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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 1, 2000
ARMSTRONG HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 333-32530 23-3033414
(State or other jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification Number)
2500 Columbia Avenue, Lancaster, PA 17604
(Address of principal executive offices) (ZIP code)
Registrant's telephone number including area code: (717) 397-6011
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Item 5. Other Events
Effective May 1, 2000, Armstrong Holdings, Inc. ("Holdings"), a
Pennsylvania corporation, became the indirect parent holding company of
Armstrong World Industries, Inc. ("Armstrong"). This restructuring was approved
Armstrong's shareholders at Armstrong's 2000 annual meeting on May 1, 2000. As
of the effective date, the holders of Armstrong common stock became holders of
Holdings common stock and the present stock certificates representing Armstrong
common stock automatically represent Holdings common stock. Each share of
Holdings common stock is accompanied by a preferred stock purchase right,
pursuant to the Rights Agreement dated as of March 14, 2000 by and between
Armstrong Holdings, Inc. and American Stock Transfer & Trust, Inc. (the "Rights
Agreement"). The Rights Agreement has terms substantially identical to those of
the shareholder rights plan adopted by Armstrong in 1996. The terms of the
rights are summarized in Exhibit B of the Rights Agreement, attached hereto as
Exhibit 99.2, and Exhibit B is incorporated herein by reference. A copy of the
press release dated May 1, 2000 announcing the consummation of the transaction
is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Pursuant to Section 12g-3(a) of the General Rules and Regulation under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), Holdings is a
successor issuer to Armstrong and shares of common stock of Holdings and the
accompanying preferred stock purchase rights are deemed registered for the
purposes of Section 12(b) of the 1934 Act. The Holdings common stock and rights
are listed on the New York Stock Exchange and trade under the symbol "ACK".
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
2.1 Agreement and Plan of Exchange dated as of March 14, 2000, by
and among Armstrong Holdings, Inc. and Armstrong World
Industries, Inc.
3.1(i) Amended and Restated Articles of Incorporation of Armstrong
Holdings, Inc.
99.1 Press Release issued by Armstrong Holdings, Inc., dated as of
May 1, 2000.
99.2 Shareholders Summary of Rights to Purchase Preferred Stock
dated March 14, 2000.
99.3 Rights Agreement dated as of March 14, 2000 by and between
Armstrong Holdings, Inc. and American Stock Transfer & Trust,
Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARMSTRONG HOLDINGS, INC.
Dated: May 4, 2000 By: /s/ Deborah K. Owen
Name: Deborah K. Owen
Title: Senior Vice President, Secretary
and General Counsel
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EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement and Plan of Exchange dated as of March 14, 2000, by
and among Armstrong Holdings, Inc. and Armstrong World
Industries, Inc.
3.1(i) Amended and Restated Articles of Incorporation of Armstrong
Holdings, Inc.
99.1 Press Release issued by Armstrong Holdings, Inc., dated as of
May 1, 2000.
99.2 Shareholders Summary of Rights to Purchase Preferred Stock
dated as of March 14, 2000.
99.3 Rights Agreement dated as of March 14, 2000 by and between
Armstrong Holdings, Inc. and American Stock Transfer & Trust,
Inc.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF EXCHANGE
BETWEEN
ARMSTRONG WORLD INDUSTRIES, INC.
AND
ARMSTRONG HOLDINGS, INC.
RECITALS
A. Armstrong World Industries, Inc. (the "Exchanging Corporation") is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania, which is authorized to issue 200,000,000
shares of Common Stock, par value $1.00 per share ("AWI Common Stock"), of which
40,217,225 shares are issued and outstanding as February 18, 2000, and
20,000,000 shares of Class A Preferred Stock, without par value ("AWI Preferred
Stock"), none of which are issued and outstanding as of the date hereof.
B. Armstrong Holdings, Inc. (the "Acquiring Corporation") is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, which is authorized to issue 200,000,000 shares of
Common Stock, par value $1.00 per share ("Holdings Common Stock"), of which 100
shares are issued and outstanding as of the date hereof and 20,000,000 shares of
Class A Preferred Stock, without par value ("Holdings Preferred Stock").
C. The Exchanging Corporation and the Acquiring Corporation desire to
effect the exchange of shares immediately contemplated hereby (the "Exchange")
so that after the Exchange, the shareholders of the Exchanging Corporation hold
all of the issued and outstanding shares of the Acquiring Corporation and the
Exchanging Corporation is a wholly-owned subsidiary of the Acquiring
Corporation.
D. The Board of Directors of the Exchanging Corporation and the Acquiring
Corporation have each adopted resolutions approving this Agreement and Plan of
Exchange (the "Agreement") in accordance with the Pennsylvania Business
Corporation Law of 1988 (the "BCL") and each directing that it be submitted to
the shareholders of the Exchanging Corporation and the Acquiring Corporation,
respectively, for adoption.
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ARTICLE I
General
1.01 Parties to Exchange. The Exchanging Corporation and the Acquiring
-------------------
Corporation shall effect the Exchange in accordance with and subject to the
terms of this Agreement.
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1.02. Effectiveness. Subject to the terms of this Agreement, the parties
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hereto shall file Articles of Exchange, and such other documents and instruments
as are required by, and complying in all respects with, the BCL with appropriate
state officials after the adoption of the Agreement by the shareholders of the
Exchanging Corporation, at such time as the Exchanging Corporation and the
Acquiring Corporation shall mutually agree. The Exchange shall become effective
upon the filing of the Articles of Exchange in the Department of State of the
Commonwealth of Pennsylvania in accordance with the terms of the Articles of
Exchange (the "Effective Time").
1.03. Termination. Notwithstanding shareholder approval of this
-----------
Agreement, this Agreement may be terminated at any time prior to the Effective
Time by either the Acquiring Corporation by written notice to the Exchanging
Corporation prior to the Effective Time or by the Exchanging Corporation at any
time prior to the Effective Time by resolution approved by its Board of
Directors.
1.04. Amendment. This Agreement may be amended by the Board of Directors
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of both the Exchanging Corporation and the Acquiring Corporation at any time
prior to submission of the Agreement to the shareholders of the Exchanging
Corporation for approval and, to the extent permitted by law, at any time
thereafter prior to the Effective Time.
ARTICLE II
Capital Stock
2.01. Exchange. At the Effective Time each share of AWI Common Stock and
--------
AWI Preferred Stock issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Exchange and without any action on the part of the
holders thereof, be converted into and exchanged for one share of Holdings
Common Stock and one share of Holdings Preferred Stock, respectively. The
Acquiring Corporation shall thereupon have acquired and be the holder of each
share of AWI Common Stock and AWI Preferred Stock converted and exchanged in the
Exchange. No shares of AWI Common Stock or AWI Preferred Stock shall cease to
exist by reason of such conversion and exchange.
2.02. Stock Certificates. Following the Effective Time, each holder of an
------------------
outstanding certificate or certificates theretofore representing shares of AWI
Common Stock or AWI Preferred Stock may, but shall not be required to, surrender
the same to the Acquiring Corporation for new certificates representing shares
of Holdings Common Stock or Holdings Preferred Stock, as the case may be, and
each such holder or transferee will be entitled to receive a certificate or
certificates representing the same number of shares of the Acquiring
Corporation. Without any further action on the part of the Exchanging
Corporation or the Acquiring Corporation, each outstanding certificate which,
immediately prior to the Effective Time, represented AWI Common Stock or AWI
Preferred Stock, shall from and after the Effective Time be deemed and treated
for all corporate purposes to represent the ownership of the same number of
shares of Holdings Common Stock or Holdings Preferred Stock, as the case maybe,
as though a surrender or transfer and exchange had taken place.
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2.03. Cancellation of Holdings Common and Holdings Preferred Stock held by
--------------------------------------------------------------------
the Exchanging Corporation. Immediately prior to the Effective Time, each share
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of Holdings Common and Preferred Stock issued and outstanding immediately before
the Effective Time shall be cancelled and thereupon shall constitute an
authorized but unissued share, and all rights in respect thereof shall cease.
ARTICLE III
3.01 Articles of Incorporation of the Exchanging Corporation. The
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Articles of Incorporation of the Acquiring Corporation in effect prior to the
Effective Time and attached hereto as Attachment A shall continue to be the
Articles of Incorporation of the Acquiring Corporation after the Effective Time,
unaffected by the Exchange until amended, modified or repealed.
3.02 Bylaws. The Bylaws of the Acquiring Corporation in effect prior to
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the Effective Time and attached hereto as Attachment B shall continue to be the
Bylaws of the Acquiring Corporation after the Effective Time, unaffected by the
Exchange, until amended, modified or repealed.
3.03 Directors. The directors of the Exchanging Corporation immediately
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prior to the Effective Time shall be the directors of the Acquiring Corporation
from and after the Effective Time until their successors are duly elected and
qualified or until their earlier death, resignation or removal.
3.04 Stock Plans. The Acquiring Corporation shall assume the obligations
------------
of the Exchanging Corporation pursuant to the existing stock plans of the
Exchanging Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Exchange as of March 14, 2000.
ARMSTRONG WORLD INDUSTRIES, INC.
By: /s/ George A. Lorch
------------------------------
Name: George A. Lorch
Title: Chairman and Chief Executive
Officer
ARMSTRONG HOLDINGS, INC.
By: /s/ George A. Lorch
------------------------------
Name: George A. Lorch
Title: Chairman and Chief Executive
Officer
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EXHIBIT 3.1(i)
ARMSTRONG HOLDINGS, INC.
ARTICLES OF INCORPORATION
1ST. The name of the Corporation is Armstrong Holdings, Inc.
2ND. The location and post office address of its registered office in this
Commonwealth is 2500 Columbia Avenue, Lancaster, Lancaster County, Pennsylvania.
3RD. The purpose or purposes for which the Corporation is incorporated under
the Business Corporation Law of the Commonwealth of Pennsylvania are to engage
in, and do any lawful act concerning, any or all lawful business for which
corporations may be incorporated under the Business Corporation Law, including,
but not limited to, manufacturing, purchasing and selling a variety of interior
furnishings, interior finish materials and related services for residential,
commercial and institutional interiors, including resilient floors and
carpeting, ceiling materials and ceiling systems, furniture and related
accessory items; as well as insulation materials and industrial specialties;
engaging in research and development, furnishing services, and acquiring,
owning, using, and disposing of real property of any nature whatsoever.
4TH. The term of its existence is perpetual.
5TH. The authorized capital stock of the Corporation shall be 20,000,000 shares
of Class A Preferred Stock (without par value) and 200,000,000 shares of Common
Stock of the par value of $1.00 per share. A description of each class of
shares and a statement of the preferences, voting powers, qualifications,
limitations, restrictions and the special or relative rights granted to or
imposed upon the shares of each class and of the authority vested in the Board
of Directors of the Corporation to establish series of Class A Preferred Stock
and to fix and determine the variations in the relative rights and preferences
as between the series of each class are as follows:
(i). The holders of Common Stock shall be entitled to receive dividends,
when and as declared by the Board of Directors, out of surplus
legally available therefor.
(ii). The holders of Common Stock shall have one vote per share.
(iii). The Corporation may issue shares of stock, option rights or
securities having conversion or option rights, without first
offering them to the holders of Class A Preferred Stock or Common
Stock.
(iv). The Board of Directors may in its discretion, at any time or from
time to time, issue or cause to be issued all or any part of the
authorized and unissued shares of Common Stock for consideration of
such character and value as the Board shall from time to time fix or
determine.
(v). The Board of Directors is hereby expressly authorized, at any time
or from time to time, to divide any or all of the shares of Class A
Preferred Stock into one or more series, and in the resolution or
resolutions establishing a particular series, before
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issuance of any of the shares thereof, to fix and determine the
number of shares and the designation of such series, so as to
distinguish it from the shares of all other series and classes, and
to fix and determine the preferences, voting rights, qualifications,
privileges, limitations, options, conversion rights, restrictions
and other special or relative rights of the Class A Preferred Stock
or of such series, to the fullest extent now or hereafter permitted
by the laws of the Commonwealth of Pennsylvania, including, but not
limited to, the variations between different series in the following
respects:
(a) the distinctive designation of such series and the number of
shares which shall constitute such series, which number may be
increased or decreased (but not below the number of shares
thereof then outstanding) from time to time by the Board of
Directors;
(b) the annual dividend rate for such series, and the date or
dates from which dividends shall commence to accrue;
(c) the price or prices at which, and the terms and conditions on
which, the shares of such series may be made redeemable;
(d) the purchase or sinking fund provisions, if any, for the
purchase or redemption of shares of such series;
(e) the preferential amount or amounts payable upon shares of such
series in the event of liquidation, dissolution, or winding up
of the Corporation;
(f) the voting rights, if any, of shares of such series;
(g) the terms and conditions, if any, upon which shares of such
series may be converted and the class or classes or series of
shares of the corporation or other securities into which such
shares may be converted;
(h) the relative seniority, priority or junior rank of such series
as to dividends or assets with respect to any other classes or
series of stock then or thereafter to be issued; and
(i) such other terms, qualifications, privileges, limitations,
options, restrictions, and special or relative rights and
preferences, if any, of shares of such series as the Board of
Directors may, at the time of such resolution or resolutions,
lawfully fix or determine under the laws of the Commonwealth
of Pennsylvania.
Unless otherwise provided by law, the Articles of Incorporation, the
bylaws of the Corporation or in a resolution or resolutions establishing
any particular series of Class A Preferred Stock, the aggregate number
of authorized shares of Class A Preferred Stock may be increased by an
amendment of the Articles of Incorporation approved solely by a majority
vote of the outstanding shares of Common Stock.
All shares within each series of Class A Preferred Stock shall be alike
in every particular, except with respect to the dates from which
dividends shall commence to accrue.
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The Board of Directors may in its discretion, at any time or from time
to time, issue or cause to be issued all or any part of the authorized
and unissued shares of Class A Preferred Stock for consideration of such
character and value as the Board of Directors shall from time to time
fix or determine.
(vi). Series One Preferred Stock (A Series Of Class A Preferred Stock).
There is established a series of the Class A Preferred Stock of the
Corporation to consist initially of 500,000 shares with the
designation and relative rights and preferences thereof to be as
follows:
Section 1. Designation. The shares of such series shall be
designated as "Series One Preferred Stock." Shares of this series
shall be issued pursuant to the exercise of rights to purchase Series
One Preferred Stock distributed to the holders of Common Stock, par
value $1.00 per share, of the Corporation (the "Common Stock").
Section 2. Dividends and Distributions. Subject to the rights and
preferences of the holders of any shares of any series of Class A
Preferred Stock ranking senior as to dividends to this Series One
Preferred Stock, the holders of shares of Series One Preferred Stock,
in preference to the holders of Common Stock and shares of stock
ranking junior as to dividends to the Series One Preferred Stock,
shall be entitled to receive, when and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the 15th day of March, June, September
and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series One Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $36.00
or (b) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends plus
100 times the aggregate per share amount (payable in kind) of all non-
cash dividends or other distributions, other than a dividend payable
in shares of Common Stock, or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), paid on the Common
Stock at any time during the quarter year immediately preceding the
quarter year ending on the day immediately preceding such Quarterly
Dividend Payment Date. In the event the Corporation shall at any time
after May1, 2000 (the "Rights Distribution Date") during any quarter
year immediately preceding the quarter year ending on the day
immediately preceding a Quarterly Dividend Payment Date (i) declare
any dividend on Common Stock payable in shares of Common Stock, or
(ii) subdivide the outstanding Common Stock or combine the outstanding
Common Stock into a greater or lesser number of shares of Common
Stock, then in each such case the amounts to which holders of shares
of Series One Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying each 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
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the number of shares of Common Stock that were outstanding immediately
prior to such event.
Dividends shall begin to accrue and be cumulative on
outstanding shares of Series One Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Series One Preferred Stock, unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series One Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series One Preferred Stock in an
amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series One Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. Except as otherwise provided by law,
holders of shares of Series One Preferred Stock shall have no voting
rights.
Section 4. Certain Restrictions.
1. Whenever quarterly dividends or other dividends or distributions
payable on the Series One Preferred Stock as provided in Section 2 are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series One
Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
a. declare or pay dividends on, make any distributions on, or
redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or as to
assets) to the Series One Preferred Stock;
b. declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends
or as to assets) with the Series One Preferred Stock, except
dividends paid ratably on the Series One 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;
c. redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or
as to assets) to the Series One Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares
of any stock of the
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Corporation ranking junior (either as to dividends or as to
assets) to the Series One Preferred Stock; or
d. purchase or otherwise acquire for consideration any shares of
Series One Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series One Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the
respective series of classes.
2. The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under Paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time
and in such manner.
Section 5. Reacquired Shares. Any shares of Series One 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 Class A Preferred Stock and
may be reissued as part of a new series of Class A Preferred Stock to
be created by resolution or resolutions of the Board of Directors,
subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. Subject to the
rights and preferences of the holders of any shares of any series of
Class A Preferred Stock ranking senior as to assets to this Series One
Preferred Stock:
1. Upon any involuntary or voluntary liquidation, dissolution or
winding up of the Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or
as to assets) to the Series One Preferred Stock unless, prior thereto,
the holders of shares of Series One Preferred Stock shall have
received an amount per share equal to the Per Share Series One
Liquidation Preference. The Per Share Series One Liquidation
Preference shall be equal to the sum of (x) $100.00 plus an amount
equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, plus (y) the
Participation Preference. The "Participation Preference" is an amount
per each share of Series One Preferred Stock outstanding, equal to the
product of (A) the Excess Distribution Amount, as hereinafter defined,
times (B) a fraction whose numerator is 100 and whose denominator is
the sum of (i) the product of 100 times the number of outstanding
shares of Series One Preferred Stock, plus (ii) the product of 100
times a fraction whose numerator is the number of outstanding shares
of Common Stock and whose denominator is the Adjustment Number;
provided, however, if the foregoing computation results in a negative
number, then the Participation
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Preference shall be 0. Following the payment of the full amount of the
Series One Liquidation Preference, holders of shares of Common Stock
shall receive the remaining assets to be distributed.
The "Excess Distribution Amount" is an amount equal to the
amount available for distribution to shareholders of the Corporation
after payment of all debts and liabilities less the sum of (i) the
liquidation preferences in respect of all shares of preferred stock of
the Corporation other than the Series One Preferred Stock, (ii) the
product of 100 times the number of outstanding shares of Series One
Preferred Stock, and (iii) the product of the number of outstanding
shares of Common Stock times a fraction whose numerator is 100 and
whose denominator is the Adjustment Number.
2. The Adjustment Number shall initially be 100 and shall be
subject to adjustment as provided in this subsection (B). In the event
the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to
such event shall be adjusted by multiplying such Adjustment Number by
a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then in any
such case the shares of Series One Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In the
event the Corporation shall at any time (i) declare any dividend on
Common Stock payable in shares of Common Stock, or (ii) subdivide the
outstanding Common Stock or combine the outstanding 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 Series One Preferred Stock
shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. Redemption. The outstanding shares of Series One
Preferred Stock may be redeemed at the option of the Board of
Directors as a whole, but not in part, at any time, or from time to
time, at a cash price per share equal to (i) the
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product of the Adjustment Number times the Average Market Value, as
such term is hereinafter defined, of the Common Stock, plus (ii) all
dividends which on the redemption date have accrued on the shares to
be redeemed and have not been paid or declared and a sum sufficient
for the payment thereof set apart, without interest; provided,
however, that if and whenever any quarter-yearly dividend shall have
accrued on the Series One Preferred Stock which has not been paid or
declared and a sum sufficient for the payment thereof set apart, the
Corporation may not purchase or otherwise acquire any shares of Series
One Preferred Stock unless all shares of such stock at the time
outstanding are so purchased or otherwise acquired. The "Average
Market Value" is the average of the closing sale prices of the Common
Stock during the 30-day period immediately preceding the date before
the redemption date on the Composite Tape for New York Stock Exchange-
Listed Stocks, or, if such stock is not quoted on the Composite Tape,
on the New York Stock Exchange, or, if such stock is not listed on
such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934, as amended, on
which such stock is listed, or, if such stock is not listed on any
such exchange, the average of the closing bid quotations with respect
to a share of Common Stock during such 30-day period on the National
Association of Securities Dealers, Inc. Automated Quotations System or
any system then in use, or if no such quotations are available, the
fair market value of the Common Stock as determined by the Board of
Directors in good faith.
Section 9. Fractional Shares. Series One Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting
rights, if applicable, receive dividends, participate in distributions
and to have the benefit of all other rights of holders of Series One
Preferred Stock.
6TH. A. In addition to the right of the Board of Directors under law to remove
a director for cause, and subject to the rights of the holders of any series of
preferred stock then outstanding, any director, any class of directors, or the
entire Board of Directors may be removed from office by a vote of the
shareholders at any time, with or without assigning any cause, but only if
shareholders entitled to cast at least eighty percent (80% ) of the votes which
all shareholders would be entitled to cast at an annual election of directors or
of such class shall vote in favor of such removal; provided, however, that no
individual director shall be removed (unless the entire Board of Directors or
any class of directors shall be removed) if the votes cast against such removal
would be sufficient, if voted cumulatively for such director, to elect him or
her to the class of directors of which he or she is a member.
B. Notwithstanding any other provision of law, the Articles of
Incorporation or the bylaws of the Corporation, the affirmative vote of
shareholders entitled to cast at least eighty percent (80%) of the votes which
all shareholders would be entitled to cast at an annual election of directors,
voting together as a single class, shall be required to amend, alter, or repeal,
or to adopt any provision inconsistent with, this Article 6th or any provision
of the bylaws of the Corporation relating to the number of directors, the
classification of directors, and/or the filling of vacancies on the Board of
Directors; provided, however, that this Paragraph B shall not apply
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to and such eighty percent (80%) vote shall not be required for any such
amendment, repeal, or adoption unanimously approved by all of the Directors of
the Corporation.
7TH. A. In addition to any affirmative vote required by law, the Articles of
Incorporation or the bylaws of the Corporation. Business Combinations with an
Interested Shareholder shall require the affirmative vote of the shareholders
entitled to cast at least a majority of the votes which all shareholders other
than the Interested Shareholder would be entitled to cast in an annual election
of directors, without counting the vote of the Interested Shareholder, voting
together as a single class; provided, however, that such affirmative vote shall
not be required and such Business Combination shall require only the affirmative
vote required by law, the Articles of Incorporation or the bylaws of the
Corporation if:
(1) The Business Combination shall have been approved by a majority of
Disinterested Directors; or
(2) All of the following six conditions shall have been met:
(a) The transaction constituting the Business Combination shall
provide for a consideration to be received by holders of Common
Stock in exchange for their stock, and the aggregate amount of
the cash consideration and the Fair Market Value as of the date
of the consummation of the Business Combination of consideration
other than cash to be received per share by holders of Common
Stock in such Business Combination shall be at least equal to
the highest of the following:
(i) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes, and
soliciting dealers' fees) paid by the Interested
Shareholder in order to acquire any shares of Common
Stock beneficially owned by the Interested Shareholder
which were acquired (I) within the two-year period
immediately prior to the first public announcement of
the proposed Business Combination (the "Announcement
Date") or (II) in the transaction in which the
Interested Shareholder became an Interested
Shareholder, whichever is higher;
(ii) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the
Interested Shareholder became an Interested Shareholder
(the "Determination Date"), whichever is higher;
(iii) the highest Fair Market Value per share of Common Stock
for the two years immediately preceding the
Announcement Date, where the closing sale price is
determined for each trading day without reference to
the 30-day period; and
(iv) (if applicable) the price per share equal to the Fair
Market Value per share of Common Stock determined
pursuant to clause (ii) preceding, multiplied by the
ratio of (I) the highest per share price (including any
brokerage commissions, transfer taxes, and soliciting
dealers' fees) paid in order to acquire any shares of
Common Stock beneficially owned by the Interested
Shareholder which were
<PAGE>
acquired within the two-year period immediately prior
to the Announcement Date to (II) the Fair Market Value
per share of Common Stock on the first day in such two-
year period on which the Interested Shareholder
beneficially owned any shares of Common Stock.
All per share prices shall be adjusted to reflect any intervening stock
splits, stock dividends, and reverse stock splits.
(b) If the transaction constituting the Business Combination shall
provide for a consideration to be received by holders of any class
of outstanding Voting Stock other than Common Stock, the aggregate
amount of the cash and the Fair Market Value as of the date of the
consummation of the Business Combination of consideration other than
cash to be received per share by holders of shares of such Voting
Stock shall be at least equal to the highest of the following (it
being intended that the requirements of this clause (2)(b) shall be
required to be met with respect to every such class of outstanding
Voting Stock whether or not the Interested Shareholder beneficially
owns any shares of a particular class of such Voting Stock):
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes, and soliciting dealers'
fees) paid by the Interested Shareholder in order to acquire
any shares of such class of Voting Stock beneficially owned by
the Interested Shareholder which were acquired (I) within the
two-year period immediately prior to the Announcement Date or
(II) in the transaction in which the Interested Shareholder
became an Interested Shareholder, whichever is higher;
(ii) (if applicable) the highest preferential amount per share to
which the holders of shares of such class of Voting Stock are
entitled in the event of any liquidation, dissolution, or
winding up of the Corporation;
(iii) the highest Fair Market Value per share of such class of Voting
Stock for the two years immediately preceding the Announcement
Date, where the closing sale price is determined for each
trading day without reference to the 30-day period;
(iv) the Fair Market Value per share of such class of Voting Stock
on the Announcement Date or on the Determination Date,
whichever is higher; and
(v) (if applicable) the price per share equal to the Fair Market
Value per share of such class of Voting Stock determined
pursuant to clause (iv) immediately preceding, multiplied by
the ratio of (I) the highest per share price (including any
brokerage
<PAGE>
commissions, transfer taxes, and soliciting dealers'
fees) paid in order to acquire any shares of such class of
Voting Stock beneficially owned by the Interested Shareholder
which were acquired within the two-year period immediately
prior to the Announcement Date to (II) the Fair Market Value
per share of such class of Voting Stock on the first day in
such two-year period on which the Interested Shareholder
beneficially owned any share of such class of Voting Stock.
All per share prices shall be adjusted to reflect any intervening stock
splits, stock dividends, and reverse stock splits.
(c) The consideration to be received by holders of a particular
class of outstanding Voting Stock (including Common Stock) shall be in cash
or in the same form as was previously paid in order to acquire shares of
such class of Voting Stock which are beneficially owned by the Interested
Shareholder. If the Interested Shareholder beneficially owns shares of any
class of Voting Stock which were acquired with varying forms of
consideration, the form of consideration to be received by holders of such
class of Voting Stock shall be either cash or the form used to acquire the
largest number of shares of such class of Voting Stock beneficially owned
by the Interested Shareholder.
(d) After such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business Combination:
(i) except as approved by a majority of Disinterested
Directors, there shall have been no failure to declare and
pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on any outstanding
preferred stock;
(ii) there shall have been (I) no reduction in the annual rate
of dividends paid on the Common Stock (except as necessary
to reflect any subdivision of the Common Stock), except as
approved by a majority of the Disinterested Directors, and
(II) an increase in such annual rate of dividends (as
necessary to prevent any such reduction) in the event of
any reclassification (including any reverse stock split),
recapitalization, reorganization, or any similar
transaction which has the effect of reducing the number of
outstanding shares of the Common Stock, unless the failure
so to increase such annual rate is approved by a majority
of the Disinterested Directors; and
(iii) such Interested Shareholder shall not have become the
beneficial owner of any additional shares of Voting Stock
<PAGE>
except as part of the transaction in which such Interested
Shareholder became an Interested Shareholder .
(e) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the
benefit, directly or indirectly (except proportionately as a shareholder),
of any loans, advances, guarantees, pledges, or other financial assistance
or any tax credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with a Business Combination or
otherwise.
(f) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(or any subsequent provisions replacing such Act, rules, or regulations)
shall be mailed to public shareholders of the Corporation at least 30 days
prior to the consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed pursuant to such
Act or subsequent provisions).
B. For the purposes of this Article 7th:
(1) The term "Business Combination" shall mean:
(a) any merger or consolidation of the Corporation or any
Subsidiary with (i) any Interested Shareholder or with (ii)
any other corporation (whether or not itself an Interested
Shareholder) which is, or after such merger or consolidation
would be, an Affiliate or Associate of an Interested
Shareholder;
(b) any sale, lease, exchange, mortgage, pledge, transfer, or
other disposition (in one transaction or a series of
transactions) to or with any Interested Shareholder and/or
any Affiliate or Associate of any Interested Shareholder of
all or a Substantial Part of the assets of the corporation
or any Subsidiary thereof;
(c) the issuance, exchange, sale, or transfer by the Corporation
or any Subsidiary (in one transaction or a series of
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Shareholder and/or any
Affiliate or Associate of any Interested Shareholder in
exchange for cash, securities, or other consideration (or a
combination thereof) having an aggregate Fair Market Value
of, equal to or in excess of a Substantial Part of the
assets of the Corporation;
(d) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of
any Interested Shareholder or any Affiliate or Associate of
any Interested Shareholder; or
<PAGE>
(e) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with
or into or otherwise involving an Interested Shareholder)
which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any
class of equity securities or securities convertible into
equity securities of the Corporation or any Subsidiary which
is directly or indirectly owned by an Interested Shareholder
or any Affiliate or Associate of any Interested Shareholder.
(2) The term "person" shall mean any individual, firm, corporation, or
other entity and shall include any group comprised of any person and
any other person with whom such person or any Affiliate or Associate
of such person has any agreement, arrangement, or understanding,
directly or indirectly, for the purpose of acquiring, holding, voting,
or disposing of Voting Stock of the Corporation.
(3) The term "Interested Shareholder" at any particular time shall mean
any person (other than the Corporation or any Subsidiary and other
than any profit sharing, employee stock ownership, or other employee
benefit plan of the Corporation or any Subsidiary or any trustee of or
fiduciary with respect to any such plan when acting in such capacity)
who or which:
(a) is at such time the beneficial owner, directly or
indirectly, of more than ten percent (10%) of the voting
power of the outstanding Voting Stock;
(b) was at any time within the two-year period immediately prior
to such time the beneficial owner, directly or indirectly,
of more than ten percent (10%) of the voting power of the
then outstanding Voting Stock; or
(c) is at such time an assignee of or has otherwise succeeded to
the beneficial ownership of any shares of Voting Stock which
were at any time within the two-year period immediately
prior to such time beneficially owned by any Interested
Shareholder, if such assignment or succession shall have
occurred in the course of a transaction or series of
transactions not involving a public offering within the
meaning of the Securities Act of 1933, as amended.
(4) A person shall be a "beneficial owner" of any shares of Voting Stock:
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly;
(b) which such person or any of its Affiliates or Associates has
(i) the right to acquire (whether or not such right is
exercisable
<PAGE>
immediately) pursuant to any agreement, arrangement, or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement, or
understanding; or
(c) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates
or Associates has any agreement, arrangement, or
understanding for the purpose of acquiring, holding, voting,
or disposing of any shares of Voting Stock.
(5) For the purposes of determining whether a person is an Interested
Shareholder pursuant to Section (B)(3) of this Article 7th the number
of shares of Voting Stock deemed to be outstanding shall include
shares deemed owned by an Interested Shareholder through application
of Section (B)(4) immediately preceding but shall not include any
other shares of Voting Stock which may be issuable pursuant to any
agreement, arrangement, or understanding, or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise.
(6) "Affiliate" or "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended, as in effect on
January 1, 1985 (the term "registrant" in said Rule 12b-2 meaning in
this case the Corporation).
(7) "Subsidiary" means any corporation of which a majority of any class of
equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of
Interested Shareholder set forth in Section (B)(3) of this Article 7th
the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(8) "Disinterested Director" means any member of the Board of Directors of
the Corporation who is unaffiliated with, and not a representative of,
an Interested Shareholder and who was a member of the Board of
Directors prior to the time that the Interested Shareholder became an
Interested Shareholder or became a member subsequently to fill a
vacancy created by an increase in the size of the Board of Directors
and did receive the favorable vote of a majority of the Disinterested
Directors in connection with being nominated for election by the
shareholders to fill such vacancy or in being elected by the Board of
Directors to fill such vacancy, and any successor of a Disinterested
Director who is unaffiliated with, and not a representative of, the
Interested Shareholder and is recommended or elected to succeed a
Disinterested Director by a majority of the disinterested directors
then on the Board of Directors.
(9) "Fair Market Value" means: (1) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the
date in question of a share of such stock on the Composite Tape for
New York Stock Exchange-Listed Stocks,
<PAGE>
or, if such stock is not quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on such exchange, on
the principal United States securities exchange registered under the
Securities Exchange Act of 1934, as amended, on which such stock is
listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock
during the 30-day period preceding the date in question on the
National Association of Securities Dealers, Inc., Automated Quotations
System or any system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of
such stock as determined by the Board of Directors in good faith with
the approval of at least a majority of the Disinterested Directors in
the determination made; and (2) in the case of property other than
cash or stock, the fair market value of such property on the date in
question as determined by the Board of Directors in good faith with
the approval of at least a majority of the Disinterested Directors in
the determination made.
(10) In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as
used in Section (A)(2) of this Article 7th shall include the shares of
Common Stock and/or the shares of any class of outstanding Voting
Stock retained by the holders of such shares.
(11) "Substantial Part" of the Corporation shall mean more than ten percent
(10%) of the fair market value of the total assets of the Corporation
as of the end of its most recent fiscal quarter ending prior to the
time the determination is made.
(12) The term "Voting Stock" shall mean all outstanding shares of capital
stock of the Corporation entitled to vote in an annual election of
directors.
(13) The term "beneficial owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, as in effect on January
1, 1985.
C. A majority of the Disinterested Directors shall have the power and duty
to determine for the purposes of this Article 7th, on the basis of information
known to them after reasonable inquiry, all facts necessary to determine
compliance with this Article 7th, including without limitation (1) whether a
person is an Interested Shareholder, (2) the number of shares of Voting Stock
beneficially owned by any person, (3) whether a person is an Affiliate or
Associate of another, (4) whether the applicable conditions set forth in Section
(A)(2) of this Article 7th have been met with respect to any Business
Combination, and (5) whether the assets which are the subject of any Business
Combination equal or exceed, or whether the consideration to be received from
the issuance or transfer of securities by the Corporation or any Subsidiary in
any Business Combination equals or exceeds, a Substantial Part of the assets of
the Corporation. Any such determination made in good faith shall be binding and
conclusive on all parties.
D. Nothing contained in this Article 7th shall be construed to relieve any
Interested Shareholder from any fiduciary obligation imposed by law.
<PAGE>
E. Unless otherwise clear from the context, all terms used in this Article
7th shall have the meanings given to them in this Article 7th. The masculine
gender shall include the feminine and neuter genders, and vice versa; and the
singular shall include the plural, and vice versa.
F. Notwithstanding any other provisions of law, the Articles of
Incorporation or the bylaws of the Corporation, and notwithstanding the fact
that a lesser percentage may be specified by law, the affirmative vote of
shareholders entitled to cast at least eighty percent (80%) of the votes which
all shareholders would be entitled to cast at an annual election of directors,
voting together as a single class, shall be required to amend, alter, or repeal,
or to adopt any provision inconsistent with, this Article 7th.
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Stan Steinreich
--------
May 1, 2000 V.P. of Corporate Relations
(717) 396-2169
Tom Waters
Director of Investor Relations
(717) 396-2216
ARMSTRONG SHAREHOLDERS APPROVE CREATION
- ---------------------------------------
OF HOLDING COMPANY
- ------------------
NEW CORPORATE STRUCTURE WILL ENABLE GREATER FLEXIBILITY IN FINANCING AND
- ------------------------------------------------------------------------
DEVELOPING NEW BUSINESSES
- -------------------------
LANCASTER, PA - Shareholders of Armstrong World Industries (NYSE: ACK)
today approved a plan to establish a holding company that will give the building
materials manufacturer greater financial and organizational flexibility to more
effectively compete in its global markets.
The creation of a holding company was one of three key issues shareholders
approved at today's annual meeting. The other topics included changes to the
terms of the Management Achievement Plan and the re-election of three directors.
The new entity will be called Armstrong Holdings, Inc. and will become the
parent company for Armstrong World Industries, which continues to have the same
operations, employees and assets as before. All current Armstrong common stock
will be exchanged for Holdings common stock on a share-for-share basis. The
corporate governance and dividend policy of the holding company are the same as
that of Armstrong World Industries.
A holding company is a parent company that conducts no business operations
itself. It owns stock of operating subsidiaries and may own various investments.
Its sources of revenue are cash from its subsidiaries and earnings on any
investments it holds.
A number of companies in the building materials industry are already
organized as holdings companies, including USG Corp. and American Standard
Companies Inc.
"Holding companies are increasingly becoming the appropriate structure
through which global companies such Armstrong grow. The new structure will
better position us to compete more effectively in today's business environment,"
said Chairman and CEO George A. Lorch.
<PAGE>
Shareholders also voted on several changes to the company's Management
Achievement Plan covering performance criteria, eligibility to receive awards
under the Plan and the award maximum under the Plan. The major change in the
program will be a shift from using an Economic Value Added (EVA(R)) model as the
sole basis for determining awards under the Achievement Plan, to now also
include other performance criteria such as: cash flow, earnings, operating
income, return on shareholder's equity and sales. Management proposed the change
in order to supplement EVA(R) with other financial criteria that are also
directly aligned with investor evaluations of Armstrong's financial performance.
In other action, shareholders re-elected three directors for terms expiring
in 2003: Van C. Campbell, 61, former vice chairman of Corning Inc.; John A.
Krol, 63, former chairman of E.I. duPont Nemours and Co.; and David W. Raisbeck,
50, vice chairman of Cargill, Inc.
This news release contains forward looking statements related to future
sales growth and earnings. Actual results could differ materially as a result
of known and unknown risks and uncertainties and other factors, including the
outcome of asbestos-related and other litigation, future sales growth resulting
from our investment in research and development, our success in the introduction
of new products, interest, foreign exchange and effective tax rates, impacts to
international operations caused by changes to intellectual property protections
or trade regulations, potential business combinations among our competitors or
suppliers, variations in raw material and energy costs, the strength of domestic
and foreign end-use markets, product and price competition caused by factors
such as worldwide excess industry capacity, the political climate in emerging
markets, and the successful integration of our 1998 acquisitions. Additional
information on matters which could affect the company's financial results is
included in its 1999 annual report and form 10-K
Armstrong World Industries is a global leader in the design, innovation and
manufacture of interior finishing solutions, most notably floors and ceilings.
Based in Lancaster, PA, Armstrong has approximately 18,000 employees worldwide.
In 1999, Armstrong's net sales totaled more than $3.4 billion. Additional
information about the company can be found on the Internet at www.armstrong.com.
<PAGE>
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
The Board of Directors of Armstrong Holdings, Inc. (the "Company")
declared a distribution of one Right for each share of Common Stock of the
Company distributed to shareholders in connection with the Share Exchange under
the Agreement and Plan of Exchange (whereby all Armstrong World Industries, inc.
common stock was exchanged for the Company's Common Stock) and with respect to
each share of Common Stock that may be issued by the Company thereafter and
prior to the "Distribution Date" (or the earlier redemption or expiration of the
Rights) described below. The Rights are effective as of their distribution to
shareholders.
Upon the occurrence of certain events described below, each Right would
entitle the registered holder to purchase from the Company a unit consisting of
one-hundredth of a share (a "unit") of Series One Class A Preferred Stock,
without par value (the "Preferred Stock"), at a purchase price of $300 per unit,
subject to adjustment (the "Purchase Price"). The Purchase Price must be paid
in cash or, if the Company shall in its sole discretion so consent, shares of
Common Stock having a value at the time of exercise equal to the Purchase Price.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and the Rights Agent.
Unless otherwise delayed by an action of the Board of Directors, the
Rights will separate from the Common Stock upon the earlier to occur of (i) ten
(10) days following a public announcement that a person or group of affiliated
or associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of shares of the Company's capital stock
representing twenty percent (20%) or more of the voting power of all outstanding
shares of capital stock of the Company (the date of such announcement being
referred to as the "Stock Acquisition Date") or such later date as specified by
the majority of the Disinterested Directors, or (ii) ten (10) business days
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially owning outstanding shares of the Company's
capital stock representing twenty-eight percent (28%) or more of the voting
<PAGE>
power of all outstanding shares of capital stock of the Company, or such later
date as specified by the majority of the Disinterested Directors.
The term "Disinterested Directors" means any member of the Board of
Directors of the Company who was a member of the Board prior to the time that
the Acquiring Person became an Acquiring Person, any person who is subsequently
elected to the Board to fill a vacancy created by an increase in the size of the
Board if such person is recommended or approved by a majority of the
Disinterested Directors, and any successor of a Disinterested Director if such
person is recommended or approved by a majority of the Disinterested Directors,
but shall not include an Acquiring Person, or an affiliate or associate of an
Acquiring Person, or any representative of the foregoing entities.
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred only with such Common Stock
certificates, (ii) new Common Stock certificates issued will contain a notation
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any certificates for Common Stock will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
The Rights will be attached to all Common Stock certificates representing shares
then outstanding until the occurrence of a Distribution Date or the earlier
redemption or expiration of the Rights. No separate Rights Certificates will be
---------------------------------------
distributed unless and until a Distribution Date occurs. The Rights will expire
- -------------------------------------------------------
at the close of business on March 21, 2006, unless extended or earlier redeemed
by the Board as described below.
As soon as practicable after a Distribution Date (except as otherwise
provided above), Rights Certificates will be mailed to holders of record of the
Common Stock as of the close of business on a Distribution Date and, thereafter,
such separate Rights Certificates alone will represent the Rights.
In the event that, at any time following the Distribution Date, (i) the
Company is the surviving corporation in a merger with an Acquiring Person and
its Common Stock is not changed or exchanged, or (ii) a Person becomes the
beneficial owner of shares of the Company's
<PAGE>
capital stock representing twenty-eight percent (28%) or more of the voting
power of all outstanding shares of capital stock of the Company, each holder of
a Right will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right. The
exercise price per Right is $300. Notwithstanding any of the foregoing,
following the occurrence of any of the events described in item (i) or (ii) in
this paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person will
be null and void. However, the Rights are not exercisable following the
occurrence of either of the events set forth in this paragraph until such time
as the Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $300 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an event
set forth in the preceding paragraph would entitle its holder to purchase $600
worth of Common Stock (or other consideration, as noted above) for $300.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in certain merger or other business combination
transactions (other than a merger described in the second preceding paragraph)
or (ii) fifty percent (50%) or more of the Company's assets or earning power is
sold or transferred, each holder of a Right (except Rights which previously have
been voided as set forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the Right.
The right to purchase Common Stock of the Company or common stock of an
Acquiring Person at a discount in the circumstances described in the preceding
paragraphs would not be exercisable if the Right holder has previously exercised
the right to purchase Preferred Stock.
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to
<PAGE>
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to holders
of the Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least one percent (1%) of the
Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise.
At any time until ten days after the Stock Acquisition Date, the Board
of Directors may redeem the Rights in whole, but not in part, at a price of $.05
per Right. The redemption period may be extended by the Company's Board of
Directors at any time prior to the expiration of such period. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem shall
require the concurrence of a majority of the Disinterested Directors. After the
redemption period has expired, the Company's right of redemption may be
reinstated if an Acquiring Person reduces his beneficial ownership to shares of
capital stock of the Company representing ten percent (10%) or less of the
voting power of all outstanding shares of capital stock of the Company in a
transaction or series of transactions not involving the Company. Immediately
upon the action of the Board of Directors ordering redemption of the Rights,
with, where required, the concurrence of a majority of the Disinterested
Directors, the Rights will terminate and the only right of the holders of Rights
will be to receive the $.05 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company arising from the Right itself, including,
without limitation, the right to vote or to receive dividends. While the
initial declaration and distribution of the Rights will not be taxable to the
shareholders or the Company, shareholders may, depending upon the circumstances,
recognize taxable income in the event that the Rights become exercisable for
Common Stock (or
<PAGE>
other consideration) of the Company or for common stock of an acquiring company
as set forth above.
Under the Rights Plan, the Board has broad amendatory powers. Other than
those provisions relating to the principal economic terms of the Rights, any of
the provisions of the Rights Agreement may be amended by the Board prior to the
Distribution Date. After the Distribution Date, amendments may not adversely
affect Right holders' interests but any amendment suspending the provisions of
the Rights Plan by excluding any acquirer from its benefits shall not be deemed
to adversely affect Rights' holders interests. Under certain circumstances, an
amendment would require the concurrence of the Disinterested Directors.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission. A copy is also available free of charge from the Company.
This summary description does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, which is incorporated herein by
reference.
<PAGE>
EXHIBIT 99.3
ARMSTRONG HOLDINGS, INC.
Rights Agreement
Dated: March 14, 2000
<PAGE>
<TABLE>
<CAPTION>
Section Page
- ------- --------
<S> <C>
1. Certain Definitions
2. Appointment of Rights Agent
3. Issue of Rights Certificates
4. Form of Rights Certificates
5. Countersignature and Registration
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates
7. Exercise of Rights; Purchase Price; Expiration Date of Rights
8. Cancellation and Destruction of Rights Certificates
9. Reservation and Availability of Capital Stock
10. Preferred Stock Record Date
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights
12. Certificate of Adjusted Purchase Price or Number of Shares
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
14. Fractional Rights and Fractional Shares
15. Rights of Action
16. Agreement of Rights Holders
17. Rights Certificate Holder Not Deemed a Stockholder
18. Concerning the Rights Agent
19. Merger or Consolidation or Change of Name of Rights Agent
20. Duties of Rights Agent
21. Change of Rights Agent
22. Issuance of New Rights Certificates
23. Redemption and Termination
24. Notice of Certain Events
25. Notices
26. Supplements and Amendments
27. Successors
28. Determinations and Actions by the Board of Directors, etc.
29. Benefits of this Agreement
30. Severability
31. Governing Law
32. Counterparts
33. Descriptive Headings
Exhibit A -- Form of Rights Certificate
Exhibit B -- Summary of Rights to Purchase Preferred Stock
</TABLE>
<PAGE>
ARMSTRONG HOLDINGS, INC.
Rights Agreement
THIS RIGHTS AGREEMENT (the "Agreement") is effective as of March 14, 2000,
between Armstrong Holdings, Inc., a Pennsylvania corporation (the "Company"),
and American Stock Transfer and Trust Company (the "Rights Agent"). This
Agreement is made in connection with an Agreement and Plan of Exchange dated
March 14, 2000 between the Company and Armstrong World Industries, Inc. ("AWI")
which contemplates a one-for-one exchange of shares of common stock of the
Company in return for all outstanding common stock of AWI. In connection with
that Agreement and Plan of Exchange, the Company establishes this present
Agreement, which has the same substantive terms as the current AWI rights
agreement. This will provide that when AWI's shareholders exchange their AWI
shares for Company shares, those shareholders will have the continued benefit of
the protection provided hereby.
Accordingly on this March 14, 2000 date (the "Rights Declaration Date"),
the Board of Directors of the Company authorized and declared a distribution of
one Right for each share of common stock, par value $1.00 per share, of the
Company (the "Common Stock") to be issued by the Company at the "Effective Time"
as defined in said Agreement and Plan of Exchange, and has authorized the
issuance at said Effective Time of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof) for each share of
Common Stock of the Company issued at that time or thereafter (whether
originally issued or delivered from the Company's treasury) and prior to the
Expiration Date. The date during which the Effective Time occurs is referred to
here as the "Record Date." Each "Right" initially represents the right to
purchase one one-hundredth of a share of Series One of Class A Preferred Stock
of the Company, having the rights, powers and preferences as set forth in the
Articles of Incorporation of the Company, upon the terms and subject to the
conditions hereinafter set forth.
In consideration of the premises and the mutual agreements herein set forth
and intending to be legally bound hereby, the parties agree as set forth herein.
<PAGE>
1. Certain Definitions.
-------------------
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of
outstanding shares of Voting Stock representing 20% or more of the Voting Power,
but shall not include the current sole shareholder of the Company prior to the
Effective Time, the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan.
(b) "Adjustment Shares" has the meaning ascribed in Section 11(a)(ii).
(c) "Affiliate" and "Associate" have the respective meanings ascribed to
such words in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended and in effect on the date of this
Agreement (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, 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, warrants or options, or otherwise; provided, however, that a Person
--------
shall not be deemed the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B) securities
issuable upon exercise of the Rights at any time prior to the occurrence of
a Triggering Event, or (C) securities issuable upon exercise of Rights from
and after the occurrence of a Triggering Event which Rights were acquired
by such Person or any of such Person's Affiliates or Associates prior to
the Distribution Date or
<PAGE>
pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) in connection with an adjustment made with
respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including pursuant
to any agreement, arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this subparagraph (ii) as
a result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(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 the proviso to subparagraph (ii) of this paragraph (c)) or
disposing of any voting securities of the Company.
(e) "Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
(f) "Close of business" on any given date means 5:00 P.M., New York City
time, on such date; provided, however, that if such date is not a Business Day,
--------
it shall mean 5:00 P.M., New York City time, on the next succeeding Business
Day.
<PAGE>
(g) "Common Stock" means the common stock, par value $1.00 per share, of
the Company, except that "Common Stock" when used with reference to any Person
other than the Company means the capital stock of such Person with the greatest
aggregate voting power, or the equity securities or other equity interest having
power to control or direct the management, of such Person.
(h) "common stock equivalents" has the meaning ascribed in Section
11(a)(iii).
(i) "current market price" has the meaning ascribed in Section 11(d)(i) and
(ii).
(j) "Current Value" has the meaning ascribed in Section 11(a)(iii).
(k) "Disinterested Director" means (i) any member of the Board of Directors
of the Company, while such Person is a member of the Board, who is not an
Acquiring Person or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate, and
was a member of the Board prior to the time that the Acquiring Person became an
Acquiring Person, or (ii) any Person who subsequently becomes a member of the
Board to fill a vacancy created by an increase in the size of the Board, while
such Person is a member of the Board, who is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election by the shareholders or election to the Board is
recommended or approved by a majority of the Disinterested Directors, or (iii)
any successor of a Disinterested Director who is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election by the shareholders or election to the Board is
recommended or approved by a majority of the Disinterested Directors.
(l) "Distribution Date" has the meaning ascribed in Section 3(a) hereof.
(m) "Expiration Date", has the meaning ascribed in Section 7(a) hereof.
<PAGE>
(n) "Final Expiration Date" means March 21, 2006 as prescribed in Section
7(a) hereof.
(o) "Person" means any individual, firm, corporation, partnership or other
entity.
(p) "Preferred Stock" means shares of Series One of Class A Preferred
Stock, no par value, of the Company.
(q) "Principal Party" has the meaning ascribed in Section 13(b) herein.
(r) "Purchase Price" has the meaning ascribed in Section 4(a) hereof and is
equal to the amount specified in Section 7(b) hereof.
(s) "Record Date" has the meaning ascribed in the beginning of this
Agreement.
(t) "Right" has the meaning ascribed in the beginning of this Agreement.
(u) "Rights Agent" has the meaning ascribed in the beginning of this
Agreement.
(v) "Rights Certificates" has the meaning ascribed in Section 3(a) hereof.
(w) "Rights Declaration Date" has the meaning ascribed in the beginning of
this Agreement.
(x) "Section 11(a)(ii) Event" means any event described in Section
11(a)(ii)(A) or (B) hereof.
(y) "Section 11(a)(ii) Trigger Date" has the meaning ascribed in Section
11(a)(iii).
(z) "Section 13 Event" means any event described in clauses (x), (y) or (z)
of Section 13(a) hereof.
<PAGE>
(aa) "Spread" has the meaning ascribed in Section 11(a)(iii)
(bb) "Stock Acquisition Date" means the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) under the Exchange Act) by the Company or
an Acquiring Person that an Acquiring Person has become such.
(cc) "Subsidiary" means, with reference to any Person, any corporation of
which an amount of voting securities sufficient to elect at least a majority of
the directors of such corporation is beneficially owned, directly or indirectly,
by such Person, or otherwise controlled by such Person.
(dd) "Substitution Period" has the meaning ascribed in Section 11(a)(iii).
(ee) "Trading Day" has the meaning ascribed in Section 11(d)(i).
(ff) "Triggering Event" means any Section 11(a)(ii) Event or Section 13(a)
Event.
(gg) "Voting Power" means, at any particular point in time, the total
number of votes that all holders of the then outstanding shares of capital stock
of the Company would be entitled to cast in an annual election of the directors
of the Company, voting together as a single class.
(hh) "Voting Stock" means Common Stock of the Company and all other equity
securities of the Company that would entitle the holders thereof to cast votes
in an election of directors of the Company.
2. Appointment of Rights Agent.
---------------------------
The Company appoints the Rights Agent to act as agent for the Company and
the holders of the Rights (who, in accordance with Section 3 hereof, shall prior
to the Distribution Date also be the holders of the Common Stock) in accordance
with the terms and conditions hereof, and
<PAGE>
the Rights Agent accepts such appointment. The Company may from time to time
appoint such Co-Rights Agents as it may deem necessary or desirable.
3. Issue of Rights Certificates
----------------------------
(a) Until the earlier of:
(i) the close of business on the tenth day (or such later date as
specified by the majority of the Disinterested Directors) after the
Stock Acquisition Date, or
(ii) the close of business on the tenth business day (or such later date
as specified by the majority of the Disinterested Directors) after
the date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan
of the Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published or sent or
given within the meaning of Rule 14e-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof,
such Person would be the Beneficial Owner of shares of Voting Stock
representing 28% or more of the Voting Power,
(the earlier of (i) and (ii) being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the Common Stock
registered in the names of the holders of the Common Stock (which certificates
for Common Stock shall be deemed also to be certificates for rights) and not by
separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock (including
a transfer to the Company). Unless otherwise delayed by an action of the Board
of Directors, 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 the Common Stock as of the close of business on the Distribution Date,
at the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to
<PAGE>
Section 11(p) hereof, at the time of distribution of the Rights Certificates,
the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) AWI previously provided a Summary of Rights, containing the substance
of Exhibit B (the "Summary of Rights") to its shareholders. As it deems
advisable, the Company may also provide such a Summary of Rights to its
shareholders. Until the Distribution Date, the Rights will be evidenced by
certificates for the Common Stock, and the registered holders of the Common
Stock shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration Date (as such term is defined
in Section 7 hereof), the transfer of any certificates representing shares of
Common Stock in respect of which Rights have been issued shall also constitute
the transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock which
are issued on and after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing such shares
of Common Stock shall also be deemed to be certificates for Rights, and shall
bear the following legend:
"This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between
Armstrong Holdings, Inc. (the "Company") and the Rights Agent under
that Agreement effective as of March 14, 2000 (the "Rights Agreement")
the terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal offices of the Company.
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 Company will mail or
cause to be mailed to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person or any
Affiliates or Associates thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void. Rights
will expire March 21, 2006
<PAGE>
unless earlier redeemed or otherwise extended as described in the
Rights Agreement."
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
4. Form of Rights Certificates.
---------------------------
(a) The Rights Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall each be substantially in
the form set forth in Exhibit A hereto and may have such marks of identification
or designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof to purchase such
number of one one-hundredths of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per one one-
hundredth of a share being hereinafter called the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued 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
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
<PAGE>
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 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 avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent feasible)
the following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified
in Section 7(e) of such Agreement."
5. Countersignature and Registration.
---------------------------------
(a) The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President, any Vice President or its Treasurer,
either manually or by facsimile signature, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this 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 or offices designated as the appropriate place
for surrender of Rights Certificates
<PAGE>
upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates, the Certificate Number
and the date of each of the Rights Certificates.
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
--------------------------------------------------------------------
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
- --------------------------------------------------------
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the close of business on the Distribution Date, and at
or prior to the close of business on the Expiration Date, any Rights Certificate
or Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates entitling the registered holder to purchase a
like number of one-hundredths of a share of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
<PAGE>
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the back thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one-hundredths of a share of Preferred Stock (or other securities,
cash or other assets, as the case may be) as to which such surrendered Rights
are then exercisable, at or prior to the earlier of (i) the close of business on
March 21, 2006 unless otherwise extended (the "Final Expiration Date") or (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof (the
earlier of (i) and (ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $300, and shall be
subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in accordance with paragraph (c) below (the
"Purchase Price").
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-hundredth of a share of Preferred
<PAGE>
Stock (or other shares, securities, cash or other assets, as the case may be) to
be purchased as set forth below and an amount equal to any applicable transfer
tax, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly
(i) (A) requisition from any transfer agent of the shares of
Preferred Stock
or
make available, if the Rights Agent is the transfer agent
for such shares, certificates for the total number of one
one-hundredths of a share of Preferred Stock to be
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 will direct the depositary agent to
comply with such request,
(ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may
be designated by such holder, and
<PAGE>
(iv) after receipt thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) may be made (x) in cash or by certified bank check or
money order payable to the order of the Company, or (y) if the Company shall in
its sole discretion so consent, by delivery of a certificate or certificates
(with appropriate stock powers executed in blank attached thereto) evidencing a
number of shares of Common Stock equal to the then Purchase Price divided by the
closing price (as determined pursuant to Section 11(d) hereof) per share of
Common Stock on the Trading Date immediately preceding the date of such
exercise. In the event that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by:
(i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or
<PAGE>
(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
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 Rights Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have:
(i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and
<PAGE>
(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.
8. Cancellation and Destruction of Rights Certificates.
---------------------------------------------------
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury) the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) that, as provided in this Agreement, including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock (and, following the occurrence
of a Triggering Event, Common Stock and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
<PAGE>
(c) 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 law following the Distribution Date, as the
case may be, a registration statement under the Securities Act of 1933 (the
"Act") with respect to the securities purchasable upon exercise of the Rights on
an appropriate form, (ii) cause such registration statement to become effective
as soon as practicable after such filing, and (iii) cause such registration
statement to remain 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 or (B) the date of the
expiration of the Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all one one-hundredths of a share of Preferred
Stock (and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and non-
assessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect
<PAGE>
of the issuance or delivery of the Rights Certificates and of any certificates
for a number of one one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a number of one one-hundredths
of a share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) in respect of a name other than that of, the registered holder of
the Rights Certificates evidencing Rights surrendered for exercise, or to issue
or deliver any certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be) in
a name other than that of the registered holder upon the exercise of any Rights
until such tax shall have been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
10. Preferred Stock Record Date.
---------------------------
Each person in whose name any certificate for a number of one one-
hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of such fractional
shares of Preferred Stock (or Common Stock and/or other securities, as the case
may be) represented thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
- --------
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or otherwise) on, and
such certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a stockholder of the Company with respect to shares for
<PAGE>
which the Rights shall be exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
--------------------------------------------------------------------
Rights.
- ------
The Purchase Price, the number and kind of shares covered by each Right and
the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at the time of the record
date for such dividend or of the 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 receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs
which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
<PAGE>
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, shall merge into the
Company or otherwise combine with the Company and the
Company shall be the continuing or surviving corporation of
such merger or combination and the Common Stock of the
Company shall remain outstanding and unchanged, or
(B) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity appointed
or established by the Company for or pursuant to the terms
of any such plan), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Declaration
Date, become the Beneficial Owner of shares of Voting Stock
representing 28% or more of the Voting Power, other than
pursuant to any transaction set forth in Section 13(a)
hereof,
then, promptly following five (5) days after the date of the
occurrence of an event described in Section 11(a)(ii)(B) hereof and
promptly following the occurrence of an event described in Section
11(a)(ii)(A) hereof, proper provision shall be made so that each
holder of a Right (except as provided below and in Section 7(e)
hereof) shall thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of one one-hundredths of
a share of Preferred Stock, such number of shares of Common Stock of
the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one one-hundredths
of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the "Purchase Price"
for each Right and for all purposes of this
<PAGE>
Agreement) by 50% of the current market price (determined pursuant to
Section 11(d) hereof) per share of Common Stock on the date of such
first occurrence (such number of shares hereinafter referred to as the
"Adjustment Shares").
(iii) If the number of shares of Common Stock which are authorized by
the Company's Articles of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section 11(a), the Company 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 (such excess, the "Spread"), and (B) with respect to each Right, 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 shares of Common Stock (such shares of preferred stock,
"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 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; provided, however, if the Company shall not have
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made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first occurrence of
a Section 11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is likely
that sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the
<PAGE>
thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval for
the authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence. 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 (as determined pursuant to Section
11(d) hereof) per share of the Common Stock on the Section 11(a)(ii)
Trigger Date and the value of any "common stock equivalent" shall be deemed
to have the same value as the Common Stock on such date.
(b) If the Company shall set a record date for the issuance of rights,
options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("equivalent
preferred stock")) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be
<PAGE>
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and
the denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares of
Preferred Stock and/or equivalent preferred stock to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) If the Company shall set a record date for a distribution to all
holders of Preferred Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to a
share of Preferred Stock, and the denominator of which shall be such current
market price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event
<PAGE>
that such distribution is not so made, the Purchase Price shall be adjusted to
be the Purchase Price which would have been in effect if such record date had
not been fixed.
(d) For the purpose of any computation hereunder:
(i) other than computations made pursuant to Section 11(a)(iii)
hereof, the "current market price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the thirty (30) consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; and for
purposes of computations made pursuant to Section 11(a)(iii) hereof, the
"current market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the current
--------
market price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set
forth above, after the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination or reclassification,
then, and in each such case, the "current market price" shall be properly
adjusted to take into account ex-dividend trading. The closing price for
each day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the New York Stock
Exchange, 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
<PAGE>
and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be
used. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Common Stock are listed
or admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share
shall mean the fair value per share as determined in good faith by the
Board 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 above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the current
market price per share of 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 clause (i) of this Section 11(d),
the "current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date
of this Agreement) multiplied by the current market price per share of the
Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "current market price" per share of
the Preferred Stock shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
<PAGE>
conclusive for all purposes. For 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 one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
- --------
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment or
(ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b)
<PAGE>
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) obtained by (i) multiplying (x) the
number of one one-hundredths of a share covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights in lieu of any adjustment in the
number of one one-hundredths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one ten-thousandth) obtained by dividing the Purchase Price in effect
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 Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and
<PAGE>
may bear, at the option of the Company, the adjusted Purchase Price) and shall
be registered in the names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of one one-hundredths of a share which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated value if any, of the number of one one-
hundredths of a share of Preferred Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of one one-hundredths of a share of
Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the number
of one one-hundredths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-hundredths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
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however, that the Company shall deliver to such holder a due bill 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 shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly
<PAGE>
required by this Section 11, as and to the extent that in their good faith
judgment the Board of Directors of the Company shall determine to be advisable
in order that any
(i) consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at
less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
shares of Preferred Stock,
(iv) stock dividends, or
(v) issuance of rights, options or warrants referred to in this
Section 11 hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such 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 which complies with Section 11(o) hereof),
(ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction or a series of related transactions, assets
or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person
or Persons (other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o) hereof),
if (x) at the time of or immediately after such consolidation, merger or sale
there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights, or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
shareholders of the Person who constitutes the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
<PAGE>
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 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
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Declaration Date and
prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or
(iii) combine the outstanding shares of Common Stock into a smaller
number of shares,
the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction, the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.
12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 or Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c)
provide a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock) in accordance with Section 25 hereof. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained.
<PAGE>
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
--------------------------------------------------------------------
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person or Persons (other than the Company or any Subsidiary of
the Company in one or more transactions each of which complies with Section
11(o) hereof), then, and in each such case, proper provision shall be made so
that: (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and freely
tradable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one one-hundredths
of a share of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event, multiplying
the number of such one one-hundredths of a share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and (2) 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 50% of the current
market price
<PAGE>
(determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock
of such Principal Party on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall 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 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section 13 Event.
(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), 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 or earning power transferred pursuant to
such transaction or transactions; provided, however, that in any such case,
--------
(1) if the Common Stock of such Person is not at such time and has not been
continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person, and (2) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever
<PAGE>
of such Persons is the issuer of the Common Stock having the greatest
aggregate market value.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities 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 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).
14. Fractional Rights and Fractional Shares
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered
<PAGE>
holders of the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price of the Rights for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
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 NASDAQ or such other system then in use, or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value
of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a
<PAGE>
share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall not
be required to issue fractions of shares of Common Stock upon exercise of the
Rights or to distribute certificates which evidence fractional shares of Common
Stock. In lieu of fractional shares of Common Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one (1) share of Common Stock. For purposes of this Section
14(c), the current market value of one share of Common Stock shall be the
closing price of one share of Common Stock (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the 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.
15. Rights of Action.
----------------
All rights of action in respect of this Agreement are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
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 Rights Certificate in the manner provided in such Rights
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 shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
<PAGE>
16. Agreement of Rights Holders.
---------------------------
Every holder of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the earlier of the Distribution Date and the Expiration Date,
the Rights will be transferable only in connection with the transfer of Common
Stock;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the Person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
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, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of 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.
<PAGE>
17. Rights Certificate Holder Not Deemed a Stockholder.
--------------------------------------------------
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of one
one-hundredths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 24 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.
18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for Preferred 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
<PAGE>
to be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business 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 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
<PAGE>
20. Duties of Rights Agent.
----------------------
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the President, any Vice President, the Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent, and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own negligence,
bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its
<PAGE>
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 hereof or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock or Preferred Stock to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any shares of Common Stock or Preferred
Stock will, when so issued, be validly authorized and issued, fully paid and
non-assessable.
(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, any
Assistant Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with 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.
<PAGE>
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was exercised in the
--------
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
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 of transfer without first consulting with the Company.
21. Change of Rights Agent.
----------------------
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon thirty (30) days' notice in writing
mailed to the Company, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon thirty (30) days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights 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 thirty
(30) days after giving notice of such removal or after it has been notified in
writing of such resignation or
<PAGE>
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of the State of New York (or of
any other state of the United States so long as such corporation is authorized
to do business as a banking institution in the State of New York), in good
standing, having a principal office in the State of New York, 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 $10,000,000 or (b) an Affiliate controlled by a corporation
described in clause (a). After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
22. Issuance of New Rights Certificates.
-----------------------------------
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date
<PAGE>
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 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 Rights Certificates representing
the appropriate number of Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
--------
that (i) no such Rights Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
23. Redemption and Termination.
--------------------------
(a) The Board of Directors of the Company may, at its option, at any time
prior to 5:00 P.M., New York City time, on the earlier of (i) the close of
business on the tenth day following the Stock Acquisition Date or (ii) the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.05 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); provided, however, if the Board of
--------
Directors of the Company authorizes redemption of the Rights in either of the
circumstances set forth in clauses (i) and (ii) below, then there must be
Disinterested Directors then in office and such authorization shall require the
concurrence of a majority of such Disinterested Directors: (i) such
authorization occurs on or after the time a Person becomes an Acquiring Person,
or (ii) such authorization occurs on or after the date of a change (resulting
from a proxy or consent solicitation) in a majority of the directors in office
at the commencement of such solicitation if any Person who is a participant in
such solicitation has stated (or, if upon the commencement of such solicitation,
a majority of the Board of Directors of the Company has determined in good
faith) that such Person or any of its Affiliates or Associates intends to take,
or may consider taking, any action which would result in such Person becoming an
Acquiring Person or which would cause the occurrence of a Triggering Event,
unless,
<PAGE>
concurrent with such solicitation, such Person or one or more of its
Affiliates or Associates is making a cash tender offer pursuant to a Schedule
14D-1 (or any successor form) filed with the Securities and Exchange Commission
for all outstanding shares of Common Stock not beneficially owned by such Person
or by its Affiliates or Associates; provided further, however, that if,
----------------
following the occurrence of a Stock Acquisition Date and following the
expiration of the right of redemption hereunder but prior to any Triggering
Event, (i) a Person who is an Acquiring Person shall have transferred or
otherwise disposed of a number of shares of Common Stock in one transaction, or
series of transactions, not directly or indirectly involving the Company or any
of its Subsidiaries, which did not result in the occurrence of a Triggering
Event such that such Person is not thereafter a Beneficial Owner of shares of
Voting Stock representing more than 10% of the Voting Power, and (ii) there are
no other Persons, immediately following the occurrence of the event described in
clause (i), who are Acquiring Persons, then the right of redemption shall be
reinstated and thereafter be subject to the provisions of this Section 23.
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event
until such time as the Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, evidence of which shall have been filed
with the Rights Agent and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
<PAGE>
24. Notice of Certain Events.
------------------------
(a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
Preferred Stock or to make any other distribution to the holders of Preferred
Stock (other than a regular quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other securities, rights
or options, or (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock), or (iv) to effect any consolidation or merger into
or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions, of
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 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, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of the shares of Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action and, in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Preferred
Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) or Section 13 Event shall occur, then, in
any such case, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 25 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights
<PAGE>
under Section 11(a)(ii) or Section 13 hereof, and (ii) all references in the
preceding paragraph to Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.
25. Notices.
-------
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Armstrong Holdings, Inc.
P. O. Box 3001
Lancaster, PA 17604
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
American Stock Transfer & Trust Co.
40 Wall Street
New York, NY 10005
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company, or by any other means
which the Secretary of the Company determines to be reasonable and appropriate
under the circumstances.
26. Supplements and Amendments.
--------------------------
Prior to the Distribution Date and subject to the penultimate sentence of
this Section 26, the Company may, and the Rights Agent shall if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing
<PAGE>
shares of Common Stock. From and after the Distribution Date, and subject to the
penultimate sentence of this Section 26, the Company may, and the Rights Agent
shall if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person), (iv) to suspend the
effectiveness of Section 7(e) hereof (which suspension, following the first
occurrence of an event set forth in clauses (i) and (ii) of the first proviso to
Section 23(a) hereof, shall be effective only if there are Disinterested
Directors and shall require the concurrence of a majority of such Disinterested
Directors), or (v) to shorten or lengthen any time period hereunder (which
lengthening or shortening, following the first occurrence of an event set forth
in clauses (i) and (ii) of the first proviso to Section 23(a) hereof, shall be
effective only if there are Disinterested Directors and shall require the
concurrence of a majority of such Disinterested Directors); provided, this
--------
Agreement may not be supplemented or amended to lengthen, pursuant to clause (v)
of this sentence, (A) a time period relating to when the Rights may be redeemed
at such time as the Rights are not then redeemable or (B) any other time period
unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of Rights. 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.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which (i) changes the Redemption Price,
the Purchase Price or the number of one one-hundredths of a share of Preferred
Stock for which a Right is exercisable or (ii) shortens the Final Expiration
Date. Prior to the Distribution Date, the interests of the holders of Rights
shall be deemed coincident with the interests of the holders of Common Stock.
<PAGE>
27. Successors.
----------
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
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 or of any other class of capital stock outstanding at any
particular time, including for purposes of determining the particular percentage
of outstanding shares of Common Stock or of Voting Power 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 Disinterested Directors) shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board (with, where specifically provided for herein,
the concurrence of the Disinterested 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 a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
(with, where specifically provided for herein, the concurrence of the
Disinterested Directors) in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board or the Disinterested Directors to
any liability to the holders of the Rights.
29. Benefits of this Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock) any legal or equitable right, remedy or claim under this
Agreement, but this Agreement shall be for the sole and exclusive
<PAGE>
benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock).
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 day following the date
of such determination by the Board of Directors.
31. Governing Law.
-------------
This Agreement, each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of the Commonwealth of
Pennsylvania and for all purposes shall be governed by and construed in
accordance with the laws of such Commonwealth applicable to contracts made and
to be performed entirely within such Commonwealth except for Sections 18, 19, 20
and 21 hereof, which for all purposes shall be governed by and construed in
accordance with the laws of the State of New York.
32. Counterparts.
------------
This Agreement may be executed in any number of counterparts and each shall
be deemed an original, and all together constitute one and the same instrument.
33. Descriptive Headings.
--------------------
Descriptive headings of the Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or construction of
the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Attest: ARMSTRONG HOLDINGS, INC.
By /s/ Walter T. Gangl By /s/ Deborah K. Owen
--------------------- ----------------------------
Name: Walter T. Gangl Name: Deborah K. Owen
Title: Attorney Title: Senior Vice President,
Secretary and General Counsel
Attest: American Stock Transfer & Trust Co.
By /s/ By /s/
------------------------ -----------------------------
<PAGE>
EXHIBIT A
[Form of Rights Certificate]
----------------------------
Certificate No. R-Rights
------------------------
NOT EXERCISABLE AFTER MARCH 21, 2006 (UNLESS OTHERWISE EXTENDED) OR EARLIER
IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.05 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.]/*/
Rights Certificate
ARMSTRONG HOLDINGS, 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, effective as of March 14, 2000 (the "Rights
Agreement"), between Armstrong Holdings, Inc., a Pennsylvania corporation (the
"Company"), and American Stock Transfer & Trust Company, (the "Rights Agent"),
to purchase from the Company at any time prior to 5:00 PM (New York City time)
on March 21, 2006 (unless otherwise extended) at the office or offices of the
Rights Agent designated for such purpose, or its successors as Rights Agent, one
one-hundredth of a fully paid, non-assessable share of Series One of Class A
Preferred Stock (the "Preferred Stock") of the Company, at a purchase price of
$300 per one one-hundredth of a share (the "Purchase Price"), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate duly executed. The Purchase Price shall be paid in cash
or, if the Company shall in its sole discretion so consent, in shares of Common
Stock of the Company having an equivalent value. The number of Rights evidenced
by this Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price
- ----------------
* The portion of the legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence.
<PAGE>
per share set forth above, are the number and Purchase Price as of the date of
the Share Exchange by the Company under an Agreement and Plan of Exchange dated
March 14, 2000, based on the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void, and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Company and are
also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-hundredths of a share of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.05 per Right at any time prior to the earlier of the close of
business on (i) the tenth day following the Stock Acquisition Date (as such
number of days may be extended), and (ii) the Final Expiration Date. Under
certain circumstances set forth in the Rights Agreement, the decision to redeem
shall require the concurrence of a majority of the Disinterested Directors.
Thereafter, the Company's right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to shares of Voting Stock representing
10% or less of the Voting Power in a transaction or series of transactions not
involving the Company.
<PAGE>
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ,
ATTEST: Armstrong Holdings, Inc.
By
- -------------------------------- ----------------------------
Title: Title:
Countersigned:
American Stock Transfer &
Trust Company
By
----------------------------
Authorized Signature
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by the
Rights Certificate.)
To: ARMSTRONG HOLDINGS, INC.
The undersigned hereby irrevocably elects to exercise
--------------------
Rights represented by this Rights Certificate to purchase the shares of Series
One of Class A Preferred Stock issuable upon the exercise of the Rights (or such
other securities of the Company or of any other person which may be issuable
upon the exercise of the Rights) and requests that certificates for such shares
be issued in the name of and delivered to:
Please insert social security or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated: ___________________ __________________________
Signature
Signature Guaranteed:
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _______________
---------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
[Back of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder desires to transfer
the Rights Certificate.)
FOR VALUE RECEIVED ______________________________________________
hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________
Attorney, to transfer the within
Rights Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _________________ ________________________________
Signature
Signature Guaranteed:
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) This Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _________________ __________________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
