuant to 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 Rights Holders Concerning Transfer and
Ownership of Rights. Every holder of a Right by accepting the same consents and
agrees with the Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal stock transfer office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificate or the associated Common Stock certificate
made by anyone other than the Company, the transfer agent for the stock
purchasable with such Right or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Rights Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote or to receive dividends or
distributions or shall be deemed for any purpose the holder of Preferred Stock
or any other securities, cash or other property which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Agreement or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right (i) to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, (ii) to give or withhold consent to any corporate action,
(iii) to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 24),
-29-
(iv) to receive dividends, distributions or subscription rights, (v) to
institute, as a holder of Preferred Stock or other securities issuable on
exercise of the Rights represented by any Rights Certificate, any derivative
action on behalf of the Company, or otherwise, until and only to the extent that
the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions of this Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without
negligence, bad faith, willful misconduct or breach of this Agreement on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises.
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Preferred Stock or Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document reasonably believed by it to be genuine and to be signed,
executed and, when necessary, verified or acknowledged, by the proper Person or
Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the 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 document 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 Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificate so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificate either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and
-30-
in case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights 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 Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or the determination of Current
Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman,
the Chief Executive Officer, the President, the Chief Financial Officer, the
General Counsel, the Treasurer, any Vice President or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for the
negligence, bad faith, willful misconduct or breach of this Agreement by it or
its attorneys or agent.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (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 of this
Agreement (except the due execution and delivery of this Agreement by the Rights
Agent) or in respect of the validity or execution of any Rights 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 Rights Certificate; nor shall it be responsible for any change or
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13 or 23 or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after actual
notice of any change or adjustment is required); 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 Preferred Stock, Common Stock or
other
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securities to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Preferred Stock, Common Stock or other securities
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performance 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, the Chief Executive Officer, the President, the Chief Financial
Officer, the General Counsel, the Treasurer, any Vice President or the Secretary
of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though the Rights Agent were not
serving as such under this Agreement. Nothing in this Agreement shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/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 notice of 30 days in writing mailed to the Company and to each transfer
agent of the Common Stock or Preferred Stock by registered or certified mail and
to the holders of the Rights Certificates by either (i) first-class mail or (ii)
by disclosure in a periodic report of the Company required to be filed under the
Exchange Act, any permitted report under the Exchange Act, a press release of
the Company or in any proxy or other communication of the Company with its
stockholders. The Company may remove the Rights Agent or any successor Rights
Agent upon notice of 30 days 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
or Preferred Stock by registered or certified mail, and to the holders of the
Rights Certificates by either (i) first-class mail or (ii) by disclosure in a
periodic report of the Company required to be filed under
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the Exchange Act, any permitted report under the Exchange Act, a press release
of the Company or in any proxy or other communication of the Company with its
stockholders. 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. Notwithstanding any other provision of this Agreement, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by any holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the incumbent Rights Agent or the
registered holder of any Rights 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 (i) a
corporation organized and doing business under the laws of the United States or
of the State of New York (or of any other state of the United States so long as
such corporation is authorized to conduct a banking, corporate trust or stock
transfer business in the State of New York) in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (ii) a subsidiary of a corporation described
in clause (i) 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 such 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 or Preferred Stock; the Company shall also either (i) mail a
notice thereof in writing to the registered holders of the Rights Certificates
or (ii) make a disclosure with respect thereto in a periodic report of the
Company required to be filed under the Exchange Act, any permitted report under
the Exchange Act, a press release of the Company or in any proxy or other
communication of the Company with its stockholders. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights Certificates to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by a majority of the Board of Directors of the
Company or, if there is then an Acquiring Person, by a majority of the
Continuing Directors to reflect any adjustment or change in the Purchase Price
per share and the number or kind or class of securities, cash or other property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) Trigger Date and (ii) the Expiration Date,
redeem all but not less than all of the
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then-outstanding Rights at a redemption price of $.01 per Right (the "Redemption
Price") appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date of this Agreement. The Company
may, at its option, pay the Redemption Price in cash, shares (including
fractional shares) of Common Stock (based on the Current Market Price of the
Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors. The redemption of the Rights by
the Board of Directors of the Company may be made effective at such time, on
such basis and with such conditions as the Board of Directors of the Company in
its sole discretion may establish.
(b) At the time and date of effectiveness set forth in any resolution
of the Board of Directors of the Company ordering the redemption of the Rights,
without any further action and without any further notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price; provided, however, that such
resolution of the Board of Directors of the Company may be revoked, rescinded or
otherwise modified at any time prior to the time and date of effectiveness set
forth in such resolution, in which event the right to exercise will not
terminate at the time and date originally set for such termination by the Board
of Directors of the Company. The Company shall promptly give public notice of
any such redemption; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such redemption. The
Company shall also give notice of such redemption to the Rights Agent. The
Company may elect to give notice of such redemption to the holders of the then-
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the issuance of Rights Certificates, on the registry books of the transfer
agent for the Common Stock. Any notice which is mailed in the manner provided
in this Agreement shall be deemed given, whether or not the holder receives the
notice. In connection with any redemption permitted under this Section 23, the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the issuance of the Rights Certificates,
on the registry books of the transfer agent for the Common Stock, and upon such
action, all outstanding Rights Certificates shall be null and void without any
further action by the Company. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23, and other
than in connection with the purchase of shares of Common Stock prior to the
earlier of the Distribution Date and the Expiration Date.
Section 24. Notice of Certain Events. In case the Company, on or after
the Distribution Date, shall propose to (a) pay any dividend payable in stock of
any class to the holders of its Common Shares or to make any other distribution
to the holders of its Common Shares (other than a regular periodic cash dividend
at an annual rate not in excess of 125% of the annualized rate of the cash
dividend paid on the Common Shares during the immediately preceding fiscal
year), or (b) offer to the holders of its Common Shares rights, options or
warrants to subscribe for or to purchase any additional shares of Common Shares
or shares of stock of any class or any other securities, rights or options, or
(c) effect any reclassification of the Common Shares (other than a
reclassification involving only the subdivision of outstanding shares of Common
Shares, a change
-34-
in the par value of such Common Shares or a change from par value to no par
value), or (d) directly or indirectly effect any consolidation or merger into or
with, or effect any sale, lease, exchange, or other transfer or disposition (or
to permit one or more of its Subsidiaries to effect any sale, lease, exchange or
other transfer or disposition), in one transaction or a series of related
transactions, of more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, or (e) 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, in accordance with Section 25,
a notice of such proposed action, which shall specify any record date for the
purposes of such stock dividend or distribution of rights, or the date on which
such reclassification, consolidation, merger, sale, lease, exchange, transfer,
disposition, liquidation, dissolution or winding up is to take place and if such
holders will or may participate therein, the date of participation therein by
the holders of Common Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (a) or (b) above
at least 20 days prior to the record date for determining holders of the Common
Shares for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein, if any, by the holders of Common Shares,
whichever shall be the earlier. The failure to give notice as required by this
Section 24 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.
In case any Triggering Event or Business Combination shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, in accordance with Section 25, notice of
the occurrence of such Triggering Event or Business Combination, which shall
specify the Triggering Event or Business Combination and include a description
of the consequences of such event to holders of Rights under Section 11 or 13.
Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Whirlpool Corporation
0000 Xxxxx X-00
Xxxxxx Xxxxxx, Xxxxxxxx 00000
Attn: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
First Chicago Trust Company of New York
Suite 4660
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Tender and Exchanges Administration
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Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
Section 26. Supplements and Amendments.
(a) At any time prior to the Trigger Date, a majority of the Board of
Directors of the Company may, and the Rights Agent shall, if so directed,
supplement or amend any provision of this Agreement, including, without
limitation, the Beneficial Ownership percent as set forth in Section 1 at which
a Person becomes an Acquiring Person and the definition of Exempt Person as set
forth in Section 1 to include any Person in addition to the Persons described
therein, without the approval of any holders of Rights.
(b) Except as otherwise provided in Section 26(c):
(1) The Board of Directors of the Company (with, where
specifically provided for in this Agreement, the concurrence
of the Continuing Directors) shall have the exclusive power
and authority to administer this Agreement (except those
provisions specifically requiring the approval of the
Continuing Directors only) and to exercise all rights and
powers specifically granted to the Board of Directors or the
Company, or as may be necessary or advisable in the
administration of this Agreement, including, without
limitation, the right and power to (i) interpret the
provisions of this Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem
the Rights, to exchange or not exchange the Rights for Common
Stock or other securities of the Company, or to amend or
supplement this Agreement).
(2) 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 of Directors of the Company and/or 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 Persons, and (y) not
subject the Board of Directors of the Company and/or the
Continuing Directors to any liability to the holders of the
Rights.
(c) From and after the Trigger Date:
-36-
(1) No amendment or other change shall be made in this Agreement
or the terms of the Rights which is prohibited by Section
11(j) or Section 13(f) or which would otherwise adversely
affect the interests of the holders of Rights Certificates
(other than an Acquiring Person or any other person in whose
hands the Rights are void under the provisions of Section
7(e)).
(2) The Board of Directors of the Company shall not be entitled
to exercise the powers specified in Section 26(b) after the
Trigger Date unless the Board of Directors can establish by
clear and convincing evidence that its action satisfies the
requirement in Section 23(c)(1).
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. 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 Rights any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights.
Section 29. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and enforceable
under applicable law, but if any provision of this Agreement shall be held to be
prohibited by or unenforceable under applicable law, (i) such provision shall be
applied to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and (ii) all other provisions of this
Agreement shall remain in full force and effect. No rule of strict
construction, rule resolving ambiguities against the person who drafted the
provision giving rise to such ambiguities, or other such rule of interpretation
shall be applied against any party with respect to this Agreement.
Section 30. Governing Law. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the internal laws of Delaware applicable to contracts to be made
and performed entirely within Delaware.
Section 31. Counterparts. This Agreement may be executed in
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and both such counterparts shall together constitute but one and
the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Agreement.
-37-
Section 33. Grammatical Construction. Throughout this Agreement, where
such meanings would be appropriate, (a) any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms (e.g., references to "he"
shall also include "she" and "it" and references to "who" and "whom" shall also
include "which") and (b) the plural form of nouns and pronouns shall include the
singular and vice-versa.
-38-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
WHIRLPOOL CORPORATION
By________________________________
Title:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
as Rights Agent
By________________________________
Title:
Exhibit A
---------
WHIRLPOOL CORPORATION
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES B PARTICIPATING CUMULATIVE PREFERRED STOCK
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, ____________________, the _____________________________ of
Whirlpool Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 151 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 April 21, 1998, adopted the following resolution creating a series of 250,000
shares of Preferred Stock designated as Series B Participating Cumulative
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board by the
Certificate of Incorporation of the Corporation and out of the Preferred Stock
authorized therein, the Board hereby authorizes that a series of Preferred Stock
of the Corporation be, and it hereby is, created and that the designation and
amount thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series B Participating Cumulative Preferred Stock," par value
$1.00 per share (the "Series B Preferred Stock") and the number of shares
constituting such series shall be 250,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior
to the shares of Series B Preferred Stock with respect to dividends,
the holders of shares of Series B Preferred Stock, in preference to
the holders of Common Stock and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the fifteenth day of March, June,
September and December in each year (each such date, a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a
share of Series B Preferred Stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (a) $25.00 or (b) the
Adjustment Number (as defined below) times the aggregate per share
amount of all cash dividends, and the Adjustment Number times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series B Preferred Stock. The "Adjustment Number" shall initially be
1000. In the event the Corporation shall at any time after May 22,
1998 (i) declare or pay any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock into a
greater number of shares or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series B Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $25.00 per share on the Series B
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 B Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Series B Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series B Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series B 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 B Preferred Stock entitled to receive payment of a
dividend or distribution declared
-2-
thereon, which record date shall be no more than 30 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B
Preferred Stock shall have the following voting rights:
(A) Each share of Series B Preferred Stock shall entitle the
holder thereof to a number of votes equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2(A) hereof) on all
matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or bylaws, the holders of shares of Series B Preferred
Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the
Corporation.
(C) (i) If at any time dividends on any Series B 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 (a "default period") that shall extend until such time
when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly period on all shares of
Series B Preferred Stock then outstanding shall have been declared and
paid or set apart for payment. During each default period, (1) the
number of Directors shall be increased by two, effective as of the
time of election of such Directors as herein provided, and (2) the
holders of Series B Preferred Stock and the holders of other Preferred
Stock upon which these or like voting rights have been conferred and
are exercisable (the "Voting Preferred Stock") with dividends in
arrears equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect such two
Directors.
(ii) During any default period, such voting right of the
holders of Series B 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 such voting right shall
not be exercised unless the holders of at least one-third in number of
the shares of Voting Preferred Stock outstanding shall be present in
person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Voting Preferred
Stock of such voting right.
(iii) Unless the holders of Voting 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 Voting Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting
of
-3-
the holders of Voting Preferred Stock, which meeting shall thereupon
be called by the Chairman of the Board, Vice Chairman, the Chief
Executive Officer, the President, an Executive Vice President or the
Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Voting Preferred Stock are entitled
to vote pursuant to this paragraph (C)(iii) shall be given to each
holder of record of Voting 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 10 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 Voting Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, after the holders of Voting
Preferred Stock shall have exercised their right to elect Directors
voting as a class, (x) the Directors so elected by the holders of
Voting 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 be
filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class or classes of stock which elected
the Director whose office shall have become vacant. Reference in this
paragraph (C) to Directors elected by the holders of a particular
class or classes of stock shall include Directors elected by such
Directors to fill vacancies as provided in clause (y) of the foregoing
sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Voting Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors elected by
the holders of Voting 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) 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) Except as set forth herein, holders of Series B Preferred
Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate
action.
-4-
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series B Preferred Stock outstanding 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 B 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 B Preferred Stock, except dividends paid ratably on the Series
B Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series B Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series B Preferred Stock, or any shares of stock ranking on
a parity with the Series B Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become
-5-
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (A) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received the greater of (i) $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, and (ii) an aggregate amount per
share, equal to the Adjustment Number (as adjusted from time to time pursuant to
Section 2(A) hereof) times the aggregate amount to be distributed per share to
holders of Common Stock, or (B) to the holders of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series B Preferred Stock, except distributions made ratably on the Series B
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series B Preferred Stock then outstanding shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2(A) hereof) times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.
Section 8. No Redemption. The shares of Series B Preferred Stock
shall not be redeemable.
Section 9. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series B Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of
two-thirds of the outstanding shares of Series B Preferred Stock, voting
together as a single class.
Section 10. Rank. The Series B Preferred Stock shall rank junior
with respect to payment of dividends and on liquidation to all other series of
the Corporation's preferred stock outstanding on the date hereof and to all such
other series that specifically provide that they shall rank senior to the Series
B Preferred Stock.
Section 11. Fractional Shares. The Series B Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares,
-6-
to exercise voting rights, receive dividends, participate in distributions and
to have the benefit of all other rights of holders of Series B Preferred Stock.
* * * * * * * * *
-7-
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this ____ day of
____, 1998.
______________________________
Name:
Title:
-8-
Exhibit B
---------
Form of Right Certificate
Certificate No. R- ______________ Rights
NOT EXERCISABLE AFTER May 22, 2008 OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01
PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH
TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
WHIRLPOOL CORPORATION
This certifies that ________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of April 21, 1998 (the "Rights Agreement") between Whirlpool
Corporation, a Delaware corporation (the "Company"), and First Chicago Trust
Company of New York, a New York corporation (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M. (New York time) on May
22, 2008 at the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one one-thousandth of a fully paid,
non-assessable shares of Series B Participating Cumulative Preferred Stock (the
"Preferred Stock") of the Company, at a cash purchase price of $300 per one one-
thousandth of a share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase and the related
Certificate duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of April ___, 1998, based on the Preferred
Stock as constituted at such date.
Any Rights that are or were formerly beneficially owned on or after
the earlier of the Distribution Date and the Trigger Date (as such terms are
defined in the Rights Agreement) by (i) an Acquiring Person or any Associate or
Affiliate (as such terms are defined in the Rights Agreement) of an Acquiring
Person, (ii) a direct or indirect transferee of an Acquiring Person (or of an
Associate or Affiliate of such Acquiring Person) who becomes or becomes entitled
to be a transferee after the Acquiring Person becomes such, or (iii) a direct or
indirect transferee of an Acquiring Person (or of an Associate or Affiliate of
such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person (or from an
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or to holders of equity interests in any Associate or
Affiliate of such Acquiring Person) or to any Person with whom the Acquiring
Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a direct or indirect transfer which a majority of the Continuing
Directors (as defined in the Rights Agreement) (or if no Continuing Directors
are then in office, the Board of Directors of the Company) determines is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this provision, shall, immediately upon the occurrence of a
Triggering Event (as defined in the Rights Agreement) and without any further
action, be null and void and no holder of such Rights shall have any rights
whatsoever with respect to such Rights whether under the Rights Agreement or
otherwise, provided, however, that, in the case of transferees under clause (ii)
or clause (iii) above, any Rights beneficially owned by such transferee shall be
null and void only if and to the extent such Rights were formerly beneficially
owned by a Person who was, at the time such Person beneficially owned such
Rights, or who later became, an Acquiring Person or an Affiliate or Associate of
such Acquiring Person.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, 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.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-thousandths of a share of Preferred Stock as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole Rights
not exercised.
-2-
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Board of Directors at a redemption price
of $.01 per Right at any time prior to the Stock Acquisition Date, as such term
is defined in the Rights Agreement.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-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.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or, to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ______________, ______
WHIRLPOOL CORPORATION
______________________________ By ____________________________
Secretary Title:
Countersigned:
XXXXXX TRUST AND SAVINGS BANK,
as Rights Agent
By ______________________________
Authorized Signature
-3-
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________________________
hereby sells, assigns and transfers unto _____________________________________
______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: __________________, _____
____________________________
Signature
Signature Guaranteed:
-4-
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: _____________________, ____ ____________________________
Signature
NOTICE
------
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.
-5-
FORM OR ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: Whirlpool Corporation
The undersigned hereby irrevocably elects to exercise ____ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security
or other identifying number
____________________________________________________
(Please print name and address)
____________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
-6-
Please insert social security
or other identifying number
____________________________________________
(Please print name and address)
____________________________________________
____________________________________________
Dated: _____________________________, 19____
___________________________
Signature
Signature Guaranteed:
-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: _____________________, ____ ____________________________
Signature
NOTICE
------
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.
-8-
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On April 21, 1998, the Board of Directors of Whirlpool Corporation (the
"Company") authorized the issuance of one preferred share purchase right a
("Right") for each outstanding share of common stock, par value $1.00 per share
(the "Common Shares"), of the Company. The distribution is payable to the
stockholders of record at the close of business on May 22, 1998 (the "Record
Date"), and with respect to all Common Shares that become outstanding after the
Record Date and prior to the earliest of the Distribution Date (as defined
below), the redemption of the Rights, the exchange of the Rights and the
expiration of the Rights (and, in certain cases, following the Distribution
Date). Each Right entitles the registered holder to purchase from the Company
one one-thousandth of a share of a Junior Participating Preferred Stock, Series
B, par value $1.00 per share, of the Company (the "Preferred Shares") at a price
of $300 per one one-thousandth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and First
Chicago Trust Company of New York, as Rights Agent ("Rights Agent").
Until the earlier to occur of (i) 10 days after a person or group (an
"Acquiring Person"), together with persons affiliated or associated with such
Acquiring Person, has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Shares (the "Trigger Date")
or (ii) the tenth business day after the date of commencement or public
disclosure of an intention to commence a tender offer or exchange offer by a
person if, upon consummation of the offer, such person could acquire beneficial
ownership of 15% or more of the outstanding Common Shares (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced by
Common Share certificates and not by separate certificates. The Rights
Agreement provides that, until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date (or earlier
redemption, exchange or expiration of the Rights), new Common Share certificates
issued after May 22, 1998, upon transfer or new issuance of the Common Shares,
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption, exchange or expiration of the
Rights) the surrender for transfer of any certificate for Common Shares, with or
without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date, and such separate Right
Certificates alone will evidence the Rights.
The Rights will first become exercisable after the Distribution Date
(unless sooner redeemed or exchanged). The Rights will expire at the close of
business on May 22, 2008 (the "Expiration Date"), unless earlier redeemed or
exchanged by the Company as described below.
The Purchase Price payable, and the number of Common Shares or Preferred
Shares or other securities, cash or other property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend or distribution on, or a subdivision,
combination or reclassification of, the Common Shares or Preferred Shares, (ii)
upon the grant to holders of the Common Shares or Preferred Shares of certain
rights, options or warrants to subscribe for Common Shares or Preferred Shares
or securities convertible into Common Shares or Preferred Shares at less than
the current market price of the Common Shares or Preferred Shares or (iii) upon
the distribution to holders of the Common Shares or Preferred Shares of
evidences of indebtedness or assets (excluding regular periodic cash dividends
out of earnings or retained earnings) or of subscription rights or warrants
(other than those referred to above).
In the event that a person becomes an Acquiring Person, proper provision
shall be made so that each holder of a Right, other than Rights that are or were
beneficially owned by the Acquiring Person and certain related persons and
transferees (which will thereafter be void), shall thereafter have the right to
receive upon exercise of such Right that number of Common Shares (or other
securities) having at the time of such transaction a market value of two times
the exercise price of the Right. In the event that a person becomes an
Acquiring Person and the Company is involved in a merger or other business
combination transaction where the Company is not the surviving corporation or
where Common Stock is changed or exchanged or in a transaction or transactions
in which 50% or more of its consolidated assets or earning power are sold,
proper provision shall be made so that each holder of a Right (other than such
Acquiring Person and certain related persons or transferees) shall thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction would have a market
value of two times the exercise price of the Right. In addition, in the event
that an Acquiring Person, together with persons affiliated or associated with
such Acquiring Person, does not have beneficial ownership of 50% or more of the
Common Shares, the Company's Board of Directors has the option of exchanging all
or part of the Rights (excluding void Rights) for an equal number of Common
Shares in the manner described in the Rights Agreement.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading date prior to the date
of exercise.
At any time prior to the Trigger Date, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"), payable in cash, shares (including fractional
shares) of common stock or any other form of consideration deemed appropriate by
the Board of Directors. Immediately upon action of the Board of Directors
ordering redemption of the Rights, the ability of holders to exercise the Rights
will terminate and the only rights of such holders will be to receive the
Redemption Price.
-2-
At any time prior to the Trigger Date, the Board of Directors of the
Company may amend or supplement the Rights Agreement without the approval of the
Rights Agent or any holder of the Rights. Thereafter, the Board of Directors of
the Company may amend or supplement the Rights Agreement without such approval
only to cure ambiguity, correct or supplement any defective or inconsistent
provision or change or supplement the Rights Agreement in any manner which shall
not adversely affect the interests of the holders of the Rights (other than an
Acquiring Person or an affiliate or associate thereof). Immediately upon the
action of the Board of Directors providing for any amendment or supplement, such
amendment or supplement will be deemed effective.
The Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of $25 per share and 1,000 times
the dividend declared per Common Share. In the event of liquidation, the
holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment equal to the greater of $100 per share and 1,000 times the
payment made per Common Share. Each Preferred Share will have 1,000 votes per
share, voting together with the Common Shares. In the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1,000 times the amount received per
Common Share.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board, except pursuant to an offer conditioned on a
substantial number of Rights being acquired. The Rights should not interfere
with any merger or other business combination approved by the Board of Directors
prior to the time a person or group has acquired beneficial ownership of 15% or
more of the Common Shares, because until such time the Rights may generally be
redeemed by the Company at $.01 per Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. A copy of the Rights Agreement has been filed
with the Securities and Exchange Commission as an Exhibit to an Application for
Registration on Form 8-A and as an Exhibit to the Company's Current Report on
Form 8-K. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
-3-
