FIRST BRANDS CORPORATION
AND
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF MARCH 22, 1996
Table of Contents
Page
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...............................................9
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............12
Section 8. Cancellation and Destruction of Rights Certificates......................14
Section 9. Reservation and Availability of Preferred Stock..........................14
Section 10. Preferred Stock Record Date..............................................16
Section 11. Adjustments to Purchase Price, Number of Shares or Number of Rights......16
Section 12. Certification of Adjustments.............................................24
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.....24
Section 14. Fractional Rights and Fractional Shares..................................27
Section 15. Rights of Action.........................................................28
Section 16. Agreement of Rights Holders Concerning Transfer
and Ownership of Rights..................................................28
Section 17. Rights Holder Not Deemed a Stockholder...................................29
- i -
Section 18. Concerning the Rights Agent..............................................29
Section 19. Merger or Consolidation or Change of Name of Rights Agent................30
Section 20. Duties of Rights Agent...................................................30
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...............................................35
Section 27. Successors...............................................................36
Section 28. Benefits of this Agreement; Determinations and Actions
by the Board of Directors...............................................36
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 A
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
- ii -
RIGHTS AGREEMENT
Rights Agreement dated as of March 22, 1996, between First Brands
Corporation, a Delaware corporation (the "Company") and Continental Stock
Transfer & Trust Company, a New York corporation (the "Rights Agent").
RECITALS
The Board of Directors of the Company has authorized and declared
the payment of a dividend of one preferred share purchase right (the "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 between the Record Date and the
Distribution Date (as defined in Section 1), and, in certain cases following the
Distribution Date. Each Right represents, as of the Record Date, the right to
purchase one one-thousandth of a 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 20% 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.
A Person does not become an "Acquiring Person" solely as the
result of (i) an acquisition of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 20% or more of the Common Stock then
outstanding as determined above, or (ii) such Person becoming the Beneficial
Owner of 20% 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 20% 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 an Exempt Event, a stock dividend or a
subdivision of the Common
- 1 -
Stock into a larger number of shares or a similar transaction), then such Person
shall be deemed to be an "Acquiring Person."
(b) "Affiliate" of a Person 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.
(c) "Associate" of a Person 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.
(d) Except as provided below, a Person is the "Beneficial Owner"
of, and "beneficially owns," 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;
(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);
- 2 -
(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 subparagraph (iii) of this Section 1(d)) or
disposing of any securities of the Company.
Nothing in this Section 1(d) causes 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 is to be treated as the "Beneficial Owner"
of, or to "beneficially own," any securities owned by any other Person that is
an Exempt Person.
(e) "Business Combination" has the meaning set forth in Section
13 of this Agreement.
(f) "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.
(g) "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.
(h) "Common Stock" when used in any context applicable prior to a
Business Combination means the Common Stock, par value $.01 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
- 3 -
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.
(i) "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 (as defined herein), 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.
(j) "Current Market Price" per share of Common Stock, Preferred
Stock or Equivalent Shares on any date is the average of the daily closing
prices per share of such Common Stock, Preferred Stock or Equivalent Shares 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 except computations made pursuant to Section 11(a)(iv), and for the
Trading Day immediately prior to such date for the purpose of any computation
under Section 11(a)(iv); provided, however, that in the event that the Current
Market Price per share of Common Stock, Preferred Stock or Equivalent Shares is
determined during a period following the announcement by the issuer of such
Common Stock, Preferred Stock or Equivalent Shares of (i) a dividend or
distribution on such Common Stock, Preferred Stock or Equivalent Shares other
than a regular quarterly cash dividend, or (ii) any subdivision, combination or
reclassification of such Common Stock, Preferred Stock or Equivalent Shares, and
prior to the expiration of 30 Trading Days after the "ex-dividend" date for such
dividend or distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "Current 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, Preferred Stock or Equivalent Shares are 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, Preferred Stock
or Equivalent Shares are listed or admitted to trading or, if the Common Stock,
Preferred Stock or Equivalent Shares are not listed or admitted to trading on
any United States national securities exchange, the last quoted sale price on
such day or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market on such day, as reported by the
- 4 -
National Association of Securities Dealers, Inc. Automated Quotation System
("Nasdaq") or such other system then in use. If on such day the Common Stock,
Preferred Stock or Equivalent Shares are not quoted by any such organization,
the average of the closing bid and asked prices on such day as furnished by a
professional market maker making a market in the Common Stock, Preferred Stock
or Equivalent Shares selected by a majority of the Continuing Directors (or if
no Continuing Directors are then in office, the Board of Directors of the
Company) shall be used. 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 Continuing Directors (or if no Continuing Directors are then in
office, the Board of Directors of the Company) or the Board of Directors of the
issuer of such Common Stock, Preferred Stock or Equivalent Shares must be used,
which determination must be described in a statement filed with the Rights Agent
and is 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, Preferred Stock or Equivalent Shares are listed or admitted to
trading is open for the transaction of business or, if the Common Stock,
Preferred Stock or Equivalent Shares are not listed or admitted to trading on
any United States national securities exchange, but are traded in the
over-the-counter market and reported by Nasdaq, then any day for which Nasdaq
reports the high bid and low asked prices in the over-the-counter market, or if
the Common Stock, Preferred Stock or Equivalent Shares are not traded in the
over-the-counter market and reported by Nasdaq, then a Business Day. If the
Common Stock, Preferred Stock or Equivalent Shares have not been so listed or
admitted to trading for 30 or more Trading Days or traded in the
over-the-counter market and reported by Nasdaq for 30 or more Trading Days,
"Current Market Price" per share means the fair market value per share as
determined in good faith by a majority of the Continuing Directors (or, if no
Continuing Directors are then in office, the Board of Directors of the Company),
whose determination must be described in a statement filed with the Rights Agent
and will be final, binding and conclusive for all purposes.
(k) "Distribution Date" means the earlier of (i) the day after
the Company's right to redeem the Rights pursuant to Section 23(a)(i) expires
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 on 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. If there is at least one Continuing Director then in office, the Board
of Directors of the Company, with the concurrence of a majority of the
Continuing Directors then in office, 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.
(l) "Equivalent Shares" means any class or series of capital
stock of the Company, other than the Preferred Stock, which is entitled to
participate on a proportional basis with the Preferred Stock in dividends and
other distributions, including distributions upon the liquidation, dissolution
or winding up of the Company. In calculating the number of any class or series
of Equivalent Shares for purposes of Section 11, the number of shares, or
fractions of a share, of such
- 5 -
class or series of capital stock that is entitled to the same dividend or
distribution as a whole share of Preferred Stock shall be deemed to be one
share.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
(n) "Exchange Date" means the time at which the Rights are
exchanged pursuant to Section 11(a)(iv).
(o) "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.
(p) "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.
(q) "Expiration Date" means the Close of Business on April 3,
2006.
(r) "Person" means any individual, firm, corporation,
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).
(s) "Preferred Stock" means the Company's Junior Participating
Preferred Stock, Series A, 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 A, attached hereto as Exhibit A.
(t) "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
- 6 -
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.
(u) "Purchase Price" with respect to each Right is initially
$87.50 per one one-thousandth of a share of Preferred Stock, shall be subject
to adjustment from time to time as provided in Sections 11 and 13, and shall be
payable in lawful money of the United States of America in cash or by certified
check or bank draft payable to the order of the Company.
(v) "Record Date" means the Close of Business on April 1, 1996.
(w) "Redemption Date" means the time at which the Rights are
scheduled to be redeemed as provided in Section 23.
(x) "Redemption Price" has the meaning given to such term in
Section 23.
(y) "Securities Act" means the Securities Act of 1933, as
amended, and any successor statute.
(z) "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.
(aa) "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.
- 7 -
(bb) "Summary of Rights" means a summary of the Rights, in
substantially the form attached hereto as Exhibit C.
(cc) "Triggering Event" occurs when 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 after the Record Date and prior to the earliest of the Distribution
Date, the Redemption Date, the Exchange Date or 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 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 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. In the event that an adjustment in the number of
Rights per share of Common Stock has been made pursuant to Section 11(o) of this
Agreement, at the time of distribution of the Rights Certificates, the Company
may make the necessary and appropriate adjustments (in accordance with Section
14(a) of this Agreement) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights.
(b) As soon as practicable after the Record Date, the Company
will send a copy of the Summary of Rights by first-class, postage prepaid mail,
to each record holder of Common Stock as of the Close of Business on the Record
Date, as shown by the records of the Company, at
the address of such holder shown on such records.
(c) Rights shall be issued in respect of all shares of Common
Stock which are 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
- 8 -
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 pursuant to (i) 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 or 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 First
Brands Corporation and Continental Stock Transfer & Trust
Company, as Rights Agent, dated as of March 22, 1996 (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 First Brands 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. First Brands 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.
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
- 9 -
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 of such
securities and the Purchase Price shall be subject to adjustment as provided in
this Agreement.
(b) Notwithstanding any other provision of this Agreement, (i)
any Rights Certificate issued pursuant to this Agreement that represents Rights
beneficially owned or formerly beneficially owned, on or after the earlier of
the Distribution Date and the Stock Acquisition Date, by a Person known by the
Company to be: (A) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person; (B) 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 (C) 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 (x) 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
an Associate or Affiliate of such Acquiring Person) or to any Person with whom
such Acquiring Person (or an Associate or Affiliate of such Acquiring Person)
has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (y) 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) has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance of
Section 7(e) of this Agreement, or (ii) any Rights Certificate issued pursuant
to this Agreement upon transfer, exchange, replacement or adjustment of any
other Rights Certificate beneficially owned by a Person referred to in this
Section 4(b), shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
7(e) of the Rights 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, 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,
- 10 -
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 corporate trust 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.
Section 6. Transfer, Division, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of 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 other securities, cash or other property,
following a Triggering Event or a Business Combination, 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
- 11 -
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 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 corporate trust office of
the Rights Agent, together with payment of the Purchase Price for each one one-
thousandth of a share of Preferred Stock (or other securities, cash or other
assets, as the case may be) as to which the Rights are 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 Purchase Price for each one one-thousandth of a share of
Preferred Stock (or, following a Triggering Event or a Business Combination,
other securities, cash or other assets, as the case may be) to be purchased and
an amount in cash, certified bank check or bank draft payable to the order of
the Company 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 total number of one
one-thousandths of a share of 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 number of one one- thousandths of a share of 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
- 12 -
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 6 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 or the Stock Acquisition 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 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) and Section 4(b) 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
- 13 -
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.
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, 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, shares of
Common Stock and/or other securities) issuable upon the exercise of Rights may
be listed on any United States national securities exchange, 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 upon official notice of issuance upon such exercise.
- 14 -
(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.
(e) The Company shall use its best efforts (i) as soon as
practicable following a Triggering Event (provided the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) of this Agreement), or as soon as is required
by law following the Distribution Date, as the case may be, to 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) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which Rights are no longer exercisable
for such securities and (B) the Expiration Date. The Company shall also use its
best efforts to 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 described in clause (i) of the first sentence of this paragraph
of Section 9, 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.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be
- 15 -
exercisable in any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained and until a registration statement has
been declared effective.
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) (i) In the event the Company shall at any time on or after
the date of this Agreement (A) pay a dividend or make a distribution on the
Preferred Stock payable in shares of Preferred Stock, (B) subdivide (by a stock
split or otherwise) the outstanding Preferred Stock into a larger number of
shares, (C) combine (by a reverse stock split or otherwise) the outstanding
Preferred Stock into a smaller number of shares, or (D) issue any securities in
a reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
surviving corporation), then in each such event the Purchase Price and the
Redemption Price set forth in Section 23, as each is in effect at the time of
the record date for such dividend or distribution, or of the effective date of
such subdivision, combination or reclassification, shall be proportionately
adjusted by multiplying the Purchase Price and such Redemption Price by a
fraction the numerator of which shall be the total number of shares of Preferred
Stock outstanding immediately prior to the occurrence of such event and the
denominator of which shall be the total number of shares of Preferred Stock
outstanding immediately following the occurrence of such event. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(iiUpon the first occurrence of a Triggering Event, 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, and the
Company shall issue, upon exercise thereof at the then-current Purchase Price
required to be paid in order to exercise a Right in accordance with the terms of
this Agreement, in lieu of the number of one one-thousandths of a share of
Preferred Stock or other
- 16 -
securities receivable upon exercise of a Right prior to the occurrence of the
Triggering Event, such number of shares of Common Stock of the Company as shall
equal the result obtained by (x) multiplying the then-current Purchase Price by
the number of one-thousandths of a share of Preferred Stock or other securities
for which a Right was then exercisable (without giving effect to such Triggering
Event) and (y) dividing that product by 50% of the Current Market Price per
share of Common Stock on the date of the occurrence of the Triggering Event
(such number of shares being referred to as the "Adjustment Shares"); provided,
however, that if the transaction or event that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 of this
Agreement, then only the provisions of Section 13 of this Agreement shall apply
and no adjustment shall be made pursuant to this Section 11(a)(ii). Upon the
occurrence of such Triggering Event, the Purchase Price required to be paid in
order to exercise a Right shall be unchanged, and the Purchase Price shall be
appropriately adjusted to reflect, and shall thereafter mean, the amount
required to be paid per share of Common Stock upon exercise of a Right.
(iiiIn lieu of issuing shares of Common Stock in accordance
with Section 11(a)(ii), the Company may, if a majority of the Continuing
Directors (or if no Continuing Directors are then in office, the Board of
Directors of the Company) determine that such action is necessary or appropriate
and not contrary to the interests of holders of Rights (and, 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, are not sufficient
to permit the exercise in full of the Rights in accordance with Section
11(a)(ii), the Company shall) take one or more of the following actions: (A)
reduce the Purchase Price required to be paid in order to exercise a Right by
any amount (the "Reduction Amount"), in which event the number of Adjustment
Shares and/or the amount of any Substitute Consideration (as hereinafter
defined) issuable in respect of each Right (the Adjustment Shares, if any, and
the Substitute Consideration, if any, issuable in respect of a Right are herein
collectively referred to as the "Total Consideration") shall be reduced so that
the aggregate value of the Total Consideration issuable in respect of each Right
is equal to the Current Value (as hereinafter defined) less the Reduction Amount
(herein the "Adjusted Current Value"), and/or (B) make adequate provision with
respect to each Right to substitute for all or part of the Adjustment Shares
otherwise obtainable upon exercise of a Right: (1) cash, (2) other equity
securities of the Company (including, without limitation, shares, or units of
shares, of preferred stock which a majority of the Continuing Directors (or if
no Continuing Directors are then in office, the Board of Directors of the
Company) have determined to have the same value as shares of Common Stock (such
shares or units of preferred stock being referred to as "Common Stock
Equivalents")), (3) debt securities of the Company, (4) other assets, or (5) any
combination of the foregoing (collectively, "Substitute Consideration"), having
an aggregate value which, when added to the value of the Adjustment Shares (if
any) in respect of which no substitution is being made, is equal to the Adjusted
Current Value. If a majority of the Continuing Directors (or if no Continuing
Directors are then in office, the Board of Directors) determine to issue or
deliver any equity securities (other than Common Stock or Common Stock
Equivalents), debt securities and/or other assets pursuant to this Section
11(a)(iii), the value of such securities and/or assets shall be determined by a
majority of the Continuing Directors (or if no Continuing Directors are then in
office, the Board of Directors of the Company)
- 17 -
based upon the advice of a nationally recognized investment banking firm
selected by a majority of the Continuing Directors (or if no Continuing
Directors are then in office, the Board of Directors of the Company). If the
Company is required to make adequate provision to deliver value pursuant to the
first sentence of this Section 11(a)(iii) and the Company shall not have made
such adequate provision to deliver value within ninety (90) days following the
first occurrence of a Triggering Event (the "Substitution Period"), then
notwithstanding any provision of Section 11(a)(ii) or this Section 11(a)(iii) to
the contrary, the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase Price, shares
of Common Stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the excess of the Current
Value over the Purchase Price. If both Common Stock and cash are to be delivered
pursuant to the preceding sentence, amounts of both Common Stock and cash shall
be delivered upon surrender of each Right in a ratio of Common Stock to cash
that bears the same ratio as the total value of all Common Stock to be delivered
(as determined pursuant to this Section 11(a)(iii)) bears to the total value of
all cash to be delivered; provided, however, that the Company may adjust such
ratio to avoid issuing any fractional shares of Common Stock so long as the
method of adjustment is applied consistently to each holder of Rights entitled
to receive value thereon pursuant to this Section 11(a)(iii). To the extent that
the Company determines that some action is to be taken pursuant to the first
and/or third sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights, and (y) may suspend the exercisability of the Rights
but in no event to a time later than the expiration of the Substitution Period.
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Upon any change in the Adjustment Shares obtainable upon
exercise of a Right pursuant to this Section 11(a)(iii), the Purchase Price
shall thereafter mean the amount, if any, required to be paid upon exercise of a
Right for the Adjustment Shares, if any, and the Substitute Consideration, if
any, then issuable or deliverable upon exercise of a Right, and a majority of
the Continuing Directors (or if no Continuing Directors are then in office, the
Board of Directors of the Company) shall make any necessary provisions to ensure
that the provisions of Section 11(e) shall thereafter apply as appropriate to
the Total Consideration. For purposes of this Section 11(a)(iii), (A) "Current
Value" shall be the product derived by multiplying (x) the number of Adjustment
Shares issuable in respect of each Right determined under Section 11(a)(ii), by
(y) the Current Market Price per share of Common Stock on the date of the
Triggering Event, and (B) the value of each share of Common Stock and each share
or unit of any "Common Stock Equivalent" shall be deemed conclusively to be
equal to the Current Market Price per share of the Common Stock on the date of
the Triggering Event.
(iv) A majority of the Continuing Directors (or if no
Continuing Directors are then in office, the Board of Directors of the Company)
may, at their option, at any time and from time to time after the first
occurrence of a Triggering Event, 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 or Common Stock Equivalents at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted
- 18 -
to reflect any stock split, stock dividend or similar transaction occurring
after the date of this Agreement (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). 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.
Immediately upon the action of a majority of the Continuing
Directors (or if no Continuing Directors are then in office, the Board of
Directors of the Company) ordering the exchange of any Rights pursuant to this
Section 11(a)(iv) and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
and/or Common Stock Equivalents equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange 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 the validity
of such exchange. Each such notice of exchange will state the method by which
the exchange of the Common Stock or Common Stock Equivalents for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. In the event that the number of shares of Common Stock which
is authorized but not outstanding or reserved for issuance for a purpose other
than exercise of the Rights is not sufficient to permit any exchange of Rights
as contemplated in accordance with this Section 11(a)(iv), the Board of
Directors of the Company shall take all such action within its power as may be
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights. The Company shall not be required to issue fractions of
shares of Common Stock or Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents. In
lieu of such fractional shares of Common Stock or Common Stock Equivalents, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock or Common Stock
Equivalents 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). For the purposes of this Section 11(a)(iv) the value of
any Common Stock Equivalent on any date shall be the same as the value of the
Common Stock, as determined pursuant to the previous sentence, on such date.
(b) If the Company shall at any time on or after the date of this
Agreement fix a record date for the issuance of rights, options or warrants to
holders of Preferred Stock entitling them to subscribe for or purchase Preferred
Stock or Equivalent Shares (or securities convertible into
- 19 -
Preferred Stock or Equivalent Shares) at a price per share of Preferred Stock or
Equivalent Shares (or, in the case of a convertible security, having a
conversion price per share of Preferred Stock or Equivalent Shares) less than
the Current Market Price per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Preferred
Stock and Equivalent Shares (if any) outstanding on such record date, plus the
number of shares of Preferred Stock or Equivalent Shares, as the case may be,
which the aggregate exercise and/or conversion price for the total number of
shares of Preferred Stock or Equivalent Shares, as the case may be, 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 Preferred Stock and
Equivalent Shares (if any) outstanding on such record date, plus the number of
additional shares of Preferred Stock or Equivalent Shares, as the case may be,
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 Continuing Directors (or, if no Continuing Directors are then in office,
by the Board of Directors of the Company), whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent. Preferred Stock and Equivalent 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.
(c) In case the Company shall at any time after the date of this
Agreement fix a record date for the making of a distribution to holders of
Preferred Stock (including any such distribution made in connection with a
reclassification of the Preferred Stock or a consolidation or merger in which
the Company is the surviving corporation) of securities (other than Preferred
Stock and rights, options or warrants referred to in Section 11(b)), 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 Preferred Stock
during the immediately preceding fiscal year (or, if the Preferred Stock was not
outstanding during such preceding fiscal year, then 125% of the annual rate of
the regular cash dividend paid on the Common Stock during such year), or (y) in
the event that a regular cash dividend was not paid on the Preferred Stock (or
Common Stock) during such preceding fiscal year, 5% of the Current Market Value
of the Preferred 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 Preferred
Stock on such record date, less the fair market value (as determined in good
faith by a majority of the Continuing Directors (or if no Continuing Directors
are then in office, by 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
- 20 -
distributed in respect of one share of Preferred Stock, and the denominator of
which shall be such Current Market Price per share of Preferred 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.
(d) Except as provided below, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(d) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment.
All calculations under this Section 11 shall be made to the nearest cent, to the
nearest ten-thousandth of a share of Common Stock, or to the nearest
ten-millionth of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section 11(d), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment or (ii) the Expiration
Date.
(e) If, as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) of this Agreement, the holder of any Right thereafter
exercised shall become entitled to receive any securities of the Company other
than shares of Preferred Stock, thereafter the Purchase Price and the number of
such other securities so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Preferred Stock
contained in this Section 11 and the provisions of Sections 7, 9, 10, 12, 13, 14
and 24 with respect to the shares of Preferred Stock shall apply on like terms
to any such other securities.
(f) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock or other securities, cash or other property purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided in this Agreement.
(g) Unless the Company shall have exercised its election as
provided in Section 11(h), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(a)(i), 11(b) and 11(c), each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-thousandths of a share of Preferred Stock (calculated to the
nearest one ten- millionth of a share of Preferred Stock) obtained by (i)
multiplying the number of one one- thousandths of a share of Preferred Stock
covered by a Right immediately prior to adjustment pursuant to this Section
11(g) by the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
- 21 -
(h) The Company may elect, on or after the date of any adjustment
of the Purchase Price or any adjustment to the number of shares of Preferred
Stock for which a Right may be exercised, to adjust the number of Rights, in
lieu of an adjustment in the number of one one- thousandths of a share of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right
outstanding prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one hundred-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to such adjustment by
the Purchase Price in effect immediately after such adjustment. The Company
shall make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days after the date of the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(h) the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date a new Rights Certificate evidencing,
subject to Section 14, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record, in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment and upon surrender thereof (if required by the Company), new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates to be so distributed shall
be issued, executed and countersigned in the manner provided for in this
Agreement (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase
Price or the number or kind of shares issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per one one-thousandth of a share of Preferred Stock
and the number of shares of Preferred Stock which were expressed in the initial
Rights Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of one
one-thousandth of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable one one-thousandth shares of such Preferred
Stock at such adjusted Purchase Price.
(k) 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 Preferred
Stock and other securities, cash or property of the Company, if any, issuable
upon
- 22 -
such exercise over and above the shares of Preferred 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.
(l) 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 Preferred Stock, issuance
wholly for cash of any Preferred Stock at less than the Current Market Price,
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable or exercisable for Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to in this Section
11, hereafter made by the Company to holders of its Preferred Stock, shall not
be taxable to such stockholders.
(m) The Company covenants and agrees that it shall not (i)
consolidate with, (ii) merge with or into, 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 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(m).
(n) The Company covenants and agrees that, after the Stock
Acquisition Date it will not, except as permitted by Section 11(a)(iv), 26 or
29(b) 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.
(o) Anything in this Agreement to the contrary notwithstanding,
if the Company shall at any time prior to the Distribution Date (i) pay a
dividend or distribution on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding
- 23 -
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, and the Purchase Price under, and the number of one
one-thousandths of a share of Preferred Stock issuable in respect of, the
Rights, shall be proportionately adjusted, so that following such event one
Right (with the Purchase Price and the number of one one-thousandths of a share
proportionately adjusted thereunder) shall thereafter be associated with each
share of Common Stock then outstanding, or issued or delivered thereafter but
prior to the Distribution Date. For example, if the Company effects a
two-for-one stock split at a time when each Right (if it becomes exercisable)
would entitle the holder to purchase one one-thousandth of a share of Preferred
Stock for a Purchase Price of $"Z", then following such stock split each
previous Right would be split into two current Rights and thereafter each
current Right, upon becoming exercisable, would (subject to further adjustment)
entitle the holder to purchase one two- thousandth of a share of Preferred Stock
at a Purchase Price of 1/2 x $"Z".
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 Preferred Stock 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(m) and Section 11(n) 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(m) and Section 11(n) 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, 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,
- 24 -
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(m) and Section 11(n) 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 thereof
at the Purchase Price immediately prior to the first occurrence of a Triggering
Event multiplied by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event (without giving effect to the Triggering Event)
in accordance with the terms of this Agreement, such number of shares of Common
Stock of the Principal Party as shall be equal to the result obtained by (x)
multiplying the Purchase Price immediately prior to the first occurrence of a
Triggering Event by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event (without giving effect to the Triggering
Event), and (y) dividing that product 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.
(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
- 25 -
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 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). Following a
Business Combination, the provisions of Section 11(a)(ii) of this Agreement
shall be of no effect.
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number of shares of Preferred Stock (or fractions of a share)
or other securities, 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.
(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
- 26 -
such Principal Party upon exercise of the Rights as required by Section 13(a) as
a result of a 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. In lieu
of such fractional Rights, the Company may at its option pay to the registered
holders of the Rights Certificates with respect to which such fractional Rights
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of a Right
for the Trading Day immediately prior to the date on which such fractional
Rights otherwise would have been issuable. The closing price for any Trading Day
shall be the last sale price on such day, regular way, 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 NYSE or, if the Rights are 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 Rights are listed or admitted
to trading or, if the Rights are not listed or admitted to trading on any United
States national securities exchange, the last quoted sale price on such day or,
if not so quoted, the average of the high bid and low asked prices on such day
in the over-the-counter market, as reported by Nasdaq or such other system then
in use or, if on such day the Rights are not quoted by any such system, the
average of the closing bid and asked prices on such day as furnished by a
professional market maker making a market in the Rights selected by a majority
of the Continuing Directors (or if no Continuing Directors are then in office,
the Board of Directors of the Company). If on such day no such market maker is
making a market in the Rights, the current market value of the Rights on such
day shall be determined in good faith by a majority of the Continuing Directors
(or if no Continuing Directors are then in office, the Board of Directors of the
Company), whose determination shall be described in a statement filed with the
Rights Agent and shall be binding and conclusive for all purposes.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). 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
- 27 -
integral multiples of one one-thousandth of a share of Preferred Stock, 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 a full one
one-thousandth of a share of Preferred Stock upon the surrender of such scrip or
warrants aggregating a full one one-thousandth of a 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 current market value of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value 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 Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents. In
lieu of such fractional shares of Common Stock or Common Stock Equivalents, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock or Common Stock
Equivalents would otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) Current Market Price of
the Company's Common Stock.
(c) 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;
- 28 -
(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 corporate trust 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
Common Stock 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), (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
- 29 -
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 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 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
- 30 -
by a certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer 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 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 of the Board, the President, any Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
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
- 31 -
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 30 days' notice 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 first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock or Preferred Stock
by registered or certified mail, and to the holders of the Rights Certificates
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. 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 a corporation organized and doing business under the laws of the United
States or of the State of Connecticut (or of any other state of the United
States so long as such corporation is authorized to conduct a corporate trust or
banking business in the State of Connecticut) in good standing, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. 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, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
- 32 -
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 new Rights in such form as may be approved by a majority of the
Continuing Directors (or if no Continuing Directors are then in office, by the
Board of Directors of the Company) 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) the Stock Acquisition Date and (ii) the
Expiration Date, redeem all but not less than all of the 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.
(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. As soon as practicable after the action
of the Board of Directors of the Company ordering the redemption of the Rights,
the Company shall give notice of such redemption to the Rights Agent and 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. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. In any case, failure
to give such notice by mail, or any defect in the notice, to any particular
holder of Rights shall not affect the sufficiency of the notice to other holders
of Rights. In the case of a 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
- 33 -
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 Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (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 Preferred Stock during the immediately
preceding fiscal year), or (b) offer to the holders of its Preferred Stock
rights, options, or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (c) effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock, a change in the par value of such
Preferred Stock 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 Stock and/or Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (a) or (b) above at least 20 days prior to the record date for
determining holders of the Preferred Stock 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 Preferred Stock, 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(a)(ii)
or 13.
- 34 -
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:
First Brands Corporation
00 Xxxxxxx Xxxxxxx Xxxx, Xxxx. 000
Xxxxxxx, XX 00000-0000
Attention: General Counsel
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:
Continental Stock Transfer & Trust Company
0 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Compliance Department
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 Stock Acquisition Date, a majority
of the Continuing Directors (or, if no Continuing Directors are then in office,
the Board of Directors of the
Company)
may, except as provided in Section 26(c), and the Rights Agent shall, if so
directed, supplement or amend any provision of this Agreement without the
approval of any holders of Rights.
(b) From and after the Stock Acquisition Date, a majority of the
Continuing Directors (or, if no Continuing Directors are then in office, the
Board of Directors of the Company) may, except as provided in Section 26(c), and
the Rights Agent shall, if so directed, amend this Agreement without the
approval of any holders of Rights Certificates (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained in this Agreement which may be
defective or inconsistent with any other provision of this Agreement, or (iii)
to change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable and which
- 35 -
shall not adversely affect the interests of the holders of Rights Certificates
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person).
(c) No supplement or amendment to this Agreement shall be made
which changes the Purchase Price, the number of shares of Preferred Stock, other
securities, cash or other property for which a Right is then exercisable or the
Redemption Price or provides for an earlier Expiration Date.
(d) Immediately upon the action of a majority of the Continuing
Directors (or, if no Continuing Directors are then in office, the Board of
Directors) providing for any amendment or supplement pursuant to this Section
26, and without any further action and without notice, such amendment or
supplement shall be deemed effective. Promptly following the adoption of any
amendment or supplement pursuant to this Section 26, the Company shall deliver
to the Rights Agent a copy, certified by the Secretary or any Assistant
Secretary of the Company, of resolutions of a majority of the Continuing
Directors (or, if no Continuing Directors are then in office, the Board of
Directors of the Company) adopting such amendment or supplement. Upon such
delivery, the amendment or supplement shall be administered by the Rights Agent
as part of this Agreement in accordance with the terms of this Agreement, as so
amended or supplemented.
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; Determinations and
Actions by the Board of Directors. 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.
For purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act (or any successor provision); provided,
however, that any such calculation made for purposes of determining the
particular percentage of outstanding shares of Common Stock of which any Person
is the Beneficial Owner shall also include any such other securities not then
actually issued and outstanding which such Person would be deemed to be the
Beneficial Owner of, or to "beneficially own," pursuant to Section 1(d) of this
Agreement. The Board of Directors of the Company (or, where specifically
provided for herein, a majority of the Continuing Directors) shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Continuing Directors, the Board of
Directors of the Company 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
- 36 -
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). 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 (or,
where specifically provided for herein, a majority of 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 or the Continuing Directors to any
liability to the holders of the Rights.
Section 29. Severability.
(a) If any term, provision, covenant or restriction of this
Agreement or the application thereof to any Person or to any circumstance is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(b) If legal counsel to the Company delivers to the Company a
written opinion to the effect that, as a result of changes in federal law or
Delaware law, any term, provision, covenant or restriction of this Agreement may
be invalid, void, or unenforceable, then, notwithstanding any other provision of
this Agreement, the Company and the Rights Agent may amend this Agreement to
modify, revise or delete such term, provision, covenant or restriction to the
extent necessary to comply with such law as so changed.
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 such state applicable to
contracts to be made and performed entirely within such State.
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.
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
- 37 -
pronouns shall include the singular and vice-versa (e.g., references to
"Continuing Directors" shall also mean "Continuing Director" if there be only
one Continuing Director at the relevant
time).
* * * * *
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.
FIRST BRANDS CORPORATION
By_________________________________
Title:
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By_________________________________
Title:
- 38 -
Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
OF
FIRST BRANDS CORPORATION
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, Xxxxxx X. Xxxxx, Vice President and Secretary of First Brands
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 Restated Certificate of Incorporation of the Corporation, the
Board of Directors on March 22, 1996, adopted the following resolution creating
a series of 50,000 shares of Preferred Stock designated as Junior Participating
Preferred Stock, Series A:
RESOLVED, that pursuant to the authority vested in the Board by
ARTICLE IV of the Certificate of Incorporation, 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 "Junior Participating Preferred Stock, Series A" (the
"Series A Preferred Stock") and the number of shares constituting such series
shall be 50,000.
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 A Preferred Stock with
respect to dividends, the holders of shares of Series A 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 being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A 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 A Preferred Stock. The "Adjustment Number" shall initially
be 1000. In the event the Corporation shall at any time after
April 1, 1996 (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 A 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 A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares of Series A Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A 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
- 2 -
of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which
record date shall 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 A
Preferred Stock shall have the following voting rights:
(A) Each share of Series A 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 by-laws, the holders of shares of
Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall xxxx
the beginning of a period (herein called a "default period") 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 A 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 A 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 A Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph
(iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders,
provided that 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,
- 3 -
irrespective of series, may request, the calling of a special
meeting of the holders of Voting Preferred Stock, which meeting
shall thereupon be called by the Chairman of the Board, the
President, an Executive Vice President, a 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. References 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 By-Laws 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
By-Laws). Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may
be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A
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 A Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Series A 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 A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably
on the Series A Preferred Stock and all such 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 A Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of 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 Corpora tion unless the Corporation
could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after
the acquisition thereof. All such shares shall upon their
cancellation become
- 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 A
Preferred Stock unless, prior thereto, the holders of shares of Series A
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 A Preferred Stock, except distributions made ratably on the Series A
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 A 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 A 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 A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
- 6 -
IN WITNESS WHEREOF, I have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this 25th day of March, 1996.
--------------------------------------------
Xxxxxx X. Xxxxx
Vice President and Secretary
- 7 -
Exhibit B
----------
[Form of Rights Certificate]
Certificate No. R- __________Rights
NOT EXERCISABLE AFTER APRIL 3, 2006 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION OR EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(e) OF THE RIGHTS AGREEMENT.]
Rights Certificate
FIRST BRANDS 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 March 22, 1996 (the "Rights
Agreement") between First Brands Corporation, a Delaware corporation (the
"Company"), and Continental Stock Transfer & Trust Company, a New York
corporation (the "Agent"), unless notice of redemption shall have been
previously given by the Company, 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, New York time) on April 3, 2006, at the principal
corporate trust office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-thousandth of a fully paid nonassessable share of the
Junior Participating Preferred Stock, Series A, par value $1.00 per share, of
the Company (the "Preferred Stock"), at a purchase price (the "Purchase Price")
of $87.50 per one one-thousandth share, upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase duly executed. The
Purchase Price may be paid in cash or by certified bank check or bank draft
payable to the order of the Company.
As provided in the Rights Agreement, the Purchase Price and the
number of shares of Preferred Stock or other securities, cash or other property
which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
If the Rights evidenced by this Rights Certificate are or were
formerly beneficially owned, on or after the earlier of the Distribution Date
and the Stock Acquisition Date, by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, or (ii) a direct or indirect transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring Person), such
Rights may become null and void, in which event the holder of any such Right
(including any subsequent holder) shall not have any right with respect to such
Right.
This Rights 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 Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of the
Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal corporate trust office of the
Rights Agent, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Preferred Stock or other property
as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered entitled such holder to purchase. If this Rights Certificate shall
be exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (a) may be redeemed by the Board of Directors of
the Company at its option at a redemption price of $.01 per Right subject to
adjustment, payable, at the election of the Company, in cash or shares
(including fractional shares) of Common Stock or such other consideration as the
Board of Directors may determine, at any time prior to the earlier of (i) 12:00
a.m. (midnight, New York, New York time) on the Stock Acquisition Date, and (ii)
the Expiration Date, or, (b) may be exchanged after the Stock Acquisition Date
by the Board of Directors of the Company at its option in whole or in part for
shares of the Company's Common Stock or other Company securities.
No fractional shares of Preferred Stock (other than fractions
that are integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depository receipts)
are required to be issued upon the exercise of any Right or Rights evidenced
hereby, but in lieu thereof the Company may elect to (i) evidence fractional
shares by depositary receipts, (ii) 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 a full
share upon the surrender of such scrip or warrants aggregating a full share, or
(iii) make a cash payment, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled
to vote or to receive dividends on, or shall be deemed for any purpose the
holder of, Preferred Stock or of any other
- 2 -
securities, cash or property which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or this Certificate
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company, including, without limitation, 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 to institute, as a holder of Preferred Stock or other securities
issuable on the exercise of the Rights represented by this Certificate, any
derivative action, or otherwise, until and only to the extent the Right or
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
* * * * *
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _______ __, ____.
FIRST BRANDS CORPORATION
By: ________________________________
Title:
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: __________________________
Authorized Officer
- 3 -
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED the undersigned ___________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
________________________ with a power of Attorney to transfer the said Rights
and a Rights Certificate evidencing such Rights on the books of First Brands
Corporation, with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to (complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the undersigned):
Please insert Social Security or
other identifying number of transferee: ________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate or any Rights evidenced hereby [ ]
are [ ] are not being sold, assigned and transferred by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire any of the Rights
evidenced by this Rights Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ___________________________ _________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Assignment must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: FIRST BRANDS CORPORATION
The undersigned hereby irrevocably elects to exercise __________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock or other securities, cash or other property issuable upon the
exercise of such Rights and requests that certificates for such shares or other
securities be issued in the name of, and such cash or other property be paid to:
Please insert social security
or other identifying number: ________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
A new Rights Certificate evidencing the remaining balance, if
any, of such Rights not hereby exercised shall be mailed to and registered in
the name of the undersigned unless such person requests that such Rights
Certificate be registered in the name of and mailed to (complete only if Rights
Certificate evidencing any remaining balance of Rights is to be registered in a
name other than the undersigned):
Please insert social security
or other identifying number: ________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights 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 an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: __________________________ _________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Election to Purchase is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and, in the case of an assignment or other transfer of this Rights Certificate
or any Rights evidenced hereby, will affix a legend to that effect on any Rights
Certificate issued in whole or partial exchange for this Rights Certificate.
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On March 22, 1996, the Board of Directors of First Brands
Corporation (the "Company") authorized the issuance of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par value
$.01 per share (the "Common Shares"), of the Company. The distribution is
payable to the stockholders of record at the close of business on April 1, 1996
(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 A, par value $1.00 per share, of the Company (the "Preferred
Shares") at a price of $87.50 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 Continental Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agent").
Until the earlier to occur of (i) the expiration of the Company's
redemption rights following the date of public disclosure that a person or group
other than certain exempt persons (an "Acquiring Person"), together with persons
affiliated or associated with such Acquiring Person (other than those that are
exempt persons), has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding Common Shares (the "Stock
Acquisition 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 other than an exempt person if, upon consummation of the
offer, such person could acquire beneficial ownership of 20% 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 April 1, 1996, 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 ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date, and
such separate Right Certificates alone will evidence the Rights.
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 April 3, 2006 (the "Expiration Date"), unless earlier redeemed or
exchanged by the Company as described below.
The Purchase Price payable, and the number of 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 Preferred Shares, (ii) upon the grant to holders of the
Preferred Shares of certain rights, options or warrants to subscribe for
Preferred Shares or securities convertible into Preferred Shares at less than
the current market price of the Preferred Shares or (iii) upon the distribution
to holders of the 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
addition, the Purchase Price payable and the number of Preferred Shares
purchasable, on exercise of a Right is subject to adjustment in the event that
the Company should (i) declare or pay any dividend on the Common Shares payable
in Common Shares or (ii) effect a subdivision or combination of the Common
Shares into a different number of Common Shares.
In the event that, at any time following public disclosure that
an Acquiring Person has become such, 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 wherein 50% or more of its consolidated assets or earning power are
sold, proper provision would 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 or the Company, as the case may be, which at the time of
such transaction would have a market value of two times the exercise price of
the Right. In the event that there is public disclosure that an Acquiring Person
has become such, proper provision would 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), on
or after the earlier of the Distribution Date and the first public disclosure
that an Acquiring Person has become such, will thereafter have the right to
receive upon exercise 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 addition, 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.
- 2 -
At any time prior to public disclosure that an Acquiring Person
has become such, 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.
At any time prior to public disclosure that an Acquiring Person
has become such, 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, except for an amendment or supplement which would change the
Redemption Price, provide for an earlier expiration date of the Rights or change
the Purchase Price. 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. These rights are protected by customary
antidilution provisions.
The Rights have certain anti-takeover effects. The Rights may
cause substantial dilution to a person or group other than an exempt person 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 other than an exempt person has acquired beneficial ownership of 20% 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
- 3 -
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
- 4 -
