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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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
Emerson Electric Co.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Missouri 43-0259330
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(STATE OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
8000 West Florissant Avenue
St. Louis, Missouri 63136
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(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
securities pursuant to Section 12(b) securities pursuant to Section 12(g)
of the Exchange Act and is effective of the Exchange Act and is effective
pursuant to General Instruction A.(c), pursuant to General Instruction
please check the following box. [ ] A.(d), please check the following
box. [ ]
SECURITIES ACT REGISTRATION STATEMENT FILE NUMBER TO WHICH THIS FORM RELATES:
_____________________________ (IF APPLICABLE)
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
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New York Stock Exchange
Preferred Stock Purchase Rights Chicago Stock Exchange
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SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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(TITLE OF CLASS)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On October 6, 1998, the Board of Directors of Emerson Electric
Co. (the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock, par value $0.50 per share,
of the Company (the "Common Stock"). The dividend distribution is payable on
November 1, 1998 (the "Record Date") to the stockholders of record as of the
close of business on that date. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series B Junior
Participating Preferred Stock, par value $2.50 per share (the "Preferred Stock")
of the Company at a price of $260.00 per one one-thousandth of a share of
Preferred Stock (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a 1998 Rights Agreement dated as of
November 1, 1998, as the same may be amended from time to time (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the
tenth business day following the date of public announcement or the date on
which the Company first has notice or determines that a person or group of
affiliated or associated persons (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company) (an "Acquiring Person") has
acquired, or obtained the right to acquire, 20% or more of the outstanding
shares of voting stock of the Company without the prior express written consent
of the Company executed on behalf of the Company by a duly authorized officer of
the Company following express approval by action of at least a majority of the
members of the Board of Directors then in office (the "Stock Acquisition Date")
or (ii) the close of business on the tenth business day (or such later date as
may be determined by action of the Board of Directors but not later than the
Stock Acquisition Date) following the commencement of a tender offer or exchange
offer, without the prior written consent of the Company, by a person (other than
the Company, any subsidiary of the Company or an employee benefit plan of the
Company) which, upon consummation, would result in such party's control of 20%
or more of the Company's voting stock (the earlier of the dates in clause (i) or
(ii) above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Company's Common Stock. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
new Common Stock certificates issued after the Record Date upon transfer or new
issuances of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights, will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate certificates alone will then evidence the
Rights.
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The Rights are not exercisable until the Distribution Date.
The Rights will expire, if not previously exercised, on November 1, 2008 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed or exchanged by the Company.
The Purchase Price payable, and the number of shares of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
Preferred Stock at a price, or securities convertible into Preferred Stock with
a conversion price, less than the then-current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in shares of Common Stock
or subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable and junior to any other series of preferred stock
the Company may issue (unless otherwise provided in the terms of such stock).
Each share of Preferred Stock will have a preferential dividend in an amount
equal to 1,000 times any dividend declared on each share of Common Stock. In the
event of liquidation, the holders of the Preferred Stock will receive a
preferred liquidation payment of equal to the greater of $1,000 and 1,000 times
the payment made per share of Common Stock. Each share of Preferred Stock will
have one vote, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be entitled to
receive 1,000 times the amount and type of consideration received per share of
Common Stock. The rights of the Preferred Stock as to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-thousandth interest in a
share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
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If any person or group (other than the Company, any subsidiary
of the Company, any employee benefit plan of the Company) acquires 20% or more
of the Company's outstanding voting stock without the prior written consent of
the Board of Directors, each Right, except those held by such persons, would
entitle each holder of a Right to acquire such number of shares of the Company's
Common Stock as shall equal the result obtained by multiplying the then current
Purchase Price by the number of one one-thousandths of a share of Preferred
Stock for which a Right is then exercisable and dividing that product by 50% of
the then current per-share market price of Company Common Stock.
If any person or group (other than the Company, any subsidiary
of the Company, any employee benefit plan of the Company) acquires more than 20%
but less than 50% of the outstanding Company Common Stock without prior written
consent of the Board of Directors, each Right, except those held by such
persons, may be exchanged by the Board of Directors for one share of Company
Common Stock.
If the Company were acquired in a merger or other business
combination transaction where the Company is not the surviving corporation or
where Company Common Stock is exchanged or changed or 50% or more of the
Company's assets or earnings power is sold in one or several transactions
without the prior written consent of the Board of Directors, each Right would
entitle the holders thereof (except for the Acquiring Person) to receive such
number of shares of the acquiring company's common stock as shall be equal to
the result obtained by multiplying the then current Purchase Price by the number
one one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by 50% of the then current market price
per share of the common stock of the acquiring company on the date of such
merger or other business combination transaction.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares of Preferred Stock will be
issued (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes
such, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $0.005 per Right (the "Redemption Price"). The
redemption of the Rights 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 of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including, but not limited to, an amendment to lower certain thresholds
described above to not less than the greater of (i) any percentage greater than
the largest percentage of the voting power of all securities of the Company then
known to the Company to be beneficially owned by any person or group of
affiliated or associated persons (other than an excepted person) and (ii) 10%,
except that from and after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person no such amendment may adversely
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 stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
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The form of Rights Agreement between the Company and the
Rights Agent specifying the terms of the Rights, which includes as Exhibit B
thereto the form of Right Certificate, is attached hereto as Exhibit 1 and is
incorporated herein by reference. The foregoing description of the Rights does
not purport to be complete and is qualified in its entirety by reference to the
form of Rights Agreement (and the exhibits thereto) attached hereto.
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ITEM 2. EXHIBITS.
Exhibit No. Description of Exhibit
1 Rights Agreement, dated as of November 1, 1998
between Emerson Electric Co. and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent, which
includes the form of Certificate of Designations,
setting forth the terms of the Series B Junior
Participating Preferred Stock, par value $2.50 per
share, as Exhibit A, the form of Right Certificate as
Exhibit B and the Summary of Preferred Stock Purchase
Rights as Exhibit C. Pursuant to the Rights
Agreement, printed Right Certificates will not be
mailed until as soon as practicable after the earlier
of the tenth day after public announcement that a
person or group (except for certain exempted persons
or groups) has acquired beneficial ownership of 20%
or more of the outstanding shares of Common Stock or
the tenth business day (or such later date as may be
determined by action of the Board of Directors) after
a person commences, or announces its intention to
commence, 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 shares of Common Stock.
2 Letter to be sent to the Shareholders of Emerson
Electric Co.
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, thereto duly authorized.
EMERSON ELECTRIC CO.
(Registrant)
Date: October 6, 1998 By: /s/ W. Wayne Withers
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W. Wayne Withers
Senior Vice President,
Secretary and General Counsel
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
1 Rights Agreement, dated as of November 1, 1998
between Emerson Electric Co. and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent, which
includes the form of Certificate of Designations,
setting forth the terms of the Series B Junior
Participating Preferred Stock, par value $2.50 per
share, as Exhibit A, the form of Right Certificate as
Exhibit B and the Summary of Preferred Stock Purchase
Rights as Exhibit C. Pursuant to the Rights
Agreement, printed Right Certificates will not be
mailed until as soon as practicable after the earlier
of the tenth day after public announcement that a
person or group (except for certain exempted persons
or groups) has acquired beneficial ownership of 20%
or more of the outstanding shares of Common Stock or
the tenth business day (or such later date as may be
determined by action of the Board of Directors) after
a person commences, or announces its intention to
commence, 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 shares of Common Stock.
2 Letter to be sent to the Shareholders of Emerson
Electric Co.
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Exhibit 1
1998 RIGHTS AGREEMENT
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EMERSON ELECTRIC CO.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
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Dated as of November 1, 1998
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INDEX
Page
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Section 1. Certain Definitions................................................1
Section 2. Appointment of Rights Agent........................................4
Section 3. Issue of Right Certificates........................................4
Section 4. Form of Right Certificates.........................................6
Section 5. Countersignature and Registration..................................7
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates............8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights......8
Section 8. Cancellation and Destruction of Right Certificates................10
Section 9. Reservation and Availability of Shares of Preferred Stock.........11
Section 10. Preferred Stock Record Date......................................11
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights.................................................12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.......18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power....................................................19
Section 14. Fractional Rights and Fractional Shares..........................21
Section 15. Rights of Action.................................................22
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Section 16. Agreement of Right Holders.......................................23
Section 17. Right Certificate Holder Not Deemed a Stockholder................23
Section 18. Concerning the Rights Agent......................................23
Section 19. Merger or Consolidation or Change of Name of Rights Agent........24
Section 20. Duties of Rights Agent...........................................25
Section 21. Change of Rights Agent...........................................27
Section 22. Issuance of New Right Certificates...............................27
Section 23. Redemption and Termination.......................................28
Section 24. Exchange.........................................................28
Section 25. Notice of Proposed Actions.......................................30
Section 26. Notices..........................................................31
Section 27. Supplements and Amendments.......................................31
Section 28. Successors.......................................................32
Section 29. Benefits of This Rights Agreement................................32
Section 30. Severability.....................................................32
Section 31. Governing Law....................................................32
ii
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Section 32. Counterparts.....................................................32
Section 33. Descriptive Headings.............................................33
Exhibit A - Form of Certificate of Designation for
Series B Junior Participating
Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Preferred Stock Purchase Rights
iii
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1998 RIGHTS AGREEMENT
This 1998 Rights Agreement, dated as of November 1, 1998 (the
"Rights Agreement") is entered into between Emerson Electric Co., a Missouri
corporation (the "Company") and ChaseMellon Shareholder Services, L.L.C., a New
Jersey limited liability company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on November 1, 1988 the Board of Directors of the
Company declared a dividend of one Preferred Stock Purchase Right (the "1988
Rights") for each share outstanding share of Common Stock to shareholders of
record as of the close of business on November 14, 1988 which 1988 Rights expire
at the close of business on November 1, 1998; and
WHEREAS, on October 6, 1998 the Board of Directors of the
Company authorized and declared a dividend distribution of one right
(hereinafter referred to as a "Right") for each share of Common Stock, par value
$0.50 per share, of the Company outstanding at the close of business on November
1, 1998 (the "Record Date") (other than shares of such Common Stock held in the
Company's treasury on such date), and has authorized the issuance of one Right
in respect of each share of Common Stock of the Company issued between the
Record Date (whether originally issued or issued from the Company's treasury)
and the Distribution Date (as such term is defined in Section 3 hereof), each
Right representing the right to purchase one one-thousandth of a share of Series
B Junior Participating Preferred Stock of the Company having the rights, powers
and preferences set forth in the form of Certificate of Designation attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth (the "Rights"); and
WHEREAS, the Company desires to appoint the Rights Agent to
act as provided herein, and the Rights Agent is willing to so act.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter
defined) who or which, together with all Affiliates (as hereinafter defined) and
Associates (as hereinafter defined) of such Person, without the Prior Written
Approval of the Company (as hereinafter defined), shall be the Beneficial Owner
(as hereinafter defined) of securities of the Company constituting 20% or more
of the Voting Power (as hereinafter defined) of the Company or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of securities representing 20% or more of
the Voting Power of the Company, but shall not include (i) the Company, any
Subsidiary of the Company, any employee benefit plan or compensation arrangement
of the Company or any Subsidiary of the Company, or any entity holding
securities of the Company to the extent organized, appointed or established by
the Company or any Subsidiary of the Company for or pursuant to the terms of any
such employee benefit plan or compensation arrangement, or (ii) any Person who
or which, together with all
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Affiliates and Associates of such Person, inadvertently may become the
Beneficial Owner of securities of the Company representing 20% or more of the
Voting Power of the Company or otherwise becomes such a Beneficial Owner without
a plan or intention to acquire control of the Company, so long as such Person,
individually or together with the Affiliates and Associates of such Person,
promptly enters into, and delivers to the Company, an irrevocable commitment
promptly to divest, and thereafter promptly divests (without exercising or
retaining any power, including voting, with respect to such securities),
sufficient securities of the Company so that such Person, together with all
Affiliates and Associates of such Person, ceases to be the Beneficial Owner of
20% or more of the Voting Power of the Company. Notwithstanding the foregoing,
no Person shall become an "Acquiring Person" as the result of an acquisition of
voting securities of the Company by the Company which, by reducing the amount of
such securities outstanding, increases the proportionate voting power of such
securities beneficially owned by such Person to 20% or more of the Voting Power;
provided, however, that if a Person becomes the Beneficial Owner of securities
constituting 20% or more of the Voting Power of the Company by reason of
purchases by the Company and shall, after such purchases by the Company, become
the Beneficial Owner of any additional voting securities of the Company without
the Prior Written Approval of the Company, then such Person shall be deemed to
be an Acquiring Person.
(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 Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own", any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly as
determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act, as in effect on the date hereof;
(ii) which such Person or any of such Person's
Affiliates 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 group
members with respect to a bona fide public offering 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 "Beneficial Owner" of
securities tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for payment or
exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding, provided, however, that a Person shall
not be deemed the "Beneficial Owner" of any security under this clause
(B) if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations under the
Exchange Act and (2) is not also then reportable by such person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
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(iii) which are beneficially owned, directly or
indirectly, 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 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 pursuant to a revocable proxy or consent as described in
clause (B) of subparagraph (ii) of this paragraph (c)) or disposing of
any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," 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 beneficially hereunder.
(d) "Board of Directors" shall mean the Board of Directors of
the Company as constituted from time to time.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Missouri are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., St. Louis, Missouri time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., St. Louis, Missouri time, on
the next succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, par value
$0.50 per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock with
the greatest Voting Power of such Person or the equity securities or other
equity interest having power to control or direct the management of such Person
or, if such Person is a Subsidiary (as hereinafter defined) of another Person,
of the Person which ultimately controls such first-mentioned Person and which
has issued and outstanding such capital stock, equity securities or equity
interests.
(h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(i) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(j) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of any such entity.
(l) "Preferred Stock" shall mean the Series B Junior
Participating Preferred Stock, par value $2.50 per share, of the Company.
(m) "Prior Written Approval of the Company" shall mean prior
express written consent of the Company to the actions in question, executed on
behalf of the Company by a duly
3
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authorized officer of the Company following express approval by action of at
least a majority of the members of the Board of Directors then in office.
(n) "Purchase Price" shall have the meaning set forth in
Section 4 hereof.
(o) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(p) "Section 11(b) Event" shall have the meaning set
forth in Section 11(b) hereof.
(q) "Section 13 Event" shall mean an event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(r) "Stock Acquisition Date" shall mean the earlier of (i) the
first date of public announcement by a Person that an Acquiring Person has
become an Acquiring Person, or (ii) the date on which the Company first has
notice, direct or indirect, or otherwise determines that a Person has become an
Acquiring Person.
(s) "Subsidiary" shall mean, with respect to any Person, any
other Person of which securities or other ownership interests having ordinary
Voting Power, in the absence of contingencies, to elect a majority of the board
of directors (or other persons performing similar functions) of such other
Person are at the time directly or indirectly owned by such Person or one or
more of such Person's Subsidiaries, except that "Subsidiary" when used with
reference to the Company shall mean any Person of which either a majority of the
Voting Power of the voting equity securities or a majority of the equity
interests is owned, directly or indirectly, by the Company.
(t) "Voting Power" shall mean the voting power of all
securities of a Person then outstanding generally entitled to vote for the
election of directors of the Person (or, where appropriate, for the election of
persons performing similar functions).
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable. In the event the Company appoints one or
more Co-Rights Agents, the respective duties of the Rights Agents and any
Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the
tenth Business Day after the Stock Acquisition Date or (ii) the Close of
Business on the tenth Business Day (or such later date as may be determined by
action of the Board of Directors but in no event later than the tenth Business
Day after such time as any Person becomes an Acquiring Person) after the date
that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan or compensation arrangement
of the Company or of any Subsidiary of the Company, or any entity holding
securities of the Company to the extent organized, appointed or established by
the Company or any Subsidiary of
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the Company for or pursuant to the terms of any such employee benefit plan or
compensation arrangement) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, without the Prior Written Approval of the Company, which tender
or exchange offer would result in any Person becoming the Beneficial Owner of
Voting Power aggregating 20% or more of the outstanding Voting Power (including
any such date which is after the date of this Rights Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein referred to as
the "Distribution Date"), (y) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be Right Certificates)
and not by separate Right Certificates, as more fully set forth below, and (z)
the Rights (and the right to receive certificates therefor) will be
transferable only in connection with the transfer of the underlying
shares of Common Stock, as more fully set forth below. As soon as practicable
after the Company has notified the Rights Agent of the occurrence of the
Distribution Date and provided the Rights Agent with all necessary information,
the Company shall prepare and execute, and the Rights Agent shall countersign
and send, by first-class, insured, postage prepaid mail, to each record holder
of the Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a right certificate,
in substantially the form of Exhibit B hereto (the "Right Certificate"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. As of and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred Stock,
in substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage prepaid mail, to each record holder of the Common Stock as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date (or the earlier
redemption, expiration or termination of the Rights), the Rights will be
evidenced by such certificates for the Common Stock registered in the names of
the holders of the Common Stock and the registered holders of the Common Stock
shall also be registered holders of the associated Rights. Until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the surrender for transfer of any of the certificates for the Common
Stock outstanding in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(c) Certificates for the Common Stock issued after the Record
Date but prior to the earlier of the Distribution Date or the redemption,
expiration or termination of the Rights shall be deemed also to be certificates
for Rights and shall have impressed, printed or written on, or otherwise affixed
to them a legend substantially to the following effect:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a 1998 Rights Agreement
dated as of November 1, 1998 between Emerson Electric Co. (the
"Company") and ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agreement"), as it may from time to time be
supplemented or amended,
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<PAGE> 10
the terms of which are incorporated herein by reference and
a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may expire or may
be redeemed, exchanged or be evidenced by separate
certificates and no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a
copy of the Rights Agreement without charge promptly after
receipt of a written request therefor. Under certain
circumstances, Rights issued to or held by Acquiring
Persons or their Affiliates or Associates (as defined in the
Rights Agreement) and any subsequent holder of such Rights may
become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificates.
In the event that the Company purchases or acquires any Common
Stock after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Stock shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights associated with shares
of Common Stock which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase Preferred Stock and of assignment to be printed on the reverse thereof)
shall be in substantially the same form 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 (but which does
not affect the duties or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Rights Agreement, or as may be required
to comply with any applicable law, rule or regulation 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 customary usage. Subject to the provisions of Section
11 and Section 22 hereof, the Right Certificates, whenever issued, shall be
dated as of the Record Date, and on their face shall entitle the holders thereof
to purchase such number of one one-thousandths of a share of Preferred Stock as
shall be set forth therein at the price per one one-thousandth of a share as set
forth therein (the "Purchase Price"), but the number and identity of such shares
and the Purchase Price shall be and remain subject to adjustment as provided
herein.
(b) Any Right Certificate issued pursuant hereto that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate
6
<PAGE> 11
or Affiliate) to holders of equity interests in such Acquiring Person (or such
Associate or Affiliate) or to any Person with whom such Acquiring Person (or
such Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding either the transferred Rights, shares of Company
Common Stock or the Company or (B) a transfer which a majority of the Board of
Directors has determined to be part of an agreement, arrangement or
understanding which has as a primary purpose or effect the avoidance of
Section 7(e), and any Right Certificate issued pursuant to Section 6 hereof,
Section 11 hereof or Section 22 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent the Rights Agent has notice and to the extent feasible)
the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or an Associate of an Acquiring Person.
Accordingly, this Right Certificate and the Rights represented
hereby are void in the circumstances specified in Section 7(e)
of the Rights Agreement.
The failure to print the foregoing legend on any such Right Certificate or any
defect therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, President, Chief
Financial Officer or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right Certificates
shall be countersigned manually or by facsimile signature by the Rights Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company whose manual or facsimile signature is affixed to 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,
issued and delivered 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.
Any Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
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.
(b) Following the Distribution Date and receipt by the Rights
Agent of any relevant information, the Rights Agent will keep or cause to be
kept, at its stockholder services office or such other office designated for
such purpose, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on
its face by each of the Right Certificates, the certificate number of each of
the Right Certificates and the date of each of the Right Certificates.
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<PAGE> 12
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the Expiration Date (as such term is
defined in Section 7(a) hereof), any Right Certificate or Right Certificates may
be transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the stockholder services office of the Rights Agent or
such office designated for such purpose. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly and properly executed, to the Rights Agent at the stockholder
services office of the Rights Agent or such office designated for such purpose,
together with payment of the Purchase Price for each one one-thousandth of a
share of Preferred Stock as to which the Rights are exercised, at or prior to
the Close of Business on the Expiration Date. The "Expiration Date", as used in
this Rights Agreement, shall be the earliest of (i) the Final Expiration Date
(as defined below), (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof, or (iii) the time at which the Rights are exchanged as
provided in Section 24 hereof. The "Final Expiration Date", as used in this
Rights Agreement, shall be November 1, 2008.
(b) The Purchase Price for each one one-thousandth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
$260.00, shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
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<PAGE> 13
(c) Upon receipt of a Right Certificate, with the form of
election to purchase duly and properly executed, accompanied by payment of the
Purchase Price for each one one-thousandth of a share of Preferred Stock to be
purchased and an amount equal to any applicable tax or charge required to be
paid by the holder of the Rights pursuant hereto in accordance with Section 9
hereof by certified check, bank draft or money order payable to the order of the
Company or the Rights Agent, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i) either (A) requisition from any transfer agent of
the shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes any such transfer agent
to comply with all such requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company hereby directs such depositary agent to comply with all such requests,
(ii) promptly after receipt of such certificates or depositary receipts cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder, (iii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, (iv) after receipt of any such cash, promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate, (v) when
appropriate, requisition from the Company the amount of cash or securities
issuable upon exercise of a Right pursuant to the adjustment provisions of
Section 11 or the exchange provisions of Section 24, and (vi) after receipt of
any such cash or securities, promptly deliver such cash or securities to or upon
the order of the registered holder of such Right Certificate, of any such cash
or securities.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, upon the first occurrence of a Section 11(b) Event or a Section 13
Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or any such Associate or Affiliate) or to
any Person with whom such Acquiring Person (or such Associate or Affiliate) has
any continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer which a
majority of the Board of Directors has determined to be part of an agreement,
arrangement or understanding which has as a primary
9
<PAGE> 14
purpose or effect the avoidance of this Section 7(e), shall be null and void
without any further action, and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and Section 4(b) are complied with
(including notifying the Rights Agent thereof), but neither the Company nor the
Rights Agent shall have any liability to any holder of Rights or any other
Person as a result of the Company' s failure to make any determination under
this Section 7(e) or Section 4(b) with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless the certificate
contained in the appropriate form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise shall have
been properly completed and duly executed by the registered holder thereof and
the Company or the Rights Agent shall have been provided with such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of
Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding Rights and, after the occurrence
of a Section 11(b) Event or a Section 13 Event, shall so reserve and keep
available a sufficient number of shares of Preferred Stock, Common Stock and/or
other securities which may be required to permit the exercise in full of the
Rights pursuant to this Rights Agreement.
(b) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
and/or other securities delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares or securities.
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<PAGE> 15
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the first occurrence of an event which would
establish the Distribution Date, a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date. The Company will also take such action as may be
appropriate under the "blue sky laws" of the various states.
(d) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any shares of Preferred Stock and/or other securities upon the exercise of
Rights. The Company shall not, however, be required to pay any tax or charge
which may be payable in respect of any transfer involved in the transfer or
delivery of Right Certificates or the issuance or delivery of certificates or
depositary receipts for Preferred Stock and/or other securities in a name other
than that of the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, nor shall the Company be required to issue or deliver
any certificates or depositary receipts for shares of Preferred Stock and/or
other securities upon the exercise of any Rights until any such tax or charge
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax or charge is due.
Section 10. Preferred Stock Record Date. Each Person (other
than the Company) in whose name any certificate for shares of Preferred Stock
(or other securities) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Preferred Stock
(or other securities) 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 taxes or
charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or other securities) transfer
books of the Company are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or other securities)
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 stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number and identity of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) In the event the Company shall at any time after the date
of this Rights Agreement (i) declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (ii) subdivide the outstanding Preferred Stock,
(iii) combine the outstanding Preferred Stock into a smaller number of shares or
(iv) issue any shares of its capital stock in a reclassification of the
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<PAGE> 16
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11, the Purchase
Price in effect at the time of the record date for such dividend or the time of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock, including Preferred Stock, issuable
upon exercise of a Right, shall be proportionately adjusted so that the holder
of any Right exercised after such time, upon payment of the aggregate
consideration such holder would have had to pay to exercise such Right prior to
such time, shall be entitled to receive the aggregate number and kind of shares
of capital stock, including Preferred Stock, which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification.
(b) In the event any Person becomes an Acquiring Person
("Section 11(b) Event"), then proper provision shall be made so that each holder
of a Right, subject to Section 7(e) and Section 24 hereof and except as provided
below, shall after the later of the occurrence of such event and the effective
date of an appropriate registration statement pursuant to Section 9 hereof, have
a right to receive, upon exercise thereof at the then current Purchase Price,
multiplied by the then number of one one-thousandths of a share of Preferred
Stock for which a Right is then exercisable, in accordance with the terms of
this Rights Agreement, in lieu of shares of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result obtained by (y)
multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (z) 50% of the current market price per
one share of Common Stock (determined pursuant to Section 11(f) hereof on the
date of the occurrence of the Section 11(b) Event) (such number of shares being
referred to as the "number of Adjustment Shares").
(c) In the event that there shall not be sufficient Treasury
shares or authorized but unissued shares of Common Stock to permit the exercise
in full of the Rights in accordance with the foregoing Section 11(b), and the
Rights become so exercisable, notwithstanding any other provision of this Rights
Agreement, to the extent necessary and permitted by applicable law and any
agreements in effect on the date hereof to which the Company is a party, each
Right shall thereafter represent the right to receive, upon exercise thereof at
the then current Purchase Price, multiplied by the then number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Rights Agreement, a number of
shares, or units of shares, of (y) Common Stock, and (z) preferred stock (or
other equity securities) of the Company, including, but not limited to Preferred
Stock, equal in the aggregate to the number of Adjustment Shares where the Board
of Directors shall have in good faith deemed such shares or units, other than
the shares of Common Stock, to have at least the same value and voting rights as
the Common Stock (a "common stock equivalent"); provided, however, if there are
unavailable sufficient shares (or fractions of shares) of Common Stock and/or
common stock equivalents, then the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock or common stock
equivalents for issuance upon exercise of the Rights, including the calling of a
meeting of stockholders; and provided, further, that if the Company is unable to
cause sufficient shares of Common Stock and/or common stock equivalents to be
available for issuance upon exercise in full of the Rights, then the Company, to
the extent
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<PAGE> 17
necessary and permitted by applicable law and any agreements or instruments
in effect on the date thereof to which it is a party, shall make
provision to pay an amount in cash equal to twice the Purchase Price (as
adjusted pursuant to this Section 11), in lieu of issuing shares of Common Stock
and/or common stock equivalents. To the extent that the Company determines that
some action needs to be taken pursuant to this Section 11(c), the Board of
Directors by action of at least a majority of its members then in office may
suspend the exercisability of the Rights for a period of up to sixty (60) days
following the date on which the Section 11(b) Event shall have occurred, in
order to decide the appropriate form of distribution to be made pursuant to this
Section 11(c) and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement (with prompt notice
thereof to the Rights Agent) stating that the exercisability of the Rights has
been temporarily suspended. The Board of Directors may, but shall not be
required to, establish procedures to allocate the right to receive Common Stock
and common stock equivalents upon exercise of the Rights among holders of
Rights, which such allocation may be, but is not required to be, pro-rata.
(d) If the Company shall fix a record date for the issuance of
rights or warrants to all holders of Preferred Stock entitling them (for a
period expiring within 90 calendar days after such record date) to subscribe for
or purchase Preferred Stock (or securities having the same or more favorable
rights, privileges and preferences as the Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent preferred
stock, at a price per share of Preferred Stock or per share of equivalent
preferred stock or having a conversion or exercise price per share, as the case
may be, less than the current market price (as defined in Section 11(f) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock or equivalent
preferred stock to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of additional
shares of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a consideration, part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by a majority
of the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(e) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend out of earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but
13
<PAGE> 18
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(d) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price for one share of Preferred Stock (as defined
in Section 11(f) hereof) on such record date less the fair market value (as
determined in good faith by a majority of the Board of Directors, 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 convertible securities, subscription rights or warrants applicable to
one share of Preferred Stock, and the denominator of which shall be such current
market price for one share of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(f) (i) For the purpose of any computation hereunder, the
"current market price" of any security (a "Security" for purposes of
this Section 11(f)(i)) on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the 30
consecutive Trading Days (as hereinafter defined) immediately prior to
but not including such date; provided, however, that in the event that
the current market price per share of such Security is determined
during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into shares of such
Security or (B) any subdivision, combination or reclassification of
such Security, and prior to the expiration of 30 Trading Days after but
not including the ex-dividend date for such dividend or distribution or
the record date for such subdivision, combination or reclassification,
then, and in each such case, the "current market price" shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the
principal national securities 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, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation
System ("Nasdaq") National Market System, or if the Security is not
listed or admitted to trading on any national securities exchange or
included in the Nasdaq National Market System, 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
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 a majority of the
Board of Directors. If on any such date no market maker is making a
market in the Security, the fair value of such Security on such date as
determined in good faith by a majority of the Board of Directors shall
be used. The term "Trading Day" shall mean a day on which the principal
national securities
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<PAGE> 19
exchange 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 securities exchange a day on
which the Nasdaq National Market System is open for the transaction of
business or, if the Security is not listed or admitted to trading on
any national securities exchange or included in the Nasdaq National
Market System, a Business Day. If the Security is not publicly held or
not so listed or traded, "current market price" shall mean the fair
value as determined in good faith by a majority of the Board of
Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per share (or one one-thousandth of a share)
of Preferred Stock shall be determined in the same manner as set forth
above for the Common Stock in clause (i) of this Section 11(f) (other
than the last sentence thereof). If the current market price per share
(or one one-thousandth of a share) of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(f), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to
1,000 (as such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the
Common Stock occurring after the date of this Rights Agreement)
multiplied by the current market price per share of the Common Stock
and the "current market price" per one one-thousandth of a share of
Preferred Stock shall be equal to the current market price per share of
the Common Stock (as appropriately adjusted). If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded,
"current market price" per share shall mean the fair value per share as
determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall
be conclusive for all purposes.
(g) 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(g) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of
a share, as the case may be. Notwithstanding the first sentence of this Section
11(g), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which mandates
such adjustment or (ii) the Expiration Date.
(h) In the event that at any time, as a result of an
adjustment made pursuant to Section 11(a) or (b) hereof, the holder of any Right
shall be entitled to receive upon exercise of such Right any shares of capital
stock of the Company other than shares of Preferred Stock, 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 shares contained in Section 11
hereof, inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the shares of Preferred Stock shall apply on like terms to any
such other shares.
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<PAGE> 20
(i) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock or other capital stock of the Company purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment of the Purchase Price.
(j) Unless the Company shall have exercised its election as
provided in Section 11(k) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Section 11(d) and (e) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a share of Preferred Stock (calculated to the nearest one
ten-thousandth) obtained by (i) multiplying (A) the number of one
one-thousandths of a share of Preferred Stock covered by a Right immediately
prior to the adjustment by (B) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(k) 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 shares of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one one-thousandths
of a share of Preferred Stock for which such Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement (with prompt notice thereof to the Rights Agent) of
its election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Right Certificates have been issued, shall be at
least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(k), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of
the Company, the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Right Certificates on the record date specified in
the public announcement.
(l) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Preferred Stock issuable upon the exercise of
the Rights, the Right
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<PAGE> 21
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of shares which were expressed in the initial
Right Certificates issued hereunder.
(m) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares of
Common Stock or other securities and below one one-thousandth of the then par
value, if any, of the Preferred Stock, issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of such Preferred Stock, Common Stock or
other securities at such adjusted Purchase Price. If upon any exercise of the
Rights, a holder is to receive a combination of Common Stock and common stock
equivalents, a portion of the consideration paid upon such exercise, equal to at
least the then par value of a share of Common Stock of the Company, shall be
allocated as the payment for each share of Common Stock of the Company so
received.
(n) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (with prompt notice thereof to
the Rights Agent) until the occurrence of such event the issuing to the holder
of any Right exercised after such record date the shares of Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(o) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment a majority of
the Board of Directors shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any Preferred Stock at less than the then current market price, (iii)
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable for Preferred Stock, (iv) stock dividends
or (v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to the holders of its Preferred Stock,
shall not be taxable to such stockholders.
(p) In the event that at any time after the date of this
Rights Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Stock payable in shares of Common
Stock or (ii) effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in any such case (y) the number of one one-thousandths of a share of Preferred
Stock purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-thousandths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the
17
<PAGE> 22
number of shares of Common Stock outstanding immediately before such event and
the denominator of which is the number of shares of Common Stock outstanding
immediately after such event, and (z) each share of Common Stock outstanding
immediately after such event shall have issued with respect to it that number
of Rights which each share of Common Stock outstanding immediately prior to
such event had issued with respect to it. The adjustments provided for in this
Section 11(p) shall be made successively whenever such a dividend is declared
or paid or such a subdivision, combination or consolidation is effected.
(q) The Company covenants and agrees that it shall not, at any
time after the Distribution Date and so long as the Rights have not been
redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24
hereof, (i) consolidate with, (ii) merge with or into, or (iii) sell or
transfer, in one or more transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, if at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(r) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Sections 23 and 24 hereof,
take any action the purpose or effect of which is to diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 or 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts and computations accounting for
such adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such certificate
and (c) include a brief summary thereof in a mailing to each holder of a Right
Certificate in accordance with Section 26 hereof, or prior to the Distribution
Date, disclose a brief summary in a filing under the Exchange Act. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustments therein contained. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall have no duty with respect to and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, directly or indirectly, at any time
after a Person has become an Acquiring Person, (x) the Company shall consolidate
with, or merge with and into, any other Person, (y) any Person shall consolidate
with 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 Stock 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 (z) the Company shall sell, or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets 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
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<PAGE> 23
Person other than to the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right, subject to Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price multiplied by the then number of one one-thousandths of a
share of Preferred Stock for which a Right is then exercisable (or if a Section
11(b) Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-thousandths of a share for which a Right
was exercisable immediately prior to the first occurrence of a Section 11(b)
Event by the Purchase Price in effect immediately prior to such first
occurrence) in accordance with the terms of this Rights Agreement, in lieu of
Preferred Stock, such number of shares of freely tradable Common Stock of the
Principal Party (as hereinafter defined), free and clear of liens, rights of
call or first refusal, encumbrances or other adverse claims, as shall be equal
to the result obtained by (A) multiplying the then current Purchase Price by the
number of one one-thousandths of a share of Preferred Stock for which a Right is
then exercisable (or if a Section 11(b) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such one
one-thousandths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(b) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product by (B)
50% of the current market price per share of the Common Stock of such Principal
Party (determined in the manner described in Section 11(f) hereof) on the date
of consummation of such consolidation, merger, sale or transfer; (ii) the
Principal Party 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 Rights Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof, except for the provisions of
11(b), shall apply to such Principal Party; and (iv) such Principal Party shall
take such steps (including, but not limited to, the authorization and
reservation of a sufficient number of shares of its Common Stock to permit
exercise of all outstanding Rights in accordance with this Section 13(a)) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the shares of its Common Stock thereafter deliverable upon
the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a) hereof, the
Person that is the issuer of any securities into which shares of Common
Stock of the Company are converted in such merger or consolidation, and
if no securities are so issued, the Person, including the Company, that
is the other party to the merger or consolidation; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a) hereof, the Person
that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions;
provided, however, that in any case described in clause (i) or (ii) in
this Section 13(b), (x) if the Common Stock of such Person is not at
such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary or Affiliate of another Person,
"Principal
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<PAGE> 24
Party" shall refer to such other Person; (y) in case such
Person is a Subsidiary, directly or indirectly, or Affiliate of more
than one Person, the Common Stocks of all of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market
value, and (z) in case such Person is, or is owned directly or
indirectly by, a partnership or joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (x) and (y) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers and
the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of shares of its authorized Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Company and each Principal
Party and each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under
the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, will
use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and will use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under
the "blue sky laws" of such jurisdictions as may be necessary or
appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(b) Event, the Rights which have not theretofore been exercised shall
thereafter also become exercisable in the manner described in Section 13(a)
hereof.
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
20
<PAGE> 25
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 on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, as reported
by the Nasdaq National Market System or, if the Rights are not listed or
admitted to trading on any national securities exchange or included in the
Nasdaq National Market System, the last quoted price, or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use or, if on
any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by a majority of the
Board of Directors. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by a majority of the Board of Directors shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Right Certificates at the time
such Right Certificates are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one one-thousandths of a
share of Preferred Stock. For purposes of this Section 14(b), the current market
value of one one-thousandth of a share of Preferred Stock shall be one
one-thousandth of the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(f)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of one of the transactions or
events specified in Section 11 hereof giving rise to the right to receive common
stock equivalents (other than Preferred Stock) or other securities upon the
exercise of a Right, the Company shall not be required to issue fractions of
shares or units of such common stock equivalents or other securities upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of such
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<PAGE> 26
common stock equivalents or other securities. In lieu of fractional shares
or units of such common stock equivalents or other securities, the
Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a share or unit of such common stock
equivalent or other securities. For purposes of this Section 14(c), the current
market value shall be determined in the manner set forth in Section 11(f) hereof
for the Trading Day immediately prior to the date of such exercise and, if such
common stock equivalent is not traded, each such common stock equivalent shall
have the value of one one-thousandth of a share of Preferred Stock.
(d) Except as otherwise expressly provided in this Section 14,
the holder of a Right by the acceptance of the Right expressly waives such
holder's right to receive any fractional Rights or any fractional share upon
exercise of Rights.
Section 15. Rights of Action. All rights of action in respect
of this Rights Agreement, except for rights of action given to the Rights Agent
under Section 18 or Section 20 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), 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 Stock), may, in such holder's
own behalf and for such holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Rights Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Rights Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Rights Agreement.
Holders of Rights shall be entitled to recover from the Company the reasonable
costs and expenses, including attorneys' fees, incurred by them in any action to
enforce the provisions of this Rights Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the stockholder services office of the Rights Agent or such office designated
for such purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock Certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby
22
<PAGE> 27
(notwithstanding any notations of ownership or writing on the Right
Certificate or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any
notice to the contrary.
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 Preferred Stock, Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the preparation, execution, delivery and
amendment of this Rights Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability, damage, judgment, fine,
penalty, claim, demand, settlement, cost or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent
(each as determined by a court of competent jurisdiction), for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the costs and expenses of
defending against any claim of liability. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect, consequential or incidental loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage. Any liability of the Rights
Agent under this Rights Agreement will be limited to the amount of fees paid by
the Company to the Rights Agent.
(b) The Rights Agent shall be authorized and protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its acceptance and administration of this
Rights Agreement in reliance upon any Right Certificate or certificate for
Preferred Stock, Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
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<PAGE> 28
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust powers or business or the stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such Person
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 Rights 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 Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent and
the Right shall incur no liability for or in respect of any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person and the determination of current market price) be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, Chief Executive Officer,
President, Chief Financial Officer or any Vice President and by the Treasurer or
any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization and
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<PAGE> 29
protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken or suffered in good faith
by it under the provisions of this Rights Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross 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 Rights 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 have any liability for or be
under any responsibility in respect of the validity of this Rights Agreement or
the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Rights
Agreement or in any Right Certificate; nor shall it be responsible for any
adjustment required under the provisions of Sections 11 or 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice to the Rights Agent of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or other
securities to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Preferred Stock or other securities
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, Chief Executive Officer, President, Chief Financial
Officer, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered or omitted to be taken 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, director, affiliate
officer, employee, agent or representative of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not the Rights Agent under this Rights
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other Person.
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<PAGE> 30
(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 that reasonable care was exercised
in the selection and continued employment thereof.
(j) No provision of this Rights Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1, clause 2
and/or, in the case of the certificate attached to the form of election to
purchase, clause 3 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting
with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail or, prior to the Distribution Date, through any
filing made by the Company pursuant to the Exchange Act. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(which holder shall, with such notice, submit such holder's Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation or other entity organized
and doing business under the laws of the United States or of any state, in good
standing, having an office in the States of New York or Missouri, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority, or
(b) an affiliate of a corporation or other entity described in clause (a) of
this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
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<PAGE> 31
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Right Certificates or, prior to the Distribution
Date, through any filing made by the Company pursuant to the Securities Exchange
Act of 1934, as amended. Failure to give any notice provided for this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
(a) Notwithstanding any of the provisions of this Rights
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 a majority of the Board of Directors then in office to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares of
stock or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Rights Agreement.
(b) In addition, in connection with the issuance or sale of
Common Stock following the Distribution Date and prior to the redemption,
exchange or expiration of the Rights, the Company (a) shall with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee benefit plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Right Certificates shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Right Certificates would be issued, and (ii) no Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) A majority of the Board of Directors then in office may,
at its option, at any time prior to the earlier of (i) the Close of Business on
the Stock Acquisition Date or (ii) the Close of Business on the Final Expiration
Date, elect to redeem all but not less than all of the then outstanding Rights
at a redemption price of $0.005 per Right, as appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). 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 a majority of the Board of
Directors then in office electing to redeem the Rights, evidence of which shall
be promptly filed with the Rights Agent, or, when appropriate, immediately upon
the time or satisfaction of such conditions as the Board of Directors may have
established, 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
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<PAGE> 32
shall be to receive the Redemption Price. The Company shall promptly give public
disclosure of any such redemption; provided, however, that the failure to give,
or any defect in, any such disclosure shall not affect the validity of such
redemption. Within 10 days after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and to the holders of the then outstanding Rights by mailing
such notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
(c) Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or Section
24 hereof and other than in connection with the purchase of Common Stock prior
to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors 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 null and void pursuant to the provisions of Section 7(e) hereof) for
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect adjustments in the number of Rights pursuant
to Section 11 of this Rights Agreement (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan or compensation arrangement of the Company or any such Subsidiary,
or any entity holding securities of the Company to the extent organized,
appointed or established by the Company or any such Subsidiary for or pursuant
to the terms of any such employee benefit plan or compensation arrangement),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Voting Power of the Company.
(b) Immediately upon the action of the Board of Directors
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 rights thereafter of holders of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company promptly shall give public notice of any such exchange (with prompt
notice thereof to the Rights Agent); 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 the exchange
of Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
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<PAGE> 33
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Stock (or equivalent preferred stock, as
such term is defined in Section 11(d) hereof) for Common Stock exchangeable for
Rights, at the initial rate of one one-thousandth of a share of Preferred Stock
(or equivalent preferred stock) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock (or equivalent preferred stock) issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock or
Preferred Stock (or equivalent preferred stock) for issuance upon exchange of
the Rights.
(e) The Company shall not be required to issue fractions of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this paragraph (e), the current
market value of a whole share of Common Stock shall be the current market price
of a share of Common Stock (as determined pursuant to the second sentence of
Section 11(f)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
(a) In case the Company shall propose at any time after the
Distribution Date (a) to pay any dividend payable in stock of any class to the
holders of the Preferred Stock or to make any other distribution to the holders
of the Preferred Stock (other than a regular periodic cash dividend out of
earnings or retained earnings of the Company), (b) to offer to the holders of
the Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any other class or
any other securities, rights or options, (c) to effect any reclassification of
the Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), (d) 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 sales or other
transfer), in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person, (e) to effect the liquidation, dissolution or winding up of the Company,
or (f) to declare or pay any dividend on the Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in Common
Stock), then, in each such case, the Company shall give to each holder of a
Right and the Rights Agent, in accordance with Section 26 hereof, a notice of
such
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<PAGE> 34
proposed action, which shall specify the record date for the purposes of
such stock dividend, distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Stock and/or Preferred Stock, if any such
date is to be fixed. Such notice shall be so given in the case of any action
covered by clauses (a) or (b) above at least ten days prior to the record date
for determining holders of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least ten days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Preferred Stock, whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case a Section 11(b) Event shall occur, then the
Company shall as soon 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 shall specify the event and the consequences of the event to
holders of Rights under Section 11(b) hereof.
Section 26. Notices. Notices or demands authorized by this
Rights Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Emerson Electric Co.
8000 W. Florissant Avenue
St. Louis, Missouri 63136
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
any Right Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
200 N. Broadway, Suite 1722
St. Louis, Missouri 63102
Attention: H. Eugene Bradford
Notices or demands authorized by this Rights 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 Company may from
time to time supplement or amend this Rights Agreement without the approval of
any holders of Right Certificates in order (a) to cure any ambiguity, (b) to
correct or supplement any provision
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<PAGE> 35
contained herein which may be defective or inconsistent with any other
provisions herein, (c) to shorten or lengthen any time period hereunder
(including without limitation to extend the Final Expiration Date),
(d) increase or decrease the Purchase Price, or (e) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; provided, however, that from and after such time as any
Person becomes an Acquiring Person, this Rights Agreement shall not be amended
in any manner which would adversely affect the interests of the holders of
Rights; provided further that this Rights Agreement may not be supplemented or
amended to lengthen pursuant to clause (c) of this sentence, (A) the time period
relating to the when the Rights may be redeemed at such time as the Rights are
not then redeemable, or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of the Rights; provided further that the Company shall
have the right to make unilaterally any changes necessary to facilitate the
appointment of a successor Rights Agent, which such changes shall be set forth
in a writing by the Company or by the Company and such successor Rights Agent.
Without limiting the foregoing, the Company may at any time prior to such time
as any Person becomes an Acquiring Person amend this Rights Agreement to lower
the thresholds set forth in Sections 1(a) and 3(a) hereof from 20% to not less
than the greater of (i) any percentage greater than the largest percentage of
the Voting Power of the Company then known by the Company to be beneficially
owned by any Person (other than the Company, any Subsidiary of the Company, or
any employee benefit plan or compensation arrangement of the Company or any
Subsidiary of the Company, and any entity holding securities of the Company to
the extent organized, appointed or established by the Company or any such
Subsidiary for or pursuant to the terms of any such employee benefit plan or
compensation arrangement) together with all Affiliates and Associates of such
Person and (ii) 10%. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27 and such supplement or amendment
does not increase the Rights Agent's duties, liabilities or obligations, the
Rights Agent shall execute such supplement or amendment.
Section 28. Successors. All the covenants and provisions of
this Rights Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of This Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights 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 Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. It is the intent of the parties hereto to enforce the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement to the maximum extent permitted by law.
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<PAGE> 36
Section 31. Governing Law. This Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Missouri 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; provided however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within such
State.
Section 32. Counterparts. This Rights 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 Rights Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
Attest: EMERSON ELECTRIC CO.
By: /s/ Harley M. Smith By: /s/ W. Wayne Withers
--------------------------- --------------------------------
Name:Harley M. Smith Name: W. Wayne Withers
Title: Assistant Secretary Title: Senior Vice President,
Secretary and General Counsel
Attest: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By /s/ Jane A. Marten By /s/ H. Eugene Bradford
--------------------------- --------------------------------
Name: Jane A. Marten Name: H. Eugene Bradford
--------------------------- --------------------------------
Title: Assistant Vice President Title: Vice President
--------------------------- --------------------------------
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<PAGE> 38
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B JUNIOR
PARTICIPATING PREFERRED STOCK
OF
EMERSON ELECTRIC CO.
PURSUANT TO SECTION 351.180 OF
THE GENERAL AND BUSINESS CORPORATION LAW OF MISSOURI
We, _________, [NAME OF OFFICE], and __________, [NAME OF
OFFICE], of Emerson Electric Co., a corporation organized and existing under The
General and Business Corporation Law of the State of Missouri, in accordance
with the provisions of Section 351.180 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Restated Articles of Incorporation, as amended, of the Company,
the said Board of Directors on October 6, 1998, adopted the following resolution
creating a series of One Million Two Hundred Thousand (1,200,000) shares of
Preferred Stock designated as Series B Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Company in accordance with the provisions of its Restated
Articles of Incorporation, as amended, a series of Preferred Stock of the
company be and it hereby is created, and that the designation and amount thereof
and the powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series B Junior Participating Preferred Stock" (the
"Series B Preferred Stock") and the number of shares constituting the Series B
Preferred Stock shall be One Million Two Hundred Thousand (1,200,000). Such
number of shares may be increased or decreased by resolution of the Board of
Directors; provided that no decrease shall reduce the number of shares of Series
B Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Company convertible into Series B Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock (or any similar stock) ranking prior and
superior to the Series B Preferred Stock with respect to dividends, the
holders of shares of Series B Preferred Stock, in preference to the
holders of shares of Common Stock, par value $0.50 per share (the
"Common Stock"), of the Company, 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,
<PAGE> 39
quarterly dividends payable in cash on any regular quarterly dividend
payment date as shall be established by the Board of Directors (each
such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series B
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series B Preferred Stock. In the
event the Company shall at any time after October 6, 1998 (the "Rights
Declaration Date") 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 outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of
shares of Series B Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series B Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series B Preferred
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B 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 issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series B 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 B Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata
2
<PAGE> 40
on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may, in accordance with
applicable law, fix a record date for the determination of holders of
shares of Series B Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be
not more than such number of days prior to the date fixed for the
payment thereof as may be allowed by applicable law.
Section 3. Voting Rights. The holders of shares of
Series B Preferred Stock shall have the following voting rights:
(A) Each share of Series B Preferred Stock shall entitle the
holder thereof to one vote on all matters submitted to a vote of the
stockholders of the Company.
(B) Except as otherwise provided herein, in the Company's
Restated Articles of Incorporation, or by law, the holders of shares of
Series B Preferred Stock, the holders of shares of Common Stock, and
the holders of shares of any other capital stock of the Company having
general voting rights, shall vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(C) Except as set forth herein or in the Company's Restated
Articles of Incorporation, and except as otherwise provided by law,
holders of Series B Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B 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 B Preferred Stock outstanding shall have been paid in full, the
Company shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series B Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series B Preferred Stock, except
dividends paid ratably on the Series B Preferred Stock and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series B Preferred Stock, provided that the Company may at
any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the
Company ranking junior (either as to
3
<PAGE> 41
dividends or upon dissolution, liquidation or winding up) to
the Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series B Preferred Stock, or any
shares of stock ranking on a parity with the Series B
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock
of the Company unless the Company could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and
in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Restated Articles of Incorporation of the Company, or in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, 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 B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received $1,000.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series B
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate 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 B Preferred Stock, except distributions made ratably on the Series B
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Company shall at any time after the
Rights Declaration Date 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 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 B Preferred 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 denominator of which is the number of
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<PAGE> 42
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series B 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 1,000 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 Company shall at any time after the Rights Declaration Date
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
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series B
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 are outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series B
Preferred Stock shall not be redeemable.
Section 9. Rank. The Series B Preferred Stock shall
rank, with respect to the payment of dividends and the distribution of
assets, junior to all series of any other class of the Company's Preferred
Stock.
Section 10. Amendment. The Restated Articles of Incorporation
of the Company shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series B 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 B Preferred Stock,
voting together as a single class.
Section 11. Fractional Shares. Series B Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series B Preferred Stock.
5
<PAGE> 43
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this ____ the day of _____, 1998.
By:_________________________
Name: [NAME OF OFFICER]
Title: [OFFICE]
Attest
By:_________________________
Name: [NAME OF OFFICER]
Title: [OFFICE]
6
<PAGE> 44
Exhibit B
[Form of Right Certificate]
Certificate No. R-___________ ____ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE. AT THE OPTION OF THE COMPANY, THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $0.005 PER RIGHT OR EXCHANGE FOR COMMON
STOCK, UNDER THE CIRCUMSTANCES AND ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN
ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON. THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Right Certificate
EMERSON ELECTRIC CO.
This certifies that _______________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of November 1, 1998 (the "Rights Agreement")
between Emerson Electric Co., a Missouri corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability company
(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. St. Louis, Missouri time on the Expiration Date, as that term is
defined in the Rights Agreement, at the stockholder services office (or such
office designated for such purpose) of the Rights Agent, or its successor as
Rights Agent, one one-thousandth of a fully paid, nonassessable share of the
Series B Junior Participating Preferred Stock, par value $2.50 per share
("Preferred Stock"), of the Company, at a purchase price of $260.00 per one
one-thousandth of a share (the "Purchase Price") upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the number of
shares which may be purchased upon exercise of each Right) and the Purchase
Price set forth above, are the number
__________________
* The portion of the legend in brackets shall be inserted only if applicable.
<PAGE> 45
and Purchase Price as of _________, _____based on the shares of Preferred Stock
of the Company as constituted at such date.
The Purchase Price and the number of shares of Preferred Stock
which may be purchased upon the exercise of each of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the happening
of certain events as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the Company and the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the stockholder services office (or such office
designated for such purpose) of the Rights Agent, may be exchanged for another
Right Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of shares of Preferred
Stock as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive,
upon surrender hereof, another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.005 per Right on or prior to the Stock Acquisition Date
(as defined in the Rights Agreement). In addition, subject to the provisions of
the Rights Agreement, each Right evidenced by this Certificate may be exchanged
by the Company at its option for one share of Common Stock following the Stock
Acquisition Date and prior to the time an Acquiring Person, as that term is
defined in the Rights Agreement, owns 50% or more of the Voting Power, as that
term is defined in the Rights Agreement, of the Company.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts). In
lieu of fractions of a share, a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions
2
<PAGE> 46
affecting stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Right Certificate shall have been exercised as provided in
the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of __________, _____.
Attest: EMERSON ELECTRIC CO.
By_______________________ By_______________________
Name:____________________ Name:____________________
Title:_____________________ Title:_____________________
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By:________________________
Authorized signature
3
<PAGE> 47
[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:__________________
__________________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in
the Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
4
<PAGE> 48
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:_________________ __________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Right Certificate)
<PAGE> 49
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To Emerson Electric Co.:
The undersigned hereby irrevocably elects to exercise
___________________ Rights represented by this Right Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of such Rights and requests
that certificates for such shares be issued in the name of:
Name:____________________________
Address:_________________________
_________________________
Social security
or taxpayer identification
number:__________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Name:____________________________
Address:_________________________
_________________________
Social security
or taxpayer identification
number:__________________________
Dated:__________________
_______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in
the Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
6
<PAGE> 50
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:_______________
__________________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
NOTICE
------
The signature in the foregoing Forms of Assignment and
Election 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 as described in Section
7(e) of the Rights Agreement.
7
<PAGE> 51
Exhibit C
EMERSON ELECTRIC CO.
SUMMARY OF PREFERRED STOCK
PURCHASE RIGHTS
On October 6, 1998, the Board of Directors of Emerson Electric
Co. (the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock, par value $0.50 per share,
of the Company (the "Common Stock"). The dividend distribution is payable on
November 1, 1998 (the "Record Date") to the stockholders of record as of the
close of business on that date. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series B Junior
Participating Preferred Stock, par value $2.50 per share (the "Preferred Stock")
of the Company at a price of $260.00 per one one-thousandth of a share of
Preferred Stock (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a 1998 Rights Agreement dated as of
November 1, 1998, as the same may be amended from time to time (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the
tenth business day following the date of public announcement or the date on
which the Company first has notice or determines that a person or group of
affiliated or associated persons (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company) (an "Acquiring Person") has
acquired, or obtained the right to acquire, 20% or more of the outstanding
shares of voting stock of the Company without the prior express written consent
of the Company executed on behalf of the Company by a duly authorized officer of
the Company following express approval by action of at least a majority of the
members of the Board of Directors then in office (the "Stock Acquisition Date")
or (ii) the close of business on the tenth business day (or such later date as
may be determined by action of the Board of Directors but not later than the
Stock Acquisition Date) following the commencement of a tender offer or exchange
offer, without the prior written consent of the Company, by a person (other than
the Company, any subsidiary of the Company or an employee benefit plan of the
Company) which, upon consummation, would result in such party's control of 20%
or more of the Company's voting stock (the earlier of the dates in clause (i) or
(ii) above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Company's Common Stock. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
new Common Stock certificates issued after the Record Date upon transfer or new
issuances of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights, will also constitute
the transfer of the Rights associated with the Common Stock
<PAGE> 52
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate certificates alone
will then evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire, if not previously exercised, on November 1, 2008 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed or exchanged by the Company.
The Purchase Price payable, and the number of shares of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
Preferred Stock at a price, or securities convertible into Preferred Stock with
a conversion price, less than the then-current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in shares of Common Stock
or subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable and junior to any other series of preferred stock
the Company may issue (unless otherwise provided in the terms of such stock).
Each share of Preferred Stock will have a preferential dividend in an amount
equal to 1,000 times any dividend declared on each share of Common Stock. In the
event of liquidation, the holders of the Preferred Stock will receive a
preferred liquidation payment of equal to the greater of $1,000 and 1,000 times
the payment made per share of Common Stock. Each share of Preferred Stock will
have one vote, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be entitled to
receive 1,000 times the amount and type of consideration received per share of
Common Stock. The rights of the Preferred Stock as to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-thousandth interest in a
share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
If any person or group (other than the Company, any subsidiary
of the Company, any employee benefit plan of the Company) acquires 20% or more
of the Company's outstanding voting stock without the prior written consent of
the Board of Directors, each Right, except those held by such persons, would
entitle each holder of a Right to acquire such number of shares of the
2
<PAGE> 53
Company's Common Stock as shall equal the result obtained by multiplying the
then current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is then exercisable and dividing that product
by 50% of the then current per-share market price of Company Common Stock.
If any person or group (other than the Company, any subsidiary
of the Company, any employee benefit plan of the Company) acquires more than 20%
but less than 50% of the outstanding Company Common Stock without prior written
consent of the Board of Directors, each Right, except those held by such
persons, may be exchanged by the Board of Directors for one share of Company
Common Stock.
If the Company were acquired in a merger or other business
combination transaction where the Company is not the surviving corporation or
where Company Common Stock is exchanged or changed or 50% or more of the
Company's assets or earnings power is sold in one or several transactions
without the prior written consent of the Board of Directors, each Right would
entitle the holders thereof (except for the Acquiring Person) to receive such
number of shares of the acquiring company's common stock as shall be equal to
the result obtained by multiplying the then current Purchase Price by the number
one one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by 50% of the then current market price
per share of the common stock of the acquiring company on the date of such
merger or other business combination transaction.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares of Preferred Stock will be
issued (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes
such, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $0.005 per Right (the "Redemption Price"). The
redemption of the Rights 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 of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including, but not limited to, an amendment to lower certain thresholds
described above to not less than the greater of (i) any percentage greater than
the largest percentage of the voting power of all securities of the Company then
known to the Company to be beneficially owned by any person or group of
affiliated or associated persons (other than an excepted person) and (ii) 10%,
except that from and after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
3
<PAGE> 54
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, as the
same may be amended from time to time, which is hereby incorporated herein by
reference.
4
<PAGE> 1
Exhibit 2
EMERSON ELECTRIC CO.
8000 W. Florissant Avenue
St. Louis, Missouri 63136
November 2, 1998
To Our Shareholders:
Emerson's Board of Directors adopted a Shareholder Rights Plan on
October 6, 1998, to succeed a plan adopted by the Company in 1988. Many publicly
traded corporations have such plans, which are designed to protect the long-term
interests of all shareholders.
The Emerson plan is designed to assure that all of the Company's
shareholders receive fair and equal treatment in the event of any proposed
takeover and to guard against partial tender offers, open market accumulations
and other abusive practices. Such tactics could be used to gain control of the
Company without paying all shareholders a premium. While there has been no
indication whatsoever of any such attempt, or of any plans to make such an
attempt, we believe maintaining such plan is a prudent and reasonable thing to
do.
Under the Plan, one Preferred Stock Purchase Right is being distributed
as a dividend for each outstanding share of the Company's Common Stock to
holders of record as of the close of business on November 1, 1998. Each Right
will entitle you, under certain conditions, to purchase one one-thousandth of a
share of a newly issued Series B Junior Participating Preferred Stock at an
exercise price of $260.00 per one one-thousandth of a Share, subject to
anti-dilution adjustments. Each one-thousandth of a share of the new Preferred
Stock is designed to have a value equal to one share of the Company's common
stock.
The Rights will become exercisable and will trade separately from the
Common Stock only after a person or a group becomes the beneficial owner of 20%
or more of the outstanding Common Stock of the Company or commences, or
announces an intention to commence, a tender or exchange offer which would
result in ownership by the person or group of 20% or more of the Company's
outstanding Common Stock.
If an acquiring person or group acquires 20% or more of the Company's
Common Stock, holders of Rights (other than the acquiring person or group) may
purchase, at the Right's then exercise price, Common Stock of the Company having
a value at that time of twice the $260.00 exercise price. Further, at any time
after a person or group acquires 20% or more (but less than 50%) of the
Company's outstanding Common Stock, the Board may, at its option, exchange the
Rights (other than Rights held by the acquiring person or group), in whole or in
part, at an exchange ratio of one share of Common Stock (or one one-thousandth
of a share of the new series of Preferred Stock) per Right.
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November 2, 1998
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In addition, in the event that the Company is acquired in a merger,
sale of assets or similar transaction after the rights become exercisable,
holders of Rights may purchase, at the then exercise price, common stock of the
acquiring entity having a value equal to twice the exercise price.
Prior to the acquisition by a person or group of beneficial ownership
of 20% or more of the Company's Common Stock, the Rights are redeemable for
one-half cent per Right at the option of the Board of Directors.
The Board of Directors is authorized to reduce the 20% thresholds
referred to above to not less than 10%.
If not earlier redeemed or exchanged, the Rights will expire on
November 1, 2008.
The distribution of the Rights is not taxable to you or to the Company
and does not in any way weaken the financial strength of the Company or
interfere with its business plans. If the Rights should become exercisable,
shareholders, depending upon the particular circumstances at that time, may
realize taxable income then. The Rights are not dilutive and will not affect
reported earnings per share, nor will the Rights affect the manner in which you
may presently buy or sell the Company's shares.
The enclosed Summary of Rights, which outlines the principal features
of the Plan, is being sent to you pursuant to the terms of the Rights Agreement
and should be attached to the certificate(s) representing your Common Stock. As
indicated in the Summary of Rights, separate certificates for the Rights will
only be issued upon the occurrence of certain specified events. Until such time,
the Rights will be evidenced only by Common Stock certificates, together with a
copy of the Summary of Rights, and any transfer of the Common Stock represented
by such certificate(s) will also constitute a transfer of the related Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission and is available free of charge from the Company.
The Board believes that the Shareholder Rights Plan represents a sound
and reasonable means of addressing the complex problems created by the current
takeover environment. We continue to be enthusiastic about the future prospects
for your Company and are committed to serving the best interests of our
shareholders in every way.
Sincerely,
/s/ Charles F. Knight
Charles F. Knight
Chairman of the Board
and Chief Executive Officer
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EMERSON ELECTRIC CO.
SUMMARY OF PREFERRED STOCK
PURCHASE RIGHTS
On October 6, 1998, the Board of Directors of Emerson Electric
Co. (the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock, par value $0.50 per share,
of the Company (the "Common Stock"). The dividend distribution is payable on
November 1, 1998 (the "Record Date") to the stockholders of record as of the
close of business on that date. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series B Junior
Participating Preferred Stock, par value $2.50 per share (the "Preferred Stock")
of the Company at a price of $260.00 per one one-thousandth of a share of
Preferred Stock (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a 1998 Rights Agreement dated as of
November 1, 1998, as the same may be amended from time to time (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the
tenth business day following the date of public announcement or the date on
which the Company first has notice or determines that a person or group of
affiliated or associated persons (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company) (an "Acquiring Person") has
acquired, or obtained the right to acquire, 20% or more of the outstanding
shares of voting stock of the Company without the prior express written consent
of the Company executed on behalf of the Company by a duly authorized officer of
the Company following express approval by action of at least a majority of the
members of the Board of Directors then in office (the "Stock Acquisition Date")
or (ii) the close of business on the tenth business day (or such later date as
may be determined by action of the Board of Directors but not later than the
Stock Acquisition Date) following the commencement of a tender offer or exchange
offer, without the prior written consent of the Company, by a person (other than
the Company, any subsidiary of the Company or an employee benefit plan of the
Company) which, upon consummation, would result in such party's control of 20%
or more of the Company's voting stock (the earlier of the dates in clause (i) or
(ii) above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Company's Common Stock. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
new Common Stock certificates issued after the Record Date upon transfer or new
issuances of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights, will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
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certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate certificates alone will then evidence the
Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire, if not previously exercised, on November 1, 2008 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed or exchanged by the Company.
The Purchase Price payable, and the number of shares of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
Preferred Stock at a price, or securities convertible into Preferred Stock with
a conversion price, less than the then-current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in shares of Common Stock
or subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable and junior to any other series of preferred stock
the Company may issue (unless otherwise provided in the terms of such stock).
Each share of Preferred Stock will have a preferential dividend in an amount
equal to 1,000 times any dividend declared on each share of Common Stock. In the
event of liquidation, the holders of the Preferred Stock will receive a
preferred liquidation payment of equal to the greater of $1,000 and 1,000 times
the payment made per share of Common Stock. Each share of Preferred Stock will
have one vote, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be entitled to
receive 1,000 times the amount and type of consideration received per share of
Common Stock. The rights of the Preferred Stock as to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-thousandth interest in a
share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
If any person or group (other than the Company, any subsidiary
of the Company, any employee benefit plan of the Company) acquires 20% or more
of the Company's outstanding voting stock without the prior written consent of
the Board of Directors, each Right, except those held by such persons, would
entitle each holder of a Right to acquire such number of shares of the
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Company's Common Stock as shall equal the result obtained by multiplying the
then current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is then exercisable and dividing that product
by 50% of the then current per-share market price of Company Common Stock.
If any person or group (other than the Company, any subsidiary
of the Company, any employee benefit plan of the Company) acquires more than 20%
but less than 50% of the outstanding Company Common Stock without prior written
consent of the Board of Directors, each Right, except those held by such
persons, may be exchanged by the Board of Directors for one share of Company
Common Stock.
If the Company were acquired in a merger or other business
combination transaction where the Company is not the surviving corporation or
where Company Common Stock is exchanged or changed or 50% or more of the
Company's assets or earnings power is sold in one or several transactions
without the prior written consent of the Board of Directors, each Right would
entitle the holders thereof (except for the Acquiring Person) to receive such
number of shares of the acquiring company's common stock as shall be equal to
the result obtained by multiplying the then current Purchase Price by the number
one one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by 50% of the then current market price
per share of the common stock of the acquiring company on the date of such
merger or other business combination transaction.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares of Preferred Stock will be
issued (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes
such, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $0.005 per Right (the "Redemption Price"). The
redemption of the Rights 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 of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including, but not limited to, an amendment to lower certain thresholds
described above to not less than the greater of (i) any percentage greater than
the largest percentage of the voting power of all securities of the Company then
known to the Company to be beneficially owned by any person or group of
affiliated or associated persons (other than an excepted person) and (ii) 10%,
except that from and after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
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Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, as the
same may be amended from time to time, which is hereby incorporated herein by
reference.
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