FORM 8 - A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Lilly Industries, Inc.
______________________________________________________
(Exact name of registrant as specified in its charter)
Indiana 35-0471010
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
733 South West Street, Indianapolis, Indiana 46225
(Address of principal executive offices) (Zip Code)
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
Class A Common Stock,
Without Par Value New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
<PAGE>
Item 1. Description of Registrant's Securities
to be Registered
On January 12, 1996, the Board of Directors of Lilly
Industries, Inc.(the "Registrant") declared a dividend of one
common share purchase right (a "Right" or "Rights") for each
outstanding share of all Class A and Class B common stock,
without par value (the "Common Shares"), of the Registrant. The
dividend is payable on January 26, 1996 to the shareholders of
record as of January 26, 1996 (the "Record Date"). If and when
the Rights become exercisable, each Right will entitle the
registered holder to purchase from the Registrant one Common
Share at a purchase price of [$55.00] (the "Purchase Price"),
although the price may be adjusted as described below. The
description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Registrant and
KeyCorp Shareholder Services, Inc., as Rights Agent (the "Rights
Agent").
Initially, shareholders will not receive a separate
certificate for the Rights. The Rights will be represented by the
outstanding Common Share certificates with a copy of a "Summary
of Rights" attached thereto (the Summary of Rights is included as
Exhibit B to the Rights Agreement which is attached hereto as
Exhibit 4); and the Rights cannot be bought, sold or otherwise
traded separately from the Common Shares. Certificates for
Common Shares issued after the Record Date will carry a notation
that indicates that Rights are attached to the Common Shares and
that the terms of the Rights Agreement are incorporated therein.
Separate certificates representing the Rights will be
distributed as soon as practicable after the "Distribution Date,"
which is the earliest to occur of:
(1) 10 calendar days following a public
announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has (a)
acquired beneficial ownership of 15% or more of the
outstanding Class A Common Shares or (b) become the
beneficial owner of an amount of the outstanding Class
A Common Shares (but not less than 10%) which the Board
of Directors determines to be substantial and which
ownership the Board of Directors determines is intended
or may be reasonably anticipated, in general, to cause
the Registrant to take actions determined by the Board
of Directors to be not in the Registrant's best long-
term interests (an "Adverse Person"), or
(2) 10 business days (or such later date as may
be determined by action of the Board of Directors prior
to the time any person or group becomes an Acquiring
Person) following the commencement or announcement of
an intention to make a tender offer or exchange offer
the consummation of which would result in the
<PAGE>
beneficial ownership by a person or group of 30% or
more of such outstanding Class A Common Shares.
Until the Distribution Date (or earlier exchange, redemption
or expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date,
even without such notation or a copy of the Summary of Rights
being attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares 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
Shares as of the close of business on the Distribution Date and,
thereafter, such separate Right Certificates alone will evidence
the Rights.
The holders of the Rights are not required to take any
action until the Rights become exercisable. As described above,
the Rights are not exercisable until the Distribution Date.
Holders of the Rights will be notified that the Rights have
become exercisable when the Rights Agent mails the Rights
Certificates. The Rights will expire on January 12, 2006 (the
"Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed or exchanged
by the Registrant, in each case, as described below.
To protect the value of the Rights to the holders, the
Purchase Price payable and the number of Common Shares, or other
securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time (1) in the event of a
stock dividend on, or a subdivision, combination or
reclassification of, the Common Shares, (2) upon the grant to
holders of the Common Shares of certain rights or warrants to
subscribe for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price, less than
the then current market price of Common Shares, or (3) upon the
distribution to holders of the Common Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in
Common Shares) or of subscription rights or warrants, other than
those referred to above (the "Anti-Dilution Rights").
The Anti-Dilution provisions are intended to ensure that a
holder of Rights will not be adversely affected by the occurrence
of such events. With certain exceptions, the Registrant is not
required to adjust the Purchase Price until cumulative
adjustments require a change of at least 1% in the Purchase
Price. No fractional Common Shares will be issued and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Common Shares on the last trading day prior to the
date of exercise.
In the event that (1) the Registrant is acquired in a merger
or other business combination transaction and the Registrant is
not the surviving corporation, or (2) any person consolidates or
merges with the Registrant and all or part of the Registrant's
Common Shares are exchanged for securities, cash or property of
<PAGE>
any other person, or (3) 50% or more of the Registrant's
consolidated assets or earning power are sold (collectively,
"Flip-Over Events"), proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon
the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring
company which at the time of such transaction will have a market
value of two times the exercise price of the Right. In the event
that (1) an Acquiring Person engages in certain self-dealing
transactions, or (2) a person is declared an Adverse Person by
the Board of Directors of the Registrant, or (3) a person
acquires 15% or more of the outstanding Class A Common Shares
(collectively, "Flip-In Events"), proper provision shall be made
so that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void),
will thereafter have the right to receive upon exercise that
number of Common Shares having a market value of two times the
exercise price of the Right.
At any time after a person becomes an Acquiring Person, and
prior to the acquisition by such Acquiring Person of 50% or more
of the outstanding Class A Common Shares, the Board of Directors
of the Registrant may exchange the Rights (other than Rights
owned by such person or group which have become void), in whole
or in part, at an exchange ratio of one Common Share per Right
(subject to adjustment).
At any time prior to the tenth calendar day following the
date of a public announcement that a person or group has become
an Acquiring Person, the Board of Directors of the Registrant may
redeem the Rights in whole, but not in part, at a price of $.01
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.
If the Board of Directors' ability to redeem the Rights
pursuant to the Rights Agreement has expired because a person or
group has become an Acquiring Person, but a Flip-Over Event or
certain Flip-In Events have not yet occurred, the redemption
right will be reinstated if the Acquiring Person disposes of a
sufficient number of the Registrant's Common Shares so that such
person then only owns less than 10% of the outstanding
Registrant's Class A Common Shares and if certain other
conditions are met.
The terms of the Rights may be amended by the Board of
Directors of the Registrant without the consent of the holders of
the Rights, except that from and after such time as any person
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 shareholder of the Registrant,
<PAGE>
including, without limitation, the right to vote or to receive
dividends.
As of January 12, 1996, there were 22,184,366 Class A Common
Shares issued and outstanding, and there were 349,431 Class B
Common Shares issued and outstanding. As of such date, an
additional 4,756,674 Class A Common Shares were held in Treasury
and 8,275,627 Class A Common Shares were reserved for issuance.
Also, as of such date, an additional 190,569 Class B Common
Shares were held in Treasury. One Right will be distributed to
shareholders of the Registrant for each Common Share owned of
record by them on the Record Date. As long as the Rights are
attached to the Common Shares, the Registrant will issue one
Right with each Common Share that shall become outstanding so
that all Common Shares will have attached Rights. The Registrant
has initially reserved 35,216,667 Class A Common Shares and
540,000 Class B Common Shares for issuance upon exercise of
Rights.
The Rights have certain anti-takeover effects. The Rights
may cause substantial dilution to a person or group which
attempts to acquire the Registrant on terms not approved by the
Board of Directors of the Registrant, except pursuant to an offer
conditioned on a substantial number of Rights being acquired.
The Rights should not interfere with any merger or other business
combination approved by the Board of Directors since the Rights
may be redeemed by the Registrant at $.01 per Rights prior to the
time that a person or group has acquired beneficial interest of
15% or more of the Common Shares.
The form of Rights Agreement between the Registrant and
KeyCorp Shareholder Services, Inc. (the "Rights Agent")
specifying the terms of the Rights, which includes as Exhibit A
thereto the form of Rights Certificate and as Exhibit B the
Summary of Rights, is attached hereto as Exhibit 4 and is
incorporated herein by reference. The foregoing description of
the Rights is qualified by reference to such Exhibit 4.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the Registrant has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
LILLY INDUSTRIES, INC.
By: /s/ Roman J. Klusas
-------------------
Roman J. Klusas
Vice President, Chief
Financial Officer,
and Secretary
Dated: January 18, 1996
<PAGE>
EXHIBIT LIST
II. Exhibits filed with the Commission.
Number Assigned
in Form 8-A Description of Exhibit
4 Form of Rights Agreement, dated as of January
12, 1996, between Lilly Industries, Inc. and
KeyCorp Shareholder Services, Inc. as Rights
Agent, which includes as Exhibit A the form
of Rights Certificate. Pursuant to the
Rights Agreement, Rights Certificates will
not be mailed until as soon as practicable
after the Distribution Date.
<PAGE>
_______________________________________________________
LILLY INDUSTRIES, INC.
and
KEYCORP SHAREHOLDER SERVICES, INC.
Rights Agent
RIGHTS AGREEMENT
Dated as of January 12, 1996
_________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain definitions . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . 8
Section 3. Issue of Right Certificates . . . . . . . . . . 8
Section 4. Form of Right Certificates . . . . . . . . . . 10
Section 5. Countersignature and Registration . . . . . . 11
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates . . . . . . 12
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . 13
Section 8. Cancellation and Destruction of Right
Certificates . . . . . . . . . . . . . . . . . 15
Section 9. Availability of Common Shares . . . . . . . . 16
Section 10. Common Shares Record Date . . . . . . . . . . 18
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights . . . . . . . . . . 19
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares . . . . . . . . . . . . . . . 34
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . 34
Section 14. Fractional Rights and Fractional Shares . . . 38
Section 15. Rights of Action . . . . . . . . . . . . . . . 40
Section 16. Agreement of Right Holders . . . . . . . . . . 41
Section 17. Right Certificate Holder Not Deemed a
Shareholder . . . . . . . . . . . . . . . . . 42
Section 18. Concerning the Rights Agent . . . . . . . . . 42
Section 19. Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . 43
Section 20. Duties of Rights Agent . . . . . . . . . . . . 44
Section 21. Change of Rights Agent . . . . . . . . . . . . 48
Section 22. Issuance of New Right Certificates . . . . . . 49
<PAGE>
Section 23. Redemption . . . . . . . . . . . . . . . . . . 50
Section 24. Exchange . . . . . . . . . . . . . . . . . . . 52
Section 25. Notice of Certain Events . . . . . . . . . . . 54
Section 26. Notices . . . . . . . . . . . . . . . . . . . 55
Section 27. Supplements and Amendments . . . . . . . . . . 56
Section 28. Successors . . . . . . . . . . . . . . . . . . 58
Section 29. Benefits of this Agreement . . . . . . . . . . 58
Section 30. Severability . . . . . . . . . . . . . . . . . 58
Section 31. Governing Law . . . . . . . . . . . . . . . . 59
Section 32. Counterparts . . . . . . . . . . . . . . . . . 60
Section 33. Descriptive Headings . . . . . . . . . . . . . 60
<PAGE>
RIGHTS AGREEMENT
This AGREEMENT, dated as of January 12, 1996, between Lilly
Industries, Inc., an Indiana corporation (the "Corporation"), and
KeyCorp Shareholder Services, Inc., a Delaware corporation (the
"Rights Agent").
WHEREAS, the Board of Directors of the Corporation has
authorized and declared a dividend distribution of one Common
Share Purchase Right (hereinafter referred to as a "Right") for
each Common Share of the Corporation outstanding and held of
record as of the Close of Business on January 26, 1996 (the
"Record Date"), each Right representing the right to purchase one
Common Share upon the terms and subject to the conditions herein
set forth, and has further authorized and directed the issuance
of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration
Date.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean (i) any Person (other
than the Corporation or any Related Person), who or which,
together with all Affiliates and Associates of such Person, shall
<PAGE>
be the Beneficial Owner of 15% or more of the Class A Common
Shares then outstanding, or (ii) any Adverse Person; provided,
however, that a Person shall not be deemed to have become an
Acquiring Person solely as a result of a reduction in the number
of Class A Common Shares outstanding, unless subsequent to such
reduction, such Person or any Affiliate or Associate of such
Person shall become the Beneficial Owner of any additional Class
A Common Shares other than as a result of a stock dividend, stock
split or similar transaction effected by the Corporation in which
all shareholders of Class A Common Shares are treated equally.
(b) "Adverse Person" shall mean any Person declared to be
an Adverse Person by the Board of Directors upon (i) a
determination by the Board of Directors, at any time after the
date of this Agreement, that such Person, alone or together with
its Affiliates and Associates, has become, or has announced an
intention to become, in one or more transactions, the Beneficial
Owner of a number of Class A Common Shares which the Board of
Directors determines to be substantial (which amount shall in no
event be less than 10% of the Class A Common Shares then
outstanding) and (ii) a determination by at least a majority of
the Board of Directors who are not officers of the Corporation,
after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem
appropriate, that (A) such Beneficial Ownership by such Person
(1) is intended to cause the Corporation to repurchase the Class
A Common Shares beneficially owned by such Person, (2) is
intended or may reasonably be anticipated to cause pressure on
the Corporation to take action or enter into a transaction or
<PAGE>
series of transactions to provide such Person with short-term
financial gain under circumstances in which the Board of
Directors determines that the best long-term interests of the
Corporation and its shareholders would not be served by taking
such action or entering into such transactions or series of
transactions at that time, or (3) is intended or may reasonably
be anticipated to permit such Person to acquire control of or a
controlling influence over the Corporation, as a result of such
Beneficial Ownership or one or more subsequent actions or
transactions, in a manner or pursuant to one or more actions or
transactions that the Board determines to be unfair or coercive
to shareholders, or (B) such Beneficial Ownership is causing or
may reasonably be anticipated to cause a material adverse impact
on the business, financial condition or prospects of the
Corporation (including, without limitation, the Corporation's
ability to maintain its competitive position).
(c) "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 of this
Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such person's
Affiliates or Associates beneficially owns, directly or
indirectly,
<PAGE>
(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, or to beneficially own,
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange; or (B) the right to vote or dispose of
pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable
or successor report); or
<PAGE>
(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 to the extent
contemplated by the proviso to Section 1(d)(ii)(B)) or
disposing of any securities of the Corporation;
provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, any
security if such beneficial ownership arises solely as
a result of such Person's status as a "clearing
agency," as defined in Section 3(a)(23) of the Exchange
Act.
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 Corporation,
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.
(e) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in the
<PAGE>
State of Indiana 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., eastern standard time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00 P.M.,
eastern standard time, on the next succeeding Business Day.
(g) "Common Shares" when used with reference to the
Corporation shall mean the shares of Class A and Class B common
stock, without par value, of the Corporation. "Class A Common
Shares" when used with reference to the Corporation shall mean
the shares of Class A common stock, no par value, of the
Corporation. "Class B Common Shares" when used with reference to
the Corporation shall mean the shares of Class B common stock, no
par value of the Corporation. "Common Shares" when used with
reference to any Person other than the Corporation (including an
Issuer as defined in Section 13) shall mean the capital stock or
equity security with the greatest voting power of such other
Person.
(h) "Distribution Date" shall mean the earlier of (i) the
Close of Business on the tenth calendar day after the Share
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 prior to such time as any person
becomes an Acquiring Person) after the date of the commencement
by any Person (other than the Corporation or any Related Person),
or of the first public announcement of the intention of any
<PAGE>
Person (other than the Corporation or any Related Person), to
commence a tender or exchange offer, the consummation of which
would result in any Person becoming the Beneficial Owner of Class
A Common Shares aggregating 30% or more of the then outstanding
Class A Common Shares (including any such date which is after the
date of this Agreement and prior to the issuance of the Rights).
(i) "Final Expiration Date" shall have the meaning set
forth in Section 7.
(j) "Person" shall mean any individual, firm, corporation
or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(k) "Purchase Price" shall have the meaning set forth in
Section 7.
(l) "Redemption Date" shall have the meaning set forth in
Section 7.
(m) "Related Person" shall mean (i) any Subsidiary of the
Corporation, (ii) any employee benefit or stock ownership plan of
the Corporation or any entity holding Common Shares for or
pursuant to the terms of any such plan, or (iii) any Person who
acquires Common Shares from the Corporation or any other Related
Person in one or a series of related transactions, each of which
is approved by the Board of Directors; provided, however, that if
any Person who becomes a Related Person solely by virtue of
subsection (iii) above, or any Affiliate or Associate of such
<PAGE>
Person, subsequently becomes the Beneficial Owner of any
additional Common Shares in a transaction or transactions not
approved by the Board of Directors, such Person shall no longer
be deemed a "Related Person" with respect to all Common Shares of
which it, or any of its Affiliates or Associates, is the
Beneficial Owner."
(n) "Share Acquisition Date" shall mean the first date of
public announcement by the Corporation or an Acquiring Person
that an Acquiring Person has become such.
(o) "Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Corporation
hereby appoints the Rights Agent to act as agent for the
Corporation and the holders of the Rights (who, in accordance
with Section 3, shall prior to the Distribution Date also be the
holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
<PAGE>
Section 3. Issue of Right Certificates.
(a) Until the Distribution Date, (i) the Rights will be
evidenced (subject to the provisions of Section 3(b)) by the
certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and
(ii) the right to receive Right Certificates will be transferable
only in connection with the transfer of Common Shares. As soon as
practicable after the written notification to the Rights Agent by
the Company of the Distribution Date, the Corporation will
prepare and execute, the Rights Agent will countersign, and the
Corporation will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, postage-prepaid mail,
to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such holder
shown on the records of the Corporation, a Right Certificate, in
substantially the form of Exhibit A hereto (a "Right
Certificate"), evidencing one Right for each Common Share so
held. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates or brokers' due bills.
(b) On the Record Date, or as soon as practicable
thereafter, the Corporation will send a copy of a Summary of
Rights to Purchase Common Shares, in substantially the form of
Exhibit B hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of
such holder shown on the records of the Corporation. With
respect to certificates for Common Shares outstanding as of the
<PAGE>
Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights
attached thereto. Until the Distribution Date (or the earlier of
the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred
to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date shall have impressed
on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles
the holder hereof to certain rights as set
forth in a Rights Agreement between Lilly
Industries, Inc. and KeyCorp Shareholder
Service, Inc., dated as of January 12, 1996
(the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference
and a copy of which is on file at the
principal executive offices of Lilly
Industries, Inc. Under certain
circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by
separate certificates and will no longer be
evidenced by this certificate. Lilly
Industries, Inc. will mail to the holder of
this certificate a copy of the Rights
Agreement without charge after receipt of a
written request therefor. As described in
the Rights Agreement, Rights issued to any
Person who becomes an Acquiring Person (as
defined in the Rights Agreement) shall become
<PAGE>
null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Corporation purchases
or acquires any Common Shares after the Record Date but prior to
the Distribution Date, any Rights associated with such Common
Shares shall be deemed cancelled and retired so that the
Corporation shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Common Shares
and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit A hereto and may have such
marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Corporation may
deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform
to usage. Subject to the provisions of Section 22, the Right
Certificates shall entitle the holders thereof to purchase such
<PAGE>
number of Common Shares as shall be set forth therein at the
price per Common Share set forth therein (the "Purchase Price"),
but the number of such Common Shares and the Purchase Price shall
be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Corporation by
its Chairman of the Board, its President, any of its Vice
Presidents, or its Secretary or Assistant Secretary, either
manually or by facsimile signature, shall have affixed thereto
the Corporation's seal or a facsimile thereof, if any, and shall
be attested by the Secretary or any Assistant Secretary of the
Corporation, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Corporation who shall
have signed any of the Right Certificates shall cease to be such
officer of the Corporation before countersignature by the Rights
Agent and issuance and delivery by the Corporation, such Right
Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Corporation with the same
force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the
Corporation; and any Right Certificate may be signed on behalf of
the Corporation by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of
the Corporation to sign such Right Certificate, although at the
date of the execution of this Rights Agreement any such person
was not such an officer.
<PAGE>
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office, books for
registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 14, at any
time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the
Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section
11(a)(ii) or that have been exchanged pursuant to Section 24) 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 Common Shares as the Right
Certificate or Right Certificates surrendered then entitled each
holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right
Certificates 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 office of the Rights Agent designated for such purpose.
Thereupon, the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right
<PAGE>
Certificates, as the case may be, as so requested. The
Corporation may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Right
Certificates.
Upon receipt by the Corporation and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Corporation's request,
reimbursement to the Corporation 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 Corporation will make and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right 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
executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the
Purchase Price for each Common Share as to which the Rights are
<PAGE>
exercised, at or prior to the earliest of (i) the close of
business on January 12, 2006 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section
23 (the "Redemption Date"), or (iii) the time at which such
Rights are exchanged as provided in Section 24.
(b) The "Purchase Price" for each Common Share pursuant to
the exercise of a Right shall initially be $55.00, shall be
subject to adjustment from time to time as provided in Sections
11 and 13 and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the
shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 by certified check,
cashier's check or money order payable to the order of the
Corporation, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Common Shares
certificates for the number of Common Shares to be purchased and
the Corporation hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing such number of
Common Shares as are to be purchased (in which case certificates
for the Common Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and
the Corporation hereby directs the depositary agent to comply
<PAGE>
with such request, (ii) when appropriate, requisition from the
Corporation the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14, (iii) after
receipt of such certificates or depositary receipts, cause the
same to be delivered to or, upon the order of the registered
holder of such Right Certificate, registered in such name or
names as may be designated by such holder and (iv) when
appropriate, after receipt, deliver such cash to or upon the
order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14.
(e) The Corporation covenants and agrees that it will cause
to be reserved and kept available out of its authorized and
unissued Common Shares the number of Common Shares that will be
sufficient to permit the exercise in full of all outstanding
Rights in accordance with this Section 7. To the extent that
there are insufficient authorized but unissued Common Shares to
permit such a reservation, the Corporation covenants and agrees
that it will use its reasonable best efforts to cause the
additional authorization to occur.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
<PAGE>
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Corporation or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Rights Agreement. The Corporation 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 Corporation otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Corporation, or shall, at the written request
of the Corporation, provide the Corporation with a microfiche
copy thereof and destroy such cancelled Right Certificates, and
deliver a certificate of destruction thereof to the Corporation.
Section 9. Availability of Common Shares.
(a) If the class of Common Shares issuable and deliverable
upon the exercise of Rights are listed on any national securities
exchange, the Corporation shall use its reasonable best efforts
to cause, from and after such time as the Rights become
exercisable, all Common Shares of such class reserved for
issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(b) The Corporation shall use its reasonable best efforts
to (i) file, as soon as practicable following the later to occur
of an event described in Section 11(a)(ii) or Section 13 or the
Distribution Date, if necessary, a registration statement under
<PAGE>
the Securities Act of 1933, as amended (the "Act"), with respect
to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing and
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the earlier of
the Final Expiration Date or the Redemption Date. The
Corporation will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability
of the Rights; provided, however, that the Corporation may
temporarily suspend the exercisability of the Rights to prepare
and file such registration statement and permit it to become
effective and, upon any such suspension, the Corporation shall
issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. Notwithstanding any such provision of this Agreement to
the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained.
(c) The Corporation covenants and agrees that it will take
all such action as may be necessary to ensure that all Common
Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Common Shares (subject to
payment of the Purchase Price), be duly and validly authorized
<PAGE>
and issued and fully paid and nonassessable shares.
(d) The Corporation further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Common
Shares upon the exercise of Rights. The Corporation shall not,
however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or
depositary receipts for the Common Shares in a name other than
that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Common Shares
upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been
established to the Corporation's reasonable satisfaction that no
such tax is due.
Section 10. Common Shares Record Date. Each person in
whose name any certificate for Common Shares is issued upon the
exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Common Shares represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Common Shares
<PAGE>
transfer books of the Corporation are closed, such person shall
be deemed to have become the record holder on such succeeding
Business Day on which the Common Shares transfer books of the
Corporation are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Common 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, if any, and shall not be entitled
to receive any notice of any proceedings of the Corporation,
except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights. The Purchase Price, the number of Common
Shares covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event the Corporation shall at
any time after the date of this Agreement (A) declare a
dividend on the Common Shares payable in Common Shares,
(B) subdivide the outstanding Common Shares, (C)
combine the outstanding Common Shares into a smaller
number of Common Shares or (D) issue any shares of its
capital stock in a reclassification of the Common
Shares (including any such reclassification in
connection with a consolidation or merger in which the
Corporation is the continuing or surviving
corporation), except as otherwise provided in this
<PAGE>
Section 11(a), the Purchase Price in effect at the time
of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the
Common Shares transfer books of the Corporation were
open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the
aggregate par value, if any, of the shares of capital
stock of the Corporation issuable upon exercise of one
Right.
(ii) Subject to Section 24 of this Agreement, in
the event that
(A) any Acquiring Person or any
Associate or Affiliate of any Acquiring
Person, at any time after the date of this
Agreement, directly or indirectly, shall (1)
merge into the Corporation or otherwise
combine with the Corporation and the
Corporation shall be the continuing or
<PAGE>
surviving corporation of such merger or
combination (other than in a transaction
subject to Section 13), (2) merge or
otherwise combine with any Subsidiary of the
Corporation, (3) in one or more transactions
(other than in connection with the exercise
of Rights or the exercise or conversion of
securities exercisable or convertible into
capital stock of the Corporation or any of
its Subsidiaries) transfer any assets to the
Corporation or any of its Subsidiaries in
exchange (in whole or in part) for shares of
any class of capital stock of the Corporation
or any of its Subsidiaries or for securities
exercisable for or convertible into shares of
any class of capital stock of the Corporation
or of any of its Subsidiaries, or otherwise
obtain from the Corporation or any of its
Subsidiaries, with or without consideration,
any additional shares of any class of capital
stock of the Corporation or any of its
Subsidiaries or securities exercisable for or
convertible into shares of any class of
capital stock of the Corporation or any of
its Subsidiaries (other than as part of a pro
rata distribution to all holders of such
shares of any class of capital stock of the
Corporation, or any of its Subsidiaries), (4)
sell, purchase, lease, exchange, mortgage,
<PAGE>
pledge, transfer or otherwise dispose (in one
or more transactions) of any assets
(including securities) to, from, with or of,
as the case may be, the Corporation or any of
its Subsidiaries (other than in a transaction
subject to Section 13), (5) receive any
compensation from the Corporation or any of
its Subsidiaries other than compensation as a
director or for full-time employment as a
regular employee, in either case, at rates in
accordance with the Corporation's (or its
Subsidiaries') past practices, or (6) receive
the benefit, directly or indirectly (except
proportionately as a shareholder), of any
loans, advances, guarantees, pledges or other
financial assistance or any tax credits or
other tax advantage provided by the
Corporation or any of its Subsidiaries, or
(B) during such time as there is an
Acquiring Person, there shall be any
reclassification of securities (including any
reverse stock split), or recapitalization or
reorganization of the Corporation, or any
merger or consolidation of the Corporation
with any of its Subsidiaries or any other
transaction or series of transactions
involving the Corporation or any of its
Subsidiaries (whether or not with or into or
<PAGE>
otherwise involving an Acquiring Person),
other than a transaction subject to Section
13, which has the effect, directly or
indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares
of any class of equity securities of the
Corporation or any of its Subsidiaries
beneficially owned by any Acquiring Person or
any Affiliate or Associate thereof, or
(C) any Person (other than the
Corporation or any Related Person) who or
which, together with all Affiliates and
Associates of such Person, shall at any time
after the date of this Agreement, become the
Beneficial Owner of 15% or more of the Class
A Common Shares then outstanding (other than
pursuant to any transaction set forth in
Section 13); provided, however, that a Person
shall not be deemed to have become the
Beneficial Owner of 15% or more of the Common
Shares then outstanding for the purposes of
this Section 11(a)(ii)(C) solely as a result
of a reduction in the number of Common Shares
outstanding, unless subsequent to such
reduction such Person or any Affiliate or
Associate of such Person shall become the
Beneficial Owner of any additional Class A
Common Shares, or
<PAGE>
(D) any Person is declared to be an
Adverse Person by the Board of Directors,
then each holder of a Right shall thereafter have a right to
receive, upon exercise thereof in accordance with the terms
of this Agreement and in lieu of the number of Common Shares
for which the Right is then exercisable, such number of
Common Shares of the Corporation as shall equal the result
obtained by (x) multiplying the then current Purchase Price
by the number of Common Shares for which a Right is then
exercisable and dividing that product by (y) 50% of the then
current per share market price of the Corporation's Class A
Common Shares (determined pursuant to Section 11(d) on the
date such Person became an Acquiring Person). In the event
that any Person shall become an Acquiring Person and the
Rights shall then be outstanding, the Corporation shall not
take any action which would eliminate or diminish the
benefits intended to be afforded by the Rights.
From and after the occurrence of the earlier of the
events described in clauses (A), (B), (C) and (D) above, any
Rights that are or were acquired or beneficially owned by
such Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) shall be void and any holder of such
Rights shall thereafter have no right to exercise such
Rights under any provision of this Agreement. No Right
Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person
whose Rights would be void pursuant to the preceding
<PAGE>
sentence or any Associate or Affiliate thereof; no Right
Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof shall be
cancelled.
(iii) In the event that there shall not be
sufficient Common Shares authorized and unissued to
permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii), the Corporation
shall take all such action as may be necessary to
authorize additional Common Shares for issuance upon
exercise of the Rights. However, if the Corporation is
unable to cause the authorization of additional Common
Shares within 90 calendar days after the occurrence of
an event in Section 11(a)(ii), then, notwithstanding
anything in this Agreement to the contrary, the
Corporation shall determine the excess of the value of
the Common Shares issuable upon the exercise of a Right
over the Purchase Price (such excess being hereinafter
referred to as the "Spread") and shall be obligated to
deliver, upon the surrender of such Right and without
requiring payment of the Purchase Price, Common Shares
(to the extent available) and cash (to the extent
<PAGE>
permitted by applicable law and any agreements or
instruments to which the Corporation is a party in
effect immediately prior to the first occurrence of an
event in Section 11(a)(ii)) in an amount equal to the
Spread. To the extent that any legal or contractual
restrictions prevent the Corporation from paying the
full amount of cash payable in accordance with the
foregoing sentence, the Corporation shall pay to
holders of the Rights as to which such payments are
payable all amounts which are not then restricted on a
pro rata basis and shall continue to make payments on a
pro rata basis as funds become available until the full
amount due to each such Right holder has been paid.
(b) In case the Corporation shall fix a record date for the
issuance of rights, options or warrants to all holders of Common
Shares entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Common
Shares (or shares having the same rights, privileges and
preferences as the Common Shares ("equivalent common shares")) or
securities convertible into Common Shares or equivalent common
shares at a price per Common Share or equivalent common share (or
having a conversion price per share, if a security convertible
into Common Shares or equivalent common shares) less than the
then current per share market price of the Common Shares (as
defined in Section 11(d)) on such record date, the Purchase Price
to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
<PAGE>
the number of Common Shares outstanding on such record date plus
the number of Common Shares which the aggregate offering price of
the total number of Common Shares and/or equivalent common shares
so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at
such current market price and the denominator of which shall be
the number of Common Shares outstanding on such record date plus
the number of additional Common Shares and/or equivalent common
shares to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value, if any, of the shares of capital
stock of the Corporation issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration part
or all of which shall be in a form other than cash, the value of
such consideration shall be as determined in good faith by the
Board of Directors of the Corporation, whose determination shall
be described in a statement filed with the Rights Agent. Common
Shares owned by or held for the account of the Corporation shall
not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Corporation shall fix a record date for the
making of a distribution to all holders of the Common Shares
<PAGE>
(including any such distribution made in connection with a
consolidation or merger in which the Corporation is the
continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a
dividend payable in Common Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market
price of the Common Shares on such record date less the fair
market value (as determined in good faith by the Board of
Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent) of the
portion of the assets or evidences of indebtedness so to be
distributed, or of such subscription rights or warrants
applicable, to one Common Share and the denominator of which
shall be such current per share market price of the Common
Shares; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value, if any, of the shares of capital
stock of the Corporation to be issued upon exercise of one Right.
Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
(d) (i) For the purpose of any computation hereunder,
<PAGE>
the "current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on
any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30
consecutive Trading Days immediately prior to such
date; provided, however, that in the event that the
current per share market price of the 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 such shares, or
(B) any subdivision, combination or reclassification of
such Security, and prior to the expiration of 30
Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such
subdivision, combination of reclassification, then, and
in each such case, the current per share market price
shall be appropriately adjusted to reflect the current
market price per share equivalent of such 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
<PAGE>
to securities listed 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, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then
in use, or, if on any such date the Security is not
quoted by any such organization, the average of the
closing bid and asked prices as furnished by a
professional market maker making a market in the
Security selected by the Board of Directors of the
Corporation. The term "Trading Day" shall mean a day
on which the principal national securities 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 Business Day.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Common
Shares shall be determined in accordance with the
method set forth in Section 11(d)(i). If the Common
Shares are not publicly held or so listed or traded,
"current per share market price" shall mean the fair
value per share as determined in good faith by the
Board of Directors of the Corporation, whose
<PAGE>
determination shall be described in a statement filed
with the Rights Agent. With respect to the Class B
Common Shares, the determination of "current per share
market price" by the Board of Directors shall be
conclusively presumed to be a good faith determination
if it equals the "current per share market price" of
the Class A Common Shares and if there have been no
stock dividends or stock reclassifications that
affected the Class A Common Shares and the Class B
Common Shares disparately from and after the date
hereof.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of
at least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one ten-thousandth of a Common Share or one ten-
thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the date of
the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a), the holder of any Right thereafter exercised shall
<PAGE>
become entitled to receive any shares of capital stock of the
Corporation other than Common Shares, thereafter the number of
such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Common Shares contained in Section 11(a) through
(c), inclusive, and the provisions of Sections 7, 9, 10 and 13
with respect to the Common Shares shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the Corporation
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of Common Shares purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Corporation shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
Common Shares (calculated to the nearest one ten-thousandth of a
Common Share) obtained by (i) multiplying (x) the number of
Common Shares covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately
<PAGE>
after such adjustment of the Purchase Price.
(i) The Corporation 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 Common Shares
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 Common Shares for which a Right
was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Corporation shall make a public announcement
of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the
date on which the purchase price is adjusted or any day
thereafter, but, if the Right Certificates have been issued,
shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section
11(i), the Corporation 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, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the
Corporation, shall cause to be distributed to such holders of
<PAGE>
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 Corporation, new Right
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so
to be distributed shall be issued, executed and countersigned in
the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Common Shares issuable upon the
exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and
the number of Common Shares which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of
the Common Shares issuable upon exercise of the Rights, the
Corporation shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and
nonassessable Common Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Corporation may elect to
defer, until the occurrence of such event, issuing to the holder
<PAGE>
of any Right exercised after such record date the Common Shares
and other capital stock or securities of the Corporation, if any,
issuable upon such exercise over and above the Common Shares and
other capital stock or securities of the Corporation, if any,
issuable on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Corporation shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Corporation 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 it in its sole discretion shall determine to be
advisable in order that any (i) consolidation or subdivision of
the Common Shares, (ii) issuance wholly for cash or any Common
Shares at less than the current market price, (iii) issuance
wholly for cash or Common Shares or securities which by their
terms are convertible into or exchangeable for Common Shares,
(iv) dividends on Common Shares payable in Common Shares, or (v)
issuance of rights, options or warrants referred to hereinabove
in Section 11(b), hereafter made by the Corporation to holders of
its Common Shares shall not be taxable to such shareholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Corporation
shall (i) declare or pay any dividend on the Common Shares
payable in Common Shares or (ii) effect a subdivision,
<PAGE>
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in
Common Shares) into a greater or lesser number of Common Shares,
then in any such case (y) the number of Common Shares purchasable
after such event upon proper exercise of each Right shall be
determined by multiplying the number of Common Shares so
purchasable immediately prior to such event by a fraction, the
numerator of which is the number of Common Shares outstanding
immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event,
and (z) each Common Share outstanding immediately after such
event shall have issued with respect to it that number of Rights
which each Common Share outstanding immediately prior to such
event had issued with respect to it. The adjustments provided
for in this Section 11(n) shall be made successively whenever
such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 and 13, the Corporation shall promptly (a) prepare a
certificate setting forth such adjustment, and a brief statement
of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares a
copy of such certificate and (c) mail a brief summary thereof to
each holder of a Right Certificate in accordance with Section 25.
The Rights Agent shall be fully protected in relying on such
certificate and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such
<PAGE>
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event, directly or indirectly,
(a) the Corporation shall consolidate with, or merge with and
into, any other Person, (b) any Person shall consolidate with the
Corporation, or merge with and into the Corporation and the
Corporation shall be the continuing or surviving corporation of
such merger or consolidation and, in connection with such merger
or consolidation, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any
other Person (or the Corporation) or cash or any other property,
or (c) the Corporation 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 (including
without limitation securities creating any obligation on the part
of the Corporation and/or any of its Subsidiaries) aggregating
50% or more of the assets or earning power of the Corporation and
its Subsidiaries (taken as a whole) to any other Person other
than the Corporation 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 (except as otherwise
provided herein) shall thereafter have the right to receive, upon
the exercise thereof in accordance with the terms of this
Agreement and in lieu of Common Shares of the Corporation, such
number of validly authorized and issued, fully paid,
nonassessable and freely tradeable Common Shares of such other
Person (including the Corporation as successor thereto or as the
surviving corporation), free and clear of any liens, encumbrances
<PAGE>
and other adverse claims and not subject to any rights of call or
first refusal, as shall be equal to the result obtained by (A)
multiplying the then current Purchase Price by the number of
Common Shares for which a Right is then exercisable (without
taking into account any adjustment previously made pursuant to
Section 11(a)(ii)) and dividing that product by (B) 50% of the
then current per share market price of the Common Shares of such
other Person (determined pursuant to Section 11(d)) on the date
of consummation of such consolidation, merger, sale or transfer;
(ii) the Issuer of such Common Shares shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger,
sale or transfer, all the obligations and duties of the
Corporation pursuant to this Agreement; (iii) the term
"Corporation" shall thereafter be deemed to refer to such Issuer;
and (iv) such Issuer shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common
Shares) in 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
Common Shares thereafter deliverable upon the exercise of the
Rights. For purposes of this Section 13, "Issuer" shall mean (x)
in the case of any event described in Sections 13(a) or (b)
above, the Person that is the continuing, surviving, resulting or
acquiring Person (including the Corporation as the continuing or
surviving corporation of a transaction described in Section 13(b)
above), and (y) in the case of any event described in Section
13(c) above, the Person that is the party receiving the greatest
portion of the assets or earning power (including without
limitation securities creating any obligation on the part of the
<PAGE>
Corporation and/or any of its Subsidiaries) transferred pursuant
to such transaction or transactions; provided, however, that, in
any such case, (A) if (1) no class of equity security of such
Person is, at the time of such merger, consolidation or
transaction and has been continuously over the preceding 12-month
period, registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of
equity security of which is and has been so registered, the term
"Issuer" shall mean such other Person; and (B), in case such
Person is a Subsidiary, directly or indirectly, of more than one
Person, a class of equity security of two or more of which are
and have been so registered, the term "Issuer" shall mean
whichever of such Persons is the issuer of the equity security
having the greatest aggregate market value. Notwithstanding the
foregoing, if the Issuer in any of the events listed above is not
a corporation or other legal entity having outstanding equity
securities, then, and in each such case, (i) if the Issuer is
directly or indirectly wholly owned by a corporation or other
legal entity having outstanding equity securities, then all
references to Common Shares of the Issuer shall be deemed to be
references to the Common Shares of the corporation or other legal
entity having outstanding equity securities which ultimately
controls the Issuer, and (ii) if there is no such corporation or
other legal entity having outstanding equity securities, (Y)
proper provision shall be made so that the Issuer shall create or
otherwise make available for purposes of the exercise of the
Rights in accordance with the terms of this Agreement, a type or
types of security or securities having a fair market value at
<PAGE>
least equal to the economic value of the Common Shares which each
holder of a Right would have been entitled to receive if the
Issuer had been a corporation or other legal entity having
outstanding equity securities; and (Z) all other provisions of
this Agreement shall apply to the issuer of such securities as if
such securities were Common Shares. The Corporation shall not
consummate any such consolidation, merger, sale or transfer
unless prior thereto the Issuer shall have a sufficient number of
authorized Common Shares (or other securities as contemplated
above) 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 to such consummation the Corporation
and such Issuer shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth
in this Section 13 and further providing that as soon as
practicable after the consummation of any such consolidation,
merger, sale or transfer, the Issuer 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, and will use its best
efforts to cause such registration statement to (A)
become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at
all times meeting the requirements of the Act) until
the earlier of the Expiration Date or the Redemption
Date; and
<PAGE>
(ii) deliver to holders of the Rights historical
financial statements for the Issuer and each of its
Affiliates which comply in all respects with the
requirements for registration on Form 10 under the
Exchange Act.
The Corporation shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction
there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result
of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by
the Rights. The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other
transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
<PAGE>
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected
by the Board of Directors of the Corporation. If on any such
date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Corporation shall be used.
(b) The Corporation shall not be required to issue
fractions of Common Shares upon exercise of the Rights or to
distribute certificates which evidence fractional Common Shares.
In lieu of fractional Common Shares, the Corporation shall pay to
the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one Common
<PAGE>
Share. For the purposes of this Section 14(b), the current
market value of a Common Share shall be the closing price of a
Common Share (as determined pursuant to Section 11(d)) for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or
any fractional shares upon exercise of a Right (except as
provided above).
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 18, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Corporation to enforce, or
otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights,
it is specifically acknowledged that the holders of Rights would
not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the
<PAGE>
obligations under, and injunctive relief against actual or
threatened violations of the obligations of any person subject
to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the
Corporation and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares:
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Corporation and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Corporation or the
Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent shall be affected by any notice
to the contrary.
<PAGE>
Section 17. Right Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Common Shares, or any other securities
of the Corporation 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 shareholder of the Corporation or any right to
vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in
Section 25), 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. The Corporation
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 administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Corporation also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense incurred, in the absence of negligence, bad
faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with
<PAGE>
the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of
liability in the premises.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate
for the Common Shares or for other securities of the Corporation,
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, or
otherwise upon the advice of counsel as set forth in Section 20.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent
<PAGE>
shall succeed to the agency created by this Agreement any of the
Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Corporation and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
<PAGE>
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Corporation), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion, and the
Rights Agent shall be entitled to payment or reimbursement for
reasonable fees in connection with such consultation.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the
Corporation 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 any one of the
Chairman of the Board, the President, any Vice President, the
Secretary or the Assistant Secretary of the Corporation and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Corporation and any other Person only for its own negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its
<PAGE>
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 Corporation only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Corporation of any covenant
or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii)) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof)
provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining
of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such
change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as
to whether any Common Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
<PAGE>
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept written instructions with respect to the performance of
its duties hereunder from any one of the Chairman of the Board,
the President, any Vice President, the Secretary or the Assistant
Secretary of the Corporation, 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 by it in
good faith in accordance with instructions of any such officer or
for any delay in acting while waiting for those written
instructions. Any application by the Rights Agent for written
instructions from the Corporation may, at the option of the
Rights Agent, set forth in writing any action proposed to be
taken or omitted by the Rights Agent under this Rights Agreement
and the date on and/or after which such action shall be taken or
such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent
in accordance with a proposal included in any such application on
or after the date specified in such application (which date shall
not be less than five Business Days after the date any such
officer of the Corporation actually receives such application,
unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such
application specifying the action to be taken or omitted.
<PAGE>
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Corporation or become
pecuniarily interested in any transaction in which the
Corporation may be interested, or contract with or lend money to
the Corporation or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for
the Corporation or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation resulting from any such
act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights unless the Rights
Agent has been provided with the necessary funds to pay in full
amounts payable with respect thereto.
Section 21. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days' notice in writing
<PAGE>
mailed to the Corporation and to each transfer agent of the
Common Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. The Corporation
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 Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Corporation shall appoint a successor to
the Rights Agent. If the Corporation shall fail to make such
appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate who shall,
with such notice, submit his Right Certificate for inspection by
the Corporation, 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 Corporation or by such a court,
shall be (i) a corporation organized and doing business under the
laws of the United States (or of any other state of the United
States so long as such corporation is authorized to do business
as a banking institution), in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $100
million or (ii) a subsidiary of a corporation described in clause
<PAGE>
(i) 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 than the effective date of any such
appointment the Corporation shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the
Common Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation may, at its option, issue
new Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this
Agreement.
<PAGE>
Section 23. Redemption.
(a) The Board of Directors of the Corporation may, at its
option, at any time prior to the earlier of (i) the Final
Expiration Date and (ii) the tenth calendar day following the
Share Acquisition Date (or, if the Share Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on
the tenth calendar day following the Record Date), or such later
date as may be specified by a majority of the Board of Directors,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar 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) If following the occurrence of a Share Acquisition Date
and following the expiration of the right of redemption hereunder
but prior to the occurrence of an event described in Sections
(A), (B), (C) or (D) of Section 11(a)(ii) or Sections (a), (b) or
(c) of Section 13 ("Triggering Event") each of the following
shall have occurred and remain in effect: (i) a Person who is an
Acquiring Person shall have transferred or otherwise disposed of
a number of Common Shares in a transaction, or series of
transactions, which did not result in the occurrence of any
Triggering Event such that such Person is thereafter a Beneficial
Owner of less than 10% of the outstanding Common Shares, (ii)
there are no other Persons, immediately following the occurrence
<PAGE>
of the event described in clause (i), who are Acquiring Persons,
and (iii) the transfer or other disposition described in clause
(i) above was other than pursuant to a transaction, or series of
transactions, which directly or indirectly involved the
Corporation or any of its Subsidiaries, then the right of
redemption set forth in Section 23(a) shall be reinstated and
thereafter be subject to the provisions of this Section.
(c) Immediately upon the action of the Board of Directors
of the Corporation ordering the redemption of the Rights pursuant
to paragraph (a) of this Section 23, and without any further
action and without any notice, the right to exercise the Rights
will terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. The Corporation
may, at its option, pay the Redemption Price in cash, Common
Shares (based upon the current per share market price of the
Common Shares (determined pursuant to Section 11(d)) at the time
of redemption) or any other form of consideration deemed
appropriate by the Board of Directors. The Corporation shall
promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within
10 days after such action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (a) of this
Section 23, the Corporation shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books
of the transfer agent for the Common Shares. Any notice which is
<PAGE>
mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Corporation 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 in Section 24, and
other than in connection with the purchase of Common Shares prior
to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Corporation may, at its
option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii)) for Common
Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after
any Person (other than the Corporation, any Subsidiary of the
Corporation, any employee benefit plan of the Corporation or any
such Subsidiary, or any entity holding Common Shares for or
pursuant to the terms of any such plan), together with all
Affiliates and Associates of such person, becomes the Beneficial
Owner of 50% or more of the Class A Common Shares then
outstanding.
<PAGE>
(b) Immediately upon the action of the Board of Directors
of the Corporation ordering the exchange of any Rights pursuant
to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Corporation shall promptly give public
notice of any such exchange; provided, however, that the failure
to give, or any defect in, such notice shall not affect the
validity of such exchange. The Corporation 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 the Common Shares for Rights will
be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of
Section 11(a)(ii)) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Corporation, at its option, may substitute equivalent common
shares, as such term is defined in Section 11(b), for Common
Shares exchangeable for Rights, as appropriately adjusted to
reflect adjustments in the voting rights of the applicable class
of Common Shares pursuant to the terms thereof, so that the
<PAGE>
fraction of an equivalent common share delivered in lieu of each
Common Share shall have the same voting rights as one Common
Share of the same class.
(d) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with
this Section 24, the Corporation shall take all such action as
may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights.
(e) The Corporation shall not be required to issue
fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares. In lieu of such fractional
Common Shares, the Corporation shall pay to the registered
holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a
whole Common Share. For the purposes of this paragraph (e), the
current market value of a whole Common Share shall be the closing
price of a Common Share (as determined pursuant to Section 11(d))
for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Corporation shall propose (i) to pay any
dividend payable in stock of any class to the holders of any
class of its Common Shares or to make any other distribution to
the holders of its Common Shares (other than a regular quarterly
<PAGE>
cash dividend), (ii) to offer to the holders of its Common Shares
rights or warrants to subscribe for or to purchase any additional
Common Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any
reclassification of its Common Shares, (iv) to effect any
consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions,
of 50% or more of the assets or earning power of the Corporation
and its Subsidiaries (taken as a whole) to, any other Person, or
(v) to effect the liquidation, dissolution or winding up of the
Corporation, then, in each such case, the Corporation shall give
to each holder of a Right Certificate, in accordance with Section
26, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Common
Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining
holders of the Common Shares for purposes of such action, and in
the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares,
whichever shall be the earlier.
(b) In case any event set forth in Section 11(a)(ii) shall
<PAGE>
occur, then the Corporation shall as soon as practicable
thereafter give to each holder of a Right Certificate, in
accordance with Section 26, a notice of the occurrence of such
event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section
11(a)(ii).
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Corporation 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:
Lilly Industries, Inc.
733 S. West Street
Indianapolis, Indiana 46225
Attention: Douglas W. Huemme,
Chairman, President and
Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the
Corporation 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 Corporation) as follows:
KeyCorp Shareholder Services, Inc.
127 Public Square, 15th Floor
Cleveland, Ohio 44114
Attention: [Corporate Trust Officer]
<PAGE>
Notices or demands authorized by this Agreement to be given or
made by the Corporation 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
transfer agent for the Common Shares prior to issuance of Right
Certificates; otherwise, at the address of such holder as shown
on the registry books of the Rights Agent.
Section 27. Supplements and Amendments. Prior to the
Distribution Date, if the Corporation so directs, the Corporation
and the Rights Agent shall supplement or amend any provision of
this Agreement in any manner which the Corporation may deem
desirable without the approval of any holders of Rights or
Certificates representing Common Shares. From and after the
Distribution Date, if the Corporation so directs, the
Corporation, upon approval by the Board of Directors and the
Rights Agent, shall supplement or amend this Agreement without
the approval of any holders of Rights or Certificates
representing Common Shares in order (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions
herein, (iii) to shorten or lengthen any time period hereunder,
or (iv) to change or supplement the provisions hereunder in any
manner which the Corporation, upon such approval, may deem
desirable, including without limitation the addition of other
events requiring adjustment to the Rights under Sections 11 or 13
or procedures relating to the redemption of the Rights, which
change, amendment or supplement shall not adversely affect the
<PAGE>
interests of the holders of Rights Certificates (other than an
Acquiring Person or an Affiliate or Associate of any such
Person); provided, however, that this Agreement may not be
supplemented or amended pursuant to this sentence to lengthen,
pursuant to clause (iii) of this sentence, any time period unless
such lengthening is specifically contemplated hereby or is for
the purpose of protecting, enhancing or clarifying the rights of,
or the benefits to, the holders of Rights. Upon the delivery of
a certificate from the President or any Vice President of the
Corporation which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the
Rights Agent shall execute such supplement or amendment;
provided, however, that the failure or refusal of the Rights
Agent to execute such supplement or amendment shall not affect
the validity or effective date of any supplement or amendment
adopted by the Corporation. Notwithstanding anything in this
Agreement to the contrary, no supplement or amendment shall be
made which decreases the stated Redemption Price or the period of
time remaining until the Final Expiration Date.
Section 28. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Corporation or the
Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person or corporation
other than the Corporation, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution
<PAGE>
Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Corporation, the Rights Agent
and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Indiana 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, except that the Rights duties and
obligations of the Rights Agent shall be governed and construed
in accordance with the laws of the State of Ohio.
Section 32. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 33. Descriptive Headings. Descriptive headings of
<PAGE>
the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and
year first above written.
LILLY INDUSTRIES, INC.
By: /s/ Douglas W. Huemme
------------------------
Douglas W. Huemme,
Chairman, President, and
Chief Executive Officer
Attest:
By: /s/ Roman J. Klusas
---------------------------
Roman J. Klusas, Secretary
KEYCORP SHAREHOLDER SERVICES, INC.
By: /s/ Laura Thoms
--------------------------
Laura Thoms, Assistant
Vice President
Attest:
By: /s/ T. J. Zimmerman
--------------------------
T.J. Zimmerman, Vice President
<PAGE>
EXHIBIT A
Form of Right Certificate
Certificate No. _______ Rights
NOT EXERCISABLE AFTER JANUARY __, 2006 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
LILLY INDUSTRIES, INC.
This certifies that _____________________, or registered
assigns, is the registered owner of the number of rights set
forth above, each of which entitles the owner thereof, subject to
the terms, provisions and conditions of the Rights Agreement,
dated as of January __, 1996 (the "Rights Agreement"), between
Lilly Industries, Inc., an Indiana corporation (the
"Corporation"), and [Rights Agent], (the "Rights Agent"), to
purchase from the Corporation at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M., eastern standard time, on January 12, 2006 at the
office of the Rights Agent designated for such purpose, or at the
office of its successor as Rights Agent, one fully paid
nonassessable share of the [Class A or Class B] Common Stock,
without par value, of the Corporation (the "Common Shares"), at a
purchase price of $55.00 per Common 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
Common Shares which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of January 26, 1996, based on the
Common Shares as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number of Common
Shares which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are incorporated herein by this
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 of the Corporation and of the
holders of the Right Certificates. Copies of the Rights
Agreement are on file at the principal executive offices of the
Corporation and the above-mentioned offices of the Rights Agent.
<PAGE>
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Common Shares 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. In no event will certificates for
fractional Rights be issued.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may be redeemed in
whole, but not in part, by the Corporation at a redemption price
of $.01 per Right or (ii) may be exchanged in whole or in part
for an equal number of Common Shares.
No fractional Common Shares will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of the Common Shares or of any other securities of the
Corporation 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 shareholder of the Corporation or any
right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purchase until it shall have been countersigned by the Rights
Agent.
<PAGE>
WITNESS the facsimile signature of the proper officers of
the Corporation, and its corporate seal. Dated as of January 12,
1996.
ATTEST: LILLY INDUSTRIES, INC.
--------------------- By:
Secretary -----------------------------
Chairman, President and Chief
Executive Officer
Countersigned:
KEYCORP SHAREHOLDER SERVICES, INC.
By:
--------------------------
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________ hereby sells, assigns
and transfers unto ____________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ______________, Attorney, to transfer the within Right
Certificate on the books of the within-named Corporation, with
full power of substitution.
Dated: ___________, __________
_____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
================================================================
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced
by this Right Certificate are not beneficially owned by an
Acquiring Person or an Affiliate or Associate hereof (as defined
in the Rights Agreement).
____________________________
Signature
===============================================================
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To Lilly Industries, Inc.:
The undersigned hereby irrevocably elects to exercise
_______________________ Rights represented by this Right
Certificate to purchase the Common Shares issuable upon the
exercise of such Rights and requests that certificates for such
Common Shares be issued in the name of:
Please insert social security
or other identifying number: ____________________________
__________________________________________________________
(Please print name and address)
__________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number: ____________________________
__________________________________________________________
(Please print name and address)
__________________________________________________________
Dated: _____________, ________
_______________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program, the Stock Exchanges
Medallion Program or the New York Stock Exchange Inc. Medallion
Signature Program.
<PAGE>
Form of Reverse Side of Right Certificate -- continued
================================================================
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced
by this Right Certificate are not beneficially owned by an
Acquiring Person or an Affiliate or Associate thereof (as defined
in the Rights Agreement).
______________________________
Signature
=================================================================
NOTICE
The signature in the 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 Corporation 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.
<PAGE>
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
On January 12, 1996, the Board of Directors of Lilly
Industries, Inc.(the "Company") declared a dividend of one common
share purchase right (a "Right" or "Rights") for each outstanding
share of all Class A and Class B common stock, without par value
(the "Common Shares"), of the Company. The dividend is payable on
January 26, 1996 to the shareholders of record as of January 26,
1996 (the "Record Date"). If and when the Rights become
exercisable, each Right will entitle the registered holder to
purchase from the Company one Common Share at a purchase price of
$55.00 (the "Purchase Price"), although the price may be adjusted
as described below. The description and terms of the Rights are
set forth in a Rights Agreement (the "Rights Agreement") between
the Company and KeyCorp Shareholder Services, Inc., as Rights
Agent (the "Rights Agent").
TRADING AND DISTRIBUTION OF RIGHTS
Initially, shareholders will not receive a separate
certificate for the Rights. The Rights will be represented by the
outstanding Common Share certificates with a copy of this Summary
of Rights attached thereto and the Rights cannot be bought, sold
or otherwise traded separately from the Common Shares.
Certificates for Common Shares issued after the Record Date will
carry a notation that indicates that Rights are attached to the
Common Shares and that the terms of the Rights Agreement are
incorporated therein.
Separate certificates representing the Rights will be
distributed as soon as practicable after the "Distribution Date,"
which is the earliest to occur of:
(1) 10 calendar days following a public
announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has (a)
acquired beneficial ownership of 15% or more of the
outstanding Class A Common Shares or (b) become the
beneficial owner of an amount of the outstanding Class
A Common Shares (but not less than 10%) which the Board
of Directors determines to be substantial and which
ownership the Board of Directors determines is intended
or may be reasonably anticipated, in general, to cause
the Company to take actions determined by the Board of
Directors to be not in the Company's best long-term
interests (an "Adverse Person"), or
(2) 10 business days (or such later date as may
be determined by action of the Board of Directors prior
to the time any person or group becomes an Acquiring
Person) following the commencement or announcement of
an intention to make a tender offer or exchange offer
<PAGE>
the consummation of which would result in the
beneficial ownership by a person or group of 30% or
more of such outstanding Class A Common Shares.
Until the Distribution Date (or earlier exchange, redemption
or expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date,
even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares 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
Shares as of the close of business on the Distribution Date and,
thereafter, such separate Right Certificates alone will evidence
the Rights.
EXERCISABILITY AND EXPIRATION
The holders of the Rights are not required to take any
action until the Rights become exercisable. As described above,
the Rights are not exercisable until the Distribution Date.
Holders of the Rights will be notified that the Rights have
become exercisable when the Rights Agent mails the Rights
Certificates. The Rights will expire on January 12, 2006 (the
"Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed or exchanged
by the Company, in each case, as described below.
ADJUSTMENTS
To protect the value of the Rights to the holders, the
Purchase Price payable and the number of Common Shares, or other
securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time (1) in the event of a
stock dividend on, or a subdivision, combination or
reclassification of, the Common Shares, (2) upon the grant to
holders of the Common Shares of certain rights or warrants to
subscribe for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price, less than
the then current market price of Common Shares, or (3) upon the
distribution to holders of the Common Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in
Common Shares) or of subscription rights or warrants, other than
those referred to above.
These adjustments are called anti-dilution provisions and
are intended to ensure that a holder of Rights will not be
adversely affected by the occurrence of such events. With
certain exceptions, the Company is not required to adjust the
Purchase Price until cumulative adjustments require a change of
at least 1% in the Purchase Price. No fractional Common Shares
will be issued and in lieu thereof, an adjustment in cash will be
made based on the market price of the Common Shares on the last
<PAGE>
trading day prior to the date of exercise.
FLIP-OVER EVENTS AND FLIP-IN EVENTS
In the event that (1) the Company is acquired in a merger or
other business combination transaction and the Company is not the
surviving corporation, or (2) any person consolidates or merges
with the Company and all or part of the Company's Common Shares
are exchanged for securities, cash or property of any other
person, or (3) 50% or more of the Company's consolidated assets
or earning power are sold (collectively, "Flip-Over Events"),
proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof
at the then current exercise price of the Right, that number of
shares of common stock of the acquiring company which at the time
of such transaction will have a market value of two times the
exercise price of the Right. In the event that (1) an Acquiring
Person engages in certain self-dealing transactions, or (2) a
person is declared an Adverse Person by the Board of Directors of
the Company, or (3) a person acquires 15% or more of the
outstanding Class A Common Shares (collectively, "Flip-In
Events"), proper provision shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring
Person (which will thereafter be void), will thereafter have the
right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the
Right.
EXCHANGE OPTION
At any time after a person becomes an Acquiring Person, and
prior to the acquisition by such Acquiring Person of 50% or more
of the outstanding Class A Common Shares, the Board of Directors
of the Company may exchange the Rights (other than Rights owned
by such person or group which have become void), in whole or in
part, at an exchange ratio of one Common Share per Right (subject
to adjustment).
REDEMPTION
At any time prior to the tenth calendar day following the
date of a public announcement that a person or group has become
an Acquiring Person, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01
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.
If the Board of Directors' ability to redeem the Rights
pursuant to the Rights Agreement has expired because a person or
group has become an Acquiring Person, but a Flip-Over Event or
<PAGE>
certain Flip-In Events have not yet occurred, the redemption
right will be reinstated if the Acquiring Person disposes of a
sufficient number of the Company's Common Shares so that such
person then only owns less than 10% of the outstanding Company's
Class A Common Shares and if certain other conditions are met.
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, except that from and after such time as any person
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 shareholder of the Company, including,
without limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement is available from the Company
at no charge upon written request. This summary description of
the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is
incorporated herein by this reference.
