Exhibit 4(xxv)
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AMERICAN STANDARD COMPANIES INC.
and
CITIBANK, N.A.
Rights Agent
____________________________
RIGHTS AGREEMENT
Dated as of January 5, 1995
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TABLE OF CONTENTS
Section Page
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1. Certain Definitions . . . . . . . . . . . . . . . . . . 2
2. Appointment of Rights Agent . . . . . . . . . . . . . . 13
3. Issue of Right Certificates . . . . . . . . . . . . . . 14
4. Form of Right Certificates . . . . . . . . . . . . . . 17
5. Countersignature and Registration . . . . . . . . . . . 20
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates . . . . . . . . . . . . . . . . . 21
7. Exercise of Rights; Purchase Price; Expiration Date
of Rights . . . . . . . . . . . . . . . . . . . . . . 23
8. Cancellation and Destruction of Right Certificates . . 28
9. Reservation and Availability of Capital Stock . . . . . 29
10. Preferred Stock Record Date . . . . . . . . . . . . . . 32
11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights . . . . . . . . . . . . . 33
12. Certificate of Adjusted Purchase Price or Number of
Shares . . . . . . . . . . . . . . . . . . . . . . . 56
13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power . . . . . . . . . . . . . . . . . . 57
14. Fractional Rights and Fractional Shares . . . . . . . . 63
15. Rights of Action . . . . . . . . . . . . . . . . . . . 67
16. Agreement of Right Holders . . . . . . . . . . . . . . 68
17. Right Certificate Holder Not Deemed a Stockholder . . . 69
18. Concerning the Rights Agent . . . . . . . . . . . . . . 70
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Section Page
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19. Merger or Consolidation or Change of Name of Rights
Agent . . . . . . . . . . . . . . . . . . . . . . . . 71
20. Duties of Rights Agent . . . . . . . . . . . . . . . . 73
21. Change of Rights Agent . . . . . . . . . . . . . . . . 78
22. Issuance of New Right Certificates . . . . . . . . . . 80
23. Redemption . . . . . . . . . . . . . . . . . . . . . . 82
23A. Exchange . . . . . . . . . . . . . . . . . . . . . . . 84
24. Notice of Certain Events . . . . . . . . . . . . . . . 87
25. Notices . . . . . . . . . . . . . . . . . . . . . . . . 89
26. Supplements and Amendments . . . . . . . . . . . . . . 90
27. Successors . . . . . . . . . . . . . . . . . . . . . . 92
28. Determinations and Actions by the Board of Directors,
etc . . . . . . . . . . . . . . . . . . . . . . . . . 93
29. Benefits of this Agreement . . . . . . . . . . . . . . 94
30. Severability . . . . . . . . . . . . . . . . . . . . . 95
31. Governing Law . . . . . . . . . . . . . . . . . . . . . 96
32. Counterparts . . . . . . . . . . . . . . . . . . . . . 96
33. Descriptive Headings . . . . . . . . . . . . . . . . . 96
Exhibit A - Certificate of Designation, Preferences and Rights
Exhibit B - Form of Right Certificate
Exhibit C - Form of Summary of Rights
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of January 5, 1995 (the
"Agreement"), between American Standard Companies Inc., a Delaware corporation
(the "Company"), and Citibank, N.A. (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company has authorized
and declared a dividend of one Right for each share of Common Stock, par value
$.01 per share, of the Company outstanding at the Close of Business on January
4, 1995 (the "Record Date"), each Right representing the right to purchase one
one-hundredth (1/100th) of a share of Junior Participating Cumulative Preferred
Stock, par value $.01 per share, of the Company having the rights and
preferences set forth in the form of Certificate of Designation attached hereto
as Exhibit A, and has further authorized the issuance of one Right with respect
to each share of Common Stock of the Company that shall become outstanding
between the Record Date and the earliest of the Distribution Date, the
Expiration Date and the Final Expiration Date (as such terms are hereinafter
defined);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, 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" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 15% or more of the Common Stock of the Company
then outstanding, but shall not include (i) any Person or Persons who
are the Beneficial Owners of 15% or more of the Common Stock of the
Company then outstanding by virtue of ownership of Common Stock of the
Company by such Person's Affiliates and/or Associates, which
Affiliates and/or Associates are deemed to be Affiliates and/or
Associates solely by reason of each of them being directors or
officers of the Company, American Standard Inc. ("ASI") or their
Subsidiaries or members of a slate of directors, proposed by
management, standing for election to such Board, (ii) Xxxxx ASI
Partners, L.P. or any of its Affiliates ("ASI Partners") or any
of their immediate transferees, provided any such transferee
owning 15% or more of the Common Stock of
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the Company then outstanding following any such transfer which acquires
any additional shares of Common Stock of the Company except pursuant to
a transfer from ASI Partners or any of its Affiliates shall be an
Acquiring Person, or (iii) any employee benefit plan of the Company,
ASI or any of their Subsidiaries (including, but not limited to, the
American Standard Employee Stock Ownership Plan) or any Person
organized, appointed or established by the Company, ASI or such
Subsidiary as a fiduciary for or pursuant to the terms of any such
employee benefit plan. Notwithstanding the foregoing, (x) no Person
shall become an "Acquiring Person" as a result of an acquisition of
Common Stock by the Company which, by reducing the number of shares of
Common Stock outstanding, increases the proportionate number of shares
Beneficially Owned by such Person to 15% or more of the Common Stock of
the Company then outstanding, provided, however, that if a Person shall
become the Beneficial Owner of 15% or more of the Common Stock of the
Company by reason of share purchases by the Company and, after such
share purchases by the Company, shall become the Beneficial Owner of
any additional Common Stock of the Company other than as a direct or
indirect result of any corporate action
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taken by the Company, then such Person shall be deemed to be an
"Acquiring Person", and (y) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an
"Acquiring Person", as defined pursuant to the foregoing provisions of
this Section 1(a), has become such inadvertently (including, without
limitation, because (i) such Person was unaware that it Beneficially
Owned 15% or more of the Common Stock of the Company or (ii) such
Person was aware of the extent of such Beneficial Ownership but such
Person acquired Beneficial Ownership of such shares of Common Stock
without the intention to change or influence the control of the
Company and without actual knowledge of the consequences of such
Beneficial Ownership under this Rights Agreement), and such Person
divests itself as promptly as practicable of a sufficient number of
shares of Common Stock so that such Person would no longer be an
"Acquiring Person", as defined pursuant to the foregoing provisions of
this Section 1(a), then such Person shall not be deemed to be, or have
been, an "Acquiring Person" for any purposes of this Agreement, and no
Stock Acquisition Time shall be deemed to have occurred. All
questions as to whether a Person who would otherwise be a Acquiring
Person has become such
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inadvertently shall be determined in good faith by the Board of
Directors of the Company, which determination shall be conclusive.
(b) "Adjustment Shares" shall have the meaning set forth
in Section 11(a)(ii).
(c) "Affiliate" and "Associate," when used with reference
to any Person, shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
in effect on the Record Date.
(d) "ASI" shall have the meaning set forth in Section
1(a)(i).
(e) "ASI Partners" shall have the meaning set forth in
Section 1(a)(ii).
(f) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of, including pursuant to any
agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be deemed
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the Beneficial Owner of, or to beneficially own, any security
if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2)
is not also then reportable on Schedule 13D under the Exchange
Act (or any comparable or successor report);
(ii) which such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise,
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, (A) securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are
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accepted for purchase or exchange, or (B) securities issuable
upon exercise of Rights at any time prior to the occurrence of
either a Section 11(a)(ii) Event or a Section 13 Event, or (C)
securities issuable upon exercise of Rights from and after the
occurrence of either a Section 11(a)(ii) Event or a Section 13
Event, which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22
hereof (the "Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect to
any Original Rights; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable
proxy as described in subparagraph (i) of this paragraph (f))
or disposing of any securities of the Company in a manner that
relates or is
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reasonably likely potentially to relate to influencing the
control or management of the Company;
provided, however, that nothing in this paragraph (f) shall cause a
person engaged in business as an underwriter of securities to be the
Beneficial Owner of, or to beneficially own, any securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
(g) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
(h) "Certificate of Designation" shall mean the
Certificate of Designation of Junior Participating Cumulative
Preferred Stock setting forth the powers, preferences, rights,
qualifications, limitations and restrictions of such series of
preferred stock of the Company, a form of which is attached hereto as
Exhibit A.
(i) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if
such date is not a Business Day
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it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(j) "Common Stock" when used with reference to the
Company shall mean the Common Stock, par value $0.01 per share, of the
Company. "Common Stock" when used with reference to any Person other
than the Company which is organized in corporate form shall mean the
capital stock with the greatest voting power, or the equity securities
or other equity interest having power to control or direct the
management, of such Person, or, if such Person is a Subsidiary of
another Person, the capital stock with the greatest voting power of
the Person which ultimately controls such first-mentioned Person.
"Common Stock" when used with reference to any Person which is not
organized in corporate form shall mean units of beneficial interest
which (i) shall represent the right to participate generally in the
profits and losses of such Person (including, without limitation, any
flow-through tax benefits resulting from an ownership interest in such
Person) and which (ii) shall be entitled to exercise the greatest
voting power of such Person or, in the case of a limited partnership,
shall have the power to remove the general partner or partners.
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(k) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii).
(l) "Company" shall have the meaning set forth in the
first paragraph of this Agreement.
(m) "Continuing Director" shall mean any member of the
Board of Directors of the Company (while such person is a member of
such Board of Directors) who is not an Acquiring Person, an Affiliate
or Associate of an Acquiring Person, or a representative or nominee of
an Acquiring Person or of any such Affiliate or Associate, and who
either (i) was a member of such Board of Directors prior to the Stock
Acquisition Time or (ii) subsequently became a member of such Board of
Directors, and whose nomination for election or election thereto was
recommended or approved by a majority of the Continuing Directors then
on such Board of Directors.
(n) "Current Market Price" shall have the meaning set
forth in Section 11(d).
(o) "Current Value" shall have the meaning set forth in
Section 11(a)(iii).
(p) "Distribution Date" shall have the meaning specified
in Section 3(a).
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(q) "Equivalent Preference Stock" shall have the meaning
set forth in Section 11(b).
(r) "Expiration Date" shall have the meaning specified in
Section 7(a).
(s) "Final Expiration Date" shall have the meaning
specified in Section 7(a).
(t) "NYSE" shall have the meaning set forth in Section
11(d).
(u) "Outside Directors" shall have the meaning set forth
in Section 11(a)(ii).
(v) "Person" shall mean any individual, firm,
corporation, partnership, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(w) "Preferred Stock" shall mean shares of Junior
Participating Cumulative Preferred Stock, par value $.01 per share, of
the Company, having the rights, preferences and limitations set forth
in the form of Certificate of Designation attached to this Agreement
as Exhibit A, and, to the extent there are not a sufficient number of
shares of Junior Participating Cumulative Preferred Stock authorized
to permit the full exercise of the then outstanding Rights, any other
series of preferred stock of the Company designated for
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such purpose by the Board of Directors of the Company containing terms
substantially similar to the terms of the Junior Participating
Cumulative Preferred Stock.
(x) "Principal Party" shall have the meaning set forth in
Section 13(b).
(y) "Purchase Price" shall have the meaning set forth in
Section 4(a).
(z) "Record Date" shall have the meaning set forth in the
WHEREAS clause at the beginning of this Agreement.
(aa) "Redemption Price" shall have the meaning set forth
in Section 23(a).
(ab) "Right" shall have the meaning set forth in the
WHEREAS clause at the beginning of this Agreement.
(ac) "Right Certificate" shall have the meaning set forth in
Section 3(a).
(aa) "Rights Agent" shall have the meaning set forth in the
first paragraph of this Agreement.
(bb) "Section 11(a)(ii) Event" shall have the meaning set
forth in Section 11(a)(ii).
(cc) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii).
(dd) "Section 13 Event" shall have the meaning set forth in
Section 13(a).
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(ee) "Spread" shall have the meaning set forth in Section
11(a)(iii).
(ff) "Stock Acquisition Time" shall mean the time of
occurrence of the first public announcement by the Company that an
Acquiring Person has become such.
(gg) "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient, in the absence of
contingencies, to elect a majority of the board of directors or other
persons performing similar functions are at the time beneficially
owned, directly or indirectly, by such Person or otherwise controlled
by such Person.
(hh) "Substitution Period" shall have the meaning set forth
in Section 11(a)(iii).
(ii) "Summary of Rights" shall have the meaning set forth in
Section 3(b).
(jj) "Trading Day" shall have the meaning set forth in
Section 11(d).
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
13
Co-Rights Agents as it may deem necessary or desirable. Any actions which may
be taken by the Rights Agent pursuant to the terms of this Agreement may be
taken by any such Co-Rights Agent.
Section 3. Issue of Right Certificates. (a) Until the
earlier of the Close of Business on (i) the tenth Business Day after the Stock
Acquisition Time, or (ii) the tenth Business Day, or such specified or
unspecified later date as may be determined by action of the Board of Directors
of the Company, after the date of the commencement of (as determined by
reference to Rule 14d-2(a), as now in effect under the Exchange Act), or first
public announcement of the intent of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person organized, appointed or established by
the Company or such Subsidiary as a fiduciary pursuant to the terms of any such
employee benefit plan) to commence (which intention to commence remains in
effect for five Business Days after such announcement), a tender or exchange
offer for an amount of Common Stock of the Company which, together with the
shares of such stock already owned by such Person, constitutes 15% or more of
the outstanding Common Stock of the Company (including any such date which is
after the date of this Agree-
14
ment and prior to the issuance of the Rights) (the earlier of such dates
described in clauses (i) and (ii) above being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for shares
of Common Stock registered in the names of the holders of Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate Right Certificates, and (y) the right to receive
Right Certificates will be transferable only in connection with the transfer of
the underlying Common Stock. As soon as practicable after the Distribution
Date, the Rights Agent will send, by first class, insured, postage-prepaid
mail, to each record holder of Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit B hereto (a
"Right Certificate"), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein and to the provisions of Section
14(a). As of the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) On the Record Date or as soon as practicable
thereafter, the Company will send a copy of a Summary of
15
Rights to Purchase Preferred Stock, in substantially the form attached hereto
as Exhibit C (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, at the address of such holder shown on the records of the Company. With
respect to certificates for Common Stock outstanding as of the Record Date,
until the earlier of the Distribution Date or the Expiration Date, the Rights
will be evidenced by such certificates for Common Stock registered in the names
of the holders of Common Stock with a copy of the Summary of Rights attached
thereto. Until the earliest of the Distribution Date, the Expiration Date and
the Final Expiration Date, the surrender for transfer of any of the
certificates for Common Stock outstanding on the Record Date, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate.
(c) Certificates for Common Stock issued (or delivered
from the Company's treasury) after the Record Date but prior to the earliest of
the Distribution Date, the Expiration Date and the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
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This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between American
Standard Companies Inc. (the "Corporation") and Citibank, N.A., dated
as of January 5, 1995 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of the 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. The Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge promptly
after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to an
Acquiring Person or any Associate or Affiliate thereof (as such terms
are defined in the Rights Agreement) may be null and void. The Rights
shall not be exercisable, and shall be void so long as held, by a
holder in any jurisdiction where the requisite qualification for the
issuance to such holder, or the exercise by such holder of the Rights
in such jurisdiction, shall not have been obtained or be obtainable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
Section 4. Form of Right Certificates. (a) The Right
Certificates (and the forms of election to purchase shares, certificate and
assignment to be printed on the reverse thereof) shall be substantially in the
form set
17
forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Sections 11 and 22 hereof, the
Right Certificates, whenever distributed, which are distributed in respect of
shares of Common Stock which were issued and outstanding as of the Record Date,
shall be dated as of the Record Date, on their face shall entitle the holders
thereof to purchase such number of one one-hundredths of a share of Preferred
Stock as shall be set forth therein at the price per one one-hundredth of a
share of Preferred Stock set forth therein (the "Purchase Price"), but the
number and type of securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided in this
Agreement.
(b) Any Right Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an
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Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding (whether or not in
writing) which has as a primary purpose or effect the avoidance of the
provisions of Section 7(e), Section 11(a)(ii) or of Section 13 with respect to
the limitation of the Rights beneficially owned by an Acquiring Person (or any
Associate or Affiliate thereof), and any Right Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend modified as necessary to
apply to such Person:
The Rights represented by this Certificate are or were beneficially
owned by a Person who was or
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became an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement). Accordingly, this
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. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company manually or by
facsimile signature by the Chairman of the Board, the President or any Vice
President and have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary, the Acting Secretary or any Assistant
Secretary, either manually or by facsimile signature. The Right Certificates
shall be countersigned by the Rights Agent manually and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper offi-
20
cer of the Company to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office in New York, New York,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date and certificate number of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b) and 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the earlier of the Expiration Date and the Final
Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or other securities, cash, and/or assets, as the
case may be) as the Right Certificate or Right Certificates surrendered then
entitled
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such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged, with the
form of assignment and certificate appropriately executed, at the principal
office of the Rights Agent in New York, New York. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Right Certificate or Right Certificates
until the registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Right
Certificate or Right Certificates and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of any Right Certificates.
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(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, if requested by
the Company, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will
execute and deliver a new Right Certificate of like tenor to the Rights Agent
for counter-signature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights. (a) Subject to Section 7(e) hereof, the registered holder of
any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed,
to the Rights Agent at the principal office of the Rights Agent in New York,
New York, together with payment of the Purchase Price for each one
one-hundredth of a share of Preferred Stock as to which
23
the Rights are exercised, at or prior to the earliest of (i) the Close of
Business on January 5, 2005 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23, (iii) the time at
which the Rights are exchanged as provided in Section 23A, or (iv) the time at
which the Rights expire pursuant to Section 13(d) (such earliest time being
herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a
share of Preferred Stock issued pursuant to the exercise of a Right shall
initially be $100, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and certificate duly
executed, accompanied by payment (by certified check or bank draft payable to
the order of the Company) of the Purchase Price for the Preferred Stock (or
other shares, securities, cash or other assets, as the case may be) to be
purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of the Rights pursuant hereto in cash, or by certified check
or
24
bank draft payable to the order of the Company, the Rights Agent shall, subject
to Section 20(k) hereof, thereupon promptly (i)(A) requisition from any
transfer agent of the Preferred Stock (or make available, if the Rights Agent
is the transfer agent) certificates for the number of shares of Preferred Stock
to be purchased (and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests), or (B) if the Company shall have
elected to deposit the total number of shares of Preferred Stock issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent)
and the Company hereby directs the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14, (iii) after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by
such holder, and (iv) when appro-
25
priate, after receipt, promptly deliver such cash to or upon the order of the
registered holder of such Right Certificate. In the event that the Company is
obligated to issue other securities of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of any such Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
such Acquiring Person becomes such, or (iii) a transferee of any such Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior
26
to or concurrently with such Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from such Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board of Directors of the Company has determined is part
of a plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without
any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and Section 4(b) hereof are complied
with but shall have no liability to any holder of Right Certificates or any
other Person as a result of its failure to make any determination with respect
to an Acquiring Person or any of its respective Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Right
Certificate upon the occurrence
27
of any purported transfer or exercise as set forth in this Section 7 unless
such registered holder shall have (i) completed and signed the certificate
following the form of assignment or election to purchase set forth on the
reverse side of the Right Certificate surrendered for such assignment or
exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose of exercise,
transfer, split up, 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 cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Right Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the
28
Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock or
any authorized and issued shares of Preferred Stock held in its treasury (and
will use its best efforts, following the occurrence of a Section 11(a)(ii)
Event, to cause to be reserved and kept available 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), the number of shares of Preferred Stock (and, following the
occurrence of a Section 11(a)(ii) Event, Common Stock and/or other securities)
that will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) The Company shall use its best efforts to (i) file,
as soon as practicable following the earliest date after the first occurrence
of a Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by
29
law following the Distribution Date, as the case may be, a registration
statement under the Securities Act of 1933, as amended (the "Act"), with
respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the date of the
expiration of the Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may, acting by resolution of its Board of Directors, temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(b), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in
30
effect. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained.
(c) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all one one-hundredths of a
share of Preferred Stock (and, following the occurrence of a Section 11(a)(ii)
Event, Common Stock and/or other securities) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
(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 issuance or delivery of the
Right Certificates or of any shares of Preferred Stock (or shares of Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax which may
be payable in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or depositary
receipts for a number of
31
one one-hundredths of a share of Preferred Stock (or shares of Common Stock
and/or other securities, as the case may be), in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for shares of Preferred Stock
(or Common Stock and/or other securities, as the case may be) or depositary
receipts for Preferred Stock upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in
whose name any certificate for a number of one one-hundredths of a share of
Preferred Stock (or shares of 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 shares of Preferred Stock (or shares of
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 Right
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
32
date of such surrender and payment is a date upon which the Preferred Stock (or
shares of Common Stock and/or other securities, as the case may be) transfer
books of the Company are closed, such person shall be deemed to have become the
record holder of such shares (fractional and otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or shares of Common Stock and/or other securities, as the case
may be) transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate, as such, shall not
be entitled to any rights of a stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any meetings or other proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares,
or fractions thereof, covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
33
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock into a
greater number of shares, (C) combine or consolidate the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in Section 7(e) and this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as the case may be, issuable on
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, he would have owned upon such
exercise and been entitled to
34
receive by virtue of such dividend, subdivision, combination or
reclassification.
If an event occurs which would require an adjustment under
both Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) In the event (a "Section 11(a)(ii) Event") that any
Person, alone or together with its Affiliates and Associates, shall become an
Acquiring Person, unless the event causing such Person to become an Acquiring
Person is a Section 13 Event or is an acquisition of Common Stock of the
Company pursuant to a tender or exchange offer for all outstanding Common Stock
of the Company at a price and on terms determined by at least a majority of the
members of the Board of Directors of the Company who are not Acquiring Persons
or representatives, nominees, Affiliates or Associates of an Acquiring Person
(the "Outside Directors"), after receiving advice from one or more investment
banking firms, to be (A) at a price which is fair to stockholders (taking into
account all factors which such Outside Directors deem relevant, including,
without limitation, prices which could reasonably be achieved if the Company or
its assets were to be sold on an orderly basis designed to realize maximum
35
value) and (B) otherwise in the best interests of the Company and its
stockholders, then proper provision shall be made so that each holder of a
Right (except as provided below and in Section 7(e) hereof), shall thereafter
have the right to receive, upon exercise thereof following the Distribution
Date at the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one-hundredths of a share of Preferred Stock,
such number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of such Section 11(a)(ii)
Event, whether or not such Right was then exercisable, and (y) dividing that
product (which, following such first occurrence, shall thereafter be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price per share of the Common Stock of
the Company (determined pursuant to Section 11(d)) on the date of the
occurrence of such Section 11(a)(ii) Event (such number of shares being
hereinafter referred to as the "Adjustment Shares"). The Company shall notify
the Rights Agent as to any Persons who are deemed by the Company to be
Acquiring Persons or Associates,
36
Affiliates or transferees (as described in subparagraphs (ii) and (iii) of
Section 7(e)) of such Persons and shall identify any Rights pertaining thereto.
(iii) In lieu of issuing shares of Common Stock of the
Company in accordance with Section 11(a)(ii) hereof, the Company, acting by
resolution of its Board of Directors, may (and, in the event that the number of
shares of Common Stock which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights are not sufficient to permit the exercise in
full of the Rights in accordance with Section 11(a)(ii), the Company, acting by
resolution of its Board of Directors, shall): (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value"), over (2) the Purchase Price attributable to each Right (such
excess, the "Spread") and (B) with respect to each Right (subject to Section
7(e)), make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock
which the Board of Directors of the Company has deemed to have the same value
as
37
shares of Common Stock of the Company (such shares or units of preferred stock
hereinafter called "Common Stock Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing having an
aggregate value equal to the Current Value, where such aggregate value has been
determined by action of the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the Board
of Directors of the Company which has theretofore performed no services for the
Company or any Subsidiary of the Company in the past five years; provided,
however, if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the later of (x)
the first occurrence of a Section 11(a)(ii) Event and (y) the first date that
the right to redeem the Rights pursuant to Section 23 hereof, as such date may
be amended pursuant to Section 26 hereof, shall expire (the later of (x) and
(y) being referred to herein as the "Section 11(a)(ii) Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock of the Company (to the extent available) and then, if necessary, cash,
securities and/or assets, that in the aggregate have a value equal
38
to the Spread. If, after the occurrence of a Section 11(a)(ii) Event, the
number of shares of Common Stock that are authorized by the Company's
Certificate of Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not sufficient to permit
exercise in full of the Rights in accordance with Section 11(a)(ii) hereof and
the Company, acting by resolution of its Board of Directors, shall determine in
good faith that it is likely that sufficient additional shares of Common Stock
could be authorized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the extent necessary,
but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in
order that the Company may seek stockholder approval for the authorization of
such additional shares (such period as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action is to be
taken pursuant to the terms of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e), that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek such stockholder
approval for the authorization of additional shares
39
and/or to decide the appropriate form of distribution to be made pursuant to
the first sentence of this Section 11(a)(iii) and to determine the value
thereof. 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. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the Current Market Price per share of Common Stock (as
determined pursuant to Section 11(d)) on the date of the first occurrence of
the Section 11(a)(ii) Event, and the per share or per unit value of any Common
Stock Equivalents shall be deemed to equal the Current Market Price per share
of the Common Stock of the Company on such date.
(b) In the event that the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of shares of
Preferred Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Stock (or shares
having the same rights, privileges and preferences as the shares of Preferred
Stock ("Equivalent Preference Stock")) or securities convertible into shares of
Preferred Stock or Equivalent Preference Stock at a price per
40
share of Preferred Stock or Equivalent Preference Stock (or having a conversion
price per share, if a security convertible into shares of Preferred Stock or
Equivalent Preference Stock) less than the Current Market Price per share of
the Preferred Stock (as defined in Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of additional
shares of Preferred Stock and/or Equivalent Preference Stock which the
aggregate offering price of the total number of such shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such Current Market Price, and the denominator
of which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of additional shares of Preferred Stock and/or
Equivalent Preference Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible).
In case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as de-
41
termined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular periodic cash dividend at a rate
not in excess of 125% of the rate of the last regular periodic cash dividend
theretofore paid or a dividend payable in Preferred Stock) or subscription
rights or warrants (excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price per
42
share of Preferred Stock (as defined in Section 11(d)) on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Preferred Stock, and the denominator of which shall
be such Current Market Price per share of Preferred Stock. Such adjustments
shall be made successively whenever such a record date is fixed, and in the
event that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the
"Current Market Price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common Stock for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
Current Market Price per share of Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (a) a dividend
or distribution on such Common Stock payable in
43
shares of such Common Stock or securities convertible into such Common Stock or
(b) any subdivision, combination or reclassification of such Common Stock, 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, as the case may be, then, and in each such case, the
"Current Market Price" shall be appropriately adjusted to take into account the
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter
44
market, as reported by the New York Stock Exchange ("NYSE") or such other
system then in use, or, if on any such date the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in shares of
Common Stock selected by the Company, acting by resolution of the Board of
Directors of the Company. If on any such date no market maker is making a
market in shares of Common Stock, the fair value of such shares on such date as
determined in good faith by the Company, acting by resolution of the Board of
Directors of the Company, shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange but are quoted on NYSE, a day on
which NYSE is in operation or if the shares of Common Stock are neither listed
or admitted to trading on any national securities exchange nor quoted on NYSE,
a Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions
in the State of New York are not authorized or obligated by law or executive
order to close. If the current per share market price of the Common Stock
cannot be determined in the
45
manner provided above, or if the Common Stock is not publicly held or not so
listed or traded, "Current Market Price" per share of Common Stock shall mean
the fair value per share as determined in good faith by the Company, acting by
resolution of the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share of Preferred Stock shall be determined in the
same manner as set forth for the Common Stock in Section 11(d)(i) hereof (other
than the last sentence thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in Section 11(d)(i) hereof, the "Current Market Price" per share of Preferred
Stock shall be conclusively deemed to be an amount equal to 100 (as such number
may be appropriately adjusted for such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock occurring after the date
of this Agreement) multiplied by the Current Market Price per share of the
Common Stock. If neither the Common Stock nor the Preferred Stock is publicly
held or so listed or traded, the "Current Market Price" per share of Preferred
46
Stock shall mean the fair value per share as determined in good faith by the
Company, acting by resolution of its Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of this Agreement, the "Current
Market Price" of one one-hundredth of a share of Preferred Stock shall be equal
to the "Current Market Price" of one share of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share of Common Stock or
other share or the nearest one-millionth of a share of Preferred Stock, as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which re-
47
quires such adjustment or (ii) the date of the expiration of the right to
exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Stock, thereafter the Purchase Price and the number of
such other shares so receivable upon exercise of any Right and the number of
Rights outstanding shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h),
(i), (j), (k) and (m) and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Preferred Stock shall apply on like terms to any such other
shares, provided, however, that the Company shall not be liable for its
inability or failure to reserve and keep available for issuance upon exercise
of the Rights pursuant to Section 11(a)(ii) a number of shares of Common Stock
greater than the number then authorized by the Certificate of Incorporation of
the Company but not outstanding or reserved for any other purpose.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
48
hereunder shall evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-hundredths of a share of Preferred Stock purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to the nearest
one-millionth of a share of Preferred Stock) obtained by (i) multiplying (A)
the number of one one-hundredths of a share covered by a Right immediately
prior to such adjustment of the Purchase Price by (B) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths of a share
of Preferred Stock purchasable
49
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-hundredths of a share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as
50
a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for
the Right Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Preferred Stock, or fraction thereof,
issuable upon the exercise of the Rights, the Right Certificates theretofore
and thereafter issued may continue to express the Purchase Price per one
one-hundredth of a share and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
one one-hundredths of a share of Pre-
51
ferred Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such record
date the Preferred Stock, or a fraction thereof, and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company, acting by resolution of its Board of Directors,
shall be entitled to make such reduc-
52
tions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Stock, any issuance wholly for cash of any
Preferred Stock at less than the current market price, any issuance wholly for
cash of Preferred Stock or securities which by their terms are convertible into
or exchangeable for Preferred Stock, any stock dividends or any issuance of
rights, options or warrants referred to herein above in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such shareholders.
(n) The Company covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction that complies with
Section 11(o) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction or in a series of related transactions, assets,
cash flow or earning power aggregating more than 50% of the assets, cash flow
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or
53
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements
in effect that would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) shall have received a distribution of Rights previously owned
by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 23A
or Section 26 hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or eliminate the benefits intended to be afforded
by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event the Company shall at any time after the date of
this Agreement and prior to the Distribu-
54
tion Date (i) declare or pay any dividend on the Common Stock of the Company
payable in such Common Stock or (ii) subdivide the outstanding Common Stock of
the Company into a greater number of shares (by reclassification or otherwise
than by payment of dividends in such Common Stock) or (iii) combine or
consolidate the outstanding Common Stock of the Company into a smaller number
of shares, then in any such case, (x) the number of one one-hundredths of a
share of Preferred Stock purchasable after such event upon proper exercise of
each Right shall be determined by multiplying the number of one one-hundredths
of a share of Preferred Stock so purchasable immediately prior to such event by
a fraction, the numerator of which is the number of shares of Common Stock of
the Company outstanding immediately before such event and the denominator of
which is the number of shares of such Common Stock outstanding immediately
after such event and (y) action shall be taken such that each share of Common
Stock of the Company outstanding immediately after such event shall have issued
with respect to it that number of Rights which each share of such Common Stock
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
55
or consolidation is effected. If an event occurs which would require an
adjustment under Section 11(a)(ii) and this Section 11(p), the adjustments
provided for in this Section 11(p) shall be in addition and prior to any
adjustment required pursuant to Section 11(a)(ii).
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 and 13,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Stock and Preferred Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate (or if prior to the
Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25 of this Agreement. Notwithstanding
the foregoing sentence, the failure of the Company to make such certificates or
give such notice shall not affect the validity or the force or effect of the
requirement for such adjustment. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained. Any
adjustment to be made pursuant to Sections 11 and 13
56
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) In the event (a "Section 13 Event") that,
following the Stock Acquisition Time, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o))
and the Company shall not be the surviving or continuing corporation of such
merger, consolidation or combination, (y) any Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)) shall
consolidate with the Company, or merge with and into the Company, and the
Company shall be the surviving or continuing corporation of such merger or
consolidation and, in connection therewith, all or part of the Common Stock
shall be changed into or exchanged for stock or other securities of any Person
or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one or more transactions, assets, cash flow or earning power aggregating
more than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole and calculated on the basis
57
of the Company's most recent regularly prepared financial statement) to any
other Person or Persons (other than the Company or any Subsidiary of the
Company in one or more transactions each of which complies with Section 11(o)),
then, and in each such case (except as provided in Section 13(d)), proper
provision shall be made so that (i) each holder of a Right (except as otherwise
provided in Section 7(e)) shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, such number of validly authorized and issued, fully
paid, nonassessable and freely tradable shares of Common Stock of the Principal
Party (as hereinafter defined), not subject to any liens, encumbrances, rights
of call, rights of first refusal or other adverse claims, as shall be equal to
the result obtained by (A) multiplying the then current Purchase Price by the
number of one one-hundredths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence of
a Section 13 Event, multiplying the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Purchase Price in
58
effect immediately prior to such first occurrence), and dividing that product
(which, following the first occurrence of a Section 13 Event, shall be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by (B) 50% of the Current Market Price per share of Common Stock of
such Principal Party (determined pursuant to Section 11(d)) on the date of
consummation of such merger, consolidation, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of
Section 11 shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be possible, in
relation to its Common Stock thereafter deliverable upon the exercise of the
Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence
59
of any Section 13 Event. The Company shall not consummate any such merger,
consolidation, sale or transfer unless prior thereto the Company and such
issuer shall have executed and delivered to the Rights Agent a supplemental
agreement containing the provisions required by this Section 13.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a) hereof, the Person
that is the issuer of any securities into which shares of Common Stock
of the Company are converted in such merger or consolidation, and if
no securities are so issued, the Person that is the other party to
such merger or consolidation; and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that is the
party receiving the greatest portion of the assets, cash flow or
earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at any time and has not been continuously over the preceding
twelve month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the
60
Common Stock of which is and has been so registered, "Principal Party" shall
refer to such other Person; and (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common Stock of two or
more of which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the greatest
aggregate market value.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of shares of
authorized Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement containing the
provisions set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any such Section 13
Event, the Principal Party will:
(i) prepare and file a registration statement under the
Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form and will use its best
efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain
61
effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, this Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired Common Stock of the Company
pursuant to a tender offer or exchange offer for all outstanding Common Stock
of the Company which complies with the provisions of Section 11(a)(ii) (or a
wholly owned Subsidiary of any such Person or Persons), (ii) the price per
share of Common Stock of the Company offered in such trans-
62
action is not less than the price per share of Common Stock of the Company paid
to all holders of Common Stock of the Company whose shares were purchased
pursuant to such tender offer or exchange offer and (iii) the form of
consideration being offered to the remaining holders of Common Stock of the
Company pursuant to such transaction is the same as the form of consideration
paid pursuant to such tender offer or exchange offer. Upon consummation of any
such transaction contemplated by this Section 13(d), all Rights hereunder shall
expire.
(e) The Company covenants and agrees that it will not,
after the Stock Acquisition Time, engage in any Section 13 Event if at the time
of or after such event there are any charter or by-law provisions or any
rights, warrants or other instruments outstanding or any other action taken
which would diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
Section 14. Fractional Rights and Fractional Shares. (a)
The Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractions of Rights would otherwise be
issuable, an amount in cash
63
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 the Rights for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise issuable.
The closing price of the Rights for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if
the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NYSE or
such other system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices as
furnished by a professional
64
market maker making a market in the Rights (selected by the Company, acting by
resolution of its Board of Directors). If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such
date as determined in good faith by the Company, acting by resolution of its
Board of Directors, shall be used.
(b) The Company shall not be required to issue fractions
of shares of Preferred Stock (other than fractions which are integral multiples
of one one-hundredths of a share of Preferred Stock) upon exercise of the
Rights or to distribute certificates which evidence fractional shares (other
than fractions which are integral multiples of one one-hundredths of a share of
Preferred Stock). Fractions of Preferred Stock in integral multiples of one
one-hundredths of a share 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 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 which
are not integral multiples of one one-hundredths of a share of Preferred Stock,
the Company may pay to the registered holders of Right Certificates at
65
the time such Right Certificates are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of one 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 Section
11(d)(ii)) for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Section 11(a)(ii) Event
or a Section 13 Event, the Company shall not be required to issue fractions of
shares of its Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of its Common Stock. In lieu of
fractional shares of its Common Stock, the Company may pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one share of its Common Stock. For purposes of this Section 14(c),
the current market value of one share of Common Stock of the Company shall be
the closing price of one share of Common Stock of the Company (as determined
pursuant to Section 11(d)(i)) for the Trading Day immediately prior to the date
of such exercise.
66
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, except the rights of action vested in the Rights
Agent pursuant to Section 18, are vested in the respective registered holders
of the Right Certificates (and, prior to the Distribution Date, the registered
holders of Common Stock); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of Common Stock), without the consent of
the Rights Agent or of any holder of any other Right Certificate (or, prior to
the Distribution Date, of Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the
67
obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting such Right consents and agrees with the Company and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
evidenced by the certificates for shares of Common Stock registered in
the name of the holders of such shares (which certificates for shares
of Common Stock shall also constitute certificates for Rights) and
each Right will be transferable only in connection with the transfer
of Common Stock;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates duly completed and fully executed;
(c) the Company and the Rights Agent may deem and treat
the Person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated
68
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 Right Certificates or the associated
Common Stock certificate made by anyone other than the Company 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; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the
Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
69
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right or Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder of
one one-hundredth of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent. (a) The Company
agrees to pay to the Rights Agent 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
70
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises.
(b) The Rights Agent shall be protected and shall incur
no liability for or in respect of any action taken, suffered or omitted by it
in connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for Preferred Stock or Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. (a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or
71
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Rights Agent or any successor Rights Agent shall
be a party, or any corporation succeeding to the corporate trust or stock
transfer business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto; provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21.
The purchase of all or substantially all of the Rights Agent's assets employed
in the performance of transfer agent activities shall be deemed a merger or
consolidation for purposes of this Section 19. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent;
72
and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to
73
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 an
Acquiring Person and the determination of the Current Market Price per
share of Preferred Stock and Common Stock) be proved or established by
the Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the
President, any Vice President, the Treasurer, the Secretary or Acting
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
its own negligence, bad faith or willful misconduct.
74
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except as to its
countersignature thereof) or be required to verify the same, but all
such statements and recitals are and shall be deemed to have been made
by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any adjustment required under the provisions of
Sections 11 or 13 or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise
of Rights evidenced by Right Certificates after actual notice of any
such adjustment), nor shall it be responsible for any determination by
the Board of Directors of the Company
75
of the Current Market Price of the Rights or Preferred Stock or Common
Stock, nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any shares of Common Stock or Preferred Stock or other securities to
be issued pursuant to this Agreement or any Right Certificate or as to
whether any shares of Preferred Stock or 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 performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President, any Vice
President, the Secretary, the Acting Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or
76
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 it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity,
except it may not act for an Acquiring Person in an investment banking
capacity, or otherwise assist an Acquiring Person in ways hostile to
the Company, without the consent of the Company.
(i) The Rights Agent may execute and exercise any of the
rights and powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, omission,
default, neglect or misconduct of any such attorneys or
77
agents or for any loss to the Company or to holders of the Rights
resulting from any such act, omission, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached
to the form of assignment or form of election to purchase, as the 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 dis-
78
charged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Stock and
Preferred Stock by registered, certified or express mail, and to the holders of
the Right Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock by registered, certified
or express mail, and to the holders of the Right Certificates by first- class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing
79
business under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $100
million. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, 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.
80
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by resolution of its Board of
Directors, to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures hereinafter issued by the Company,
and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Right Certificates 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
81
tax consequences to the Company or the Person to whom such Right Certificates
would be issued, and (ii) no such Right Certificates shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 23. Redemption. (a) The Company may, by resolution
of its Board of Directors (which resolution shall, if adopted following the
Stock Acquisition Time, be effective only with the concurrence of a majority of
the Continuing Directors and only if the Continuing Directors constitute a
majority of the number of directors then in office), at its option, at any time
prior to the earlier of (x) the Close of Business on the tenth Business Day
following the Stock Acquisition Time or (y) the Close of Business on the Final
Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). Notwithstanding anything contained in this Agreement to
the contrary, the Rights shall not be exercisable after the first occurrence of
a Section 11(a)(ii) Event until such time as the Company's right of redemption
under this Section 23(a) has
82
expired. The Board of Directors of the Company may, in its discretion, at any
time prior to the Stock Acquisition Time, extend the time within which to
redeem the then outstanding Rights prior to their exercise. The redemption of
the Rights by the Board of Directors may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish. The Company may, at its option, pay the Redemption
Price in cash, 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 of the Company.
(b) Immediately upon the action of the Board of Directors
of the Company (with, if required, the concurrence of a majority of the
Continuing Directors) ordering the redemption of the Rights (or at such time
subsequent to such action as the Board of Directors, with, if required, the
concurrence of a majority of the Continuing Directors, may determine), evidence
of which shall have been filed with the Rights Agent, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the action of the Board of Directors
ordering the redemption of
83
the Rights, the Company shall give notice of such redemption to the holders of
the then outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates
or Associates may redeem, acquire or purchase 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 repurchase of Common Stock of the Company prior to
the Distribution Date.
Section 23A. Exchange. (a) The Board of Directors of the
Company (with the concurrence of a majority of the Continuing Directors and
only if the Continuing Directors constitute a majority of the number of
Directors then in office) may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e)) for Common Stock at an exchange
84
ratio of one share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the
Company, any wholly owned Subsidiary of the Company, any employee benefit plan
of the Company or any such Subsidiary, or any entity holding Common Stock as a
fiduciary for or pursuant to the terms of any such employee benefit plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 23A, evidence of which shall have been filed with the Rights
Agent, and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give,
85
or any defect in, such notice shall not affect the validity of such exchange.
The Company shall promptly mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e)) held by each
holder of Rights.
(c) In the event that there shall not be sufficient
shares of Common Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section
23A, the Company shall take all such action as may be necessary to authorize
additional Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions
of Common Stock or to distribute certificates which evidence fractional Common
Stock. In lieu of such
86
fractional shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this paragraph
(d), the current market value of a whole share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to the second
sentence of Section 11(d)) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 23A.
Section 24. Notice of Certain Events. (a) In case the
Company shall propose (i) to 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 quarterly dividend out of
earnings on retained earnings of the Company at a rate not in excess of 125% of
the rate of the last regular quarterly cash dividend theretofore paid), or (ii)
to offer to the holders of Preferred Stock options, rights or warrants to
subscribe for or to purchase any additional Preferred Stock or shares of stock
of any class or any other securities, rights or options, or (iii) to effect any
reclassification of the Preferred Stock (other than a reclassification
involving only the subdivision of outstanding
87
shares of Preferred Stock), or (iv) to effect any merger, consolidation or
other combination into or with, or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other transfer),
in one or more transactions, of more than 50% of the assets, cash flow or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of
a Right, in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, merger, consolidation, combination, sale, transfer,
liquidation, dissolution or winding up is to take place and 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 (i) or (ii) above at least twenty days prior to
the record date for determining holders of Preferred Stock for purposes of such
action, and in the case of any such other action, at least twenty days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of
88
Common Stock and/or Preferred Stock, whichever shall be the earlier. The
failure to give notice 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.
(b) In case any of the events set forth in Section
11(a)(ii) or Section 13(a) of this Agreement shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, to the extent feasible and in accordance with
Section 25, a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights under Section
11(a)(ii) or Section 13(a), and (ii) all references in Section 24(a) hereof to
Preferred Stock shall be deemed thereafter to refer also to Common Stock or
other securities issuable in respect of the Rights.
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 Right
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:
89
American Standard Companies Inc.
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Acting Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Right
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:
Citibank, N.A.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Agency and Trust Dept.
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or if prior
to the Distribution Date to each holder of a certificate representing shares of
Common Stock) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such Right holder (or if prior to the
Distribution Date to such holder of Common Stock) at the address of such holder
as shown on the registry books of the Company.
Section 26. Supplements and Amendments. The Company may, by
resolution of its Board of Directors, and the Rights Agent shall, if the
Company so directs, supple-
90
ment or amend any provision of this Agreement in any respect whatsoever
(including without limitation any extension of the period in which the Rights
may be redeemed) at any time prior to the Stock Acquisition Time, without the
approval of any holders of certificates representing shares of Common Stock or,
after the Distribution Date, of Right Certificates. From and after the Stock
Acquisition Time, the Company may, by resolution of its Board of Directors
(which resolution shall be effective only with the concurrence of a majority of
the Continuing Directors, and only if the Continuing Directors constitute a
majority of the number of directors then in office), and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without
the approval of any holders of certificates representing shares of Common Stock
or of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder or (iv) to change or supplement or make any other
provisions in regard to matters or questions arising hereunder which the
Company and the Rights Agent may deem necessary or desirable, which shall not
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or an
91
Affiliate or Associate thereof); provided, however, that this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed or to
modify the ability (or inability) of the Board of Directors of the Company
(with, where required, the concurrence of a majority of the Continuing
Directors) to redeem the Rights, in either case at such time as the Rights are
not then redeemable or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of or the
benefits to the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of any such Person). Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26, the
Rights Agent shall execute such supplement or amendment. Prior to the Stock
Acquisition Time, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
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
92
benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding
shares of Common Stock of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act. The Board of Directors of the
Company (with, where specifically provided for herein, the concurrence of the
Continuing Directors or the Outside Directors) shall have the exclusive power,
authority and discretion to administer this Agreement and to exercise all
rights and powers specifically granted to such Board of Directors (with, where
specifically provided for herein, the concurrence of the Continuing Directors
or the Outside Directors) or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, but not limited to, a determi-
93
nation to redeem or not redeem the Rights, to amend the Agreement or to find or
to announce publicly that any Person has become an Acquiring Person). All such
actions, calculations, interpretations and determinations (including, for
purposes of clauses (i) and (iii) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors of the Company
(with, where specifically provided for herein, the concurrence of the
Continuing Directors or the Outside Directors), the Outside Directors or the
Company (i) shall be within the discretion of the Board of Directors (with,
where specifically provided for herein, the concurrence of the Continuing
Directors or the Outside Directors), (ii) shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Right Certificates
and all other parties, and (iii) shall not subject the Board of Directors of
the Company, the Continuing Directors or the Outside Directors to any liability
to the holders of the Rights and Right Certificates.
Section 29. Benefits of this Agree- ment. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agree-
94
ment; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23
hereof shall be reinstated and shall not expire until the Close of Business on
the tenth Business Day following the date of such determination by the Board of
Directors. Without limiting the foregoing, if any provision of this Agreement
requiring that a determination be made by the Board of Directors with the
concurrence of a majority of
95
the Continuing Directors or the Outside Directors or by the Outside Directors
is held by a court of competent jurisdiction or other authority to be invalid,
void, or unenforceable, such determination shall then be made by the Board of
Directors in accordance with applicable law and the Company's certificate of
incorporation and by-laws.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
96
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.
AMERICAN STANDARD COMPANIES INC.
By: /s/ XXXXXXX X. XXXXXXX
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Acting General Counsel
& Secretary
CITIBANK, N.A.
By: /s/ XXXX X. XXXXXX
-----------------------------
Name: Xxxx X. Xxxxxx
Title: Assistant Vice President
97
EXHIBIT A
CERTIFICATE OF DESIGNATION OF JUNIOR
PARTICIPATING CUMULATIVE PREFERRED STOCK
Par Value $.01 Per Share
of
American Standard Companies Inc.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
We, G. Xxxxxx Xxxxx, Vice President and Controller, and
Xxxxxxx X. Xxxxxxx, Secretary of American Standard Companies Inc., a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 103 thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the said Corporation, the said
Board of Directors on January 4, 1995, by the affirmative vote of at least a
majority of the members of the Board of Directors, adopted the following
resolution creating a series of 900,000 shares of Preferred Stock, par value
$.01 per share:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of its
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 Cumulative Preferred Stock, par value $.01 per share (the "Junior
Preferred Stock") and the number of shares constituting such series initially
shall be 900,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Junior Preferred Stock to a number less than the number
of shares reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding securities issued
by the Corporation convertible into Junior Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock (or any similar stock) ranking prior and
superior to the Junior Preferred Stock with respect to dividends, the
holders of shares of Junior Preferred Stock, in preference to the
holders of Common Stock and of any other junior stock which may be
outstanding, 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 first day of January,
April, July and October 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 Junior Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (a)
$25.00 per share ($100.00 per annum), or (b) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions, other than a
A-2
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 Junior Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of
shares of Junior Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Junior 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 ($100.00 per
annum) on the Junior 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 Junior Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Junior 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
A-3
date for the determination of holders of shares of Junior 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 accumulate
but shall not bear interest. Dividends paid on the shares of Junior
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Junior Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights.
The holders of shares of Junior Preferred Stock shall have the
following voting rights.
(A) Subject to the provisions for adjustment as hereinafter
set forth, each share of Junior Preferred Stock shall entitle the
holder thereof to 100 votes (and each one one-hundredth of a share of
Junior Preferred Stock shall entitle the holder thereof to one vote)
on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare
or pay any dividend on Common Stock payable in shares of Common Stock
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by classification or otherwise
than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such
case the number of votes per share to which holders of shares of
Junior Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
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(B) Except as otherwise provided herein, in the Certificate
of Incorporation, in any other certificate of designation creating a
series of preferred stock or any similar stock, or by law, the holders
of shares of Junior Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) If at any time the Corporation shall not have declared
and paid all accrued and unpaid dividends on the Junior Preferred
Stock as provided in Section 2 hereof for four consecutive Quarterly
Dividend Payment Dates, then, in addition to any voting rights
provided for in paragraphs (A) and (B), the holders of the Junior
Preferred Stock shall have the exclusive right, voting separately as a
class, to elect two directors on the Board of Directors of the
Corporation (such directors, the "Preferred Directors"). The right of
the holders of the Junior Preferred Stock to elect the Preferred
Directors shall continue until all such accrued and unpaid dividends
shall have been paid. At such time, the terms of any of the Preferred
Directors shall terminate. At any time when the holders of the Junior
Preferred Stock shall have thus become entitled to elect Preferred
Directors, a special meeting of stockholders shall be called for the
purpose of electing such Preferred Directors, to be held within 30
days after the right of the holders of the Junior Preferred Stock to
elect such Preferred Directors shall arise, upon notice given in the
manner provided by law or the by-laws of the Corporation for giving
notice of a special meeting of stockholders (provided, however, that
such a special meeting shall not be called if the annual meeting of
stockholders is to convene within said 30 days). At any such special
meeting or at any annual meeting at which the holders of the Junior
Preferred Stock shall be entitled to elect Preferred Directors, the
holders of a majority of the then outstanding Junior Preferred Stock
present in person or by proxy shall be sufficient to constitute a
quorum for the election of such directors. The persons elected by the
holders of the Junior Preferred Stock at any meeting in accordance
with the terms of the preceding sentence shall become directors on the
date of such election.
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Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior 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
Junior Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends or, make any other
distributions on any shares or stock ranking junior (either
as to dividends or upon liquidation, dissolution or
winding-up) to the Junior Preferred Stock;
(ii) declare or pay dividends, 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 Junior Preferred Stock except dividends
paid ratably on the Junior Preferred Stock, and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding-up) with the Junior Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for
shares of any stock of the of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or
winding-up) to the Junior Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding-up) with the Junior
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
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Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series or classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares.
Any shares of Junior Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever, shall be retired and
cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of preferred stock,
without designation as to series, and may be reissued as part of a new series
of preferred stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein, in the Certificate of Incorporation, in any other certificate of
designation creating a series of preferred stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding-Up.
Upon any voluntary or involuntary 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 Junior Preferred Stock unless prior thereto,
the holders of shares of Junior Preferred Stock shall have received the higher
of (i) $100.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such
payment, or (ii) an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock; nor shall any distribution be
made (B) to the holders of stock ranking on a parity (either as to
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dividends or upon liquidation, dissolution or winding-up) with the Junior
Preferred Stock, except distributions made ratably on the Junior 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. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the aggregate amount to which holders
of shares of Junior Preferred Stock are entitled immediately prior to such
event under the provision in clause (A) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc.
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, or otherwise changed, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share (subject to the provision for adjustment hereinafter
set forth) equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Junior Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common
A-8
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 8. No Redemption.
The shares of Junior Preferred Stock shall not be redeemable.
Section 9. Rank.
Unless otherwise provided in the Certificate of Incorporation
or a certificate of designation relating to a subsequent series of preferred
stock of the Corporation, the Junior Preferred Stock shall rank junior to all
other series of the Corporation's preferred stock as to the payment of
dividends and the distribution of assets on liquidation, dissolution or
winding-up, and senior to the Common Stock of the Corporation.
Section 10. Amendment.
The Certificate of Incorporation, as amended and restated,
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Junior Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Junior Preferred Stock, voting together
as a single series.
Section 11. Fractional Shares.
Junior Preferred Stock may be issued in fractions of a share
(in one one-hundredths (1/100) of a share and integral multiples thereof) which
shall entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate
A-9
in distributions and to have the benefit of all other rights of holders of
Junior Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Corporation by its Vice President and attested by its
Secretary this 29th day of March, 1995.
By: /s/ G. Xxxxxx Xxxxx
-----------------------------
Name: G. Xxxxxx Xxxxx
Title: Vice President and
Controller
ATTEST:
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Secretary
A-10
EXHIBIT B
[Form of Face of Right Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER JANUARY 5, 2005 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE WERE
ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY BECOME NULL
AND VOID AS PROVIDED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.](1)
Right Certificate
AMERICAN STANDARD COMPANIES INC.
This certifies that _______________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of January 5, 1995 (the "Rights
Agreement") between American Standard Companies Inc., a Delaware corporation
(the "Company"), and Citibank, N.A. (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M.
____________________
1. The portion of the legend in brackets shall be inserted only if applicable.
(New York City time) on January 5, 2005, at the principal office of the Rights
Agent, or its successors as Rights Agent, in New York, New York, one
one-hundredth of a share of Junior Participating Cumulative Preferred Stock,
par value $.01 per share (the "Preferred Stock"), of the Company, at a purchase
price of $100 per one one-hundredth of a share (the "Purchase Price") by
certified bank check or money order payable to the order of the Company, upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of January 4, 1995, based on the shares of
Preferred Stock of the Company as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and
the number of one one-hundredths of a share of Preferred Stock or other
securities which may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement,
B-2
which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates. Copies of the Rights Agreement are
on file at the principal executive offices of American Standard Companies Inc.
and the above-mentioned office of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights Agent, may
be exchanged for another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of one one-hundredths of a share of Preferred Stock as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per
B-3
Right. Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate may be exchanged by the Company in whole or in part
for Common Stock of the Company under certain circumstances.
No fractional shares of Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Stock or
of any other securities of the Company which may at the time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
B-4
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
B-5
[Form of Reverse of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED___________________________________________
hereby sells, assigns and transfers unto _____________________________________
______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________________
Attorney, to transfer the within Right Certificate on the books of the within
named Company, with full power of substitution.
Dated: ____________, ____
____________________________
Signature
(Signature must conform in all
respects to name of holder as
set forth on the face of this
Right Certificate, without
alteration or enlargement or
any change whatsoever.)
Signature Guaranteed:
__________________________________________________________
B-6
(To be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
____________________________
Signature
(Signature must conform in all
respects to name of holder as
set forth on the face of this
Right Certificate, without
alteration or enlargement or
any change whatsoever.)
B-7
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To American Standard Companies Inc.:
The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of such Rights and requests that certificates for
such shares be issued in the name of:
Please insert social security or other identifying number:
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number:
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: _________________, ____
B-8
______________________________________
Signature
(Signature must conform in all respects
to name of holder as set forth on the
face of this Right Certificate, without
alteration or enlargement or any change
whatsoever.)
Signature Guaranteed:
_______________________________________________________________________________
(To be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
______________________________________
Signature
(Signature must conform in all respects
to name of holder as set forth on the
face of this Right Certificate, without
alteration or enlargement or any change
whatsoever.)
B-9
NOTICE
In the event the certification set forth above in the Forms of
Assignment and Election to Purchase 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, will affix a legend to that
effect on any Right Certificates issued in exchange for this Right Certificate.
B-10
EXHIBIT C
American Standard Companies Inc.
(formerly named ASI Holding Corporation)
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On January 4, 1995, the Board of Directors of American Standard
Companies Inc. (formerly named ASI Holding Corporation) (the "Company")
declared a dividend distribution of one Right for each outstanding share of
Common Stock, par value $.01 per share (the "Common Stock"), of the Company.
The distribution was payable on January 5, 1995 to stockholders of record on
January 4, 1995 (the "Record Date"). Each Right entitles the registered holder
to purchase from the Company one one-hundredth of a share of its Junior
Participating Cumulative Preferred Stock, par value $.01 per share (the
"Preferred Stock") at a price of $100 per one one-hundredth of a 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 Citibank, N.A., as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten business days following the time
(the "Stock Acquisition Time") of a public announcement by the Company that a
person or group of affiliated or associated persons (other than (x) directors,
officers and employees of the Company, American Standard Inc. ("ASI") and their
subsidiaries as a group, (y) Xxxxx ASI Partners, L.P. or any of its affiliates
("ASI Partners") or any of their immediate tranferees, provided any such
transferee holding 15% or more of the outstanding Common Stock does not acquire
any additional shares of Common Stock except from ASI Partners or its
affiliates, or (z) any employee benefit plan of the Company, ASI or their
subsidiaries including the American-Standard Employee Stock Ownership Plan) has
acquired beneficial ownership (as defined in the Rights Agreement) of 15% or
more of the outstanding shares of Common Stock of the Company (such 15%
beneficial owner, an "Acquiring Person"), or (ii) ten business days, or such
later date as may be determined by the Board of Directors of the Company, after
the date of the commencement or announcement by a person of an intention to
make a tender offer or exchange offer for an amount of Common Stock which,
together with the shares of such stock already owned by such person,
constitutes 15% or more of the outstanding shares of such Common Stock (the
earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Company's Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificate with a copy of this Summary of
Rights attached thereto. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the
Company's Common Stock. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after the
Record Date, upon transfer or new issuance of the Company's Common Stock, will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Company's Common Stock certificates
outstanding as of the Record Date, even without a copy of this Summary of
Rights attached thereto, will also constitute the transfer of the Rights
associated with the shares of Common Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (the "Right Certificates") will be mailed to holders of
record of the Company's Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on January 5, 2005, unless earlier redeemed by the Company as
described below.
The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or 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 on, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the fixing of a record date for the issuance to
holders of Preferred Stock of certain rights, options or warrants to subscribe
for shares of Preferred Stock or convertible securities at less than the
current market price of shares of Preferred Stock or (iii) upon the fixing of a
record date for the making of a distribution to holders of shares of Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends not exceeding 125% of the last regular periodic cash dividend or
dividends payable in shares of Preferred Stock) or of subscription rights or
warrants (other than those referred to above). The number of Rights and number
of shares of Preferred Stock issuable upon the exercise of each Right are also
subject to
2
adjustment in the event of a stock split, combination or stock dividend on the
Common Stock prior to the Distribution Date.
In the event that after the Stock Acquistion Time the Company is
acquired in a merger or other business combination transaction or 50% or more
of its assets, cash flow or earning power are sold or otherwise transferred,
proper provision shall be made so that each holder of a Right shall thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction would have a market
value (as defined in the Rights Agreement) of two times the exercise price of
the Right. In the event that the Company were the surviving corporation of a
merger and its Common Stock were changed or exchanged, proper provision shall
be made so that each holder of a Right will thereafter have the right to
receive upon exercise that number of shares of common stock of the acquiring
company having a market value of two times the exercise price of the Right.
In the event that a person or group becomes an Acquiring Person
(otherwise than pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock at a price and on terms which are determined
to be fair and in the best interests of the Company and its stockholders by a
majority of the members of the Board of Directors of the Company who are
Continuing Directors (as defined below), proper provision shall be made so that
each holder of a Right, other than Rights that were beneficially owned by the
Acquiring Person, which will thereafter be void, will thereafter have the right
to receive upon exercise that number of shares of Common Stock having a market
value (as defined in the Rights Agreement) of two times the excercise price of
the Right. A person or group will not be an Acquiring Person if the Board of
Directors of the Company determines that such person or group became an
Acquiring Person inadvertently and such person or group promptly divests itself
of a sufficient number of shares of Common Stock so that such person or group
is no longer an Acquiring Person.
At any time prior to the earlier of (i) ten business days after the
Stock Acquistion Time and (ii) January 5, 2005, the Company, by resolution of
its Board of Directors, may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). If such resolution is
adopted following the Stock Acquistion
3
Time, it will be effective only with the concurrence of a majority of the
members (the "Continuing Directors") of the Board of Directors of the Company
who are not Acquiring Persons or representatives or nominees of or affiliated
or associated with an Acquiring Person and who either were members of such
Board of Directors prior to the Stock Acquisition Time or subsequently became a
member and whose election thereto was approved by a majority of the directors
who were not Acquiring Persons or representatives or nominees of or affiliated
or associated with an Acquiring Person, and only if the Continuing Directors
constitute a majority of the number of Directors then in office. The Company
may, at any time prior to the Stock Acquisition Time, extend the time in which
the Rights may be redeemed. Immediately upon the action of the Board of
Directors of the Company electing to redeem the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be
to receive the Redemption Price.
At any time after a person becomes an Acquiring Person and prior to
the acquistion by such person of 50% or more of the outstanding Common Stock of
the Company, the Board of Directors of the Company (with the concurrence of a
majority of the Continuing Directors and only if the Continuing Directors
constitute a majority of the number of Directors then in office) may exchange
the Rights (other than Rights beneficially owned by such Acquiring Person which
have become void), in whole or in part, for Common Stock of the Company at an
exchange ratio of one share of Common Stock per Right (subject to adjustment).
Immediately upon the action of the Board of Directors of the Company ordering
the exchange of any Rights, the right to exercise such Rights will terminate
and the only right of a holder of such Rights shall be to receive that number
of shares of Common Stock equal to the number of such Rights held by such
holder multiplied by the exchange ratio.
Each share of Preferred Stock pruchasable upon exercise of the Rights
will have a minimum preferential dividend of $100.00 per year, but will be
entitled to receive, in the aggregate, a dividend of 100 times the dividend
declared on a share of Common Stock. In the event of liquidation, dissolution
or winding-up of the Company, the holders of the shares of Preferred Stock
will be entitled to recieve a minimum liquidation payment of $100.00 per
share, but will be entitled to receive an aggregate liquidation payment equal
to 100 times the payment to be made per share of Common Stock. Each share of
Preferred Stock will have
4
100 votes, voting together with the shares of Common Stock. In addition, if
dividends on the Preferred Stock are in arrears for four consecutive quarterly
payment periods, the holders of the Preferred Stock will have the right, voting
as a class, to elect two members of the Board of Directors. In the event of
any merger, consolidation or other transaction in which shares of Common Stock
are exchanged, each share of Preferred Stock will be entitled to receive 100
times the amount and type of consideration received per share of Common Stock.
The rights of the shares of Preferred Stock as to dividends and liquidation,
and in the event of mergers and consolidations, are protected by anti-dilution
provisions.
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.
The Rights and the Rights Agreement can be amended by the Board of
Directors of the Company in any respect (including, without limitation, any
extension of the period in which the Rights may be redeemed) at any time prior
to the Stock Acquisition Time. From and after such a time, without the
approval of all holders of the Common Stock or all holders of the Rights, the
Board of Directors, by a majority of the Continuing Directors (provided that
the Continuing Directors constitute a majority of the Board) may only
supplement or amend the Rights Agreement in order (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained in the Rights Agreement
which may be defective or inconsistent with any other provision in the Rights
Agreement, (iii) to shorten or lengthen any time period under the Rights
Agreement or (iv) to make any changes or supplements which the Company and the
Rights Agent may deem necessary or desirable which shall not adversely affect
the interests of the holders of Right Certificates (other than an Acquiring
Person or an affiliate or associate thereof).
A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
5