SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Commission file number 1-5480
_______________
TEXTRON INC.
(Exact name of registrant as specified in its charter)
_______________
Delaware 05-0315468
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
40 Westminster Street, Providence, RI 02903
401-421-2800
(Address and telephone number of principal executive offices)
_______________
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Common stock outstanding at October 28, 1995 - 84,821,000 shares
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
TEXTRON INC.
Consolidated Statement of Income (unaudited)
(Dollars in millions except per share amounts)
<CAPTION>
Three months ended Nine months ended
September 30, October 1, September 30, October 1,
1995 1994 1995 1994
Revenues
<S> <C> <C> <C> <C>
Sales $ 1,558 $ 1,621 $ 4,763 $ 5,084
Interest, discount and service
charges 397 332 1,165 981
Insurance premiums 357 315 1,036 908
Investment income (including net
realized investment gains) 113 113 350 333
Total revenues 2,425 2,381 7,314 7,306
Costs and expenses
Cost of sales 1,276 1,330 3,905 4,241
Selling and administrative 384 376 1,137 1,115
Interest 198 168 609 489
Provision for losses on collection
of finance receivables, less
recoveries 42 37 120 117
Insurance benefits and increase in
policy liabilities 283 256 844 724
Amortization of insurance policy
acquisition costs 34 29 101 81
Total costs and expenses 2,217 2,196 6,716 6,767
Income before income taxes 208 185 598 539
Income taxes (82) (71) (236) (207)
Elimination of minority interest in
net income of Paul Revere (4) (3) (10) (11)
Net income $ 122 $ 111 $ 352 $ 321
Net income per common share $ 1.41 $ 1.23 $ 4.05 $ 3.54
Average shares outstanding* 86,692,000 90,577,000 86,857,000 90,567,000
Dividends per share:
$2.08 Preferred stock, Series A $ .52 $ .52 $1.56 $1.56
$1.40 Preferred stock, Series B $ .35 $ .35 $1.05 $1.05
Common stock $ .39 $ .35 $1.17 $1.05
* Average shares outstanding assume full conversion of preferred stock and
exercise of options.
See notes to consolidated financial statements.
</TABLE>
Item 1. FINANCIAL STATEMENTS (Continued)
<TABLE>
TEXTRON INC.
Consolidated Balance Sheet (unaudited)
(In millions)
<CAPTION>
September 30, December 31,
1995 1994
Assets
<S> <C> <C>
Cash $ 78 $ 49
Investments 5,626 5,294
Receivables - net:
Finance 9,438 8,583
Commercial and U.S. Government 787 702
10,225 9,285
Inventories 1,244 1,211
Property, plant and equipment, less accumulated
depreciation of $1,646 and $1,450 1,288 1,253
Insurance policy acquisition costs 998 911
Goodwill, less accumulated amortization of $424 and
$381 1,480 1,512
Other assets (including net prepaid income taxes) 1,773 1,410
Total assets $ 22,712 $ 20,925
Liabilities and shareholders' equity
Liabilities
Accounts payable $ 651 $ 619
Accrued postretirement benefits other than pensions 945 951
Other accrued liabilities (including income taxes) 2,534 2,424
Insurance reserves and claims 5,151 4,685
Debt:
Textron Parent Company Borrowing Group 1,669 1,582
Finance and insurance subsidiaries 8,536 7,782
10,205 9,364
Total liabilities 19,486 18,043
Shareholders' equity
Capital stock:
Preferred stock 15 16
Common stock* 12 12
Capital surplus 738 702
Retained earnings 2,771 2,518
Other 42 (108)
3,578 3,140
Less cost of treasury shares 352 258
Total shareholders' equity 3,226 2,882
Total liabilities and shareholders' equity $ 22,712 $ 20,925
*Common shares outstanding 84,761,000 85,497,000
See notes to consolidated financial statements.
</TABLE>
Item 1. FINANCIAL STATEMENTS (Continued)
<TABLE>
TEXTRON INC.
Consolidated Statement of Cash Flows (unaudited)
(In millions)
<CAPTION>
Nine Months Ended
September 30, October 1,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 352 $ 321
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 308 303
Provision for losses on receivables 151 144
Increase in insurance policy liabilities 409 305
Deferred income taxes 61 39
Changes in assets and liabilities excluding those related to
acquisitions and divestitures:
Increase in commercial and U.S. Government receivables (89) (173)
Decrease (increase) in inventories (32) 27
Additions to insurance policy acquisition costs (196) (166)
Decrease (increase) in other assets 17 (43)
Increase in accounts payable 33 12
Increase (decrease) in accrued liabilities (101) 95
Increase in unearned insurance premiums and reserves for
insurance losses and adjustment expenses 43 18
Other - net (2) 7
Net cash provided by operating activities 954 889
Cash flows from investing activities:
Purchases of investments (1,258) (1,696)
Proceeds from disposition of securities:
Sales of:
Securities available for sale 627 737
Securities held to maturity 9 10
Maturities and calls 167 490
Proceeds from disposition of other investments 29 53
Finance receivables:
Originated or purchased (4,703) (4,246)
Repaid or sold 4,173 3,635
Cash used in acquisition of business (40) -
Net proceeds from sale of business - 118
Capital expenditures (197) (198)
Other investing activities - net 15 43
Net cash used by investing activities (1,178) (1,054)
Cash flows from financing activities:
Decrease in short-term debt (46) (33)
Proceeds from issuance of long-term debt 2,347 1,854
Principal payments on long-term debt (1,927) (1,619)
Interest-sensitive insurance products:
Receipts 231 198
Return of account balances (193) (92)
Proceeds from exercise of stock options 32 11
Purchases of Textron common stock (93) -
Dividends paid (100) (94)
Net cash provided by financing activities 251 225
Effect of foreign exchange rate changes on cash 2 1
Net increase in cash 29 61
Cash at beginning of period 49 26
Cash at end of period $ 78 $ 87
See notes to consolidated financial statements.
</TABLE>
Item 1. FINANCIAL STATEMENTS (Continued)
TEXTRON INC.
Notes to Consolidated Financial Statements (unaudited)
Note 1: Summary of significant accounting policies
The financial statements should be read in conjunction with the
financial statements included in Textron's Form 10-K for the year
ended December 31, 1994. The financial statements reflect all
adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation
of Textron's consolidated financial position at September 30, 1995 and
December 31, 1994 and its consolidated results of operations for each
of the respective three and nine month periods ended September 30,
1995 and October 1, 1994 and consolidated cash flows for each of the
nine month periods ended September 30, 1995 and October 1, 1994. The
results of operations for the nine months ended September 30, 1995 are
not necessarily indicative of results for the full year.
Note 2: Acquisition
In October 1995, Textron acquired Elco Industries, Inc., a
manufacturer and distributor of fastening products and systems, for an
aggregate cost of approximately $230 million ($180 million paid
in cash, plus debt of Elco and expenses).
Note 3: Investments
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(In millions)
<C> <C> <C>
Debt and marketable equity securities
available for sale, at estimated fair value
(amortized cost: $2,512 and $2,610) $2,640 $2,511
Debt securities to be held to maturity, at amortized
cost (estimated fair value: $2,758 and $2,294) 2,606 2,470
Other 380 313
$5,626 $5,294
</TABLE>
In the third quarter of 1995, an investment in the held to maturity
category with an amortized cost of $8 million was sold due to a
significant deterioration in the issuer's creditworthiness.
Note 4: Finance receivables - net
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(In millions)
<S> <C> <C>
Finance receivables $9,971 $9,084
Less allowance for credit losses 272 250
Less finance-related insurance reserves and
claims 261 251
$9,438 $8,583
</TABLE>
Note 5: Inventories
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(In millions)
<S> <C> <C>
Finished goods $ 370 $288
Work in process 901 948
Raw materials 192 212
1,463 1,448
Less progress and advance payments 219 237
$1,244 $1,211
</TABLE>
Note 6: Insurance reserves and claims
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(In millions)
<S> <C> <C>
Paul Revere:
Future policy benefits $1,289 $1,193
Unpaid claims and claim expenses 1,794 1,576
Other policyholder funds 1,833 1,714
Other 235 202
$5,151 $4,685
</TABLE>
Note 7: Contingencies
There are pending or threatened against Textron and its subsidiaries
lawsuits and other proceedings, some of which allege violations of
federal government procurement regulations, involve environmental
matters, or are or purport to be class actions. Among these suits and
proceedings are some which seek compensatory, treble or punitive
damages in substantial amounts; fines, penalties or restitution; the
cleanup of allegedly hazardous wastes; or, under federal government
procurement regulations, could result in suspension or debarment of
Textron or its subsidiaries from U.S. Government contracting for a
period of time. These suits and proceedings are being defended or
contested on behalf of Textron and its subsidiaries. On the basis of
information presently available, Textron believes that any such
liability or the impact of the application of relevant government
regulations would not have a material effect on Textron's net income
or financial condition.
Note 8: Financial information by borrowing group
Textron consists of two borrowing groups - the Textron Parent Company
Borrowing Group and its finance and insurance subsidiaries.
The Textron Parent Company Borrowing Group is comprised of all
entities of Textron other than its finance and insurance subsidiaries.
The financial statements of this group as set forth below reflect
Textron's investments in its finance and insurance subsidiaries on the
equity basis. Its sources of cash flow include dividends paid by the
finance and insurance subsidiaries, as well as cash generated by other
operating units.
The finance and insurance subsidiaries finance their respective
operations by borrowing from their own group of external creditors.
Item 1 FINANCIAL STATEMENTS (Continued)
Note 8: Financial information by borrowing group (continued)
<TABLE>
TEXTRON PARENT COMPANY BORROWING GROUP
(unaudited) (In millions)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, October 1, September 30, October 1,
Statement of Income 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues $1,558 $1,622 $4,763 $5,086
Costs and expenses
Cost of sales 1,276 1,330 3,905 4,241
Selling and administrative 159 169 474 500
Interest 46 52 148 160
Total costs and expenses 1,481 1,551 4,527 4,901
77 71 236 185
Pretax income of finance and insurance
subsidiaries 131 114 362 354
Income before income taxes 208 185 598 539
Income taxes (82) (71) (236) (207)
Elimination of minority interest in net
income of Paul Revere (4) (3) (10) (11)
Net income $ 122 $ 111 $ 352 $ 321
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
Balance Sheet 1995 1994
<S> <C> <C>
Assets
Cash $ 57 $ 20
Receivables - net 787 702
Inventories 1,244 1,211
Investments in finance and insurance subsidiaries 2,506 2,246
Property, plant and equipment - net 1,181 1,146
Goodwill, less accumulated amortization of $222 and $194 1,207 1,231
Other assets (including net prepaid income taxes) 1,200 1,262
Total assets $8,182 $7,818
Liabilities and shareholders' equity
Accounts payable and accrued liabilities (including income taxes) $3,287 $3,354
Debt 1,669 1,582
Shareholders' equity 3,226 2,882
Total liabilities and shareholders' equity $8,182 $7,818
</TABLE>
Item 1. FINANCIAL STATEMENTS (Continued)
Note 8: Financial information by borrowing group (continued)
<TABLE>
TEXTRON PARENT COMPANY BORROWING GROUP (continued)
(unaudited) (In millions)
<CAPTION>
Nine Months Ended
September 30, October 1,
Statement of Cash Flows 1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $352 $321
Adjustments to reconcile net income to net cash provided by operating
activities:
Undistributed earnings of finance and insurance subsidiaries (117) (121)
Depreciation and amortization 165 182
Deferred income taxes 24 8
Changes in assets and liabilities excluding those
related to acquisitions and divestitures:
Increase in receivables (89) (156)
Decrease (increase) in inventories (32) 27
Decrease (increase) in other assets 41 (82)
Increase (decrease) in accounts payable and accrued liabilities (64) 148
Other - net 46 30
Net cash provided by operating activities 326 357
Cash flows from investing activities:
Net proceeds from sale of business - 118
Capital expenditures (180) (176)
Other investing activities - net (13) 43
Net cash used by investing activities (193) (15)
Cash flows from financing activities:
Decrease in short-term debt (1) (31)
Proceeds from issuance of long-term debt 810 560
Principal payments on long-term debt (722) (714)
Proceeds from exercise of stock options 32 11
Purchases of Textron common stock (93) -
Purchases of Textron common stock from Paul Revere (22) (25)
Dividends paid (100) (94)
Net cash used by financing activities (96) (293)
Effect of foreign exchange rates on cash - 2
Net increase in cash 37 51
Cash at beginning of period 20 12
Cash at end of period $ 57 $ 63
</TABLE>
Item 1 FINANCIAL STATEMENTS (Continued)
Note 8: Financial information by borrowing group (continued)
<TABLE>
FINANCE AND INSURANCE SUBSIDIARIES
(unaudited) (In millions)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
Statement of Income 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues
Interest, discount and service charges $ 397 $ 332 $1,165 $ 981
Credit life, credit disability and
casualty insurance premiums 87 75 250 208
Non-cancellable disability income, life
and group insurance premiums 270 240 786 700
Investment income (including net
realized investment gains) 113 112 350 331
Total revenues 867 759 2,551 2,220
Costs and expenses
Selling and administrative 225 207 663 615
Interest 152 116 461 329
Provision for losses on collection of
finance receivables, less recoveries 42 37 120 117
Credit life, credit disability and
casualty insurance losses and
adjustment expenses, less recoveries 39 33 109 95
Death and other insurance benefits 112 114 355 332
Increase in insurance policy liabilities 132 109 380 297
Amortization of insurance policy
acquisition costs 34 29 101 81
Total costs and expenses 736 645 2,189 1,866
Income before income taxes 131 114 362 354
Income taxes (51) (44) (141) (138)
Net income 80 70 221 216
Minority interest in net income (4) (3) (10) (11)
Textron's equity in net income $ 76 $ 67 $ 211 $ 205
</TABLE>
Item 1. FINANCIAL STATEMENTS (Continued)
Note 8: Financial information by borrowing group (continued)
<TABLE>
FINANCE AND INSURANCE SUBSIDIARIES
(unaudited) (In millions)
<CAPTION>
September 30, December 31,
Balance Sheet 1995 1994
<S> <C> <C>
Assets
Cash $ 21 $ 29
Investments 5,589* 5,265
Finance receivables - net 9,472 8,622
Property, plant and equipment - net 107 107
Insurance policy acquisition costs 998 911
Goodwill, less accumulated amortization of $202 and $187 273 281
Other assets 1,206* 633
Total assets $17,666 $15,848
Liabilities and equity
Accounts payable and accrued liabilities (including income
taxes) $1,260 $ 953
Insurance reserves and claims 5,151 4,685
Debt 8,536 7,782
Equity:
Textron 2,506 2,246
Minority interest in Paul Revere 213 182
Total liabilities and equity $17,666 $15,848
* In the third quarter of 1995, Paul Revere transferred $561 million of
investments into a trust fund in connection with a reinsurance transaction.
</TABLE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<TABLE>
TEXTRON INC.
Revenues and Income by Business Segment
(In millions)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, October 1, September 30, October 1,
1995 1994 1995 1994
REVENUES
<S> <C> <C> <C> <C>
MANUFACTURING:
Aircraft $ 609 $ 549 $1,786 $1,589
Automotive 349 341 1,171 1,152
Industrial 324 339 1,026 1,078
Systems and Components 276 392 780 1,265
1,558 1,621 4,763 5,084
FINANCIAL SERVICES:
Finance 499 421 1,461 1,227
Paul Revere 368 338 1,090 993
867 759 2,551 2,220
Total revenues $2,425 $2,380 $7,314 $7,304
INCOME
MANUFACTURING:
Aircraft $ 66 $ 56 $ 171 $ 131
Automotive 26 23 99 101
Industrial 36 37 120 113
Systems and Components 24 30 66 56
152 146 456 401
FINANCIAL SERVICES:
Finance 96 86 272 247
Paul Revere 35 28 90 107
131 114 362 354
Segment operating income 283 260 818 755
Corporate expenses and other - net (29) (24)* (72) (58)*
Interest expense - net (46) (51) (148) (158)
Income before income taxes $ 208 $ 185 $ 598 $ 539
* Includes a pretax charge of $9 million related to the early redemption of
debt.
</TABLE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Financial Condition
Textron Parent Company Borrowing Group: During the nine months ended
September 30, 1995, the Textron Parent Company Borrowing Group's operating
activities provided cash of $326 million versus $357 million during the
corresponding period of 1994, the detail of which is presented on page 9. Cash
outflows for 1995 were affected by an increase in receivables and inventory due
principally to increased business and a decrease in accrued liabilities due to
increased tax payments, partially offset by reductions of cash value of company-
owned life insurance (approximately $90 million). The group's debt increased by
$87 million principally as a result of cash used for capital expenditures,
purchases of Textron common stock and payments of dividends over the $326
million of cash provided by operations. Its ratio of debt to total capital was
34% at September 30, 1995, down from 35% at December 31, 1994.
During the nine months ended October 1, 1994, the Group's operating activities
provided cash of $357 million up from $299 million during the corresponding
period of 1993. The improvement was due to (a) increased income, (b) higher
payables due primarily to the timing of dividend payments in 1994 and (c)
increased customer deposits, partially offset by higher receivables, due
primarily to changed payment terms with certain customers. The Group's debt
decreased by $174 million principally as a result of cash provided by operations
and the proceeds from the sale of Homelite. Its ratio of debt to total capital
was 38% at October 1, 1994, down from 42% at year end 1993.
The Group's credit facilities not used or reserved as support for outstanding
commercial paper or bank borrowings at September 30, 1995 were $827 million.
Textron had $211 million available at September 30, 1995 for unsecured debt
securities under its shelf registration statement filed with the Securities and
Exchange Commission. In October 1995, Textron filed a shelf registration
statement with the Securities and Exchange Commission for the issuance of up to
an additional aggregate amount of $800 million of (a) debt issuable by Textron
and (b) preferred securities issuable by entities formed by Textron as to which
Textron would provide certain guarantees.
In 1994, Textron reactivated its program to purchase up to five million shares
of its common stock from time to time in the open market as conditions warrant.
In February 1995, Textron announced that it may purchase up to an additional
five million shares of its common stock under the program. In June 1995,
Textron completed the purchase of the first five million shares under the
program. No additional shares had been purchased as of October 28, 1995.
Management believes that the Group will continue to have adequate access to
credit markets and that its credit facilities and cash flows from operations
- --including dividends received from Textron's finance and insurance operations--
will continue to be more than sufficient to meet its operating needs and to
finance growth.
Finance and insurance subsidiaries: The finance and insurance subsidiaries paid
dividends of $94 million and $84 million to the Textron Parent Company Borrowing
Group during the nine month periods ended September 30, 1995 and October 1,
1994, respectively.
In June 1995, Avco Financial Services (AFS) filed a shelf registration statement
with the Securities and Exchange Commission, increasing the amount of registered
debt available for issuance by $1.5 billion. During the nine months ended
September 30, 1995, AFS issued $1.2 billion of unsecured debt securities,
including $892 million under its shelf registration statements. AFS had $1.5
billion and $423 million available at September 30, 1995 for unsecured debt
securities under its shelf registration statements with the Securities and
Exchange Commission and Canadian provincial security exchanges, respectively.
During the nine months ended September 30, 1995, Textron Financial Corporation
(TFC) issued $133 million of medium-term notes under a $500 million medium-term
note facility under Rule 144A of the Securities Act of 1933, as amended. TFC
had $367 million available under this facility at September 30, 1995.
During the nine months ended September 30, 1995, the finance subsidiaries had
$727 million of interest rate exchange agreements go into effect. Of these,
$250 million expire in 1996 and had the effect of exchanging the indices used to
determine interest expense under certain variable rate borrowings at
September 30, 1995 for the purpose of better matching the rate of interest
incurred on financing with the rate of interest earned on certain of their
variable rate finance receivables. The balance of the agreements, which have a
weighted average original term of 2.4 years and expire through 1999, had the
effect of fixing the rate of interest at approximately 8.1% on $477 million of
variable rate borrowings at September 30, 1995.
Results of Operations - Three months ended September 30, 1995 vs. Three months
ended October 1, 1994
Textron reported 1995 third quarter earnings per share of $1.41, up 15% from
1994 earnings per share of $1.23, reflecting higher net income and a decreased
number of average shares outstanding. Net income in 1995 of $122 million was up
from 1994 net income of $111 million. Revenues were unchanged at $2.4 billion,
reflecting the impact of divestitures in 1994. Excluding the revenues of these
divested businesses, revenues in the third quarter increased 9% over 1994.
The Aircraft segment's revenues and income increased $60 million (11%) and $10
million (18%), respectively, due to improvements at both Bell Helicopter and
Cessna Aircraft. Bell Helicopter's revenues and income increased primarily as a
result of higher international aircraft sales and higher revenues under the V-22
engineering and manufacturing development contract. Cessna's revenues and
income increased due to stronger aircraft deliveries. Cessna's operating margin
improved despite higher product development expenses related to two new Citation
aircraft models. An announcement was made in June 1995 that the JPATS contract
for a new U.S. military trainer would be awarded to a competitor. The award is
the subject of pending protests filed by Textron and Rockwell International with
the U.S. General Accounting Office.
The Automotive segment's revenues and income increased $8 million (2%) and $3
million (13%), respectively, despite lower automotive production in North
America, as a result of increased production of models which have Textron
content.
The Industrial segment's revenues decreased $15 million (4%) and income
approximated last year's level, both reflecting the divestiture of the Homelite
division in August 1994. Excluding the impact of Homelite, revenues increased
6% and income increased 11%, primarily due to higher sales in the fastening
systems and contractor tool businesses.
The Systems and Components segment's revenues decreased $116 million (30%) and
income decreased $6 million (20%). The decrease in revenues and income was due
primarily to the divestiture of the Textron Lycoming Turbine Engine division in
October 1994 and to reduced shipments on certain commercial aerospace contracts
at other divisions.
The Finance segment's revenues increased $78 million (19%), while income
increased $10 million (12%). AFS' revenues increased, due primarily to (a) a
higher level of finance receivables outstanding, (b) an increase in earned
insurance premiums, and (c) an increase in investment income, due to higher
yields and a higher level of invested assets, partially offset by a decline in
yields on finance receivables, reflecting an increase in the level of retail
installment contracts outstanding. Its income increased due to those factors,
partially offset by an increase in the average cost of borrowed funds. Revenues
at TFC increased, due to a higher level of finance receivables outstanding and
higher yields on finance receivables, reflecting the higher interest rate
environment. Its income increased as the benefit of the higher revenues was
partially offset by an increase in the average cost of borrowed funds.
Paul Revere's revenues increased $30 million (9%), due to continued premium
growth in its individual disability insurance and group insurance lines of
business, partially offset by reduced net investment income, attributable to the
transfer of investments in connection with a reinsurance transaction completed
in the third quarter. Its income increased $7 million (25%), primarily as a
result of the higher premium revenues and improved expense ratios across all
business lines. The individual disability insurance benefit ratio improved in
the third quarter of 1995 to 83.5%, from 85.3% in the third quarter of 1994 and
87.2% in the second quarter of 1995, due primarily to the reinsurance
transaction. Without this transaction, the benefit ratio for the quarter would
have been 87.5% as higher claims in the excess risk reinsurance line more than
offset an improved benefit ratio in the core individual disability insurance
line of business.
Corporate expenses and other - net for the three months ended September 30, 1995
were higher than the corresponding level in 1994, as a result of (a) increased
compensation expense due to appreciation in the market value of Textron's common
stock and (b) expenses related to acquisition activities, partially offset by a
pretax charge in 1994 related to the early redemption of debt. Lower interest
expense of the Textron Parent Company Borrowing Group primarily reflected a
lower level of average borrowing. The quarter's results reflected a slightly
higher effective income tax rate than the corresponding prior year rate.
Results of Operations - Nine months ended September 30, 1995 vs. Nine months
ended October 1, 1994
Earnings per share for the first nine months of 1995 were $4.05, up 14% from the
$3.54 reported for the corresponding period in 1994, reflecting higher net
income and a decreased number of average shares outstanding. Net income in 1995
was $352 million, up from $321 million for 1994. Revenues were unchanged at
$7.3 billion, reflecting the impact of divestitures in 1994. Excluding the
revenues of these divested businesses, revenues for the first nine months
increased 9% over 1994.
The Aircraft segment's revenues and income increased $197 million (12%) and $40
million (30%), respectively, due to improvements at both Bell Helicopter and
Cessna Aircraft. Bell Helicopter's revenues increased primarily as a result of
higher international aircraft sales and higher revenues under the V-22
engineering and manufacturing development contract, partially offset by lower
foreign military aircraft sales. Bell's income increased as a result of the
higher revenues, partially offset by increased product development expenses
related to new helicopter models. Cessna's income increased due to higher
revenues, an improved operating margin and lower bid and proposal expenses for
the JPATS competition for a new U.S. military trainer, partially offset by
higher product development expenses, principally related to two new Citation
aircraft models.
The Automotive segment's revenues increased $19 million (2%), while income
decreased $2 million (2%), due to higher start-up costs related to the launch of
new products and facilities.
The Industrial segment's revenues decreased $52 million (5%), while income
increased $7 million (6%). Excluding the impact of the 1994 divestiture of the
Homelite division, revenues and income increased 15% and 23%, respectively, as a
result of higher fastening systems sales (including Avdel's results for nine
months in 1995 compared with six months in 1994) and increased contractor tool
sales.
The Systems and Components segment's revenues decreased $485 million (38%),
while income increased $10 million (18%). The decrease in revenues was due to
the divestiture of the Textron Lycoming Turbine Engine division in October 1994
and to reduced shipments on certain U.S. Government contracts and commercial
aerospace contracts at other divisions. Income for 1994 reflected provisions
for the consolidation of certain manufacturing operations and legal matters and
charges related to certain valuation adjustments at the Textron Lycoming Turbine
Engine division. Excluding Lycoming Turbine Engine and these provisions from
1994, income decreased 11%, due primarily to lower revenues.
The Finance segment's revenues increased $234 million (19%), while income
increased $25 million (10%). AFS' revenues increased, due primarily to (a) a
higher level of finance receivables outstanding, (b) an increase in earned
insurance premiums, and (c) an increase in investment income, due to higher
yields and a higher level of invested assets, partially offset by a decline in
yields on finance receivables, reflecting an increase in the level of retail
installment contracts outstanding. Its income increased due to those factors, a
decrease in insurance losses and a decrease in the operating expense ratio,
partially offset by an increase in the average cost of borrowed funds. Revenues
at TFC increased, due to a higher level of finance receivables outstanding and
higher yields on finance receivables, reflecting the higher interest rate
environment, partially offset by higher leveraged lease income in 1994 and lower
fee income in 1995. Its income increased due to those factors and a decrease in
loan loss provisions, reflecting an improvement in equipment portfolios and a
stabilization of nonperforming real estate loans, partially offset by an
increase in the average cost of borrowed funds.
Paul Revere's revenues increased $97 million (10%), due to continued premium
growth in its individual disability insurance and group insurance lines of
business and higher net investment income despite the reinsurance transaction
described above, partially offset by lower net realized investment gains. Its
income decreased $17 million (16%), primarily as a result of a higher individual
disability insurance benefit ratio and lower net realized investment gains ($17
million in 1995 vs. $22 million in 1994), partially offset by a lower benefit
ratio in the group disability insurance line of business, increased premium
volume, and improved expense ratios across all lines of business. The higher
benefit ratio (86.6% vs. 80.8%) in the individual disability insurance business
was the result of adverse claims experience from the block of policies issued
between 1985 and 1989, especially in Florida and California, partially offset by
the favorable impact on the benefit ratio of a reinsurance transaction in the
third quarter of 1995. The ratio would have been 88.0% without this
transaction. In addition, business issued to physicians has performed below
expectations.
Corporate expenses and other - net for the nine months ended September 30, 1995
were higher than the corresponding level in 1994, primarily as a result of (a)
increased compensation expense due to appreciation in the market value of
Textron's common stock and (b) foreign exchange losses in 1995, partially offset
by a pretax charge in 1994 related to the early redemption of debt. Lower
interest expense of the Textron Parent Company Borrowing Group reflected a lower
level of average borrowing, partially offset by an increased average cost of
borrowing. Results for the nine months ended September 30, 1995 reflected a
slightly higher effective income tax rate than the corresponding prior year
rate.
PART II. OTHER INFORMATION
Item 5. OTHER INFORMATION
On September 27, 1995, Textron's Board of Directors
approved the renewal of Textron's existing Shareholder
Rights Plan by adopting a Renewed Rights Agreement
between the Company and First Chicago Trust Company of
New York, as rights agent (the "Renewed Rights
Agreement"). Pursuant to the Renewed Rights Agreement,
one new right (a "Right") will be issued for each share
of common stock, par value $0.125 per share, of the
Company (the "Common Stock") outstanding upon the
"Expiration Date" (as defined in the Company's existing
rights agreement dated as of March 8, 1986 between
Textron and Morgan Shareholder Services Trust Company
[currently known as First Chicago Trust Company of New
York], as amended and restated as of December 16, 1987)
(the "Record Date") and for each share of Common Stock
issued between the Record Date and the Distribution Date
(as defined in the Renewed Rights Agreement). Each new
Right will initially represent the right to purchase
from Textron one one-hundredth of a share of Series C
Junior Participating Preferred Stock, upon the terms and
subject to the conditions set forth in the Renewed
Rights Agreement. The new Rights are redeemable under
certain circumstances at $.05 per Right and will expire
on September 27, 2005, subject to extension or earlier
redemption.
The Shareholder Rights Plan is designed to deter
coercive takeover tactics and to prevent an acquirer
from gaining control of the Company without offering a
fair price to all of Textron's shareholders. The plan
is not aimed at preventing a takeover, but is intended
to preserve the Board's bargaining power and flexibility
to maximize value for all Textron shareholders.
The description and terms of the new Rights are set
forth in the Renewed Rights Agreement, a copy of which
is filed herewith and is incorporated herein by
reference.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4 Renewed Rights Agreement dated as of September 27, 1995
between Textron Inc. and First Chicago Trust Company of New
York.
12.1 Computation of ratio of income to fixed charges of the Textron
Parent Company Borrowing Group.
12.2 Computation of ratio of income to fixed charges of Textron Inc.
including all majority-owned subsidiaries.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the third quarter ended
September 30, 1995.
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.
TEXTRON INC.
Date: November 10, 1995 s/S. L. Key
S. L. Key
Executive Vice President and Chief
Financial Officer
(principal financial officer)
LIST OF EXHIBITS
The following exhibits are filed as part of this report on Form 10-Q:
<TABLE>
<CAPTION>
Name of Exhibit
<C> <S>
4 Renewed Rights Agreement dated as of September 27, 1995 between Textron Inc.
and First Chicago Trust Company of New York
12.1 Computation of ratio of income to fixed charges of the Textron Parent Company
Borrowing Group
12.2 Computation of ratio of income to fixed charges of Textron Inc. including all
majority-owned subsidiaries
27 Financial Data Schedule
</TABLE>
TEXTRON INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
Renewed Rights Agreement
Dated as of September 27, 1995
RENEWED RIGHTS AGREEMENT
RENEWED RIGHTS AGREEMENT dated as of September
27, 1995 (the "Agreement") between TEXTRON INC., a
Delaware corporation (the "Company"), and FIRST CHICAGO
TRUST COMPANY OF NEW YORK (formerly known as Morgan
Shareholder Services Trust Company), a New York
corporation, as rights agent (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on March 8, 1986, the Board of Direc-
tors of the Company authorized and declared a dividend
distribution of one 1986 Right (as hereinafter defined)
for each share of common stock, par value $0.25 per
share, of the Company outstanding at the close of busi-
ness on March 21, 1986 (the "1986 Record Date"), and
authorized the issuance of one 1986 Right (as such number
was subsequently adjusted pursuant to the provisions of
Section 11(p) of the Rights Agreement, dated as of
March 8, 1986 (the "1986 Agreement"), as amended and re-
stated as of December 16, 1987 (as so amended and
restated, the "1987 Agreement"), between the Company and
the Rights Agent) for each share of common stock, par
value $0.25 per share, of the Company issued between the
1986 Record Date (whether originally issued or delivered
from the Company's treasury) and the Distribution Date
(as defined in the 1986 Agreement, as amended by the 1987
Agreement), each 1986 Right initially representing the
right to purchase one one-hundredth of a share of Series
C Junior Participating Preferred Stock of the Company
having the rights, powers and preferences set forth in
the Certificate of Designation, Preferences and Rights of
Series C Junior Participating Preferred Stock of the
Company, as filed with the Secretary of State of the
State of Delaware on March 11, 1986 (a form of which was
attached as Exhibit A to the 1986 Agreement), upon the
terms and subject to the conditions set forth in the 1986
Agreement, as amended by the 1987 Agreement, (the "1986
Rights");
WHEREAS, on May 11, 1987, a two-for-one split
of the common stock of the Company became effective and,
in accordance with Section 11(p) of the 1986 Agreement,
the 1986 Rights then associated with each share of common
stock, par value $0.125 per share, of the Company (the
"Common Stock") thereafter outstanding were automatically
proportionately adjusted so that each share of Common
Stock is, at the date hereof, accompanied by one-half of
a 1986 Right;
WHEREAS, on December 16, 1987, the Board of
Directors, in accordance with Section 26 of the 1986
Agreement, determined it desirable and in the best inter-
ests of the Company and its stockholders for the Company
to supplement and amend certain provisions of the 1986
Agreement and to implement such supplements and amend-
ments by executing the 1987 Agreement;
WHEREAS, on September 27, 1995, the Board of
Directors determined it desirable and in the best inter-
ests of the Company and its stockholders for the Company
to renew the 1987 Agreement and to implement such renewal
by executing this Agreement; and
WHEREAS, on September 27, 1995 (the "Rights
Dividend Declaration Date"), the Board of Directors of
the Company authorized and declared a dividend distribu-
tion of one Right for each share of Common Stock of the
Company (as defined herein) outstanding upon the "Expira-
tion Date" under the 1987 Agreement (the "Record Date"),
and authorized the issuance of one Right (as such number
may hereafter be adjusted pursuant to the provisions of
Section 11(i) or 11(p) hereof) for each share of Common
Stock of the Company issued between the Record Date
(whether originally issued or delivered from the
Company's treasury) and the Distribution Date (as defined
herein), and under certain circumstances thereafter, each
Right initially representing the right to purchase one
one-hundredth of a share of Series C Junior Participating
Preferred Stock of the Company having the rights, powers
and preferences set forth in the Restated Certificate of
Incorporation of the Company, as filed with the Secretary
of State of the State of Delaware on March 24, 1988, as
the same will be further amended by the Amended Certifi-
cate of Designations, Preferences and Rights of Series C
Junior Participating Preferred Stock of the Company, a
form of which is attached hereto as Exhibit A (the "Cer-
tificate of Incorporation"), upon the terms and subject
to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the
premises and the mutual agreements herein set forth, the
parties hereby agree as follows:
Section 1. Certain Definitions. For purposes
of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any
Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Common Stock of the
Company then outstanding, but shall not include an Exempt
Person.
(b) "Act" shall mean the Securities Act
of 1933, as amended.
(c) "Adjustment Shares" shall have the
meaning set forth in Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the
Exchange Act (as defined herein).
(e) "Agreement" means this Renewed Rights
Agreement as originally executed or as it may from time
to time be supplemented, amended, renewed or extended
pursuant to the applicable provisions hereof.
(f) A Person shall be deemed the
"Beneficial Owner" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to 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 or on behalf
of 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 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 are
Original Rights or securities issued pursuant to
Section 11(i) or Section 11(p) hereof 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 or consent 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 (f)) or disposing of any
voting securities of the Company; provided, however,
that nothing in this paragraph (f) shall cause a
Person engaged in business as an underwriter of
securities to be deemed the "Beneficial Owner" of or
to be deemed to "beneficially own" any securities
acquired through such Person's participation in good
faith in a firm commitment underwriting until the
expiration of forty days after the date of such
acquisition.
(g) "Board" means the Board of Directors
of the Company.
(h) "Business Day" shall mean any day
other than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or
obligated by law or executive order to close.
(i) "Certificate of Incorporation" shall
have the meaning set forth in the fifth WHEREAS clause at
the beginning of this Agreement, as the same may be
amended or restated from time to time.
(j) "Close of Business" on any given date
shall mean 5:00 P.M., New York City time, on such date;
provided, however, that if such date is not a Business
Day, it shall mean 5:00 P.M., New York City time, on the
next succeeding Business Day.
(k) "Common Stock" when used in reference
to the Company shall mean the common stock, par value
$0.125 per share, of the Company or any other shares of
capital stock of the Company into which such stock shall
be reclassified or changed. "Common Stock," when used
with reference to any Person other than the Company which
shall be organized in corporate form, shall mean (i) the
capital stock or other equity interest with the greatest
voting power, (ii) the equity securities or other equity
interest having power to control or direct the management
of such Person or (iii) if such Person is a Subsidiary of
another Person, the Person or Persons which ultimately
control such first-mentioned Person and which has issued
any such outstanding capital stock, equity securities or
equity interest. "Common Stock" when used with reference
to any Person which shall not be organized in corporate
form shall mean units of beneficial interest which (x)
shall represent the right to participate generally in the
profits and losses of such Person (including, without
limitation, any flow-through tax benefits resulting from
an ownership interest in such Person) and (y) shall be
entitled to exercise the greatest voting power of such
Person or, in the case of a limited partnership, shall
have the power to rename the general partner or partners.
(l) "Common Stock Equivalents" shall have
the meaning set forth in Section 11(a)(iii) hereof.
(m) "Company" shall mean the Person named
as the "Company" in the first paragraph of this Agreement
until a successor corporation or entity shall have become
such, or until a Principal Party shall assume, and
thereafter be liable for, all obligations and duties of
the Company hereunder pursuant to the applicable
provisions of this Agreement, and thereafter "Company"
shall mean such successor or Principal Party.
(n) "Current Market Price" shall have the
meaning set forth in Section 11(d) hereof.
(o) "Current Value" shall have the mean-
ing set forth in Section 11(a)(iii) hereof.
(p) "Distribution Date" shall have the
meaning set forth in Section 3(a) hereof.
(q) "Equivalent Preferred Stock" shall
have the meaning set forth in Section 11(b) hereof.
(r) "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
(s) "Exempt Person" shall mean (i) the
Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit or employee stock plan of the Company or
of any Subsidiary of the Company or (iv) any Person or
entity organized, appointed, established or holding
Common Stock of the Company by, for or pursuant to the
terms of any such employee benefit or employee stock
plan.
(t) "Expiration Date" shall have the
meaning set forth in Section 7(a) hereof.
(u) "Final Expiration Date" shall mean
the Close of Business on September 27, 2005.
(v) "Original Rights" shall mean Rights
acquired by such Person or any of such Person's Affili-
ates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof.
(w) "Outside Directors" shall mean the
members of the Board who are not officers of the Company
or any of its Subsidiaries and who are not Acquiring
Persons or representatives, nominees, Affiliates or
Associates of Acquiring Persons.
(x) "Person" shall mean any individual,
firm, corporation, partnership, trust or other entity and
includes, without limitation, an unincorporated group of
persons who, by formal or informal agreement, have
embarked on a common purpose or act.
(y) "Preferred Stock" shall mean shares
of Series C Junior Participating Preferred Stock, without
par value, of the Company having the rights, powers and
preferences set forth in the Certificate of
Incorporation, as amended as of the Record Date by the
Amendment to Certificate of Designations, Preferences and
Rights of Series C Junior Participating Preferred Stock
of Company to be filed with the Secretary of State of the
State of Delaware on the Record Date.
(z) "Principal Party" shall have the
meaning set forth in Section 13(b) hereof.
(aa) "Purchase Price" shall have the
meaning set forth in Section 4(a) hereof.
(bb) "Record Date" shall have the meaning
set forth in the fifth WHEREAS clause at the beginning of
the Agreement.
(cc) "Redemption Price" shall have the
meaning set forth in Section 23(a) hereof.
(dd) "Rights" shall have the meaning set
forth in the fifth WHEREAS clause at the beginning of the
Agreement.
(ee) "Rights Agent" shall mean the Person
named as the "Rights Agent" in the first paragraph of
this Agreement until a successor Rights Agent shall have
become such pursuant to the applicable provisions hereof,
and thereafter "Rights Agent" shall mean such successor
Rights Agent. If at any time there is more than one
Person appointed by the Company as Rights Agent pursuant
to the applicable provisions of this Agreement, "Rights
Agent" shall mean and include each such Person.
(ff) "Rights Certificates" shall have the
meaning set forth in Section 3(a) hereof.
(gg) "Rights Dividend Declaration Date"
shall have the meaning set forth in the fifth WHEREAS
clause at the beginning of the Agreement.
(hh) "Section 11(a)(ii) Event" shall mean
any event described in Section 11(a)(ii) hereof.
(ii) "Section 11(a)(ii) Trigger Date"
shall have the meaning set forth in Section 11(a)(iii)
hereof.
(jj) "Section 13 Event" shall mean any
event described in clauses (x), (y) or (z) of Section
13(a) hereof.
(kk) "Spread" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(ll) "Stock Acquisition Date" shall mean
the first date of public announcement by the Company that
an Acquiring Person has become such.
(mm) "Subsidiary" shall mean, with
reference to any Person, any corporation or other entity
of which securities or other ownership interest having
ordinary voting power sufficient, in the absence of
contingencies, to elect a majority of the board of
directors or other persons performing similar functions
are at the time directly or indirectly beneficially
owned, or otherwise controlled, by such Person and any
Affiliate of such Person.
(nn) "Substitution Period" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(oo) "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.
(pp) "Triggering Event" shall mean any
Section 11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The
Company has appointed 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
of the Company) in accordance with the terms and
conditions hereof, and the Rights Agent has accepted such
appointment. The Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or
desirable. Any actions which may be taken by the Rights
Agent pursuant to the terms of this Agreement may be
taken by any such Co-Rights Agent.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Close of
Business on the tenth Business Day (or such specified or
unspecified later date as may be determined by the Board
before the occurrence of a Distribution Date) after the
Stock Acquisition Date (or, if the tenth Business Day
after the Stock Acquisition Date occurs before the Record
Date, the Close of Business on the Record Date) or
(ii) the Close of Business on the tenth Business Day (or
such specified or unspecified later date as may be
determined by the Board before the occurrence of a
Distribution Date) after the date that a tender or
exchange offer by any Person (other than an Exempt
Person) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation
thereof, such Person would be an Acquiring Person (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 paragraphs (b) and (c) of
this Section 3) by the certificates for the Common Stock
of the Company registered in the names of the holders of
the Common Stock of the Company whether or not bearing
the legend set forth in Section 3(c) hereof (which
certificates for Common Stock of the Company 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 of the Company
(including a transfer to the Company). 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 of the Company
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 B hereto (the "Rights
Certificates"), evidencing one Right for each share of
Common Stock of the Company so held, subject to
adjustment as provided herein. At the time of
distribution of the Rights Certificates, the Company may
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) With respect to certificates for the
Common Stock of the Company outstanding as of the Record
Date, as set forth in paragraph (a) above, until the
earlier of the Distribution Date or the Expiration Date,
the Rights will be evidenced by such certificates for the
Common Stock of the Company whether or not bearing the
legend set forth in Section 3(c) hereof and the
registered holders of the Common Stock of the Company
shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or
the Expiration Date, the transfer of any certificates
representing shares of Common Stock of the Company in
respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with
such shares of Common Stock of the Company.
(c) Rights shall be issued in respect of
all shares of Common Stock of the Company which are
issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier
of the Distribution Date or the Expiration Date, and to
the extent provided in Section 22 hereof, in respect of
shares of Common Stock of the Company issued after the
Distribution Date and prior to the Expiration Date.
Certificates representing such shares of Common Stock of
the Company shall also be deemed to be certificates for
Rights and shall, as promptly as possible following the
Record Date, bear the following legend:
This certificate also evidences and
entitles the holder hereof to certain Rights as
set forth in the Renewed Rights Agreement
between Textron Inc. (the "Company") and First
Chicago Trust Company of New York (the "Rights
Agent") dated as of September 27, 1995, as the
same may be amended, restated, renewed or
extended from time to time (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 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 beneficially owned (as such
term is defined in the Rights Agreement) by any
Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof
(as such terms are defined in the Rights
Agreement), whether currently held by or on
behalf of such Person or by any subsequent
holder, may become null and void. The Rights
shall not be exercisable, and shall be void so
long as held, by a holder in any jurisdiction
where the requisite qualification to the
issuance to such holder, or the exercise by
such holder, of the Rights in such jurisdiction
shall not have been obtained or be obtainable.
In addition to the provisions of Section 3(b) above, with
respect to such certificates containing the foregoing
legend, and certificates containing the legends specified
in the 1986 Agreement and the 1987 Agreement and with
respect to previously issued certificates that contain no
comparable legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock of the Company
represented by such certificates shall be evidenced by
such certificates alone, registered holders of Common
Stock of the Company 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 of the Company
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the
forms of election to purchase, the forms of assignment
and the accompanying certificates to be printed on the
reverse thereof) shall each be substantially in the form
set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may
from time to time be listed, or to conform to usage.
Subject to the provisions of 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 exercise price set
forth therein (such exercise price per one one-hundredth
of a share, as adjusted from time to time hereunder, 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 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 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
Renewed 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.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be
executed on behalf of the Company by its Chairman or Vice
Chairman of the Board, or its President or any Vice
President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary,
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 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 of each of the Rights Certificates and
the date of each of the Rights Certificates.
Section 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 Rights Certificates may
be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates,
entitling the registered holder to purchase a like number
of one 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 Rights 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 Rights Certificates shall make such
request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Rights
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 or
exchange of any such surrendered Rights Certificate or
Rights Certificates 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 or Rights Certificates and shall have
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon, the Rights Agent shall,
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.
(b) Upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to each
of them of the loss, theft, destruction or mutilation of
a valid Rights Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably
satisfactory to each of 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.
Section 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 reverse
side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent
designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number
of one one-hundredths of a share (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 earliest of (i) the Final Expiration Date, (ii)
the time at which the Rights are redeemed as provided in
Section 23 hereof and (iii) the time at which the Rights
expire pursuant to Section 13(d) hereof (the earliest of
(i), (ii) and (iii) 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 $250, 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.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of
election to purchase and the certificate on the reverse
side of the Rights Certificate duly executed, accompanied
by payment, with respect to each Right so exercised, of
the Purchase Price, as such amount may be reduced
pursuant to Section 11(a)(ii) hereof, per one one-
hundredth of a share of Preferred 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 Sections 7(f) and 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 (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) shall be made in cash or by certified check,
cashiers check or bank draft payable to the order of the
Company. In the event that the Company is obligated to
issue other securities (including Common Stock) of the
Company, pay cash and/or distribute other assets 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. The
Company reserves the right to require prior to the
occurrence of a Triggering Event that, upon any exercise
of Rights, a number of Rights be exercised so that only
whole shares of Preferred Stock would be issued.
(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 which the
Board in its sole discretion determines is or was
involved in or caused or facilitated, directly or
indirectly, such Section 11(a)(ii) Event, (ii) a
transferee of any such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after
such Acquiring Person becomes such, or (iii) a transferee
of any such Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or
concurrently with such Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from such Acquiring
Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person
has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a
transfer which the Board 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 the Company and the Rights Agent
shall have no liability to any holder of Rights
Certificates or other Person as a result of the Company's
failure to make any determinations with respect to an
Acquiring Person or any of 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 of any Rights
Certificate upon the occurrence of any purported
assignment or 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
assignment or election to purchase set forth on the
reverse side of the Rights Certificate surrendered for
such assignment or exercise, and (ii) provided such
additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of
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.
Section 9. Reservation and Availability of
Capital Stock.
(a) The Company covenants and agrees that
it will cause to be reserved and kept available out of
its authorized and unissued shares of Preferred Stock
(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 reasonable 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.
(c) The Company shall use all reasonable
efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Triggering
Event in which the consideration to be delivered by the
Company upon exercise of the Rights has been determined
in accordance with this Agreement, or as soon as required
by law following the Distribution Date, as the case may
be, a registration statement under the Act with respect
to the securities purchasable upon exercise of the Rights
on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable
after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the
Expiration Date. The Company will also take such action
as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the
Rights. The Company may, acting by resolution of the
Board temporarily suspend, for a period of time not to
exceed ninety 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. 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, and shall issue a public announcement at such
time as the suspension is no longer in effect. In
addition, if the Company shall determine that a regis-
tration statement is required in other circumstances
following the Distribution Date, the Company may similar-
ly temporarily suspend the exercisability of the Rights
until such time as a registration statement has been
declared effective. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been
obtained, the exercise thereof shall not otherwise be
permitted under applicable law or a registration
statement shall not have been declared effective.
(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 nonassessable.
(e) The Company further covenants and
agrees that, except as set forth in Section 6(a) hereof,
it will pay when due and payable any and all federal and
state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the 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, nor shall the
Company be required 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.
Section 10. Preferred Stock Record Date. Each
person in whose name any certificate for a number of one
one-hundredths of a share of Preferred Stock (or 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, as such,
shall not be entitled to any rights of a stockholder of
the Company with respect to shares for which the Rights
shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number of Rights. The
Purchase Price, the number and kind of shares, or
fractions thereof, purchasable upon the exercise of 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 or split the outstanding
Preferred Stock, (C) combine or consolidate the
outstanding Preferred Stock into a smaller number of
shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any
such reclassification in connection with a consolidation
or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in
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,
split, combination, consolidation or reclassification,
and the number and kind of shares of Preferred Stock (or
other 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 (or
other capital stock, as the case may be) transfer books
of the Company were open, the holder of such Right would
have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, split,
combination, consolidation 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 (a "Section 11(a)(ii)
Event") that any Person (other than an Exempt
Person), alone or together with its Affiliates and
Associates, shall, at any time after the Rights
Dividend Declaration Date, become an Acquiring
Person, unless the event causing such Person to
become an Acquiring Person is (A) a Section 13 Event
or (B) an acquisition of shares of Common Stock of
the Company pursuant to a tender offer or an
exchange offer for all outstanding shares of Common
Stock of the Company determined by at least a
majority of the Outside Directors, after receiving
advice from one or more investment banking firms, to
be (1) at a price which is fair to the Company's
stockholders (taking into account all factors which
such Outside Directors deem relevant including,
without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on
an orderly basis designed to realize maximum value)
and (2) otherwise in the best interests of the
Company and its stockholders, then, promptly after
the date of occurrence of a Section 11(a)(ii) Event,
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 (whether or
not such Right was then exercisable) and (y)
dividing that product (which, following such first
occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes
of this Agreement) by 50% of the Current Market
Price per share of Common Stock of the Company on
the date of such first occurrence (such number of
shares, the "Adjustment Shares").
(iii) In lieu of issuing only shares of
Common Stock of the Company in accordance with
Section 11(a)(ii) hereof, the Company, acting by
resolution of the Board, may, and in the event that
the number of shares of Common Stock of the Company
which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of
the Rights 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, acting by resolution of the Board,
shall (A) determine the excess of (1) the value of
the Adjustment Shares issuable upon the exercise of
a Right (the "Current Value") over (2) the Purchase
Price attributable to each Right (such excess, the
"Spread") and (B) with respect to each Right
(subject to Section 7(e) hereof), make adequate
provision to substitute for all or a portion of the
Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) equity securities of the Company
other than Common Stock of the Company (including,
without limitation, shares, or units of shares, of
preferred stock which the Board which, when added to
any shares of Common Stock issued upon such
exercise, has deemed to have the same value as
shares of Common Stock of the Company (such shares
of preferred stock, "Common Stock Equivalents")),
(4) debt securities of the Company, (5) other assets
or (6) any combination of the foregoing which, when
added to any shares of Common Stock issued upon such
exercise, has an aggregate value equal to the
Current Value, where such aggregate value has been
determined by the Board based upon the advice of a
nationally recognized investment banking firm
selected by the Board; provided, however, if the
Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within
thirty 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) hereof, as such date may
be amended pursuant to Section 26 hereof, 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 of the Company (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 shall determine in good
faith that it is likely that sufficient additional
shares of Common Stock of the Company could be
authorized for issuance upon exercise in full of the
Rights, the thirty day period set forth above may be
extended to the extent necessary, but not more than
ninety days following the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder
approval for the authorization of such additional
shares (such period, as it may be extended, the
"Substitution Period"). To the extent that the
Company determines that some action 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 and to determine the value thereof.
In the event of any such suspension, the Company
shall issue a public announcement stating that the
exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of
the Common Stock of the Company shall be the Current
Market Price per share of the Common Stock of the
Company 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 of
the Company on such date.
(b) In case the Company shall fix a
record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them
to subscribe for or purchase (for a period expiring
within forty-five 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 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 and/or Equivalent Preferred
Stock which the aggregate subscription or purchase price
of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such
Current Market Price, and the denominator of which shall
be the number of shares of Preferred Stock outstanding on
such record date, plus the number of additional shares of
Preferred Stock and/or Equivalent 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, whose determination shall be described in a
statement filed with the Rights Agent and shall be
conclusive for all purposes. Shares of Preferred Stock
owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event
that such rights, options or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a
record date for a distribution to all holders of
Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of
evidences of indebtedness, cash (other than a regular
periodic 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 per share of
Preferred Stock on such record date, less the fair market
value (as determined in good faith by the Board, whose
determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all
purposes) 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 per share of Preferred Stock.
Such adjustments shall be made successively whenever such
a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been
in effect if such record date had not been fixed.
(d) (i) For the purpose of any
computation hereunder, other than computations made
pursuant to Section 11(a)(iii) 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 consecutive Trading Days 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 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, consolidation, reverse
stock split or reclassification of such Common
Stock, and prior to the expiration of the requisite
thirty Trading Day or ten 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, consolidation,
reverse stock split 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
or by the Nasdaq National Market with respect to
securities listed or admitted to trading on another
national securities exchange or quoted by the Nasdaq
National Market, respectively, or, if the shares of
Common Stock are not listed or admitted to trading
on any national securities exchange or quoted by the
Nasdaq National Market, the last quoted price or, if
not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as
reported by The Nasdaq Stock Market or such other
quotation 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. If on any such date the
Common Stock is not publicly held or not so listed,
traded or quoted, and no market maker is making a
market in the Common Stock, Current Market Price per
share shall mean the fair value per share as
determined in good faith by the Board, whose
determination shall be described in a statement
filed with the Rights Agent and shall be conclusive
for all purposes.
(ii) For purposes 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 not so listed, traded or
quoted 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, traded or quoted, Current Market
Price per share of the Preferred Stock shall mean
the fair value per share as determined in good faith
by the Board, whose determination shall be described
in a statement filed with the Rights Agent and shall
be conclusive for all purposes. For all purposes of
this Agreement, the Current Market Price of one one-
hundredth of a share of Preferred Stock shall be
equal to the Current Market Price of one share of
Preferred Stock divided by 100.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an
increase or decrease of at least one percent 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 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 (or the number of Rights) 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), (l) 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
provided, however, that the Company shall not be liable
for its inability to reserve and keep available for
issuance upon exercise of the Rights pursuant to Section
11(a)(ii) a number of shares of Common Stock of the
Company greater than the number then authorized by the
Certificate of Incorporation but not outstanding or re-
served for any other purpose.
(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) 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 one-millionth of a share)
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 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 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 use reasonable
efforts to 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,
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 adjustments in the Purchase Price, in
addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith
judgment the Board 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 stockholders.
(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,
sale or transfer 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, sale or
transfer, the stockholders of the Person who constitutes,
or would constitute, 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.
(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 Dividend Declaration
Date and prior to the Distribution Date (i) declare a
dividend on the outstanding shares of Common Stock of the
Company payable in shares of Common Stock of the Company,
(ii) subdivide or split the outstanding shares of Common
Stock of the Company in a manner not covered in clause
(i) of this Section 11(p) or (iii) combine or consolidate
the outstanding shares of Common Stock of the Company
into a smaller number of shares, the number of Rights
associated with each share of Common Stock of the Company
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 of the Company
following any such event shall equal the result obtained
by multiplying the number of Rights associated with each
share of Common Stock of the Company immediately prior to
such event by a fraction the numerator of which shall be
the total number of shares of Common Stock of the Company
outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total
number of shares of Common Stock of the Company
outstanding immediately following the occurrence of such
event.
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares. Whenever an adjustment is
made as provided in 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 of the Company, a
copy of such certificate and (c) mail 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 of the
Company) in accordance with Section 25 hereof.
Notwithstanding the foregoing sentence, the failure of
the Company to prepare such certificate or statement or
make such filings or mailing shall not affect the validi-
ty of, or the force or effect of, the requirement for
such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.
(a) In the event (a "Section 13 Event")
that, on or after the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate or
otherwise combine with, or merge with or into, any other
Person or Persons (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, combination
or merger, (y) any Person or Persons (other than a
Subsidiary of the Company in a transaction which complies
with Section ll(o) hereof) shall consolidate or combine
with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such
consolidation, combination or merger and, in connection
with such consolidation, combination or merger, all or
part of the outstanding shares of Common Stock of the
Company shall be changed into or exchanged for stock or
other securities of any other Person or Persons 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);
provided, however, that this clause (z) of Section 13(a)
shall not apply to the pro rata distribution by the
Company of assets (including securities) of the Company
or any of its Subsidiaries to all holders of the
Company's Common Stock; then, and in each such case
(except as may be contemplated by Section 13(d) hereof),
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,
nonassessable and freely tradeable shares of Common Stock
of the Principal Party, 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 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) hereof, (A) the Person that is the
issuer of any securities into which shares of Common
Stock of the Company are converted, changed or
exchanged in such merger, consolidation or
combination, or if there is more than one such
issuer, the issuer the Common Stock of which has the
greatest market value or (B) if no securities are so
issued, the Person that is the other party to such
merger (and survives the merger), consolidation or
combination (or if there is more than one such
Person, the Person the Common Stock of which has the
greatest value), or if the other party to the merger
does not survive the merger, the Person that does
survive the merger (including the Company if it
survives); 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 or, if each Person that
is a party to such transaction or transactions
receives the same portion of the assets or earning
power so transferred or if the Person receiving the
greatest portion of the assets or earning power
cannot be determined, whichever of such Persons as
is the issuer of Common Stock having the greatest
market value;
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-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; (2) if the Common Stock of such Person is
not and has not been so registered and 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 of such Persons is the issuer of the Common
Stock having the greatest aggregate market value; and (3)
if the Common Stock of such Person is not and has not
been so registered and such Person is owned, directly or
indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by
the same Person, the rules set forth in (1) and (2) above
shall apply to each of the chains of ownership having an
interest in such joint venture as if such party were a
Subsidiary of both or all of such joint venturers and the
Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same
ratio as their direct or indirect interests in such
Person bear to the total of such interests.
(c) The Company shall not consummate any
Section 13 Event 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 confirming that the requirements of Sections
13(a) and (b) hereof shall promptly be performed in
accordance with their terms and that such Section 13
Event shall not result in a default by the Principal
Party under this Agreement as the same shall have been
assumed by the Principal Party pursuant to Sections 13(a)
and (b) hereof and further providing that, as soon as
practicable after the date of such Section 13 Event, the
Principal Party will:
(i) prepare and file a registration
statement under the Act, with respect to the Rights
and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A)
become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus
at all times meeting the requirements of the Act)
until the Expiration Date and to similarly comply
with applicable state securities laws;
(ii) use its best efforts to list or
obtain quotation of (or continue the listing or
quotation of) the Rights and the securities
purchasable upon exercise of the Rights on a
national securities exchange or automated quotation
service;
(iii) deliver to holders of the Rights
historical financial statements for the Principal
Party and each of its Affiliates which comply in all
respects with the requirements for registration on
Form 10 (or any successor form) under the Exchange
Act; and
(iv) use its best efforts to obtain
waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of
the Principal Party subject to purchase upon
exercise of outstanding Rights.
The provisions of this Section 13 shall similarly apply
to successive mergers, consolidations, combinations or
sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not
theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be
applicable to a transaction described in subparagraph (x)
or (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons (or a wholly owned
Subsidiary of any such Person or Persons) who acquired
shares of Common Stock of the Company pursuant to a
tender offer or exchange offer for all outstanding shares
of Common Stock of the Company which complies with the
exception provided for in Section 11(a)(ii) hereof, (ii)
the price per share of Common Stock of the Company
offered in such transaction is not less than the price
per share of Common Stock of the Company paid to all
holders of shares of Common Stock of the Company whose
shares were purchased pursuant to such tender offer or
exchange offer and (iii) the form of consideration being
offered to the remaining holders of shares of Common
Stock of the Company pursuant to such transaction is the
same as the form of consideration paid pursuant to such
tender offer or exchange offer. Upon consummation of any
such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional
Shares.
(a) The Company shall not be required to
issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or
to distribute Rights Certificates which evidence
fractional Rights. In lieu of any such fractional
Rights, there shall be paid to the registered 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 Trading 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 or the Nasdaq National
Market with respect to securities listed on another
national securities exchange or quoted by the Nasdaq
National Market, respectively, or if the Rights are not
listed or admitted to trading on any national securities
exchange or quoted on the Nasdaq National Market, the
last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter
market, as reported by The Nasdaq Stock Market or such
other quotation 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. 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 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 share of
Preferred Stock or, if unavailable, the appropriate
alternative price (in each case 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 of the Company
upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Common Stock of the
Company. In lieu of fractional shares of Common Stock of
the Company, 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
share of Common Stock of the Company. 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 or, if unavailable, the appropriate
alternative price (in each case 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 that Right expressly waives his right to
receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of
action in respect of this Agreement, except any rights of
action vested in the Rights Agent pursuant to Section 18
hereof, are vested in the respective registered holders
of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common
Stock of the Company); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date,
of the Common Stock of the Company), 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 of the Company), may, in such holder's own
behalf and for such holder's own benefit, enforce, and
may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in
respect of, such holder's 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.
Section 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 Distribution Date, the
Rights will be transferable only in connection with the
transfer of Common Stock of the Company;
(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 reasonable
efforts to have any such order, decree or ruling lifted
or otherwise overturned as soon as possible.
Section 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 upon 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 Rights evidenced by such Rights
Certificate shall have been exercised in accordance with
the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the
Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and
counsel fees and 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 Common
Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or
document reasonably believed by it to be genuine and to
be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change
of Name of Rights Agent.
(a) Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to the corporate
trust or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21
hereof. If 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 if
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) If 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 if at that time any of
the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights
Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The
Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with
legal counsel (who may be legal counsel for the Company),
and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and
in accordance with such opinion.
(b) Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter
(including, without limitation, the identity of any
Acquiring Person and the determination of the 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, any Assistant 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, nor shall it 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 countersignature thereon); 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 nonassessable.
(f) The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized
and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of
the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with
its duties, and it shall not be liable for any action
taken 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.
(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 Rights
Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the
Rights Agent shall not take any further action with
respect to such requested exercise or transfer without
first consulting with the Company.
Section 21. Change of Rights Agent. The
Rights Agent or any successor Rights Agent may resign and
be discharged from its duties under this Agreement upon
thirty 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 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 days after giving
notice of such removal or after it has been notified in
writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder
of a 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.
If no successor Rights Agent shall have been appointed
within thirty days from effectiveness of such removal or
resignation, and no registered holder of any Rights
Certificates have applied pursuant to this Agreement for
the appointment of a new Rights Agent, the Company shall
be automatically designated as successor Rights Agent.
Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United
States or of any state of the United States so long as
such corporation is authorized to do business as a
banking institution in such state, is in good standing,
is authorized under such laws to exercise corporate trust
powers, is subject to supervision or examination by
federal or state authority and has at the time of its
appointment as Rights Agent a combined capital and
surplus of at least $100,000,000 or (b) an Affiliate of a
corporation described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and
responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to
the successor Rights Agent any property at the time held
by it hereunder, and shall 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 shall 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.
Section 22. Issuance of New Rights
Certificates. Notwithstanding any of the provisions of
this Agreement or of the Rights Certificates to the
contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may
be approved by the Board 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 of the Company following the
Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with
respect to shares of Common Stock of the Company 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 hereafter
issued by the Company and (b) may, in any other case, if
deemed necessary or appropriate by the Board, issue
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.
Section 23. Redemption and Termination.
(a) The Board may, at its option, at any
time prior to the earlier of (i) the Close of Business on
the tenth Business Day following the Stock Acquisition
Date (or, if the Stock Acquisition Date shall have
occurred prior to the Record Date, the Close of Business
on the tenth Business Day following the Record Date), as
such period may be extended pursuant to Section 26
hereof, or (ii) the Final Expiration Date, direct the
Company to, and if so directed, the Company shall, 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"). 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. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock of the
Company (based on the Current Market Price of the Common
Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board.
(b) Immediately upon the action of the
Board 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 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.
Section 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 periodic
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, combination
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 or
distribution of rights or warrants, or the date on which
such reclassification, consolidation, combination,
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 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 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) 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
under Section 11(a)(ii) hereof and (ii) all references in
the preceding paragraph to Preferred Stock shall be
deemed thereafter to refer to Common Stock of the Company
and/or, if appropriate, other securities.
Section 25. Notices. Notices or demands
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the
Rights Agent) as follows:
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Attention: General Counsel
Subject to the provisions of Section 21, any notice or
demand authorized by this Agreement to be given or made
by the Company or by the holder of any Rights Certificate
to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with
the Company) as follows:
First Chicago Trust Company of New York
525 Washington Boulevard
Suite 4660
Jersey City, New Jersey 07310
Attention: Tenders and Exchanges
Administration
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 of the Company) 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.
Section 26. Supplements and Amendments. Prior
to the Distribution Date and subject to the penultimate
sentence of this Section 26, the Company and the Rights
Agent shall, if the Board so directs, supplement or amend
any provision of this Agreement without the approval of
any holders of certificates representing shares of Common
Stock of the Company. From and after the Distribution
Date and subject to the penultimate sentence of this
Section 26, the Company and the Rights Agent shall, if
the Board 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 shorten or lengthen any time
period hereunder or (iv) 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 any
Affiliate or Associate of any Acquiring Person),
provided, this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights
may be redeemed 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 (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person). Upon the
delivery of a certificate from an appropriate officer of
the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price or the number
of one one-hundredths of a share of Preferred Stock for
which a Right is exercisable; provided, however, that at
any time prior to (x) the existence of an Acquiring
Person or (y) the date that a tender or exchange offer by
any Person (other than an Exempt Person) is first
published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the
Exchange Act if upon consummation thereof such Person
would be an Acquiring Person, the Board may amend this
Agreement to increase the Purchase Price or extend 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 of the Company.
Section 27. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns
hereunder.
Section 28. Determinations and Actions by the
Board, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock of
the Company outstanding at any particular time, including
for purposes of determining the particular percentage of
such outstanding shares of Common Stock of the Company 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 shall have the exclusive
power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to
the Board, or to the Company, or as may be necessary or
advisable in the administration of this Agreement,
including, without limitation, the right and power to (a)
interpret the provisions of this Agreement, and (b) 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,
the Outside Directors or the Company 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 to any liability
to the holders of the Rights.
Section 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, registered holders of the
Common Stock of the Company) any legal or equitable
right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders
of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock
of the Company).
Section 30. Severability. If any term,
provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable
and the Board determines in its good faith judgment that
severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the Close
of Business on the tenth Business Day following the date
of such determination by the Board. Without limiting the
foregoing, if any provision of this Agreement requiring
that a determination be made by the Board or by the
Outside Directors is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by
the Board in accordance with applicable law and the
Company's Certificate of Incorporation and By-laws.
Section 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 State of Delaware, and the laws of the State of
Delaware shall govern the rights and duties of the Rights
Agent hereunder, and for all purposes this Agreement
shall be governed by and construed in accordance with the
laws of such State applicable to contracts made and to be
performed entirely within such State.
Section 32. Counterparts. This Agreement may
be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and their
respective corporate seals to be hereunto affixed and
attested, all as of September 27, 1995.
Attest: TEXTRON INC.
By s/Michael D. Cahn By s/B. T. Downing
Name: Michael D. Cahn Name: B. T. Downing
Title: Assistant Secretary Title: Vice President and
Treasurer
Attest: FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By s/Joanne Gorostiola By s/Ralph Persreo
Name: Joanne Gorostiola Name: Ralph Persreo
Title: Assistant Vice President Title: Customer Service Officer
Exhibit A
TEXTRON INC.
_______________________________________
AMENDMENT TO CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF
SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
Pursuant to Section 151 of the
General Corporation Law of
the State of Delaware
Textron Inc., a corporation organized and
existing under the General Corporation Law of the State
of Delaware in accordance with the provisions of Section
103 thereof (the "Corporation"), does hereby certify:
FIRST: That the Corporation filed a Certifica-
te of Designation, Preferences and Rights on March 11,
1986 creating a series of 500,000 shares of preferred
stock designated as "Series C Junior Participating Pre-
ferred Stock" (the "Certificate of Designations").
SECOND: That as authorized and directed by a
resolution adopted by the Board of Directors of the
Corporation (the "Board") at a duly convened meeting of
the Board held on September 27, 1995, pursuant to the au-
thority vested in it by the provisions of the Restated
Certificate of Incorporation of the Corporation, the Cer-
tificate of Designations is hereby amended to increase
the number of shares constituting the series from 500,000
to 2,000,000.
THIRD: That none of the shares of the
Corporation's Series C Junior Participating Preferred
Stock have been issued as of the date set forth below.
FOURTH: That the Certificate of Designations
is hereby amended to change the Rights Declaration Date
(as referenced therein) from March 8, 1986 to September
27, 1995 and that the foregoing amendment to the Certifi-
cate of Designations was effected by the following reso-
lution adopted by the Board at a duly convened meeting of
the Board held on September 27, 1995, pursuant to the au-
thority vested in it by the provisions of the Restated
Certificate of Incorporation of the Corporation:
FURTHER RESOLVED, that, subject to the filing
of an Amendment to Certificate of Designations,
Preferences and Rights of Series C Junior Par-
ticipating Preferred Stock with the Secretary
of State of the State of Delaware, the Certifi-
cate of Designation, Preferences and Rights of
Series C Junior Participating Preferred Stock
filed by the Corporation with the Secretary of
State of the State of Delaware on March 11,
1986 (the "Certificate of Designations") be
amended to change the Rights Declaration Date
(as defined in the Certificate of Designations)
from March 8, 1986 to September 27, 1995 and to
increase the number of shares constituting the
Series C Junior Participating Preferred Stock
from 500,000 to 2,000,000.
FIFTH: That the Amendment to Certificate of
Designations, Preferences and Rights of Series C Junior
Participating Preferred Stock has been duly adopted in
accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware.
The Corporation has caused this Certificate to
be signed by its ___________________ and attested to by
its __________________ this ___ day of ____________,
19__.
Name:
Title:
Exhibit B
[Form of Rights Certificate]
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 27, 2005 OR EARLIER RE-
DEMPTION BY THE COMPANY OR EXPIRATION PURSUANT TO THE
RENEWED RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO RE-
DEMPTION, AT THE OPTION OF THE COMPANY, AT $.05 PER RIGHT
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. THE
RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID SO
LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE
REQUISITE QUALIFICATION FOR THE ISSUANCE TO SUCH HOLDER,
OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH
JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE OBTAIN-
ABLE. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RENEWED 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 RE-
NEWED RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CER-
TIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME
NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(e) OF SUCH AGREEMENT.]
Rights Certificate
TEXTRON 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 Renewed Rights Agreement, dated as of
September 27, 1995, as amended, restated, renewed or
extended from time to time (the "Rights Agreement"), be-
tween Textron Inc., a Delaware corporation (the "Compa-
ny"), and First Chicago Trust Company of New York (for-
merly known as Morgan Shareholder Services Trust Compa-
ny), a New York corporation (the "Rights Agent"), to pur-
chase from the Company at any time prior to 5:00 p.m.
(New York City time) on September 27, 2005 at the office
or offices of the Rights Agent, designated for such pur-
pose, one one-hundredth of a fully paid, nonassessable
share of Series C Junior Participating Preferred Stock
(the "Preferred Stock") of the Company, at a purchase
price of $250 per one one-hundredth of a share (the
"Purchase Price"), upon presentation and surrender of
this Rights Certificate with the Election to Purchase and
related Certificate duly executed. 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 per share set forth
above, are the number and Purchase Price as of September
27, 1995, based on the Preferred Stock as constituted at
such date. The Company reserves the right to require
prior to the occurrence of a Triggering Event (as such
term is defined in the Rights Agreement) that a number of
Rights be exercised so that only whole shares of Pre-
ferred Stock will be issued.
As more fully set forth in the Rights Agree-
ment, from and after the first occurrence of a Section
11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Cer-
tificate are beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring
Person (as such terms are defined in the Rights Agree-
ment), which the Board (as defined in the Rights Agree-
ment) in its sole discretion determines is or was in-
volved in or caused or facilitated directly or indirect-
ly, such Section 11(a)(ii) Event, (ii) a transferee of
any such Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after such Acquiring
Person becomes such or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of such
Acquiring Person (or of any such Associate or Affiliate),
who becomes a transferee prior to or concurrently with
such Acquiring Person becoming such, such Rights shall
become null and void and no holder hereof shall have any
right with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Pur-
chase Price and the number and kind of shares of Pre-
ferred 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 Trigger-
ing Events.
This Rights Certificate is subject to all of
the terms, provisions and conditions of the Rights Agree-
ment, 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. Reference is also made to the Rights
Agreement for definitions of capitalized terms used and
not defined herein. Copies of the Rights Agreement are
on file at the principal offices of the Company and are
available upon written request to the Rights Agent.
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 Certifi-
cate or Rights Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agree-
ment, 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 (i) the Close of Business on the tenth Business Day
following the Stock Acquisition Date (or if the Stock
Acquisition Date shall have occurred prior to the Record
Date, the Close of Business on the tenth Business Day
following the Record Date), as such time period may be
extended pursuant to the Rights Agreement, and (ii) the
Final Expiration Date (as defined in the Rights Agree-
ment).
If the Company so determines, no fractional
shares of Preferred Stock will be issued upon the exer-
cise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hun-
dredth 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, as such,
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 affect-
ing stockholders (except as provided in the Rights Agree-
ment), or to receive dividend 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 ____________ __, 19__
ATTEST: TEXTRON INC.
_______________________ By
Secretary Name:
Title:
Countersigned:
FIRST CHICAGO TRUST
COMPANY OF NEW YORK
By_____________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
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 consti-
tute and appoint _________________, Attorney, to transfer
the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated: , 19__
Signature
Signature Guaranteed:
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);
and
(2) after due inquiry and to the best knowl-
edge of the undersigned, the undersigned [ ] 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 any such Acquiring Person.
Dated: ___________ ___, 19__ ______________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment 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 whatsoev-
er.
ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: TEXTRON INC.:
The undersigned hereby irrevocably elects to
exercise _____________ Rights represented by this Rights
Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other
securities of the Company or of any other Person which
may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in
the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the
Rights evidenced by this 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: ______________ ___, 19__
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking
the appropriate boxes that:
(1) the Rights evidenced by this Rights Cer-
tificate [ ] 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 Agree-
ment); and
(2) after due inquiry and to the best knowl-
edge of the undersigned, the undersigned [ ] 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 any such
Acquiring Person.
Dated: ____________ __, 19__
Signature
Signature Guaranteed:
NOTICE
The signatures 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.
EXHIBIT 12.1
<TABLE>
TEXTRON PARENT COMPANY BORROWING GROUP
COMPUTATION OF RATIO OF INCOME TO FIXED CHARGES
(unaudited)
(In millions except ratio)
<CAPTION>
Nine Months
Ended
September 30, 1995
<S> <C>
Fixed charges:
Interest expense (1) $148
Estimated interest portion of rents 15
Total fixed charges $163
Income:
Income before income taxes $598
Fixed charges 163
Eliminate equity in undistributed pretax income of finance and
insurance subsidiaries (268)
Adjusted income $493
Ratio of income to fixed charges 3.02
(1) Includes interest unrelated to borrowings of $26 million (primarily
interest accretion).
</TABLE>
EXHIBIT 12.2
<TABLE>
TEXTRON INC. INCLUDING ALL MAJORITY-OWNED SUBSIDIARIES
COMPUTATION OF RATIO OF INCOME TO FIXED CHARGES
(unaudited)
(In millions except ratio)
<CAPTION>
Nine Months
Ended
September 30, 1995
<S> <C>
Fixed charges:
Interest expense (1) $609
Estimated interest portion of rents 31
Total fixed charges $640
Income:
Income before income taxes $598
Elimination of minority interest in pretax income of Paul (15)
Revere
Fixed charges 640
Adjusted income $1,223
Ratio of income to fixed charges 1.91
(1) Includes interest unrelated to borrowings of $26 million (primarily
interest accretion).
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Textron
Inc.'s Consolidated Balance Sheet as of September 30, 1995 and Consolidated
Statement of Income for the nine months ended September 30, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 78
<SECURITIES> 0
<RECEIVABLES> 10758
<ALLOWANCES> 272
<INVENTORY> 1244
<CURRENT-ASSETS> 0
<PP&E> 2934
<DEPRECIATION> 1646
<TOTAL-ASSETS> 22712
<CURRENT-LIABILITIES> 0
<BONDS> 10205
<COMMON> 12
0
15
<OTHER-SE> 3199
<TOTAL-LIABILITY-AND-EQUITY> 22712
<SALES> 4763
<TOTAL-REVENUES> 7314
<CGS> 3905
<TOTAL-COSTS> 4850
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 120
<INTEREST-EXPENSE> 609
<INCOME-PRETAX> 598
<INCOME-TAX> 236
<INCOME-CONTINUING> 352
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 352
<EPS-PRIMARY> 4.05
<EPS-DILUTED> 4.05
</TABLE>
