SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Eaton Corporation
(Exact name of registrant as specified in its charter)
Ohio 34-0196300
(State of incorporation or organization) (IRS Employer
Identification No.)
Eaton Center, Cleveland, Ohio 44114
(Address of principal executive offices)
(Zip Code)
If this Form relates to the If this Form relates to the
registration of a class of debt registration of a class of debt
securities and is effective upon securities and is to become ef-
filing pursuant to General fective simultaneously with the
Instruction A(c)(1) please check effectiveness of a concurrent
the following box. registration statement under the
Securities Act of 1933 pursuant to
General Instruction A(c)(2) please
check the following box.
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Preferred Share Purchase Rights New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
London Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)<PAGE>
Item 1. Description of Securities To Be Registered.
On June 28, 1995, the Board of Directors of Eaton
Corporation (the "Company") declared a dividend of one pre-
ferred share purchase right (a "Right") for each outstanding
common share, par value $.50 per share (the "Common Shares"),
of the Company. The dividend is payable on July 12, 1995
(the "Record Date") to the shareholders of record on that
date. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the
Company and Society National Bank, as Rights Agent (the
"Rights Agent"). The Rights contain important "flip-over"
and "flip-in" features designed to protect the Company from
unfair takeovers.
Each Right entitles the registered holder to pur-
chase from the Company one one-hundredth of a share of Series
A Participating Preferred Stock, without par value (the
"Preferred Shares"), of the Company at a price of $250 per
one one-hundredth of a Preferred Share (the "Purchase
Price"), subject to adjustment.
If the Company is acquired in a merger or other
business combination or 50% or more of its consolidated as-
sets or earning power are sold after a person or group has
become an Acquiring Person (as defined below), each holder of
a Right will thereafter have the right to receive, upon ex-
ercise, that number of shares of common stock of the acquir-
ing company which then will have a market value of two times
the exercise price of the Right.
If any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right,
other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the
right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the
Right.
Until the Distribution Date, the Rights will be
evidenced, with respect to any of the Common Share certifi-
cates outstanding as of the Record Date, by such Common Share
certificate with a copy of the summary of Rights attached
thereto. Until the Distribution Date (or earlier redemption
or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares, and transfer of those
certificates will also constitute transfer of those Rights.
Page 2 of 7<PAGE>
As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution
Date and such separate Right Certificates alone will there-
after evidence the Rights.
The "Distribution Date" is the earlier of:
(i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership
of 20% or more of the outstanding Common Shares; or
(ii) 10 business days (or such later date as may be
determined by action of the Board of Directors before
any person or group becomes an Acquiring Person) fol-
lowing the commencement of, or announcement of an in-
tention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the
outstanding Common Shares.
The Rights are not exercisable until the Distribu-
tion Date. The Rights will expire on July 12, 2005 (the
"Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed or ex-
changed by the Company, as described below.
The Purchase Price, and the number of Preferred
Shares or other securities or property issuable, upon exer-
cise of the Rights are subject to adjustment from time to
time to prevent dilution, in the event of:
(i) a stock dividend on, or a subdivision, combi-
nation or reclassification of, the Preferred Shares,
(ii) the grant to holders of the Preferred Shares
of certain rights to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Pre-
ferred Shares with a conversion price, less than the
then-current market price of the Preferred Shares, or
(iii) the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred
Shares) or of subscription rights or warrants (other
than those referred to above).
Page 3 of 7<PAGE>
The number of outstanding Rights is also subject to
adjustment upon certain occurrences prior to the Distribution
Date.
With certain exceptions, no adjustment in the Pur-
chase Price will be required until cumulative adjustments
require an adjustment of at least 1% in such Purchase Price.
No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth
of a Preferred Share, which may, at the election of the Com-
pany, be evidenced by depositary receipts) and in lieu there-
of, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior
to the date of exercise.
Preferred Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend payment
of $1 per share but will be entitled to an aggregate dividend
of 100 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation pay-
ment of $100 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share. Each
Preferred Share will have 1 vote, voting together with the
Common Shares. Finally, in the event of any merger, con-
solidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive
100 times the amount received per Common Share. The dividend
and liquidation rights and rights upon a merger, consolida-
tion or other transaction are protected by customary antidi-
lution provisions.
The value of the one one-hundredth interest in a
Preferred Share purchasable upon exercise of each Right
should, because of the nature of the Preferred Shares' div-
idend and liquidation rights, approximate the value of one
Common Share.
At any time after any person or group becomes an
Acquiring Person, and prior to the acquisition by that person
or group of 50% or more of the outstanding Common Shares, the
Board of Directors of the Company may exchange the Rights
(other than Rights owned by the Acquiring Person, which will
have become void), in whole or in part, at an exchange ratio
of one Common Share, or one one-hundredth of a Preferred
Share (or of a share of a class or series of the Company's
preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Page 4 of 7<PAGE>
At any time prior to any person or group becoming
an Acquiring Person, the Board of Directors of the Company
may redeem all the Rights at a price of $.01 per Right (the
"Redemption Price"). The redemption may be made effective at
such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
Immediately upon any redemption, the right to exercise the
Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the hold-
ers of the Rights, including an amendment to lower the 20%
threshold described above to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstand-
ing Common Shares then known to the Company to be benefi-
cially owned by any person or group of affiliated or asso-
ciated persons and (ii) 10%, except that after any person or
group becomes an Acquiring Person no such amendment may ad-
versely affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to re-
ceive dividends.
The Rights have certain anti-takeover effects. The
Rights will cause substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by
the Company's Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired.
The Rights should not interfere with any merger or other
business combination approved by the Board of Directors since
the Rights may be redeemed by the Company at the Redemption
Price prior to the time that a person or group has acquired
beneficial ownership of 20% or more of the Common Shares.
The Rights Agreement, dated as of June 28, 1995,
between the Company and Society National Bank, as Rights
Agent, specifying the terms of the Rights and including the
Form of the Certificate of Amendment by Directors of Eaton
Corporation setting forth the terms of the Preferred Shares
as an exhibit thereto and the form of press release announc-
ing the declaration of the Rights are attached hereto as ex-
hibits and are incorporated herein by reference. The fore-
going description of the Rights is qualified in its entirety
by reference to such exhibits.
Page 5 of 7<PAGE>
Item 2. Exhibits.
1. Rights Agreement, dated as of June 28,
1995, between Eaton Corporation and So-
ciety National Bank which includes the
Form of Certificate of Amendment by Di-
rectors of Eaton Corporation setting
forth the terms of the Series A Partici-
pating Preferred Stock, without par val-
ue, as Exhibit A, the form of Right Cer-
tificate as Exhibit B and the Summary of
Rights to Purchase Preferred Shares as
Exhibit C. Pursuant to the Rights
Agreement, printed Right Certificates
will not be mailed until as soon as
practicable after the earlier of ten days
after public announcement that a person
or group has acquired beneficial owner-
ship of 20% or more of the Common Shares
or ten business days (or such later date
as may be determined by action of the
Board of Directors before any person or
group becomes an Acquiring Person) fol-
lowing the commencement of, or announce-
ment of and intention to make, a tender
offer or exchange offer the consummation
of which would result in the beneficial
ownership by a person or group of 20% or
more of the outstanding Common Shares.
2. Form of press release dated June 28,
1995.
Page 6 of 7<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly
caused this registration statement to be signed on its behalf
by the undersigned thereunto duly authorized.
Eaton Corporation
By: /s/ John M. Carmont
Name: John M. Carmont
Title: Vice President and
Treasurer
Dated: June 30, 1995
Page 7 of 7<PAGE>
EXHIBIT LIST
Exhibit Description Page No.
1. Rights Agreement, dated as of June 28, 1995, be-
tween Eaton Corporation and Society National Bank
which includes the Form of Certificate of Amend-
ment by Directors of Eaton Corporation setting
forth the terms of the Series A Participating
Preferred Stock, without par value, as Exhibit A,
the Form of Right Certificate as Exhibit B and
the Summary of Rights to Purchase Preferred
Shares as Exhibit C. Pursuant to the Rights
Agreement, printed Right Certificates will not be
mailed until as soon as practicable after the
earlier of ten days after public announcement
that a person or group has acquired beneficial
ownership of 20% or more of the Common Shares or
ten business days (or such later date as may be
determined by action of the Board of Directors
before any person or group becomes an Acquiring
Person) following the commencement of, or an-
nouncement of an intention to make, a tender of-
fer or exchange offer the consummation of which
would result in the beneficial ownership by a
person or group of 20% or more of the outstanding
Common Shares.
2. Form of press release dated June 28, 1995.
EATON CORPORATION
and
SOCIETY NATIONAL BANK
Rights Agreement
Dated as of June 28, 1995
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions....................... 1
Section 2. Appointment of Rights Agent............... 7
Section 3. Issue of Right Certificates............... 7
Section 4. Form of Right Certificates................ 11
Section 5. Countersignature and Registration......... 12
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates............... 13
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights............... 14
Section 8. Cancellation and Destruction of
Right Certificates...................... 17
Section 9. Availability of Preferred Shares.......... 17
Section 10. Preferred Shares Record Date.............. 19
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights.............. 20
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares..................... 34
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power.............. 35
Section 14. Fractional Rights and Fractional Shares... 37
Section 15. Rights of Action.......................... 40
Section 16. Agreement of Right Holders................ 40
Section 17. Right Certificate Holder Not Deemed a
Stockholder............................. 41
-i-<PAGE>
Page
Section 18. Concerning the Rights Agent............... 42
Section 19. Merger or Consolidation or Change of
Name of Rights Agent.................... 43
Section 20. Rights and Duties of Rights Agent......... 45
Section 21. Change of Rights Agent.................... 48
Section 22. Issuance of New Right Certificates........ 50
Section 23. Redemption................................ 51
Section 24. Exchange.................................. 52
Section 25. Notice of Certain Events.................. 55
Section 26. Notices................................... 57
Section 27. Supplements and Amendments................ 58
Section 28. Successors................................ 59
Section 29. Benefits of this Agreement................ 59
Section 30. Severability.............................. 59
Section 31. Governing Law............................. 60
Section 32. Counterparts.............................. 60
Section 33. Descriptive Headings...................... 60
Signatures............................................ 61
Exhibit A - Form of Certificate of Amendment
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred
Shares
-ii-<PAGE>
Agreement, dated as of June 28, 1995, between Eaton
Corporation, an Ohio corporation (the "Company"), and Society
National Bank, a national banking association (the "Rights
Agent").
The Board of Directors of the Company has autho-
rized and declared a dividend of one preferred share purchase
right (a "Right") for each Common Share (as hereinafter de-
fined) of the Company outstanding on July 12, 1995 (the
"Record Date"), each Right representing the right to purchase
one one-hundredth of a Preferred Share (as hereinafter de-
fined), upon the terms and subject to the conditions herein
set forth, and has further authorized and directed the issu-
ance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date (as such terms are hereinafter de-
fined).
Accordingly, 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 indi-
cated:<PAGE>
(a) "Acquiring Person" shall mean any Person (as
such term is hereinafter defined) who or which, together with
all Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 20% or more of the Com-
mon Shares of the Company then outstanding, but shall not
include the Company, any Subsidiary (as such term is herein-
after defined) of the Company, any employee benefit plan of
the Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any
such plan. Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" as the result of an acquisition
of Common Shares by the Company which, by reducing the number
of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 20% or more of
the Common Shares of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner
of 20% or more of the Common Shares of the Company then out-
standing by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares of the Com-
pany, then such Person shall be deemed to be an "Acquiring
Person". Notwithstanding the foregoing, if the Board of Di-
rectors of the Company determines in good faith that a Person
who would otherwise be an "Acquiring Person", as defined
pursuant to the foregoing provisions of this paragraph (a),
-2-<PAGE>
has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares
so that such Person would no longer be an "Acquiring Person,"
as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be or
have ever been an "Acquiring Person" for any purposes of this
Agreement.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities Ex-
change Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial
Owner" of and shall be deemed to "beneficially own" any se-
curities:
(i) which such Person or any of such Person's Af-
filiates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's Af-
filiates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling
-3-<PAGE>
group members with respect to a bona fide public offer-
ing of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Benefi-
cial Owner of, or to beneficially own, securities ten-
dered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Af-
filiates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or un-
derstanding; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or un-
derstanding to vote such security (1) arises solely from
a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act
and (2) is not also then reportable on Schedule 13D un-
der the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or in-
directly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (other than
-4-<PAGE>
customary agreements with and between underwriters and
selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by
the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then out-
standing," when used with reference to a Person's Beneficial
Ownership of securities of the Company, shall mean the number
of such securities then issued and outstanding together with
the number of such securities not then actually issued and
outstanding which such Person would be deemed to own benefi-
cially hereunder.
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in
[Ohio] are authorized or obligated by law or executive order
to close.
(e) "Close of business" on any given date shall
mean 5:00 P.M., Cleveland, Ohio time, on such date; provided,
however, that if such date is not a Business Day it shall
mean 5:00 P.M., Cleveland, Ohio time, on the next succeeding
Business Day.
-5-<PAGE>
(f) "Common Shares" when used with reference to
the Company shall mean the shares of common stock, par value
$.50 per share, of the Company. "Common Shares" when used
with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is
a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set
forth in Section 3 hereof.
(h) "Final Expiration Date" shall have the meaning
set forth in Section 7 hereof.
(i) "Person" shall mean any individual, firm,
corporation or other entity, and shall include any successor
(by merger or otherwise) of such entity.
(j) "Preferred Shares" shall mean shares of Series
A Participating Preferred Stock, without par value, of the
Company having the rights and preferences set forth in the
Form of Certificate of Amendment attached to this Agreement
as Exhibit A.
(k) "Redemption Date" shall have the meaning set
forth in Section 7 hereof.
-6-<PAGE>
(l) "Shares Acquisition Date" shall mean the first
date of public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such.
(m) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the voting
power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Com-
pany hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance
with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Shares) in accordance with
the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates. (a) Un-
til the earlier of (i) the tenth day after the Shares Acqui-
sition Date or (ii) the tenth business day (or such later
date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person)
after the date of the commencement by any Person (other than
the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Com-
pany or any entity holding Common Shares for or pursuant to
-7-<PAGE>
the terms of any such plan) of, or of the first public an-
nouncement of the intention of any Person (other than the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms
of any such plan) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares aggregating 20% or more of
the then outstanding Common Shares (including any such date
which is after the date of this Agreement and prior to the
issuance of the Rights; the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of Sec-
tion 3(b) hereof) by the certificates for Common Shares reg-
istered in the names of the holders thereof (which certifi-
cates shall also be deemed to be Right Certificates) and not
by separate Right Certificates, and (y) the right to receive
Right Certificates will be transferable only in connection
with the transfer of Common Shares. As soon as practicable
after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if
requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares as of the close
of business on the Distribution Date, at the address of such
-8-<PAGE>
holder shown on the records of the Company, a Right Certifi-
cate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so
held. As of the Distribution Date, the Rights will be evi-
denced solely by such Right Certificates.
The Company shall notify the Rights Agent in writ-
ing immediately upon the occurrence of the Distribution Date
and, if such notification is given orally, the Company shall
confirm same in writing on or prior to the Business Day next
following. Until such notice is received by the Rights
Agent, the Rights Agent may presume conclusively for all
purposes that the Distribution Date has not occurred.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of
Rights to Purchase Preferred Shares, in substantially the
form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Record Date,
at the address of such holder shown on the records of the
Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates reg-
istered in the names of the holders thereof together with a
copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or
-9-<PAGE>
the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph
(c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expira-
tion Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agree-
ment between Eaton Corporation and Society National
Bank, dated as of June 28, 1995 (the "Rights Agree-
ment"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at
the principal executive offices of Eaton Corporation.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. Eaton Corporation, will mail to the holder
of this certificate a copy of the Rights Agreement
without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in
the Rights Agreement, Rights issued to any Person who
becomes an Acquiring Person (as defined in the Rights
Agreement) may become null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated
with the Common Shares represented by such certificates shall
be evidenced by such certificates alone, and the surrender
-10-<PAGE>
for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases
or acquires any Common Shares after the Record Date but prior
to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that
the Company shall not be entitled to exercise any Rights as-
sociated with the Common Shares which are no longer outstand-
ing.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse
thereof) shall be substantially the same as 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 regula-
tion 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 22 hereof, the Right Certificates shall entitle
the holders thereof to purchase such number of one one--
hundredths of a Preferred Share as shall be set forth therein
at the price per one one-hundredth of a Preferred Share set
forth therein (the "Purchase Price"), but the number of such
-11-<PAGE>
one one-hundredths of a Preferred Share and the Purchase
Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer,
its President, any of its Vice Presidents, or its Treasurer,
either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof, and shall
be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such
Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the
same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of
the Company by any person who, at the actual date of the ex-
ecution of such Right Certificate, shall be a proper officer
of the Company to sign such Right Certificate, although at
the date of the execution of this Rights Agreement any such
person was not such an officer.
-12-<PAGE>
Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office, books
for registration and transfer of the Right Certificates is-
sued hereunder. Such books shall show the names and ad-
dresses of the respective holders of the Right Certificates,
the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Cer-
tificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates. Subject to the provisions of Sec-
tion 14 hereof, at any time after the close of business on
the Distribution Date, and at or prior to the close of busi-
ness on the earlier of the Redemption Date or the Final Ex-
piration Date, any Right Certificate or Right Certificates
(other than Right Certificates representing Rights that have
become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be trans-
ferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-hundredths of a
Preferred Share as the Right Certificate or Right Certifi-
cates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall
-13-<PAGE>
make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certifi-
cates to be transferred, split up, combined or exchanged at
the principal office of the Rights Agent. Thereupon the
Rights Agent shall countersign and deliver to the person en-
titled thereto a Right Certificate or Right Certificates, as
the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in
case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and, at the Company's re-
quest, reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon sur-
render to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a
new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Cer-
tificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) The registered holder of any
Right Certificate may exercise the Rights evidenced thereby
-14-<PAGE>
(except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent
at the principal office of the Rights Agent, together with
payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or
prior to the earliest of (i) the close of business on July
12, 2005 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which
such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth
of a Preferred Share purchasable pursuant to the exercise of
a Right shall initially be $250, and shall be subject to
adjustment from time to time as provided in Section 11 or 13
hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate represent-
ing exercisable Rights, with the form of election to purchase
duly executed, accompanied by payment of the Purchase Price
for the shares to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof by
certified check, cashier's check or money order payable to
-15-<PAGE>
the order of the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the
Preferred Shares certificates for the number of Preferred
Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such re-
quests, or (B) requisition from the depositary agent deposi-
tary receipts representing such number of one one-hundredths
of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the deposi-
tary agent to comply with such request, (ii) when appropri-
ate, requisition from the Company the amount of cash to be
paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certifi-
cates or depositary receipts, cause the same to be delivered
to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be des-
ignated by such holder and (iv) when appropriate, after re-
ceipt, deliver such cash to or upon the order of the regis-
tered holder of such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the
-16-<PAGE>
Rights Agent to the registered holder of such Right Certifi-
cate or to his duly authorized assigns, subject to the pro-
visions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the
purpose of exercise, transfer, split up, combination or ex-
change shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or
in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by any
of the provisions of this Rights Agreement. The Company
shall deliver to the Rights Agent for cancellation and re-
tirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the
Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case
shall deliver a certificate of destruction thereof to the
Company.
Section 9. Availability of Preferred Shares. The
Company covenants and agrees that it will cause to be re-
served and kept available out of its authorized and unissued
-17-<PAGE>
Preferred Shares or any Preferred Shares held in its trea-
sury, the number of Preferred Shares that will be sufficient
to permit the exercise in full of all outstanding Rights in
accordance with Section 7. The Company covenants and agrees
that it will take all such action as may be necessary to en-
sure that all Preferred Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for
such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully
paid and nonassessable shares.
The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of
the issuance or delivery of the Right Certificates or of any
Preferred Shares upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which
may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for the Pre-
ferred Shares in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered
for exercise or to issue or to deliver any certificates or
depositary receipts for Preferred Shares upon the exercise of
any Rights until any such tax shall have been paid (any such
tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to
-18-<PAGE>
the Company's reasonable satisfaction that no such tax is
due.
Section 10. Preferred Shares Record Date. Each
person in whose name any certificate for Preferred Shares is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase
Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a
date upon which the Preferred Shares transfer books of the
Company are closed, such person shall be deemed to have be-
come the record holder of such shares on, and such certifi-
cate shall be dated, the next succeeding Business Day on
which the Preferred Shares transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate shall not be entitled to
any rights of a holder of Preferred Shares for which the
Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distribu-
tions 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.
-19-<PAGE>
Section 11. Adjustment of Purchase Price, Number
of Shares or Number of Rights. The Purchase Price, the num-
ber of Preferred Shares covered by each Right and the number
of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.
(a) (i) In the event the Company shall at any
time after the date of this Agreement (A) declare a dividend
on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of Pre-
ferred Shares or (D) issue any shares of its capital stock in
a reclassification of the Preferred Shares (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), the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such sub-
division, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books
-20-<PAGE>
of the Company were open, he would have owned upon such ex-
ercise and been entitled to receive by virtue of such divi-
dend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par
value of the shares of capital stock of the Company issuable
upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in
the event any Person becomes an Acquiring Person, each holder
of a Right shall thereafter have a right to receive, upon
exercise thereof at a price equal to the then current Pur-
chase Price multiplied by the number of one one-hundredths of
a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company
as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one one--
hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (y) 50% of the then
current per share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of
the occurrence of such event. In the event that any Person
shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which
would eliminate or diminish the benefits intended to be af-
forded by the Rights.
-21-<PAGE>
From and after the occurrence of such event, any
Rights that are or were acquired or beneficially owned by any
Acquiring Person (or any Associate or Affiliate of such Ac-
quiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under
any provision of this Agreement. No Right Certificate shall
be issued pursuant to Section 3 that represents Rights ben-
eficially owned by an Acquiring Person whose Rights would be
void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at
any time upon the transfer of any Rights to an Acquiring
Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and
any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence shall be cancelled.
(iii) In the event that there shall not be suf-
ficient Common Shares issued but not outstanding or autho-
rized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii),
the Company shall take all such action as may be necessary to
authorize additional Common Shares for issuance upon exercise
of the Rights. In the event the Company shall, after good
faith effort, be unable to take all such action as may be
-22-<PAGE>
necessary to authorize such additional Common Shares, the
Company shall substitute, for each Common Share that would
otherwise be issuable upon exercise of a Right, a number of
Preferred Shares or fraction thereof such that the current
per share market price of one Preferred Share multiplied by
such number or fraction is equal to the current per share
market price of one Common Share as of the date of issuance
of such Preferred Shares or fraction thereof.
(b) In case the Company shall fix a record date
for the issuance of rights, options or warrants to all hold-
ers of Preferred Shares entitling them (for a period expiring
within 45 calendar days after such record date) to subscribe
for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible
into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security convert-
ible into Preferred Shares or equivalent preferred shares)
less than the then current per share market price of the
Preferred Shares (as defined in Section 11(d)) on such record
date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of Preferred
Shares outstanding on such record date plus the number of
-23-<PAGE>
Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred
shares so to be offered (and/or the aggregate initial conver-
sion price of the convertible securities so to be offered)
would purchase at such current market price and the denomina-
tor of which shall be the number of Preferred Shares out-
standing on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the con-
vertible securities so to be offered are initially convert-
ible); provided, however, that in no event shall the consid-
eration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. In case
such subscription price may be paid in a consideration part
or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights
Agent. Preferred Shares 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 suc-
cessively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so is-
sued, the Purchase Price shall be adjusted to be the Purchase
-24-<PAGE>
Price which would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a record date
for the making of a distribution to all holders of the Pre-
ferred Shares (including any such distribution made in con-
nection with a consolidation or merger in which the Company
is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or sub-
scription 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 then
current per share market price of the Preferred Shares on
such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with
the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market
price of the Preferred Shares; provided, however, that in no
event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares
of capital stock of the Company to be issued upon exercise of
-25-<PAGE>
one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation here-
under, the "current per share market price" of any security
(a "Security" for the purpose of this Section 11(d)(i)) on
any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 con-
secutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in
the event that the current per share market price of the Se-
curity is determined during a period following the announce-
ment by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Se-
curity or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security
and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclas-
sification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect
the current market price per share equivalent of such Secu-
rity. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on
-26-<PAGE>
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 Security is not listed or admitted
to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with re-
spect to securities listed on the principal national securi-
ties exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc. Au-
tomated Quotations System ("NASDAQ") or such other system
then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market
maker making a market in the Security selected by the Board
of Directors of the Company. The term "Trading Day" shall
mean a day on which the principal national securities ex-
change on which the Security is listed or admitted to trading
is open for the transaction of business or, if the Security
is not listed or admitted to trading on any national securi-
ties exchange, a Business Day.
-27-<PAGE>
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares
shall be determined in accordance with the method set forth
in Section 11(d)(i). If the Preferred Shares are not pub-
licly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the cur-
rent per share market price of the Common Shares as deter-
mined pursuant to Section 11(d)(i) (appropriately adjusted to
reflect any stock split, stock dividend or similar transac-
tion occurring after the date hereof), multiplied by one
hundred. If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a state-
ment filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section
11(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 near-
est cent or to the nearest one one-millionth of a Preferred
Share or one ten-thousandth of any other share or security as
the case may be. Notwithstanding the first sentence of this
-28-<PAGE>
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 requires such adjust-
ment or (ii) the date of the expiration of the right to ex-
ercise any Rights.
(f) If as a result of an adjustment made pursuant
to Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of
capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred
Shares contained in Section 11(a) through (c), inclusive, and
the provisions of Sections 7, 9, 10 and 13 with respect to
the Preferred Shares shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the ad-
justed Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as
provided herein.
-29-<PAGE>
(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 evi-
dence the right to purchase, at the adjusted Purchase Price,
that number of one one-hundredths of a Preferred Share (cal-
culated to the nearest one one-millionth of a Preferred
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 substitution for any adjustment in the number of
one one-hundredths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to such ad-
justment. 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
-30-<PAGE>
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 thereaf-
ter, but, if the Right Certificates have been issued, shall
be at least 10 days later than the date of the public an-
nouncement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Cer-
tificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which
such holders shall be entitled as a result of such adjust-
ment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof,
if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after
such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of
-31-<PAGE>
the holders of record of Right Certificates on the record
date specified in the public announcement.
(j) Irrespective of any adjustment or change in
the Purchase Price or the number of one one-hundredths of a
Preferred Share issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one
one-hundredths of a Preferred Share which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one--
hundredth of the then par value, if any, of the Preferred
Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may val-
idly and legally issue fully paid and nonassessable Preferred
Shares 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 ef-
fective as of a record date for a specified event, the Com-
pany may elect to defer until the occurrence of such event
the issuing to the holder of any Right exercised after such
record date of the Preferred Shares and other capital stock
or securities of the Company, if any, issuable upon such ex-
ercise over and above the Preferred Shares and other capital
-32-<PAGE>
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 upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those ad-
justments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision
of the Preferred Shares, issuance wholly for cash of any
Preferred Shares at less than the current market price, issu-
ance wholly for cash of Preferred Shares or securities which
by their terms are convertible into or exchangeable for Pre-
ferred Shares, dividends on Preferred Shares payable in Pre-
ferred Shares or issuance of rights, options or warrants re-
ferred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Preferred Shares shall not be tax-
able to such stockholders.
(n) In the event that at any time after the date
of this Agreement and prior to the Distribution Date, the
Company shall (i) declare or pay any dividend on the Common
-33-<PAGE>
Shares payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by reclas-
sification or otherwise than by payment of dividends in Com-
mon Shares) into a greater or lesser number of Common Shares,
then in any such case (A) the number of one one-hundredths of
a Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the
number of one one-hundredths of a Preferred Share so purchas-
able immediately prior to such event by a fraction, the nu-
merator of which is the number of Common Shares outstanding
immediately before such event and the denominator of which is
the number of Common Shares outstanding immediately after
such event, and (B) each Common Share outstanding immediately
after such event shall have issued with respect to it that
number of Rights which each Common Share outstanding im-
mediately prior to such event had issued with respect to it.
The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is
effected.
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares. Whenever an adjustment is made as pro-
vided in Section 11 or 13 hereof, the Company shall promptly
(a) prepare a certificate setting forth such adjustment, and
a brief statement of the facts accounting for such adjust-
ment, (b) file with the Rights Agent and with each transfer
-34-<PAGE>
agent for the Common Shares or the Preferred Shares a copy of
such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate in accordance with Section 25
hereof.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power. In the event, directly
or indirectly, at any time after a Person has become an Ac-
quiring Person, (a) the Company shall consolidate with, or
merge with and into, any other Person, (b) any Person shall
consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property, or (c)
the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one
or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person other
than the Company or one or more of its wholly-owned Subsid-
iaries, then, and in each such case, proper provision shall
be made so that (i) each holder of a Right (except as other-
wise provided herein) shall thereafter have the right to re-
ceive, upon the exercise thereof at a price equal to the then
-35-<PAGE>
current Purchase Price multiplied by the number of one one--
hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement
and in lieu of Preferred Shares, such number of Common Shares
of such other Person (including the Company as successor
thereto or as the surviving corporation) as shall equal the
result obtained by (A) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that
product by (B) 50% of the then current per share market price
of the Common Shares of such other Person (determined pursu-
ant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (ii) the issuer
of such Common Shares shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale
or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to,
the reservation of a sufficient number of its Common Shares
in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provi-
sions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares thereaf-
ter deliverable upon the exercise of the Rights. The Company
shall not consummate any such consolidation, merger, sale or
-36-<PAGE>
transfer unless prior thereto the Company and such issuer
shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The Company shall not
enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or
any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or sub-
stantially diminish the benefits intended to be afforded by
the Rights. The provisions of this Section 13 shall simi-
larly apply to successive mergers or consolidations or sales
or other transfers.
Section 14. Fractional Rights and Fractional
Shares. (a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place
-37-<PAGE>
on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted
to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with re-
spect to securities listed on the principal national securi-
ties exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported
by NASDAQ or such other system then in use or, if on any such
date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights se-
lected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as deter-
mined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share)
upon exercise of the Rights or to distribute certificates
-38-<PAGE>
which evidence fractional Preferred Shares (other than frac-
tions which are integral multiples of one one-hundredth of a
Preferred Share). Fractions of Preferred Shares in integral
multiples of one one-hundredth of a Preferred Share may, at
the election of the Company, be evidenced by depositary re-
ceipts, pursuant to an appropriate agreement between the
Company and a depositary selected by it; provided, that such
agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and prefer-
ences to which they are entitled as beneficial owners of the
Preferred Shares represented by such depositary receipts. In
lieu of fractional Preferred Shares that are not integral
multiples of one one-hundredth of a Preferred Share, the
Company shall pay to the registered holders of Right Cer-
tificates 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 Preferred Share. For the pur-
poses of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to the second sentence of Sec-
tion 11(d)(i) hereof) for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right by the acceptance of the
Right expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise of a Right
(except as provided above).
-39-<PAGE>
Section 15. Rights of Action. All rights of ac-
tion in respect of this Agreement, excepting the rights of
action given to the Rights Agent under Section 18 hereof, are
vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the reg-
istered holders of the Common Shares); and any registered
holder of any Right Certificate (or, prior to the Distribu-
tion Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Shares),
may, in his own behalf and for his own benefit, enforce, and
may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect
of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate
and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifi-
cally acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obliga-
tions under, and injunctive relief against actual or threat-
ened violations of the obligations of any Person subject to,
this Agreement.
Section 16. Agreement of Right Holders. Every
holder of a Right, by accepting the same, consents and agrees
-40-<PAGE>
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
the Common Shares;
(b) after the Distribution Date, the Right Cer-
tificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office of the
Rights Agent, duly endorsed or accompanied by a proper in-
strument of transfer; and
(c) the Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any nota-
tions of ownership or writing on the Right Certificates or
the associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes what-
soever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the Preferred Shares or any other
-41-<PAGE>
securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right 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 stock-
holders (except as provided in Section 25 hereof), or to re-
ceive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The
Company agrees to pay to the Rights Agent reasonable compen-
sation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in
the administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Com-
pany also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense
(including, without limitation, the reasonable expenses of
legal counsel), incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for any-
thing done or omitted by the Rights Agent in connection with
-42-<PAGE>
the acceptance and administration of its duties under this
Agreement.
The Rights Agent shall be protected and shall incur
no liability for, or in respect of any action taken, suffered
or omitted by it in connection with, its administration of
this Agreement, in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowl-
edged, by the proper person or persons, or otherwise upon the
advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of
Name of Rights Agent. Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or
any successor Rights Agent shall be a party, or any corpora-
tion succeeding to the 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 execu-
tion or filing of any paper or any further act on the part of
any of the parties hereto; provided, that such corporation
-43-<PAGE>
would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Right Certificates
shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates
so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either
in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right Certifi-
cates shall have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates
and in this Agreement.
-44-<PAGE>
Section 20. Rights and Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations im-
posed by this Agreement upon the following terms and condi-
tions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal coun-
sel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authoriza-
tion 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 un-
der this Agreement the Rights Agent shall deem it necessary
or desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action here-
under, 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 any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full autho-
rization 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.
-45-<PAGE>
(c) The Rights Agent shall be liable hereunder to
the Company and any other Person 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 Right Certificates (except its
countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any re-
sponsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersigna-
ture thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be re-
sponsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section
11(a)(ii) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) pro-
vided for in Section 3, 11, 13, 23 or 24, or the ascertaining
of the existence of facts that would require any such change
or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such
-46-<PAGE>
change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Preferred Shares
to be issued pursuant to this Agreement or any Right Cer-
tificate or as to whether any Preferred Shares will, when
issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, ex-
ecute, acknowledge and deliver or cause to be performed, ex-
ecuted, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be re-
quired 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 di-
rected to accept instructions with respect to the performance
of its duties hereunder from any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice
President, the Secretary or the Treasurer of the Company, and
to apply to such officers for advice or instructions in con-
nection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance
with instructions of any such officer or for any delay in
acting while waiting for those instructions.
(h) The Rights Agent and any stockholder, direc-
tor, officer or employee of the Rights Agent may buy, sell or
-47-<PAGE>
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 reasonable care was exercised in the selection and
continued employment thereof.
Section 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be dis-
charged from its duties under this Agreement upon 30 days'
notice in writing mailed to the Company and to each transfer
agent of the Common Shares or Preferred Shares by registered
or certified mail, and to the holders of the Right Certifi-
cates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights
-48-<PAGE>
Agent, as the case may be, and to each transfer agent of the
Common Shares or Preferred Shares by registered or certified
mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If
the Company shall fail to make such appointment within a pe-
riod of 30 days after giving notice of such removal or after
it has been notified in writing of such resignation or inca-
pacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such no-
tice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the ap-
pointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be
a corporation organized and doing business under the laws of
the United States or of the States of Ohio or New York (or of
any other state of the United States so long as such corpo-
ration is authorized to do business as a banking institution
in the States of Ohio or New York), in good standing, having
an office in the States of Ohio or New York, which is autho-
rized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination
by federal or state authority and which has at the time of
-49-<PAGE>
its appointment as Rights Agent a combined capital and sur-
plus of at least $50 million. After appointment, the suc-
cessor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been origi-
nally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to
the successor Rights Agent any property at the time held by
it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to
give any notice provided for in this Section 21, however, or
any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the ap-
pointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option,
issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or
-50-<PAGE>
kind or class of shares or other securities or property pur-
chasable under the Right Certificates made in accordance with
the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Direc-
tors of the Company may, at its option, at any time prior to
such time as any Person becomes an Acquiring Person, redeem
all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transac-
tion occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price").
The redemption of the Rights by the Board of Directors may be
made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion
may establish.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the
Rights pursuant to paragraph (a) of this Section 23, 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. The Company shall promptly give public
notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after
-51-<PAGE>
such action of the Board of Directors ordering the redemption
of the Rights, the Company shall mail a notice of redemption
to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the reg-
istry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which
the payment of the Redemption Price will be made. Neither
the Company nor any of its Affiliates or Associates may re-
deem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this
Section 23 or in Section 24 hereof, and other than in con-
nection with the purchase of Common Shares prior to the Dis-
tribution Date.
Section 24. Exchange. (a) The Board of Directors
of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provi-
sions of Section 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or simi-
lar transaction occurring after the date hereof (such ex-
change ratio being hereinafter referred to as the "Exchange
-52-<PAGE>
Ratio"). Notwithstanding the foregoing, the Board of Direc-
tors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or
any such Subsidiary, or any entity holding Common Shares for
or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Ben-
eficial Owner of 50% or more of the Common Shares then out-
standing.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to paragraph (a) of this Section 24 and without any
further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of
Common Shares equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as
they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which
-53-<PAGE>
the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall
be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be suf-
ficient Common Shares issued but not outstanding or autho-
rized but unissued to permit any exchange of Rights as con-
templated in accordance with this Section 24, the Company
shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exchange of the
Rights. In the event the Company shall, after good faith
effort, be unable to take all such action as may be necessary
to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be
issuable upon exchange of a Right, a number of Preferred
Shares or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of
one Common Share as of the date of issuance of such Preferred
Shares or fraction thereof.
(d) The Company shall not be required to issue
fractions of Common Shares or to distribute certificates
which evidence fractional Common Shares. In lieu of such
-54-<PAGE>
fractional Common Shares, the Company shall pay to the reg-
istered holders of the Right Certificates with regard to
which such fractional Common Shares would otherwise be issu-
able an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the pur-
poses of this paragraph (d), the current market value of a
whole Common Share shall be the closing price of a Common
Share (as determined pursuant to the second sentence of Sec-
tion 11(d)(i) hereof) for the Trading Day immediately prior
to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case
the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or
to make any other distribution to the holders of its Pre-
ferred Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Preferred Shares rights
or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclas-
sification of its Preferred Shares (other than a reclas-
sification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more
-55-<PAGE>
of the assets or earning power of the Company and its Sub-
sidiaries (taken as a whole) to, any other Person, (v) to
effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by reclas-
sification or otherwise than by payment of dividends in Com-
mon Shares), then, in each such case, the Company shall give
to each holder of a Right Certificate, in accordance with
Section 26 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, merger, sale,
transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of
the Common Shares and/or Preferred Shares, if any such date
is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 10
days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case
of any such other action, at least 10 days prior to the date
of the taking of such proposed action or the date of par-
ticipation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section
11(a)(ii) hereof shall occur, then the Company shall as soon
-56-<PAGE>
as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice
of the occurrence of such event, which notice shall describe
such event and the consequences of such event to holders of
Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands autho-
rized by this Agreement to be given or made by the Rights
Agent or by the holder of any Right Certificate to or on the
Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as fol-
lows:
Eaton Corporation
Eaton Center
Cleveland, Ohio 44114
Attention: Office of the Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by
the Company or by the holder of any Right Certificate to or
on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as fol-
lows:
Society National Bank
Attention:
-57-<PAGE>
Notices or demands authorized by this Agreement to be given
or made by the Company or the Rights Agent to the holder of
any Right Certificate 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 27. Supplements and Amendments. The Com-
pany may from time to time supplement or amend this Agreement
without the approval of any holders of Right Certificates in
order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or incon-
sistent with any other provisions herein, or to make any
other provisions with respect to the Rights which the Company
may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company
and the Rights Agent; provided, however, that from and after
such time as any Person becomes an Acquiring Person, this
Agreement shall not be amended in any manner which would ad-
versely affect the interests of the holders of Rights.
Without limiting the foregoing, the Board of Directors of the
Company may at any time prior to such time as any Person be-
comes an Acquiring Person amend this Agreement to lower the
thresholds set forth in Sections 1(a) and 3(a) to not less
than the greater of (i) the sum of .001% and the largest
percentage of the outstanding Common Shares then known by the
Company to be beneficially owned by any Person (other than
-58-<PAGE>
the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company,
or any entity holding Common Shares for or pursuant to the
terms of any such plan) and (ii) 10%.
Section 28. 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 ben-
efit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing
in this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equi-
table 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
Right Certificates (and, prior to the Distribution Date, the
Common Shares).
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, provi-
sions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be af-
fected, impaired or invalidated.
-59-<PAGE>
Section 31. Governing Law. This Agreement and
each Right Certificate issued hereunder shall be deemed to be
a contract made under the laws of the State of Ohio and for
all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be
made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are in-
serted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
-60-<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and attested, all as of
the day and year first above written.
EATON CORPORATION
Attest:
By /s/ E.R. Franklin By /s/ J. M. Carmont
Title: Secretary Title: Vice President and
Treasurer
Attest: SOCIETY NATIONAL BANK,
as Rights Agent
By /s/ Laura Thoms By /s/ B. William Bedy
Title: Assistant Vice Title: Vice President
President
-61-<PAGE>
Exhibit A
FORM
of
CERTIFICATE OF AMENDMENT
by
DIRECTORS
of
EATON CORPORATION
William E. Butler, Chairman of the Board and Chief
Executive Officer, and Earl R. Franklin, Secretary of Eaton
Corporation, an Ohio corporation for profit with its principal
place of business at Cleveland, Ohio (hereinafter called the
"Corporation"), hereby certify that at a meeting of the Board
of Directors called and held on the 28th day of June, 1995 the
following resolution was adopted pursuant to Section
1701.70(B)(1) of the Ohio General Corporation Law:
RESOLVED, that pursuant to the authority vested in
the Board of Directors (hereinafter called the "Board of Di-
rectors" or the "Board") in accordance with the provisions of
the Ohio General Corporation Law, as amended, and by Article
FOURTH of the Corporation's Amended Articles of Incorporation,
such Article FOURTH is amended to add a new paragraph 9 to Di-
vision A providing for a series of Serial Preferred Shares,
without par value, of the Corporation and that the designation
and the authorized number of shares of, and the relative
rights, preferences, and limitations of, such series are as
follows:
Series A Participating Preferred Stock:
Section 1. Designation and Amount. The shares of
such series shall be designated as "Series A Participating
Preferred Stock" (the "Series A Preferred Stock") and the num-
ber of shares constituting the Series A Preferred Stock shall
be 900,000.
A-1<PAGE>
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any
shares of any class of preferred stock ranking prior and
superior to the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred
Stock, in preference to the holders of Common Stock, par
value $.50 per share (the "Common Stock"), of the Corpo-
ration, and of any other junior stock, shall be entitled
to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of
March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Divi-
dend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share
or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to
the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivi-
sion of the outstanding shares of Common Stock (by re-
classification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consoli-
dation of the outstanding shares of Common Stock (by re-
classification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which
is the number of shares of Common Stock that were out-
standing immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided
in paragraph (A) of this Section immediately after it de-
clares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the
A-2<PAGE>
next subsequent Quarterly Dividend Payment Date, a divi-
dend of $1 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumula-
tive on outstanding shares of Series A Preferred Stock
from the Quarterly Dividend Payment Date next preceding
the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of is-
sue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Pre-
ferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determi-
nation of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than
60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting
rights:
(A) Each share of Series A Preferred Stock shall
entitle the holder thereof to 1 vote on all matters sub-
mitted to a vote of the stockholders of the Corporation.
The holders of fractional Series A Preferred Stock shall
not be entitled to any vote on any matter submitted to a
vote of the shareholders of the Corporation.
(B) Subject to the provisions of Paragraph 6 of Di-
vision A of this Article FOURTH, the holders of Serial
Preferred Shares shall be entitled to elect two directors
of the Corporation whenever dividends payable on any
series of Serial Preferred Shares shall be in default as
qualified therein. For purposes of the holders of Serial
Preferred Shares exercising such right, the provisions of
the Corporation's Code of Regulations and other provisions
of law shall apply, as if the Serial Preferred Shares were
the only class of shares of the Corporation outstanding.
A-3<PAGE>
(C) Except as otherwise provided herein, in the
Amended Articles of Incorporation of the Corporation, in
any other Certificate of Amendment creating a series of
Serial Preferred Shares or any similar stock, or by law,
the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(D) Except as set forth herein, in the Amended Ar-
ticles of Incorporation of the Corporation, or as other-
wise provided by law, holders of Series A Preferred Stock
shall have no special voting rights and their consent
shall not be required (except to the extent they are en-
titled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Preferred Stock
as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Cor-
poration shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking jun-
ior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Pre-
ferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Pre-
ferred Stock, except dividends paid ratably on the
Series A Preferred Stock and all such parity stock
on which dividends are payable or in arrears in
proportion to the total amounts to which the hold-
ers of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior
(either as to dividends or upon liquidation, dis-
solution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of
any stock of the Corporation ranking junior (either
as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
A-4<PAGE>
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred
Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in ac-
cordance with a purchase offer made in writing or
by publication (as determined by the Board of Di-
rectors) to all holders of such shares upon such
terms as the Board of Directors, after consider-
ation of the respective annual dividend rates and
other relative rights and preferences of the re-
spective series and classes, shall determine in
good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsid-
iary of the Corporation to purchase or otherwise acquire
for consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Se-
ries A Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued Serial Preferred Shares and may be reissued as part
of a new series of Serial Preferred Shares subject to the
conditions and restrictions on issuance set forth herein, in
the Amended Articles of Incorporation, or in any other Cer-
tificate of Amendment creating a series of Serial Preferred
Shares or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Cor-
poration, no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares
of Series A Preferred Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the
date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an ag-
gregate amount per share, subject to the provision for ad-
justment hereinafter set forth, equal to 100 times the ag-
gregate amount to be distributed per share to holders of
shares of Common Stock, or (2) to the holders of shares of
stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in propor-
tion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or
A-5<PAGE>
winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combina-
tion or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Pre-
ferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the de-
nominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case
the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Com-
mon Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case each share of Series A Preferred Stock shall at the same
time be similarly exchanged or changed into an amount per
share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Cor-
poration shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstand-
ing shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into
a greater or lesser number of shares of Common Stock, then in
each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A
Preferred Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock
shall rank, with respect to the payment of dividends and the
distribution of assets, on a parity with any other series of
Serial Preferred Shares and shall rank junior to any series
of any other class of preferred stock of the Corporation
which by its terms is senior to the Serial Preferred Shares.
Section 10. Amendment. Subject to the provisions
of Article FOURTH of the Corporation's Amended Articles of
A-6<PAGE>
Incorporation, the Amended Articles of Incorporation and the
Code of Regulations of the Corporation shall not be amended,
altered or repealed in any manner which would affect ad-
versely the voting powers, rights or preferences of the
holders of the Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Pre-
ferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Amendment
is executed on behalf of the Corporation by its Chairman of
the Board and Chief Executive Officer and attested by its
Secretary this day of , 1995.
Chairman of the Board and
Chief Executive Officer
Attest:
Secretary
A-7<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R- Rights
NOT EXERCISABLE AFTER JULY 12, 2005 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUB-
JECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
EATON CORPORATION
This certifies that , or regis-
tered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of June 28, 1995 (the "Rights
Agreement"), between Eaton Corporation, an Ohio corporation
(the "Company"), and Society National Bank (the "Rights
Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., Cleveland, Ohio time, on
July 12, 2005 at the principal office of the Rights Agent, or
at the office of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of
Series A Participating Preferred Stock, without par value
(the "Preferred Shares"), of the Company, at a purchase price
of $250 per one one-hundredth of a Preferred Share (the "Pur-
chase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly exe-
cuted. The number of Rights evidenced by this Right Certif-
icate (and the number of one one-hundredths of a Preferred
Share which may be purchased upon exercise hereof) set forth
above, and the Purchase Price set forth above, are the number
and Purchase Price as of June 28, 1995, based on the Pre-
ferred Shares as constituted at such date. As provided in
the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a Preferred Share which may be pur-
chased upon the exercise of the Rights evidenced by this
Right Certificate are subject to modification and adjustment
upon the happening of certain events.
This Right Certificate is subject to all of the
terms, provisions and conditions of the Rights Agreement,
B-1<PAGE>
which terms, provisions and conditions are hereby incorpo-
rated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full descrip-
tion of the rights, limitations of rights, obligations, du-
ties and immunities hereunder of the Rights Agent, the Com-
pany and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive
offices of the Company and the above-mentioned offices of the
Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate
or Right Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate num-
ber of Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have en-
titled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or
Right Certificates for the number of whole Rights not exer-
cised.
Subject to the provisions of the Rights Agreement,
the Rights evidenced by this Certificate (i) may be redeemed
by the Company at a redemption price of $.01 per Right or
(ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company's Common Stock, par value
$.50 per share.
No fractional Preferred Shares will be issued upon
the exercise of any Right or Rights evidenced hereby (other
than fractions which are integral multiples of one one--
hundredth of a Preferred Share, which may, at the election of
the Company, be evidenced by depositary receipts), but in
lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be en-
titled to vote or receive dividends or be deemed for any pur-
pose the holder of the Preferred Shares or of any other secu-
rities 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 direc-
tors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corpo-
rate action, or to receive notice of meetings or other ac-
tions affecting stockholders (except as provided in the
B-2<PAGE>
Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by
this Right Certificate shall have been exercised as provided
in the Rights Agreement.
This Right Certificate shall not be valid or obliga-
tory for any purpose until it shall have been countersigned
by the Rights Agent.
WITNESS the facsimile signature of the proper offic-
ers of the Company and its corporate seal. Dated as of
, 199 .
ATTEST: EATON CORPORATION
By
Countersigned:
Society National Bank
By
Authorized Signature
B-3<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: , 199
Signature
Signature Guaranteed:
Signatures must be guaranteed by a participant in
the Securities Transfer Agent Medallion Program, the Stock
Exchanges Medallion Program or the New York Stock Exchange,
Inc. Medallion Signature Program.
------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially
owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
Signature
-------------------------------------------------------------
B-4<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: EATON CORPORATION
The undersigned hereby irrevocably elects to exer-
cise Rights represented by this
Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certif-
icates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evi-
denced by this Right Certificate, a new Right Certificate for
the balance remaining of such Rights shall be registered in
the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: , 199
Signature
B-5<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the Na-
tional Association of Securities Dealers, Inc., or a com-
mercial bank or trust company having an office or correspon-
dent in the United States.
B-6<PAGE>
Form of Reverse Side of Right Certificate -- continued
-------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially
owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
Signature
-------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of
Election to Purchase, as the case may be, must conform to the
name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in
the Form of Assignment or the Form of Election to Purchase,
as the case may be, is not completed, the Company and the
Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and such Assignment or Election to Purchase
will not be honored.
B-7<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
Introduction
On June 28, 1995, the Board of Directors of Eaton
Corporation (the "Company") declared a dividend of one pre-
ferred share purchase right (a "Right") for each outstanding
common share, par value $.50 per share (the "Common Shares"),
of the Company. The dividend is payable on July 12, 1995
(the "Record Date") to the shareholders of record on that
date. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the
Company and Society National Bank, as Rights Agent (the
"Rights Agent"). The Rights contain important "flip-over"
and "flip-in" features designed to protect the Company from
unfair takeovers.
Purchase Price
Each Right entitles the registered holder to pur-
chase from the Company one one-hundredth of a share of Series
A Participating Preferred Stock, without par value (the
"Preferred Shares"), of the Company at a price of $250 per
one one-hundredth of a Preferred Share (the "Purchase
Price"), subject to adjustment.
Flip-Over
If the Company is acquired in a merger or other
business combination or 50% or more of its consolidated
assets or earning power are sold after a person or group has
become an Acquiring Person (as defined below), each holder of
a Right will thereafter have the right to receive, upon ex-
ercise, that number of shares of common stock of the acquir-
ing company which then will have a market value of two times
the exercise price of the Right.
Flip-In
If any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right,
other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the<PAGE>
right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the
Right.
Transfer and Detachment
Until the Distribution Date, the Rights will be
evidenced, with respect to any of the Common Share certifi-
cates outstanding as of the Record Date, by such Common Share
certificate with a copy of this Summary of Rights attached
thereto. Until the Distribution Date (or earlier redemption
or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares, and transfer of those
certificates will also constitute transfer of those Rights.
As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution
Date and such separate Right Certificates alone will there-
after evidence the Rights.
Distribution Date
The "Distribution Date" is the earlier of:
(i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership
of 20% or more of the outstanding Common Shares; or
(ii) 10 business days (or such later date as may be
determined by action of the Board of Directors before
any person or group becomes an Acquiring Person) fol-
lowing the commencement of, or announcement of an in-
tention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the
outstanding Common Shares.
Exercisability
The Rights are not exercisable until the Distribu-
tion Date. The Rights will expire on July 12, 2005 (the
"Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed or ex-
changed by the Company, as described below.
C-2<PAGE>
Adjustments
The Purchase Price, and the number of Preferred
Shares or other securities or property issuable, upon exer-
cise of the Rights are subject to adjustment from time to
time to prevent dilution, in the event of:
(i) a stock dividend on, or a subdivision, combi-
nation or reclassification of, the Preferred Shares,
(ii) the grant to holders of the Preferred Shares
of certain rights to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Pre-
ferred Shares with a conversion price, less than the
then-current market price of the Preferred Shares, or
(iii) the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred
Shares) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights is also subject to
adjustment upon certain occurrences prior to the Distribution
Date.
With certain exceptions, no adjustment in the Pur-
chase Price will be required until cumulative adjustments
require an adjustment of at least 1% in such Purchase Price.
No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth
of a Preferred Share, which may, at the election of the Com-
pany, be evidenced by depositary receipts) and in lieu there-
of, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior
to the date of exercise.
Preferred Shares
Preferred Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend payment
of $1 per share but will be entitled to an aggregate dividend
of 100 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation pay-
ment of $100 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share. Each
Preferred Share will have 1 vote, voting together with the
C-3<PAGE>
Common Shares. Finally, in the event of any merger, con-
solidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive
100 times the amount received per Common Share. The dividend
and liquidation rights and rights upon a merger, consolida-
tion or other transaction are protected by customary antidi-
lution provisions.
The value of the one one-hundredth interest in a
Preferred Share purchasable upon exercise of each Right
should, because of the nature of the Preferred Shares' div-
idend and liquidation rights, approximate the value of one
Common Share.
Exchange
At any time after any person or group becomes an
Acquiring Person, and prior to the acquisition by that person
or group of 50% or more of the outstanding Common Shares, the
Board of Directors of the Company may exchange the Rights
(other than Rights owned by the Acquiring Person, which will
have become void), in whole or in part, at an exchange ratio
of one Common Share, or one one-hundredth of a Preferred
Share (or of a share of a class or series of the Company's
preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Redemption
At any time prior to any person or group becoming
an Acquiring Person, the Board of Directors of the Company
may redeem all the Rights at a price of $.01 per Right (the
"Redemption Price"). The redemption may be made effective at
such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
Immediately upon any redemption, the right to exercise the
Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Amendments
The terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the hold-
ers of the Rights, including an amendment to lower the 20%
threshold described above to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstand-
ing Common Shares then known to the Company to be benefi-
cially owned by any person or group of affiliated or asso-
ciated persons and (ii) 10%, except that after any person or
C-4<PAGE>
group becomes an Acquiring Person no such amendment may ad-
versely affect the interests of the holders of the Rights.
Rights as Holders
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to re-
ceive dividends.
Further Information
A copy of the Rights Agreement has been filed with
the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated , 1995. A
copy of the Rights Agreement is available free of charge from
the Company's Shareholder Relations Department. This summary
description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
C-5
[EATON LETTERHEAD]
Date June 28, 1995
Contact Renald M. Romain (216) 523-4736
For Release Immediately
EATON CORPORATION DECLARES DIVIDEND
DISTRIBUTION OF PREFERRED SHARE PURCHASE RIGHTS
CLEVELAND, OH ... The Board of Directors of Eaton Corporation
today declared a dividend of one Preferred Share Purchase Right
on each outstanding Eaton common share.
William E. Butler, Chairman and Chief Executive Officer, said,
"The Rights are designed to assure that all of Eaton's share-
holders receive fair and equal treatment in any proposed take-
over of the Company and to guard against abusive tactics to
gain control of the Company without paying all shareholders a
premium for that control. The Rights are not being adopted in
response to any specific takeover threat. They are in response
to the general takeover environment, which has changed sig-
nificantly since the Company redeemed its earlier rights plan
in 1993.
"The Rights will not prevent a legitimate takeover attempt.
They are, however, intended to enable all Eaton shareholders to
realize the long-term value of their investment in the Company,
and should encourage anyone seeking to acquire the Company to
negotiate with the Board prior to attempting a takeover. Pro-
tection of our existing shareholder interests is of particular
importance now, because your Board strongly believes that Eaton
enjoys extraordinary growth opportunities, which will be pur-
sued vigorously in the next several years."
The Rights will be exercisable only if a person or group ac-
quires, or announces a tender offer to acquire, 20 percent or
more of Eaton's common shares. Each Right will entitle share-
holders to buy one one-hundredth of a share of a new series of
preferred stock at an exercise price of $250.
If a person or group acquires 20 percent or more of Eaton's
outstanding common shares, each Right will entitle its holder
to purchase, at the then-current exercise price, a number of
Eaton's common shares having a market value of twice that
price. In addition, if Eaton is acquired in a merger or other
business combination after an acquiring company has acquired 20
percent or more of the Company's common shares, each Right will
entitle its holder to purchase, at the Right's then-current
exercise price, a number of the acquiring company's common<PAGE>
Page 2
shares having a market value of twice the exercise price. The
acquiring person will not be entitled to exercise these Rights.
Following the acquisition of 20 percent or more of the
Company's common shares and prior to acquisition of 50 percent
or more of the common shares, the Board of Directors may ex-
change the Rights at an exchange ratio of one common share (or
one one-hundredth of a share of the new series of participating
preferred stock) per Right. The acquiring person will not be
entitled to receive any shares in this exchange.
Prior to the acquisition of 20 percent or more of the Company's
common shares, the Rights are redeemable for one cent per Right
at the option of the Board of Directors.
The Board of Directors is also authorized to reduce the 20
percent thresholds for triggering the Rights to not less than
10 percent.
The dividend will be made on July 12, 1995 to shareholders of
record on that date, and is not taxable to shareholders. The
Rights will expire on July 12, 2005.
Eaton Corporation is a global manufacturer of highly engineered
products which serve vehicle, industrial, construction, com-
mercial, aerospace and marine markets. Principal products in-
clude truck transmissions and axles, engine components, hy-
draulic products, electrical power distribution and control
equipment, ion implanters and a wide variety of controls.
Headquartered at Eaton Center in Cleveland, the company has
52,000 employees and 150 manufacturing sites in 22 countries
around the world. Sales for 1994 were $6.1 billion.
