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_________________________________________________________________
Form 8-B
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Registration of Securities of Certain Successor Issuers
Filed Pursuant to Section 12(b) or (g) of The Securities Exchange
Act of 1934
THE MAY DEPARTMENT STORES COMPANY
(Exact name of registrant as specified in its charter)
Delaware 43-1742586
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
611 Olive Street
St. Louis, Missouri 63101-1799
(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 which each class is to be
registered
Common Stock, par value $.50 The New York Stock Exchange,
per share Inc.
Preferred Stock Purchase Rights The New York Stock Exchange,
Inc.
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of class)
_________________________________________________________________
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Item 1. General Information.
(a) The May Department Stores Company (the "Registrant"), was
incorporated on May 21, 1976 under the laws of the State of
Delaware.
(b) The Registrant's fiscal year ends on the Saturday closest to
January 31 of each year.
Item 2. Transaction of Succession.
(a) The May Department Stores Company, a New York corporation
("May New York"), which will be the predecessor of the Registrant
at the time of the succession, has securities registered pursuant
to Section 12(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(b) This Registration Statement is filed in connection with the
reincorporation of May New York from New York to Delaware (the
"Reincorporation"). The Reincorporation is to be effected by
means of a statutory share exchange (the "Share Exchange")
pursuant to an Agreement and Plan of Share Exchange dated as of
May 22, 1996 by and between May New York and the Registrant (the
"Share Exchange Agreement"). Subject to the exercise and
perfection of dissenting shareowners' appraisal rights, at the
effective time (the "Effective Time") of the Share Exchange: (i)
each share of common stock, par value $.50 per share (including
the associated preferred stock purchase rights, the "May New York
Common Shares"), of May New York outstanding immediately prior to
the Effective Time will be exchanged for one fully paid, nonas-
sessable share of common stock, par value $.50 per share
(including the associated preferred stock purchase rights, the
"Registrant Common Shares"), of the Registrant, (ii) each May New
York Common Share held in May New York's treasury immediately
prior to the Effective Time will be cancelled and returned to the
status of an authorized but unissued May New York Common Share,
(iii) each ESOP (Employee Stock Ownership Plan) preference share,
par value $.50 per share (the "May New York ESOP Shares"), of May
New York outstanding immediately prior to the Effective Time will
be exchanged for one fully paid, nonassessable ESOP (Employee
Stock Ownership Plan) preference share, par value $.50 per share
(the "Registrant ESOP Shares"), of the Registrant (which series
will be substantially identical to the May New York ESOP Shares),
and (iv) each Registrant Common Share outstanding immediately
prior to the Effective Time will be cancelled and restored to the
status of an authorized but unissued Registrant Common Share.
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At the Effective Time, the certificate of incorporation (the
"Restated Certificate") and by-laws (the "By-Laws") of the
Registrant will be substantially similar to the certificate of
incorporation and by-laws of May New York. The differences
between the two are primarily as a result of the differences
between the New York Business Corporation Law and the Delaware
General Corporation Law. A description of the differences
between these documents is set forth in the Proxy Statement dated
April 22, 1996 for the 1996 Annual Meeting of Shareowners of May
New York (the "Proxy Statement") which is attached hereto as
Exhibit 2.2 and incorporated by reference herein and made a part
hereof. The text of the Restated Certificate and the By-Laws are
attached as Appendices B and C, respectively, to the Proxy
Statement and are incorporated by reference herein and made a
part hereof.
Pursuant to the Share Exchange Agreement, at the Effective
Time, the Registrant will assume each employee benefit plan of
May New York, and options and rights to purchase May New York
Common Shares under such plans which are outstanding at the
Effective Time will be converted into options or rights to
purchase the same number of Registrant Common Shares at the same
price and on the same terms and conditions as in effect
immediately prior to the Effective Time.
At the Effective Time, the Registrant will assume the Rights
Agreement, dated as of August 19, 1994 between May New York and
The Bank of New York, as Rights Agent (the "Rights Agreement"),
and each right (a "Preferred Stock Purchase Right") to purchase
May New York Junior Participating Preference Shares, par value
$.50 per share (the "May New York Junior Preference Shares"),
issued pursuant to the Rights Agreement will be converted into
and become a right to purchase an equivalent number or amount of
Junior Participating Preference Shares, par value $.50 per share
(the "Registrant Junior Preference Shares"), of the Registrant,
at the same exercise price and upon the same terms and subject to
the same conditions as were applicable immediately prior to the
Effective Time.
The Reincorporation will be submitted to the shareowners of
May New York at its 1996 Annual Meeting of Shareowners which is
scheduled to be held on May 24, 1996, and the Share Exchange is
expected to become effective as soon as practicable thereafter.
For a complete description of the Reincorporation, the
Registrant, the Restated Certificate, the By-Laws and other
relevant information, reference is made to the heading "Proposal
to Change the Company's State of Incorporation from New York to
Delaware (Proposal (c))" on pages 11 through 16 and in Appendices
A, B and C of the Proxy Statement. The foregoing discussion
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under Item 2 is qualified in its entirety by reference to the
Proxy Statement.
Item 3. Securities to be Registered.
As of the date hereof, the authorized capital of the
Registrant consists of 1,000 Registrant Common Shares, of which
100 shares are issued and outstanding, and none of which are held
by or for the account of the Registrant.
Immediately prior to the Effective Time, the designation and
number of authorized shares of the Registrant will be (i)
700,000,000 Registrant Common Shares, each of which will have
attached thereto a Preferred Stock Purchase Right and (ii)
25,000,000 shares of preference stock, par value $.50 per share
(the "Registrant Preference Shares"), of which (x) 800,000
Registrant Preference Shares will be designated as Registrant
ESOP Shares and (y) 1,000,000 will be designated Registrant
Junior Preference Shares. At the Effective Time, the Registrant
will have outstanding the same number of Registrant Common Shares
and Registrant ESOP Shares as there were outstanding May New York
Common Shares and May New York ESOP Shares as of such time. In
addition, the Registrant will hold in its treasury the same
number of Registrant Common Shares as there were May New York
Common Shares held in the treasury of May New York.
Item 4. Description of Registrant's Securities to be Registered.
At the Effective Time, the authorized capital stock of the
Registrant will consist of 700,000,000 Registrant Common Shares
and 25,000,000 Registrant Preference Shares. The Restated
Certificate authorizes the Registrant's board of directors to
issue Registrant Preference Shares in one or more classes or
series and to fix the voting powers, preferences and relative,
participating, optional or other special rights and
qualifications, limitations or restrictions thereof.
The following statements with respect to the Registrant
Common Shares and the Preferred Stock Purchase Rights are brief
summaries of certain provisions of the Restated Certificate and
the By-Laws. The Restated Certificate and the By-Laws are filed
as exhibits hereto and are incorporated by reference herein and
made a part hereof.
REGISTRANT COMMON SHARES
Dividend Rights
Subject to the prior rights of any issued and outstanding
Registrant Preference Shares, the holders of the Registrant
Common Shares are entitled to receive dividends thereon when and
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if declared by the board of directors from funds legally
available therefor.
Voting Rights
Holders of the Registrant Common Shares are entitled to one
vote per share on all matters submitted to a vote of
shareholders. The holders of Registrant Common Shares do not
have cumulative voting rights.
Liquidation Rights
Subject to such prior rights as may be accorded to any
Registrant Preference Shares, the holders of the Registrant
Common Shares are entitled to receive all assets available for
distribution to shareholders in accordance with applicable law,
after the payment of creditors, upon the liquidation of the
Registrant.
Preemptive Rights
Holders of Registrant Common Shares do not have preemptive
rights.
Fully Paid and Nonassessable
The Registrant Common Shares which are presently outstanding
are fully paid and nonassessable, and the Registrant Common
Shares to be issued in the Share Exchange will, when so exchanged
in accordance with the terms of the Share Exchange Agreement, be
fully paid and nonassessable when so issued.
Classified Board of Directors
Article THIRTEENTH of the Restated Certificate provides for
a "classified" board of directors pursuant to which the board of
directors is divided into three classes of directors serving
staggered three-year terms, with a minimum of 3 directors and a
maximum of 21 directors constituting the entire board with the
exact number to be fixed by the By-Laws. Article III, Section 1
of the By-Laws fixes the number of directors at 14. Article
THIRTEENTH also provides that directors may be removed from
office only for cause and expressly delegates to incumbent
directors the power to fill any newly created directorship or
vacancy on the board of directors however occurring.
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Provisions Which May Delay, Defer or Prevent
a Change in Control of the Registrant
Article THIRTEENTH of the Restated Certificate (described
above) and the provisions of the Restated Certificate that are
described below may have the effect of delaying, deferring or
preventing a change in control of the Registrant.
Article SEVENTH of the Restated Certificate enables
shareowners to act by written consent, provided that it is signed
by the owners of all outstanding shares entitled to vote thereon.
Article EIGHTH of the Restated Certificate prohibits special
shareowner meetings from being called by anyone other than a
majority of the entire board of directors.
Article TWELFTH of the Restated Certificate provides that
any "Business Combination" with an "Interested Shareowner"
requires in addition to any vote required by law, the affirmative
approval of not less than 66 2/3% of the votes entitled to be
cast by the owners of all outstanding Voting Stock (as defined
therein), voting together as a single class, excluding Voting
Stock beneficially owned by the Interested Shareowner or any
"affiliate" or "associate" thereof, unless, among other things,
certain fair price criteria and disclosure obligations are
satisfied. An "Interested Shareowner" is defined as any person
(other than the Registrant or any subsidiary of the Registrant
and any profit-sharing, employee stock ownership or other
employee benefit plan of the Registrant or any subsidiary thereof
or any trustee of or fiduciary with respect to any such plan when
acting in such capacity) who (x) is or has announced or publicly
disclosed a plan or intention to become the beneficial owner of
Voting Securities representing 10% or more of the votes entitled
to be cast by the owners of all then outstanding shares of Voting
Stock; or (y) is an "affiliate" or "associate" of the Registrant
and at any time within the two-year period immediately prior to
the date in question was the beneficial owner of Voting Stock
representing 10% or more of the votes entitled to be cast by the
owners of all then outstanding shares of Voting Stock. The term
"Business Combination" is defined to include, among other things,
any merger or consolidation of the Registrant with any Interested
Shareowner, a sale, lease, exchange, mortgage, pledge, transfer
or other disposition with or for the benefit of any Interested
Shareowner which involves $10 million or more or constitutes more
than 5% of the book value of the total assets or shareowners'
equity of the Registrant, the adoption of any plan of liquidation
or dissolution or any amendment to the By-Laws or any
reclassification or recapitalization or similar transaction that
has the effect of increasing the proportionate share of any class
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or series of capital stock of the Registrant beneficially owned
by any Interested Shareowner.
As described above, the Restated Certificate authorizes the
issuance of up to 25,000,000 Registrant Preference Shares and
empowers the board of directors, without any further shareowner
approval, to issue such stock in one or more classes or series
and to determine the number of shares to be included in each such
series and to fix the designation, relative rights, preferences,
voting powers and limitations of each such class or series. Such
Registrant Preference Shares could possess voting powers or
rights of conversion into Registrant Common Shares that could
have an anti-takeover effect.
PREFERRED STOCK PURCHASE RIGHTS
As described above under Item 2(b), at the Effective Time,
the Registrant will assume May New York's rights and obligations
under the Rights Agreement, and each Preferred Stock Purchase
Right issued under the Rights Agreement to purchase May New York
Junior Preference Shares will be converted into and become a
right to purchase an equivalent number or amount of Registrant
Junior Preference Shares at the same exercise price and upon the
same terms and subject to the same conditions as were applicable
immediately prior to the Effective Time.
A description of the Preferred Stock Purchase Rights issued
pursuant to the Rights Agreement is set forth in a Registration
Statement on Form 8-A filed with the Securities and Exchange
Commission by May New York on February 28, 1986, which is
incorporated by reference herein and made a part hereof, and in
the Restated Certificate of Incorporation of May New York, dated
March 22, 1994, which is incorporated herein by reference to
Exhibit 3(a) of May New York's Annual Report on Form 10-K, filed
April 20, 1994.
Item 5. Financial Statements and Exhibits.
(a) Financial Statements.
No financial statements are being filed with this
Registration Statement because the capital structure and balance
sheet of the Registrant immediately after the Reincorporation
will be substantially the same as the capital structure and
balance sheet of May New York, the predecessor, immediately prior
thereto.
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(b) Exhibits.
Exhibit No. Description
2.1 Agreement and Plan of Share Exchange dated as of
May 22, 1996 by and between The May Department
Stores Company, a New York corporation and the
Registrant (incorporated by reference to Appendix
A of Exhibit 2.2 hereto).
2.2 Proxy Statement dated April 22, 1996 for the 1996
Annual Meeting of Shareowners of The May
Department Stores Company, a New York corporation
(incorporated by reference).
3.1 Amended and Restated Certificate of Incorporation
of The May Department Stores Company, a New York
corporation as currently in effect (incorporated
by reference to Exhibit 3(a) of the Annual Report
on Form 10-K of The May Department Stores Company,
a New York corporation, filed April 20, 1994).
3.2 Form of Amended and Restated Certificate of
Incorporation of the Registrant to be filed with
the Secretary of State of the State of Delaware
immediately prior to the consummation of the Share
Exchange (incorporated by reference to Appendix B
of Exhibit 2.2 hereto).
3.3 By-Laws of The May Department Stores Company, a
New York corporation as currently in effect
(incorporated by reference to Exhibit 4(b) of the
Form S-8 of The May Department Stores Company, a
New York corporation, filed April 1, 1996).
3.4 Form of By-Laws of the Registrant to be adopted by
the board of directors of the Registrant
immediately prior to the consummation of the Share
Exchange (incorporated by reference to Appendix C
of Exhibit 2.2 hereto).
4.1 Rights Agreement, dated August 19, 1994, by and
between The May Department Stores Company, a New
York corporation and The Bank of New York, as
Rights Agent (the "Rights Agreement"), which
includes as Exhibit A thereto the Form of Rights
Certificate (incorporated by reference to Exhibit
1 of the Current Report on Form 8-K of The May
Department Stores Company, a New York corporation,
dated September 2, 1994).
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4.2 Form of Certificate of Designation, Preferences
and Rights of Junior Participating Preference
Shares and ESOP Preference Shares of the Regis-
trant to be filed with the Secretary of State of
the State of Delaware immediately prior to the
consummation of the Share Exchange.
4.3 Form of Assignment and Assumption of the Rights
Agreement dated May __, 1996 among The May
Department Stores Company, a New York corporation,
the Registrant and The Bank of New York, as Rights
Agent.
10.1 Restricted Stock Plan for Non-Management
Directors.
10.2 Deferred Compensation Plan for Non-Management
Directors.
11.1 Statement re: Computation of Net Earnings Per
Share (incorporated by reference to Exhibit 11 of
the Annual Report on Form 10-K of The May
Department Stores Company, a New York corporation
for the year ended February 3, 1996).
12.1 Statement re: Computation of Ratio of Earnings to
Fixed Charges (incorporated by reference to
Exhibit 12 of the Annual Report on Form 10-K of
The May Department Stores Company, a New York
Corporation for the year ended February 3, 1996).
21.1 Subsidiaries of the Registrant (incorporated by
reference to Exhibit 21 of the Annual Report on
Form 10-K of The May Department Stores Company, a
New York corporation for the year ended February
3, 1996).
27.1 Financial Data Schedule (incorporated by reference
to Exhibit 27 of the Annual Report on Form 10-K of
The May Department Stores Company, a New York
corporation for the year ended February 3, 1996).
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SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, as amended, the Registrant has
duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized.
THE MAY DEPARTMENT STORES COMPANY,
a Delaware corporation
By: /s/ Richard A. Brickson
Name: Richard A. Brickson
Title: Secretary
Date: May 21, 1996
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EXHIBIT INDEX
Exhibit No. Description Page No.
2.1 Agreement and Plan of Share Exchange dated as of
May 22, 1996 by and between The May Department
Stores Company, a New York corporation and the
Registrant (incorporated by reference to Appendix
A of Exhibit 2.2 hereto).
2.2 Proxy Statement dated April 22, 1996 for the 1996
Annual Meeting of Shareowners of The May
Department Stores Company, a New York corporation
(incorporated by reference).
3.1 Amended and Restated Certificate of Incorporation
of The May Department Stores Company, a New York
corporation as currently in effect (incorporated
by reference to Exhibit 3(a) of the Annual Report
on Form 10-K of The May Department Stores Company,
a New York corporation, filed April 20, 1994).
3.2 Form of Amended and Restated Certificate of
Incorporation of the Registrant to be filed with
the Secretary of State of the State of Delaware
immediately prior to the consummation of the Share
Exchange (incorporated by reference to Appendix B
of Exhibit 2.2 hereto).
3.3 By-Laws of The May Department Stores Company, a
New York corporation as currently in effect
(incorporated by reference to Exhibit 4(b) of the
Form S-8 of The May Department Stores Company, a
New York corporation, filed April 1, 1996).
3.4 Form of By-Laws of the Registrant to be adopted by
the board of directors of the Registrant
immediately prior to the consummation of the Share
Exchange (incorporated by reference to Appendix C
of Exhibit 2.2 hereto).
4.1 Rights Agreement, dated August 19, 1994, by and
between The May Department Stores Company, a New
York corporation and The Bank of New York, as
Rights Agent (the "Rights Agreement"), which
includes as Exhibit A thereto the Form of Rights
Certificate (incorporated by reference to Exhibit
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1 of the Current Report on Form 8-K of The May
Department Stores Company, a New York corporation,
dated September 2, 1994).
4.2 Form of Certificate of Designation, Preferences
and Rights of Junior Participating Preference
Shares and ESOP Preference Shares of the Regis-
trant to be filed with the Secretary of State of
the State of Delaware immediately prior to the
consummation of the Share Exchange.
4.3 Form of Assignment and Assumption of the Rights
Agreement dated May __, 1996 among The May
Department Stores Company, a New York corporation,
the Registrant and The Bank of New York, as Rights
Agent.
10.1 Restricted Stock Plan for Non-Management
Directors.
10.2 Deferred Compensation Plan for Non-Management
Directors.
11.1 Statement re: Computation of Net Earnings Per
Share (incorporated by reference to Exhibit 11 of
the Annual Report on Form 10-K of The May
Department Stores Company, a New York corporation
for the year ended February 3, 1996).
12.1 Statement re: Computation of Ratio of Earnings to
Fixed Charges (incorporated by reference to
Exhibit 12 of the Annual Report on Form 10-K of
The May Department Stores Company, a New York
Corporation for the year ended February 3, 1996).
21.1 Subsidiaries of the Registrant (incorporated by
reference to Exhibit 21 of the Annual Report on
Form 10-K of The May Department Stores Company, a
New York corporation for the year ended February
3, 1996).
27.1 Financial Data Schedule (incorporated by reference
to Exhibit 27 of the Annual Report on Form 10-K of
The May Department Stores Company, a New York
corporation for the year ended February 3, 1996).
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EXHIBIT 4.2
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
JUNIOR PARTICIPATING PREFERENCE SHARES
AND
ESOP PREFERENCE SHARES
OF
THE MAY DEPARTMENT STORES COMPANY
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The May Department Stores Company (the "Corporation"), a
corporation organized and existing under the General Corporation
Law of the State of Delaware (the "GCL"), in accordance with the
provisions of Section 103 thereof, HEREBY CERTIFIES:
That pursuant to the authority conferred upon the board
of directors by the Certificate of Incorporation of the Corpora-
tion, the board of directors on May , 1996, adopted the following
resolutions creating a series of one million (1,000,000) shares of
preference stock designated as Junior Participating Preference
Shares and a series of eight hundred thousand (800,000) shares of
preference stock designated as ESOP Preference Shares:
A. JUNIOR PARTICIPATING PREFERENCE SHARES
RESOLVED, that pursuant to the authority vested in the
board of directors of the Corporation in accordance with the
provisions of its Certificate of Incorporation and Section 151 of
the GCL, a series of preference stock, par value $.50 per share, be
and it hereby is created and that the designation and amount
thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions
thereof are as follows:
1. Designation and Amount. The shares of such series shall
be designated as "Junior Participating Preference Shares, par value
$.50 per share" (the "Junior Preference Shares"), and the number of
shares constituting such series shall be 1,000,000.
2. Dividends and Distributions.
(A) The holders of Junior Preference Shares shall be entitled
to receive, when, as and if declared by the board of directors out
of funds legally available for the purpose, quarterly dividends
payable in cash on the fifteenth day of January, April, July and
October in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a
Junior Preference Share or fraction of a Junior Preference Share,
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in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $47.00 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock,
par value $.50 per share, of the Corporation (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any Junior Preference Share or fraction
of a Junior Preference Share. In the event the Corporation shall at
any time (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding shares of Common
Stock, (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, or (iv) issue any shares of its capital
stock in a reclassification of the outstanding Common Stock, then
in each such case the amount to which holders of Junior Preference
Shares were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Junior Preference Shares as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $47.00 per Junior
Preference Share shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding Junior Preference Shares from the Quarterly Dividend
Payment Date next preceding the date of issue of such Junior
Preference Shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of Junior Preference Shares
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on Junior Preference Shares in an amount
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less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-
by-share basis among all such shares at the time outstanding. The
board of directors may fix a record date for the determination of
holders of Junior Preference Shares entitled to receive payment of
a dividend or distribution declared thereon, which record date
shall be no more than 30 days prior to the date fixed for the
payment thereof.
3. Voting Rights. The holders of Junior Preference Shares
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each Junior Preference Share shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareowners of the Corporation. In the event the Corporation shall
at any time (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, or (iv) issue any shares of its
capital stock in a reclassification of the outstanding Common
Stock, then in each such case the number of votes per share to
which holders of Junior Preference Shares were entitled immediately
prior to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of Junior Preference Shares and the holders of shares of
Common Stock shall vote together as one class on all matters
submitted to a vote of shareowners of the Corporation.
(C) (i) If at any time dividends on any Junior
Preference Shares shall be in arrears in an amount equal to
six quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time
when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly
dividend period on all Junior Preference Shares then
outstanding shall have been declared and paid or set apart for
payment. During each default period, the holders of Junior
Preference Shares, voting separately as a class, shall have
the right to elect two directors.
(ii) During any default period, such voting right of the
holders of Junior Preference Shares may be exercised initially
at a special meeting called pursuant to subparagraph (C)(iii)
of this Paragraph 3 or at any annual meeting of shareowners,
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and thereafter at annual meetings of shareowners, provided
that neither such voting right nor the right of the holders of
Junior Preference Shares as hereinafter provided to increase
in certain cases the authorized number of directors shall be
exercised unless the holders of 25% in number of Junior
Preference Shares outstanding shall be present in person or by
proxy. The absence of a quorum of the holders of Common Stock
shall not affect the exercise by the holders of Junior
Preference Shares of such voting right. At any meeting at
which the holders of Junior Preference Shares shall exercise
such voting right initially during an existing default period,
they shall have the right, voting as a class, to elect
directors to fill such vacancies, if any, in the board of
directors as may then exist up to two directors or, if such
right is exercised at an annual meeting, to elect two
directors. If the number which may be so elected at any
special meeting does not amount to the required number, the
holders of the Junior Preference Shares shall have the right
to make such increase in the number of directors as shall be
necessary to permit the election by them of the required
number. After the holders of the Junior Preference Shares
shall have exercised their right to elect directors in any
default period and during the continuance of such period, the
number of directors shall not be increased or decreased except
by vote of the holders of Junior Preference Shares as herein
provided or pursuant to the rights of any equity securities
ranking senior to or pari passu with the Junior Preference
Shares.
(iii) Unless the holders of Junior Preference Shares
shall, during an existing default period, have previously
exercised their right to elect directors, the board of
directors may order, or any shareowner or shareowners owning
in the aggregate not less than 10% of the total number of
Junior Preference Shares outstanding, may request, the calling
of a special meeting of the holders of Junior Preference
Shares, which meeting shall thereupon be called by the
chairman of the board, the president, a vice-president or the
secretary of the Corporation. Notice of such meeting and of
any annual meeting at which holders of Junior Preference
Shares are entitled to vote pursuant to this subparagraph
(C)(iii) shall be given to each holder of record of Junior
Preference Shares by mailing a copy of such notice to him at
his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not
earlier than 20 days and not later than 60 days after such
order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may
be called on similar notice by any shareowner or shareowners
owning in the aggregate not less than 10% of the total number
of Junior Preference Shares outstanding. Notwithstanding the
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provisions of this subparagraph (C)(iii), no such special
meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual
meeting of the shareowners.
(iv) In any default period the holders of Common Stock,
and other classes of stock of the Corporation if applicable,
shall continue to be entitled to elect the whole number of
directors until the holders of Junior Preference Shares shall
have exercised their right to elect two directors voting as a
class, after the exercise of which right (x) the directors so
elected by the holders of Junior Preference Shares shall
continue in office until their successors shall have been
elected by such holders or until the expiration of the default
period, and (y) any vacancy in the board of directors may
(except as provided in subparagraph (C)(ii) of this Paragraph
3) be filled by vote of a majority of the remaining directors
theretofore elected by the holders of the class of stock which
elected the director whose office shall have become vacant.
References in this subparagraph (C) to directors elected by
the holders of a particular class of stock shall include
directors elected by such directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Junior Preference Shares as a
class to elect directors shall cease, (y) the term of any
directors elected by the holders of Junior Preference Shares
as a class shall terminate, and (z) the number of directors
shall be such number as may be provided for in the Certificate
of Incorporation or the by-laws irrespective of any increase
made pursuant to the provisions of subparagraph (C)(ii) of
this Paragraph 3 (such number being subject, however, to
change thereafter in any manner provided by law or in the
Certificate of Incorporation or the by-laws). Any vacancies in
the board of directors effected by the provisions of clauses
(y) and (z) in the preceding sentence may be filled by a
majority of the remaining directors.
(D) Except as set forth herein, holders of Junior Preference
Shares shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preference Shares as provided
in Paragraph 2 are in arrears, thereafter and until all accrued and
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unpaid dividends and distributions, whether or not declared, on
Junior Preference Shares outstanding shall have been paid in full,
the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Junior Preference Shares;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Junior Preference Shares, except
dividends paid ratably on the Junior Preference Shares and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding
up) with the Junior Preference Shares, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares
of any stock of the Corporation ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Junior Preference Shares; or
(iv) purchase or otherwise acquire for consideration any
Junior Preference Shares, or any shares of stock ranking on a
parity with the Junior Preference Shares, except in accordance
with a purchase offer made in writing or by publication (as
determined by the board of directors) to all holders of such
shares upon such terms as the board of directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could,
under subparagraph (A) of this Paragraph 4, purchase or otherwise
acquire such shares at such time and in such manner.
5. Reacquired Shares. Any Junior Preference Shares
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the
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acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued Preference Shares and may be
reissued as part of a new series of Preference Shares to be created
by resolution or resolutions of the board of directors, subject to
the conditions and restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding
up) to the Junior Preference Shares unless, prior thereto, the
holders of Junior Preference Shares shall have received $100.00 per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment (the "Liquidation Preference"). Following the payment of
the full amount of the Liquidation Preference, no additional
distributions shall be made to the holders of Junior Preference
Shares unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common
Stock) (such number in clause (ii), the "Adjustment Number").
Following the payment of the full amount of the Liquidation
Preference and the Common Adjustment in respect of all outstanding
Junior Preference Shares and shares of Common Stock, respectively,
holders of Junior Preference Shares and holders of shares of Common
Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Junior Preference Shares and
shares of Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Liquidation
Preference and the liquidation preferences of all other series of
Preference Shares, if any, which rank on a parity with the Junior
Preference Shares, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that
there are not sufficient assets available to permit payment in full
of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time (i)
declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock, or
(iii) combine the outstanding shares of Common Stock into a smaller
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number of shares, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other
property (payable in kind), then in any such case the Junior
Preference Shares shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time (i) declare any dividend on the
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, (iii) combine the outstanding
shares of Common Stock into a smaller number of shares, or (iv)
issue any shares of its capital stock in a reclassification of the
outstanding Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or
change of Junior Preference Shares shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
8. No Redemption. The Junior Preference Shares shall not be
redeemable.
9. Ranking. The Junior Preference Shares shall rank junior
to all other equity securities of any kind which the Corporation
shall at any time issue or be authorized to issue other than the
Common Stock, as to the payment of dividends and the distribution
of assets.
10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Junior Preference Shares so as to affect them
adversely without the affirmative vote of the holders of two-thirds
or more of the outstanding Junior Preference Shares, voting
separately as a class.
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11. Fractional Shares. Junior Preference Shares may be
issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in liquidating distributions
and to have the benefit of all other rights of holders of Junior
Preference Shares.
B. ESOP PREFERENCE SHARES
FURTHER RESOLVED, that pursuant to the authority vested
in the board of directors of the Corporation in accordance with the
provisions of its Certificate of Incorporation and Section 151 of
the GCL, a series of preference stock, par value $.50 per share, of
the Corporation be and it hereby is created and that the
designation and amount thereof and the voting powers, preferences
and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
1. Designation and Amount; Special Purpose Restricted
Transfer Issue.
(A) The shares of such series shall be designated as "ESOP
Preference Shares, par value $.50 per share" (the "ESOP Preference
Shares"), and the number of shares constituting such series shall
be 800,000. Each ESOP Preference Share shall have a stated value of
$507.00 per share.
(B) ESOP Preference Shares shall be issued only to The Bank
of New York, as trustee (the "Trustee") of the Profit Sharing Plan
of the Corporation, as amended from time to time, or any successor
to such plan (the "Plan"), including the employee stock ownership
plan component (the "ESOP"). All references to the holder of ESOP
Preference Shares shall mean the Trustee or any company with which
or into which the Trustee may merge or any successor trustee under
the trust agreement with respect to the Plan. In the event of any
transfer of record ownership of ESOP Preference Shares to any
person other than any successor trustee under the Plan, the ESOP
Preference Shares so transferred, upon such transfer and without
any further action by the Corporation or the holder thereof, shall
be automatically converted into shares of Common Stock on the terms
otherwise provided for the conversion of ESOP Preference Shares
into shares of Common Stock pursuant to Section 5 hereof and no
such transferee shall have any of the voting powers, preferences
and relative, participating, optional or special rights ascribed to
ESOP Preference Shares hereunder but, rather, only the powers and
rights pertaining to the Common Stock into which such ESOP
Preference Shares shall be so converted. In the event of such a
conversion, the transferee of the ESOP Preference Shares shall be
treated for all purposes as the record holder of the shares of
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Common Stock into which such ESOP Preference Shares have been
automatically converted as of the date of such transfer.
Certificates representing ESOP Preference Shares shall bear a
legend to reflect the foregoing provisions. Notwithstanding the
foregoing provisions of this paragraph (B) of Section 1, ESOP
Preference Shares (i) may be converted into shares of Common Stock
as provided by Section 5 hereof and the shares of Common Stock
issued upon such conversion may be transferred by the holder
thereof as permitted by law and (ii) shall be redeemable by the
Corporation upon the terms and conditions provided by Sections 6,
7 and 8 hereof.
2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set
forth, the holders of ESOP Preference Shares shall be entitled to
receive, when, as and if declared by the board of directors out of
funds legally available therefor, cash dividends ("ESOP Preference
Dividends") in an amount per share equal to $38.025 per share per
annum, and no more, payable semi-annually in arrears, one-half on
the 30th day of April and one-half on the 30th day of October of
each year (each a "Dividend Payment Date") commencing on October
30, 1996, to holders of record at the start of business on such
Dividend Payment Date. In the event that any Dividend Payment Date
shall fall on any day other than a "Business Day" (as hereinafter
defined), the dividend payment due on such Dividend Payment Date
shall be paid on the Business Day immediately preceding such
Dividend Payment Date. ESOP Preference Dividends shall begin to
accrue on outstanding ESOP Preference Shares from the date of
issuance of such ESOP Preference Shares; provided however, that
with respect to ESOP Preference Shares exchanged in the Statutory
Share Exchange between the Corporation and The May Department
Stores Company, a New York corporation, pursuant to Section 913 of
the New York Business Corporation Law, ESOP Preference Dividends
shall accrue from April 30, 1996. ESOP Preference Dividends shall
accrue on a daily basis whether or not the Corporation shall have
earnings or surplus at the time, but, except as provided in the
proviso to the immediately preceding sentence, ESOP Preference
Dividends accrued after issuance on the ESOP Preference Shares for
any period less than a full semi-annual period between Dividend
Payment Dates (or, in the case of the first dividend payment, from
the date of issuance through the first Dividend Payment Date) shall
be computed on the basis of a 360-day year of 30-day months.
Accrued but unpaid ESOP Preference Dividends shall cumulate as of
the Dividend Payment Date on which they first become payable, but
no interest shall accrue on accumulated but unpaid ESOP Preference
Dividends.
(B) So long as any ESOP Preference Shares shall be
outstanding, no dividend shall be declared or paid or set apart for
payment on any other series of stock ranking on a parity with the
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ESOP Preference Shares as to dividends, unless there shall also be
or have been declared and paid or set apart for payment on the ESOP
Preference Shares dividends for all dividend payment periods of the
ESOP Preference Shares ending on or before the dividend payment
date of such parity stock, ratably in proportion to the respective
amounts of dividends accumulated and unpaid through such dividend
period on the ESOP Preference Shares and accumulated and unpaid on
such parity stock through the dividend payment period on such
parity stock next preceding such dividend payment date. In the
event that full cumulative dividends on the ESOP Preference Shares
have not been declared and paid or set apart for payment when due,
the Corporation shall not declare or pay or set apart for payment
any dividends or make any other distributions on, or make any
payment on account of the purchase, redemption or other retirement
of any other class of stock or series thereof of the Corporation
ranking, as to dividends or as to distributions in the event of a
liquidation, dissolution or winding up of the Corporation, junior
to the ESOP Preference Shares until full cumulative dividends on
the ESOP Preference Shares shall have been paid or declared and set
apart for payment; provided, however, that the foregoing shall not
apply to (i) any dividend payable solely in any shares of any stock
ranking, as to dividends and as to distributions in the event of a
liquidation, dissolution or winding up of the Corporation, junior
to the ESOP Preference Shares or (ii) the acquisition of shares of
any stock ranking, as to dividends or as to distributions in the
event of a liquidation, dissolution or winding up of the
Corporation, junior to the ESOP Preference Shares in exchange
solely for shares of any other stock ranking, as to dividends and
as to distributions in the event of a liquidation, dissolution or
winding up of the Corporation, junior to the ESOP Preference
Shares.
3. Voting Rights. The holders of ESOP Preference Shares
shall have the following voting rights:
(A) The holders of ESOP Preference Shares shall be entitled
to vote on all matters submitted to a vote of the shareowners of
the Corporation, voting together with the holders of Common Stock
as one class. The holder of each ESOP Preference Share shall be
entitled to a number of votes equal to the number of shares of
Common Stock into which such ESOP Preference Share could be
converted on the record date for determining the shareowners
entitled to vote, rounded to the nearest one one-hundredth of a
vote; it being understood that whenever the "Conversion Price" (as
defined in Section 5 hereof) is adjusted as provided in Section 9
hereof, the number of votes of the ESOP Preference Shares shall
also be similarly adjusted.
(B) Except as otherwise required by law or set forth herein,
holders of ESOP Preference Shares shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as
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set forth herein) for the taking of any corporate action; provided,
however, that the vote of at least 66-2/3% of the outstanding ESOP
Preference Shares, voting separately as a series, shall be
necessary to adopt any alteration, amendment or repeal of any
provision of the Certificate of Incorporation of the Corporation
(including any such alteration, amendment or repeal effected by any
merger or consolidation in which the Corporation is the surviving
or resulting corporation), if such amendment, alteration or repeal
would alter or change the powers, preferences, or special rights of
the ESOP Preference Shares so as to affect them adversely.
4. Liquidation, Dissolution or Winding Up.
(A) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of ESOP
Preference Shares shall be entitled to receive out of assets of the
Corporation which remain after satisfaction in full of all valid
claims of creditors of the Corporation and which are available for
payment to shareowners, and subject to the rights of the holders of
any stock of the Corporation ranking senior to or on a parity with
the ESOP Preference Shares in respect of distributions upon
liquidation, dissolution or winding up of the Corporation, before
any amount shall be paid or distributed among the holders of Common
Stock or any other shares ranking junior to the ESOP Preference
Shares in respect of distributions upon liquidation, dissolution or
winding up of the Corporation, liquidating distributions in the
amount of $507.00 per share, plus an amount equal to all accrued
and unpaid dividends thereon to the date fixed for distribution,
and no more. If upon any liquidation, dissolution or winding up of
the Corporation, the amounts payable with respect to the ESOP Pref-
erence Shares and any other stock ranking as to any such
distribution on a parity with the ESOP Preference Shares are not
paid in full, the holders of the ESOP Preference Shares and such
other stock shall share ratably in any distribution of assets in
proportion to the full respective preferential amounts to which
they are entitled. After payment of the full amount to which they
are entitled as provided by the foregoing provisions of this
paragraph 4(A), the holders of ESOP Preference Shares shall not be
entitled to any further right or claim to any of the remaining
assets of the Corporation.
(B) Neither the merger or consolidation of the Corporation
with or into any other corporation, nor the merger or consolidation
of any other corporation with or into the Corporation, nor the
sale, lease, exchange or other transfer of all or any portion of
the assets of the Corporation, shall be deemed to be a dissolution,
liquidation or winding up of the affairs of the Corporation for
purposes of this Section 4, but the holders of ESOP Preference
Shares shall nevertheless be entitled in the event of any such
merger or consolidation to the rights provided by Section 8 hereof.
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(C) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, stating
the payment date or dates when, and the place or places where, the
amounts distributable to holders of ESOP Preference Shares in such
circumstances shall be payable, shall be given by hand delivery, by
courier, by standard form of telecommunication or by first-class
mail (postage prepaid), delivered, sent or mailed, as the case may
be, not less than twenty (20) days prior to any payment date stated
therein, to the holders of ESOP Preference Shares, at the address
shown on the books of the Corporation or any transfer agent for the
ESOP Preference Shares.
5. Conversion into Common Stock.
(A) A holder of ESOP Preference Shares shall be entitled, at
any time prior to the close of business on the date fixed for
redemption of such shares pursuant to Sections 6, 7 and 8 hereof,
to cause any or all of such shares to be converted into shares of
Common Stock, initially at a conversion price equal to $22.5083 per
share of Common Stock, with each ESOP Preference Share being valued
at $507.00 for such purpose, and which price shall be adjusted as
hereinafter provided (and, as so adjusted, is hereinafter sometimes
referred to as the "Conversion Price") (that is, a conversion rate
initially equivalent to 22.525 shares of Common Stock for each ESOP
Preference Share so converted, which is subject to adjustment as
the Conversion Price is adjusted as hereinafter provided in Section
9).
(B) Any holder of ESOP Preference Shares desiring to convert
such shares into shares of Common Stock shall surrender the
certificate or certificates representing the ESOP Preference Shares
being converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating
thereto), at the principal executive office of the Corporation or
the offices of the transfer agent for the ESOP Preference Shares or
such office or offices in the continental United States of an agent
for conversion as may from time to time be designated by notice to
the holders of the ESOP Preference Shares by the Corporation or the
transfer agent for the ESOP Preference Shares, accompanied by
written notice of conversion. Such notice of conversion shall
specify (i) the number of ESOP Preference Shares to be converted
and the name or names in which such holder wishes the certificate
or certificates for Common Stock and for any ESOP Preference Shares
not to be so converted to be issued and (ii) the address to which
such holder wishes delivery to be made of such new certificates to
be issued upon such conversion.
(C) Upon surrender of a certificate representing an ESOP
Preference Share or Shares for conversion, the Corporation shall
issue and send by hand delivery, by courier or by first class mail
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(postage prepaid) to the holder thereof or to such holder's
designee, at the address designated by such holder, a certificate
or certificates for the number of shares of Common Stock to which
such holder shall be entitled upon conversion. In the event that
there shall have been surrendered a certificate or certificates
representing ESOP Preference Shares, only part of which are to be
converted, the Corporation shall issue and send to such holder or
such holder's designee, in the manner set forth in the preceding
sentence, a new certificate or certificates representing the number
of ESOP Preference Shares which shall not have been converted.
(D) The issuance by the Corporation of shares of Common Stock
upon a conversion of ESOP Preference Shares into shares of Common
Stock made at the option of the holder thereof shall be effective
as of the earlier of (i) the delivery to such holder or such
holder's designee of the certificates representing the shares of
Common Stock issued upon conversion thereof or (ii) the com-
mencement of business on the second business day after the
surrender of the certificate or certificates for the ESOP
Preference Shares to be converted, duly assigned or endorsed for
transfer to the Corporation (or accompanied by duly executed stock
powers relating thereto) and accompanied by all documentation
required to effect the conversion, as provided herein. On and
after the effective date of conversion, the person or persons
entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders
of such shares of Common Stock, but no allowance or adjustment
shall be made in respect of dividends payable to holders of Common
Stock in respect of any period prior to such effective date. The
Corporation shall not be obligated to pay any dividends which shall
have been declared and shall be payable to holders of ESOP
Preference Shares on a Dividend Payment Date if such Dividend
Payment Date for such dividend is subsequent to the effective date
of conversion of such shares.
(E) The Corporation shall not be obligated to deliver to
holders of ESOP Preference Shares any fractional share of Common
Stock issuable upon any conversion of such ESOP Preference Shares,
but in lieu thereof may make a cash payment in respect thereof in
any manner permitted by law.
(F) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely
for issuance upon the conversion of ESOP Preference Shares as
herein provided, free from any preemptive rights, such number of
shares of Common Stock as shall from time to time be issuable upon
the conversion of all the ESOP Preference Shares then outstanding.
Nothing contained herein shall preclude the Corporation from
issuing shares of Common Stock held in its treasury upon the
conversion of ESOP Preference Shares into Common Stock pursuant to
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the terms hereof. The Corporation shall prepare and shall use its
best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by
law, and shall comply with all requirements as to registration or
qualification of the Common Stock in order to enable the
Corporation lawfully to issue and deliver to each holder of record
of ESOP Preference Shares such number of shares of its Common Stock
as shall from time to time be sufficient to effect the conversion
of all ESOP Preference Shares then outstanding and convertible into
shares of Common Stock.
6. Redemption At the Option of the Corporation.
(A) The ESOP Preference Shares shall be redeemable, in whole
or in part, at the option of the Corporation at any time after
April 20, 1999, or at any time after the date of issuance, if
permitted by paragraph (D) of this Section 6, at $507.00 per share,
plus, in each case, an amount equal to all accrued and unpaid
dividends thereon to the date fixed for redemption. Payment of the
redemption price shall be made by the Corporation in cash or shares
of Common Stock, or a combination thereof, as permitted by
paragraph (E) of this Section 6. From and after the date fixed for
redemption, dividends on ESOP Preference Shares called for
redemption will cease to accrue, such ESOP Preference Shares will
no longer be deemed to be outstanding and all rights in respect of
such ESOP Preference Shares shall cease, except the right to
receive the redemption price. If less than all of the outstanding
ESOP Preference Shares are to be redeemed, the Corporation shall
either redeem a portion of the ESOP Preference Shares of each
holder determined pro rata based on the number of ESOP Preference
Shares held by each holder or shall select the ESOP Preference
Shares to be redeemed by lot, as may be determined by the board of
directors of the Corporation.
(B) Unless otherwise required by law, notice of redemption
will be sent to the holders of ESOP Preference Shares at the
address shown on the books of the Corporation or any transfer agent
for the ESOP Preference Shares by hand delivery, by courier, by
standard form of telecommunication or by first class mail (postage
prepaid) delivered, sent or mailed, as the case may be, not less
than twenty (20) days nor more than sixty (60) days prior to the
redemption date. Each such notice shall state: (i) the redemption
date; (ii) the total number of ESOP Preference Shares to be
redeemed and, if fewer than all the shares held by such holder are
to be redeemed, the number of such ESOP Preference Shares to be
redeemed from such holder; (iii) the redemption price; (iv) the
place or places where certificates for such ESOP Preference Shares
are to be surrendered for payment of the redemption price; (v) that
dividends on the ESOP Preference Shares to be redeemed will cease
to accrue on such redemption date; and (vi) the conversion rights
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of the ESOP Preference Shares to be redeemed, the period within
which conversion rights may be exercised, and the Conversion Price
and number of shares of Common Stock issuable upon conversion of an
ESOP Preference Share at the time. Upon surrender of the
certificate for any ESOP Preference Shares so called for redemption
and not previously converted (properly endorsed or assigned for
transfer, if the board of directors of the Corporation shall so
require and the notice shall so state), such shares shall be
redeemed by the Corporation at the date fixed for redemption and at
the redemption price set forth in this Section 6.
(C) In the event of a change in any statute, rule or
regulation of the United States of America or any administrative or
judicial interpretation thereof which (i) has the effect of
limiting or making unavailable to the Corporation all or any of the
tax deductions for amounts paid (including dividends) on the ESOP
Preference Shares when such amounts are used as provided under
Section 404(k)(2) of the Internal Revenue Code of 1986, as amended
and in effect on the date ESOP Preference Shares are initially
issued, or (ii) relates, directly or indirectly, to the ESOP and
adversely affects the Corporation (including, without limitation,
by resulting in a "Determination of Taxability" pursuant to the
Note Purchase Agreement (as hereinafter defined)), the Corporation
may, in its sole discretion and notwithstanding anything to the
contrary in paragraph (A) of this Section 6, elect to redeem any or
all of such ESOP Preference Shares for the amount payable in
respect of the ESOP Preference Shares upon liquidation of the
Corporation pursuant to Section 4 hereof.
(D) In the event that the Plan is terminated or the ESOP is
terminated or eliminated from the Plan in accordance with its
terms, and notwithstanding anything to the contrary in paragraph
(A) this Section 6, the Corporation shall, as soon thereafter as
practicable, call for redemption all then outstanding ESOP
Preference Shares at the following redemption prices per share:
During the
Twelve-Month
Period Beginning Price Per
April 20, Share
1996. . . . . . . . . . . . . .$524.11
1997. . . . . . . . . . . . . . 518.41
1998. . . . . . . . . . . . . . 512.70
(E) The Corporation, at its option, may make payment of the
redemption price required upon redemption of ESOP Preference Shares
in cash or in shares of Common Stock, or in a combination of such
Common Stock and cash, any such shares of Common Stock to be valued
for such purposes at their Fair Market Value (as defined in para-
graph (G) of Section 9 hereof).
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7. Other Redemption Rights.
ESOP Preference Shares shall be redeemed by the Corporation
for cash or, if the Corporation so elects, in shares of Common
Stock, or a combination of such shares of Common Stock and cash,
any such shares of Common Stock to be valued for such purpose at
their Fair Market Value, at a redemption price of $507.00 per share
plus accrued and unpaid dividends thereon to the date fixed for re-
demption, at the option of the holder, at any time and from time to
time upon notice to the Corporation given not less than five (5)
business days prior to the date fixed by the holder in such notice
for such redemption, upon certification by such holder to the
Corporation of the following events: (i) when and to the extent
necessary for such holder to provide for distributions required to
be made to participants under, or to satisfy an investment election
provided to participants in accordance with, the Plan; (ii) when
and to the extent necessary for such holder to make any payments of
principal, interest or premium due and payable (whether as sched-
uled, upon acceleration or otherwise) under the Note Purchase
Agreement among the Trustee and certain institutional investor
parties thereto (the "Note Purchase Agreement") or any
indebtedness, expenses or costs incurred by the holder for the
benefit of the Plan; or (iii) in the event that the Plan is not
initially determined by the Internal Revenue Service to be
qualified within the meaning of Sections 401(a) and 4975(e)(7) of
the Internal Revenue Code of 1986, as amended.
8. Consolidation, Merger, etc.
(A) In the event that the Corporation shall consummate any
consolidation or merger or similar business combination, pursuant
to which the outstanding shares of Common Stock are by operation of
law exchanged solely for or changed, reclassified or converted
solely into stock of any successor or resulting corporation
(including the Corporation) that constitutes "qualifying employer
securities" with respect to a holder of ESOP Preference Shares
within the meaning of Section 409(1) of the Internal Revenue Code
of 1986, as amended, and Section 407(d)(5) of the Employee
Retirement Income Security Act of 1974, as amended, or any
successor provisions of law, and, if applicable, for a cash payment
in lieu of fractional shares, if any, the ESOP Preference Shares of
such holder shall, in connection with such consolidation, merger or
similar business combination, be assumed by and shall become
preferred stock of such successor or resulting corporation, having
in respect of such corporation, insofar as possible, the same
powers, preferences and relative, participating, optional or other
special rights (including the redemption rights provided by
Sections 6, 7 and 8 hereof), and the qualifications, limitations or
restrictions thereon, that the ESOP Preference Share had
immediately prior to such transaction, except that after such
transaction each ESOP Preference Share shall be convertible,
otherwise on the terms and conditions provided by Section 5 hereof,
17
<PAGE>
into the number and kind of qualifying employer securities so
receivable by a holder of the number of shares of Common Stock into
which such ESOP Preference Shares could have been converted immedi-
ately prior to such transaction; provided, however, that if by
virtue of the structure of such transaction, a holder of Common
Stock is required to make an election with respect to the nature
and kind of consideration to be received in such transaction, which
election cannot practicably be made by the holders of the ESOP
Preference Shares, then the ESOP Preference Shares shall, by virtue
of such transaction and on the same terms as apply to the holders
of Common Stock, be converted into or exchanged for the aggregate
amount of stock, securities, cash or other property (payable in
kind) receivable by a holder of the number of shares of Common
Stock into which such ESOP Preference Shares could have been
converted immediately prior to such transaction if such holder of
Common Stock failed to exercise any rights of election to receive
any kind or amount of stock, securities, cash or other property
(other than such qualifying employer securities and a cash payment,
if applicable, in lieu of fractional shares) receivable upon such
transaction (provided that, if the kind or amount of qualifying
employer securities receivable upon such transaction is not the
same for each non-electing share, then the kind and amount so
receivable upon such transaction for each non-electing share shall
be the kind and amount so receivable per share by the plurality of
the non-electing shares). The rights of the ESOP Preference Shares
as preferred stock of such successor or resulting corporation shall
successively be subject to adjustments pursuant to Section 9 hereof
after any such transaction as nearly equivalent as practicable to
the adjustment provided for by such section prior to such
transaction. The Corporation shall not consummate any such merger,
consolidation or similar transaction unless all then outstanding
ESOP Preference Shares shall be assumed and authorized by the
successor or resulting corporation as aforesaid.
(B) In the event that the Corporation shall consummate any
consolidation or merger or similar business combination, pursuant
to which the outstanding shares of Common Stock are by operation of
law exchanged for or changed, reclassified or converted into other
stock or securities or cash or any other property, or any combina-
tion thereof, other than any such consideration which is
constituted solely of qualifying employer securities (as referred
to in paragraph (A) of this Section 8) and cash payments, if
applicable, in lieu of fractional shares, outstanding ESOP
Preference Shares shall, without any action on the part of the
Corporation or any holder thereof (but subject to paragraph (C) of
this Section 8), be automatically converted by virtue of such
merger, consolidation or similar transaction immediately prior to
such consummation into the number of shares of Common Stock into
which such ESOP Preference Shares could have been converted at such
time so that each ESOP Preference Share shall, by virtue of such
transaction and on the same terms as apply to the holders of Common
Stock, be converted into or exchanged for the aggregate amount of
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<PAGE>
stock, securities, cash or other property (payable in like kind)
receivable by a holder of the number of shares of Common Stock into
which such ESOP Preference Shares could have been converted
immediately prior to such transaction; provided, however, that if
by virtue of the structure of such transaction, a holder of Common
Stock is required to make an election with respect to the nature
and kind of consideration to be received in such transaction, which
election cannot practicably be made by the holder of the ESOP
Preference Shares, then the ESOP Preference Shares shall, by virtue
of such transaction and on the same terms as apply to the holders
of Common Stock, be converted into or exchanged for the aggregate
amount of stock, securities, cash or other property (payable in
kind) receivable by a holder of the number of shares of Common
Stock into which such ESOP Preference Shares could have been
converted immediately prior to such transaction if such holder of
Common Stock failed to exercise any rights of election as to the
kind or amount of stock, securities, cash or other property
receivable upon such transaction (provided that, if the kind or
amount of stock, securities, cash or other property receivable upon
such transaction is not the same for each non-electing share, then
the kind and amount of stock, securities, cash or other property
receivable upon such transaction for each non-electing share shall
be the kind and amount so receivable per share by a plurality of
the non-electing shares).
(C) In the event the Corporation shall enter into any
agreement providing for any consolidation or merger or similar
business combination described in paragraph (B) of this Section 8,
then the Corporation shall as soon as practicable thereafter (and
in any event at least ten (10) business days before consummation of
such transaction) give notice of such agreement and the material
terms thereof to each holder of ESOP Preference Shares and each
such holder shall have the right to elect, by written notice to the
Corporation, to receive, upon consummation of such transaction (if
and when such transaction is consummated), from the Corporation or
the successor of the Corporation, in redemption and retirement of
such ESOP Preference Shares, a cash payment equal to the following
amount per share:
During the
Twelve-Month
Period Beginning Price Per
April 20, Share
1996. . . . . . . . . . . . $518.41
1997. . . . . . . . . . . . .514.61
1998. . . . . . . . . . . . .510.80
No such notice of redemption shall be effective unless given to the
Corporation prior to the close of business on the fifth business
19
<PAGE>
day prior to consummation of such transaction, unless the
Corporation or the successor of the Corporation shall waive such
prior notice, but any notice of redemption so given prior to such
time may be withdrawn by notice of withdrawal given to the Corpora-
tion prior to the close of business on the fifth business day prior
to consummation of such transaction.
9. Anti-dilution Adjustments.
(A) In the event the Corporation shall, at any time or from
time to time while any of the ESOP Preference Shares are
outstanding, (i) pay a dividend or make a distribution in respect
of the Common Stock in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares,
in each case whether by reclassification of shares, recapitaliza-
tion of the Corporation (including a recapitalization effected by
a merger or consolidation to which Section 8 hereof does not apply)
or otherwise, the Conversion Price in effect immediately prior to
such action shall be adjusted by multiplying such Conversion Price
by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately before such event, and the
denominator of which is the number of shares of Common Stock
outstanding immediately after such event. An adjustment made
pursuant to this paragraph 9(A) shall be given effect, upon payment
of such a dividend or distribution, as of the record date for the
determination of shareowners entitled to receive such dividend or
distribution (on a retroactive basis) and in the case of a
subdivision or combination shall become effective immediately as of
the effective date thereof.
(B) In the event that the Corporation shall, at any time or
from time to time while any of the ESOP Preference Shares are
outstanding, issue to holders of shares of Common Stock as a
dividend or distribution, including by way of a reclassification of
shares or a recapitalization of the Corporation, any right or
warrant to purchase shares of Common Stock (but not including as
such a right or warrant any security convertible into or
exchangeable for shares of Common Stock) at a purchase price per
share less than the Fair Market Value (as hereinafter defined) of
a share of Common Stock on the date of issuance of such right or
warrant, then, subject to the provisions of paragraphs (E) and (F)
of this Section 9, the Conversion Price shall be adjusted by
multiplying such Conversion Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the
number of shares of Common Stock which could be purchased at the
Fair Market Value of a share of Common Stock at the time of such
issuance for the maximum aggregate consideration payable upon
exercise in full of all such rights or warrants, and the denomina-
tor of which shall be the number of shares of Common Stock
outstanding immediately before such issuance of rights or warrants
20
<PAGE>
plus the maximum number of shares of Common Stock that could be
acquired upon exercise in full of all such rights and warrants.
(C) In the event the Corporation shall, at any time or from
time to time while any of the ESOP Preference Shares are
outstanding, issue, sell or exchange shares of Common Stock (other
than pursuant to any right or warrant to purchase or acquire shares
of Common Stock (including as such a right or warrant any security
convertible into or exchangeable for shares of Common Stock) and
other than pursuant to any employee or director incentive or
benefit plan or arrangement, including any employment, severance or
consulting agreement, of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted) for a consideration
having a Fair Market Value, on the date of such issuance, sale or
exchange, less than the Fair Market Value of such shares on the
date of issuance, sale or exchange, then, subject to the provisions
of paragraphs (E) and (F) of this Section 9, the Conversion Price
shall be adjusted by multiplying such Conversion Price by a
fraction the numerator of which shall be the sum of (i) the Fair
Market Value of all the shares of Common Stock outstanding on the
day immediately preceding the first public announcement of such
issuance, sale or exchange plus (ii) the Fair Market Value of the
consideration received by the Corporation in respect of such
issuance, sale or exchange of shares of Common Stock, and the
denominator of which shall be the product of (a) the Fair Market
Value of a share of Common Stock on the day immediately preceding
the first public announcement of such issuance, sale or exchange
multiplied by (b) the sum of the number of shares of Common Stock
outstanding on such day plus the number of shares of Common Stock
so issued, sold or exchanged by the Corporation. In the event the
Corporation shall, at any time or from time while any ESOP
Preference Shares are outstanding, issue, sell or exchange any
right or warrant to purchase or acquire shares of Common Stock
(including as such a right or warrant any security convertible into
or exchangeable for shares of Common Stock), other than any such
issuance to holders of shares of Common Stock as a dividend or
distribution (including by way of a reclassification of shares or
a recapitalization of the Corporation) and other than pursuant to
any employee or director incentive or benefit plan or arrangement
(including any employment, severance or consulting agreement) of
the Corporation or any subsidiary of the Corporation heretofore or
hereafter adopted, for a consideration having a Fair Market Value,
on the date of such issuance, sale or exchange, less than the Non-
Dilutive Amount (as hereinafter defined), then, subject to the
provisions of paragraphs (E) and (F) of this Section 9, the
Conversion Price shall be adjusted by multiplying such Conversion
Price by a fraction the numerator of which shall be the sum of (I)
the Fair Market Value of all the shares of Common Stock outstanding
on the day immediately preceding the first public announcement of
such issuance, sale or exchange plus (II) the Fair Market value of
the consideration received by the Corporation in respect of such
21
<PAGE>
issuance, sale or exchange of such right or warrant plus (III) the
Fair Market Value at the time of such issuance of the consideration
which the Corporation would receive upon exercise in full of all
such rights or warrants, and the denominator of which shall be the
product of (i) the Fair Market value of a share of Common Stock on
the day immediately preceding the first public announcement of such
issuance, sale or exchange multiplied by (ii) the sum of the number
of shares of Common Stock outstanding on such day plus the maximum
number of shares of Common Stock which could be acquired pursuant
to such right or warrant at the time of the issuance, sale or
exchange of such right or warrant (assuming shares of Common Stock
could be acquired pursuant to such right or warrant at such time).
(D) In the event the Corporation shall, at any time or from
time to time while any of the ESOP Preference Shares are
outstanding, make an Extraordinary Distribution (as hereinafter
defined) in respect of the Common Stock, whether by dividend,
distribution, reclassification of shares or recapitalization of the
Corporation (including a recapitalization or reclassification
effected by a merger or consolidation to which Section 8 hereof
does not apply) or effect a Pro Rata Repurchase (as hereinafter
defined) of Common Stock, the Conversion Price in effect
immediately prior to such Extraordinary Distribution or Pro Rata
Repurchase shall, subject to paragraphs (E) and (F) of this Section
9, be adjusted by multiplying such Conversion Price by the fraction
the numerator of which is the difference between (i) the product of
(x) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution or Pro Rata Repurchase
multiplied by (y) the Fair Market Value of a share of Common Stock
on the day before the ex-dividend date with respect to an
Extraordinary Distribution which is paid in cash and on the
distribution date with respect to an Extraordinary Distribution
which is paid other than in cash, or on the applicable expiration
date (including all extensions thereof) of any tender offer which
is a Pro Rata Repurchase, or on the date of purchase with respect
to any Pro Rata Repurchase which is not a tender offer, as the case
may be, and (ii) the Fair Market Value of the Extraordinary
Distribution minus the aggregate amount of regularly scheduled
quarterly dividends declared by the board of directors of the
Corporation and paid by the Corporation in the twelve months
immediately preceding such Extraordinary Distribution or the
aggregate purchase price of the Pro Rata Repurchase, as the case
may be, and the denominator of which shall be the product of (a)
the number of shares of Common Stock outstanding immediately before
such Extraordinary Dividend or Pro Rata Repurchase minus, in the
case of Pro Rata Repurchase, the number of shares of Common Stock
repurchased by the Corporation multiplied by (b) the Fair Market
Value of a share of Common Stock on the day before the ex-dividend
date with respect to an Extraordinary Distribution which is paid in
cash and on the distribution date with respect to an Extraordinary
Distribution which is paid other than in cash, or on the applicable
22
<PAGE>
expiration date (including all extensions thereof) of any tender
offer which is a Pro Rata Repurchase or on the date of purchase
with respect to any Pro Rata Repurchase which is not a tender
offer, as the case may be. The Corporation shall send each holder
of ESOP Preference Shares (i) notice of its intent to make any
dividend or distribution and (ii) notice of any offer by the
Corporation to make a Pro Rata Repurchase, in each case at the same
time as, or as soon as practicable after, such offer is first
communicated (including by announcement of a record date in
accordance with the rules of any stock exchange on which the Common
Stock is listed or admitted to trading) to holders of Common Stock.
Such notice shall indicate the intended record date and the amount
and nature of such dividend or distribution, or the number of
shares subject to such offer for a Pro Rata Repurchase and the
purchase price payable by the Corporation pursuant to such offer,
as well as the Conversion Price and the number of shares of Common
Stock into which an ESOP Preference Share may be converted at such
time.
(E) Notwithstanding any other provisions of this Section 9,
the Corporation shall not be required to make any adjustment to the
Conversion Price unless such adjustment would require an increase
or decrease of at least one percent (1%) in the Conversion Price.
Any lesser adjustment shall be carried forward and shall be made no
later than the time of, and together with, the next subsequent
adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at
least one percent (1%) in the Conversion Price.
(F) If the Corporation shall make any dividend or
distribution on the Common Stock or issue any Common Stock, other
capital stock or other security of the Corporation or any rights or
warrants to purchase or acquire any such security, which
transaction does not result in an adjustment to the Conversion
Price pursuant to the foregoing provisions of this Section 9, the
board of directors of the Corporation shall consider whether such
action is of such a nature that an adjustment to the Conversion
Price should equitably be made in respect of such transaction. If
in such case the board of directors of the Corporation determines
that an adjustment to the Conversion Price should be made, an
adjustment shall be made effective as of such date, as determined
by the board of directors of the Corporation. The determination of
the board of directors of the Corporation as to whether an
adjustment to the Conversion Price should be made pursuant to the
foregoing provisions of this paragraph 9(F), and, if so, as to what
adjustment should be made and when, shall be final and binding on
the Corporation and all shareowners of the Corporation. The
Corporation shall be entitled to make such additional adjustments
in the Conversion Price, in addition to those required by the
foregoing provisions of this Section 9, as shall be necessary in
order that any dividend or distribution in shares of capital stock
23
<PAGE>
of the Corporation, subdivision, reclassification or combination of
shares of stock of the Corporation or any recapitalization of the
Corporation shall not be taxable to the holders of the Common
Stock.
(G) For purposes of this Certificate, the following
definitions shall apply:
"Business Day" shall mean each day that is not a Saturday,
Sunday or a day on which state or federally chartered banking
institutions in New York, New York are not required to be open.
"Current Market Price" of publicly traded shares of Common
Stock or any other class of capital stock or other security of the
Corporation or any other issuer for any day shall mean the last
reported sales price, regular way, or, in the event that no sale
takes place on such day, the average of the reported closing bid
and asked prices, regular way, in either case as reported on the
New York Stock Exchange Composite Tape or, if such security is not
listed or admitted to trading on the New York Stock Exchange, on
the principal national securities exchange on which such security
is listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on the NASDAQ National
Market System or, if such security is not quoted on such National
Market System, the average of the closing bid and asked prices on
each such day in the over-the-counter market as reported by NASDAQ
or, if bid and asked prices for such security on each such day
shall not have been reported through NASDAQ, the average of the bid
and asked prices for such day as furnished by any New York Stock
Exchange member firm regularly making a market in such security
selected for such purpose by the board of directors of the
Corporation or a committee thereof, in each case, on each trading
day during the Adjustment Period. "Adjustment Period" shall mean
the period of five (5) consecutive trading days preceding, and
including, the date as of which the Fair Market Value of a security
is to be determined. The "Fair Market Value" of any security which
is not publicly traded or of any other property shall mean the fair
value thereof as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or
property selected in good faith by the board of directors of the
Corporation or a committee thereof, or, if no such investment
banking or appraisal firm is in the good faith judgment of the
board of directors or such committee available to make such
determination, as determined in good faith by the board of
directors of the Corporation or such committee.
"Extraordinary Distribution" shall mean any dividend or other
distribution to holders of Common Stock (effected while any of the
ESOP Preference Shares are outstanding) (i) of cash, where the
aggregate amount of such cash dividend or distribution together
with the amount of all cash dividends and distributions made during
24
<PAGE>
the preceding period of 12 months, when combined with the aggregate
amount of all Pro Rata Repurchases (for this purpose, including
only that portion of the aggregate purchase price of such Pro Rata
Repurchase which is in excess of the Fair Market Value of the
Common Stock repurchased as determined on the applicable expiration
date (including all extensions thereof) of any tender offer or
exchange offer which is a Pro Rata Repurchase, or the date of
purchase with respect to any other Pro Rata Repurchase which is not
a tender offer or exchange offer made during such period), exceeds
twelve and one-half percent (12 1/2%) of the aggregate Fair Market
Value of all shares of Common Stock outstanding on the day before
the ex-dividend date with respect to such Extraordinary
Distribution which is paid in cash and on the distribution date
with respect to an Extraordinary Distribution which is paid other
than in cash, and/or (ii) of any shares of capital stock of the
Corporation (other than shares of Common Stock), other securities
of the Corporation (other than securities of the type referred to
in paragraph (B) or (C) of this Section 9), evidences of
indebtedness of the Corporation or any other person or any other
property (including shares of any subsidiary of the Corporation) or
any combination thereof. The Fair Market Value of an Extraordinary
Distribution for purposes of paragraph (D) of this Section 9 shall
be equal to the sum of the Fair Market Value of such Extraordinary
Distribution plus the amount of any cash dividends which are not
Extraordinary Distributions made during such 12-month period and
not previously included in the calculation of an adjustment
pursuant to paragraph (D) of this Section 9.
"Fair Market Value" shall mean, as to shares of Common Stock
or any other class of capital stock or securities of the
Corporation or any other issuer which are publicly traded, the
average of the Current Market Prices of such shares or securities
for each day of the Adjustment Period.
"Non-Dilutive Amount" in respect of an issuance, sale or
exchange by the Corporation of any right or warrant to purchase or
acquire shares of Common Stock (including any security convertible
into or exchangeable for shares of Common Stock) shall mean the
difference between (i) the product of the Fair Market Value of a
share of Common Stock on the day preceding the first public
announcement of such issuance, sale or exchange multiplied by the
maximum number of shares of Common Stock which could be acquired on
such date upon the exercise in full of such rights and warrants
(including upon the conversion or exchange of all such convertible
or exchangeable securities), whether or not exercisable (or
convertible or exchangeable) at such date, and (ii) the aggregate
amount payable pursuant to such right or warrant to purchase or
acquire such maximum number of shares of Common Stock; provided,
however, that in no event shall the Non-Dilutive Amount be less
than zero. For purposes of the foregoing sentence, in the case of
a security convertible into or exchangeable for shares of Common
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<PAGE>
Stock, the amount payable pursuant to a right or warrant to
purchase or acquire shares of Common Stock shall be the Fair Market
Value of such security on the date of the issuance, sale or
exchange of such security by the Corporation.
"Pro Rata Repurchase" shall mean any purchase of shares of
Common Stock by the Corporation or any subsidiary thereof, whether
for cash, shares of capital stock of the Corporation, other
securities of the Corporation, evidences of indebtedness of the
Corporation or any other person or any other property (including
shares of a subsidiary of the Corporation), or any combination
thereof, effected while any of the ESOP Preference Shares are
outstanding, pursuant to any tender offer or exchange offer subject
to Section 13(e) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any successor provision of law, or
pursuant to any other offer available to substantially all holders
of Common Stock; provided, however, that no purchase of shares by
the Corporation or any subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase. For purposes
of this paragraph (G) of this Section 9, shares shall be deemed to
have been purchased by the Corporation or any subsidiary thereof
"in open market transactions" if they have been purchased
substantially in accordance with the requirements of Rule 10b-18 as
in effect under the Exchange Act, on the date ESOP Preference
Shares are initially issued by the Corporation or on such other
terms and conditions as the board of directors of the Corporation
or a committee thereof shall have determined are reasonably
designed to prevent such purchases from having a material effect on
the trading market for the Common Stock.
(H) Whenever an adjustment to the Conversion Price and the
related voting rights of the ESOP Preference Shares is required
pursuant to this Certificate, the Corporation shall forthwith place
on file with the transfer agent for the Common Stock and the ESOP
Preference Shares, and with the Secretary of the Corporation, a
statement signed by two officers of the Corporation stating the
adjusted Conversion Price determined as provided herein and the
resulting conversion ratio, and the voting rights (as appropriately
adjusted), of the ESOP Preference Shares. Such statement shall set
forth in reasonable detail such facts as shall be necessary to show
the reason and the manner of computing such adjustment, including
any determination of Fair Market Value involved in such
computation. Promptly after each adjustment to the Conversion
Price and the related voting rights of the ESOP Preference Shares,
the Corporation shall mail a notice thereof and of the then
prevailing conversion ratio to each holder of ESOP Preference
Shares.
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<PAGE>
10. Ranking; Attributable Capital And Adequacy of Surplus;
Retirement of Shares.
(A) The ESOP Preference Shares shall rank senior the Common
Stock as to the payment of dividends and the distribution of assets
on liquidation, dissolution and winding up of the Corporation, and,
unless otherwise provided in the Certificate of Incorporation of
the Corporation, as the same may be amended, or a Certificate of
Amendment relating to a subsequent series of Preference Stock, par
value $0.50 per share, of the Corporation, the ESOP Preference
Shares shall rank junior to all series of the Corporation's
Preference Stock, par value $0.50 per share, as to the payment of
dividends and the distribution of assets on liquidation,
dissolution or winding up.
(B) In addition to any vote of shareowners required by law or
by Section 3(B) of this Certificate, the vote of the holders of a
majority of the outstanding ESOP Preference Shares shall be
required to increase the par value of the Common Stock or otherwise
increase the capital of the Corporation allocable to the Common
Stock for the purpose of the GCL if, as a result thereof, the
amount legally available for the payment of dividends under the GCL
would be less than the amount of Preference Dividends that would
accrue on the then outstanding ESOP Preference Shares during the
following three years.
(C) Any ESOP Preference Shares acquired by the Corporation by
reason of the conversion or redemption of such shares as provided
by this Certificate, or otherwise so acquired, shall be retired as
ESOP Preference Shares and restored to the status of authorized but
unissued shares of Preference Shares, par value $0.50 per share, of
the Corporation, undesignated as to series, and may thereafter be
reissued as part of a new series of such Preference Shares as
permitted by law.
11. Miscellaneous.
(A) All notices referred to herein shall be in writing, and
all notices hereunder shall be deemed to have been given upon the
earlier of delivery thereof if by hand delivery, by courier or by
standard form of telecommunication or three (3) business days after
the mailing thereof if sent by registered mail (unless first-class
mail shall be specifically permitted for such notice under the
terms of this Certificate) with postage prepaid, addressed: (i) if
to the Corporation, to its office at 611 Olive Street, St. Louis,
Missouri 63101 (Attention: Secretary), or to the transfer agent for
the ESOP Preference Shares, or other agent of the Corporation
designated as permitted by this Certificate or (ii) if to any
holder of the ESOP Preference Shares or Common Stock, as the case
may be, to such holder at the address of such holder as listed in
the stock record books of the Corporation (which may include the
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records of any transfer agent for the ESOP Preference Shares or
Common Stock, as the case may be) or (iii) to such other address as
the Corporation or any such holder, as the case may be, shall have
designated by notice similarly given.
(B) The term "Common Stock" as used in this Certificate means
the Corporation's Common Stock, par value $.50 per share, as the
same exists at the date of filing of a Certificate of Amendment
relating to ESOP Preference Shares or any other class of stock
resulting from successive changes or reclassifications of such
Common Stock consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value. In the
event that, at any time as a result of an adjustment made pursuant
to Section 9 of this Certificate, the holder of any ESOP Preference
Share upon thereafter surrendering such shares for conversion,
shall become entitled to receive any shares or other securities of
the Corporation other than shares of Common Stock, the Conversion
Price in respect of such other shares or securities so receivable
upon conversion of ESOP Preference Shares shall thereafter be
adjusted, and shall be subject to further adjustment from time to
time, in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to Common Stock contained in Section
9 hereof, and the provisions of Sections 1 through 8, 10 and 11 of
this Certificate with respect to the Common Stock shall apply on
like or similar terms to any such other shares or securities.
(C) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any
issuance or delivery of ESOP Preference Shares or shares of Common
Stock or other securities issued on account of ESOP Preference
Shares pursuant hereto or certificates representing such shares or
securities. The Corporation shall not, however, be required to pay
any such tax which may be payable in respect of any transfer
involved in the issuance or delivery of ESOP Preference Shares or
Common Stock or other securities in a name other than that in which
the ESOP Preference Shares with respect to which such shares or
other securities are issued or delivered were registered, or in
respect of any payment to any person with respect to any such
shares or securities other than a payment, to the registered holder
thereof, and shall not be required to make any such issuance,
delivery or payment unless and until the person otherwise entitled
to such issuance, delivery or payment has paid to the Corporation
the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid or is not payable.
(D) In the event that a holder of ESOP Preference Shares
shall not by written notice designate the name in which shares of
Common Stock to be issued upon conversion of such shares should be
registered or to whom payment upon redemption of ESOP Preference
Shares should be made or the address to which the certificate or
certificates representing such shares, or such payment, should be
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<PAGE>
sent, the Corporation shall be entitled to register such shares,
and make such payment, in the name of the holder of such ESOP
Preference Shares as shown on the records of the corporation and to
send the certificate or certificates representing such shares, or
such payment, to the address of such holder shown on the records of
the Corporation.
(E) Unless otherwise provided in the Certificate of
Incorporation, as the same may be amended, of the Corporation, all
payments in the form of dividends, distributions on voluntary or
involuntary dissolution, liquidation or winding up or otherwise
made upon the ESOP Preference Shares and any other stock ranking on
a parity with the ESOP Preference Shares with respect to such
dividend or distribution shall be pro rata, so that amounts paid
per ESOP Preference Share and such other stock shall in all cases
bear to each other the same ratio that the required dividends,
distributions or payments, as the case may be, then payable per
share on the ESOP Preference Shares and such other stock bear to
each other.
(F) The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the ESOP Preference
Shares. Upon any such appointment or discharge of a transfer
agent, the Corporation shall send notice thereof by hand delivery,
by courier, by standard form of telecommunication or by first-class
mail (postage prepaid), to each holder of record of ESOP Preference
Shares.
IN WITNESS WHEREOF, The May Department Stores Company has
caused this Certificate to be signed by __________ its __________,
this ____ day of May, 1996.
THE MAY DEPARTMENT STORES COMPANY
By:
exh42.edg
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EXHIBIT 4.3
ASSIGNMENT AND ASSUMPTION AGREEMENT
Assignment and Assumption Agreement (the "Agreement"),
dated as of May __, 1996, among The May Department Stores Company,
a New York corporation (the "Assignor"), The May Department Stores
Company, a Delaware corporation (the "Assignee"), and The Bank of
New York, a banking company organized under the laws of New York
(the "Rights Agent").
WHEREAS, Assignor and the Rights Agent are parties to the
Rights Agreement, dated as of August 19, 1994 (the "Rights
Agreement"), pursuant to which Assignor originally distributed one
right (a "Right") for each share of common stock of Assignor, par
value $.50 per share (the "Assignor Common Stock"), each Right
initially representing the right to purchase one four-hundredth of
a Junior Participating Preference Share of the Assignor having the
rights, powers and preferences set forth in the Certificate of
Incorporation of the Assignor, upon the terms and subject to the
conditions set forth in the Rights Agreement providing for the
issuance of common stock purchase rights to the holders of shares
of Assignor Common Stock; and
WHEREAS, pursuant to the Agreement and Plan of Share Ex-
change dated as of May 22, 1996, between May New York and May
Delaware (the "Share Exchange Agreement"), which in effect provides
that by means of a statutory share exchange (the "Share Exchange"),
May New York will reincorporate from New York to Delaware (the
"Reincorporation"), and subject to the exercise and perfection of
dissenting shareowners' appraisal rights, at the effective time
(the "Effective Time") of the Share Exchange: (i) each share of
Assignor Common Stock and associated preferred stock purchase right
outstanding immediately prior to the Effective Time will be
exchanged for one fully paid, nonassessable share of common stock,
par value $.50 per share, of May Delaware (the "Assignee Common
Stock"), together with its associated preferred stock purchase
right; (ii) each share of Assignor Common Stock (and associated
preferred stock purchase right) held in Assignor's treasury immedi-
ately prior to the Effective Time will be cancelled and restored to
the status of an authorized but unissued share of Assignor Common
Stock; (iii) each ESOP (Employee Stock Ownership Plan) preference
share, par value $.50 per share, of Assignor (the "Assignor ESOP
Shares") outstanding immediately prior to the Effective Time will
be exchanged for one fully paid, nonassessable ESOP (Employee Stock
Ownership Plan) preference share, par value $.50 per share (the
"Assignee ESOP Shares"), of Assignee (which series will be substan-
tially identical to the Assignor ESOP Shares); and (iv) each share
of Assignee Common Stock outstanding immediately prior to the
Effective Time will be cancelled and restored to the status of an
authorized but unissued share of Assignee Common Stock, and as a
result of the Share Exchange, Assignor will become a wholly owned
subsidiary of Assignee; and
<PAGE>
WHEREAS, pursuant to the Share Exchange Agreement,
Assignor has agreed to assign, and Assignee has agreed to assume,
all of the rights and obligations of Assignor under the Rights
Agreement; and
WHEREAS, in order to facilitate the assignment and
assumption being implemented by this Agreement, the parties wish to
make certain conforming amendments to the Rights Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth and intending to be legally
bound hereby, the parties hereby agree as follows:
1. Assignment and Assumption. Assignor hereby conveys,
assigns, transfers and delivers to Assignee all Assignor's right,
title and interest as of the Effective Time in and to, and all of
its rights as of the Effective Time arising out of, the Rights
Agreement. Effective as of the Effective Time, Assignee hereby
assumes, undertakes and will perform, pay or otherwise discharge,
and will indemnify and hold Assignor harmless against, all
obligations, liabilities, duties, claims, damages, costs and
expenses arising out of or pursuant to the Rights Agreement.
2. Rights Agreement Amendment. Effective as of the
Effective Time, the Rights Agreement shall be amended as follows:
(a) The term "Company" shall mean and refer for all
times after the Effective Time to The May Department Stores
Company, a Delaware corporation.
(b) The term "Common Stock" shall mean and refer to the
common stock, par value $.50 per share, of The May Department
Stores Company, a Delaware corporation, except the term "Common
Stock" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such
Person.
(c) The term "Preferred Stock" shall mean and refer to
the Junior Participating Preference Shares, par value $.50 per
share, of The May Department Stores Company, a Delaware
corporation.
(d) The law governing the Rights Agreement and related
matters as provided in Section 31 of the Rights Agreement shall be
Delaware, and effective from the Effective Time all references in
Section 31 of the Rights Agreement to the State of New York shall
be deemed references to the State of Delaware.
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<PAGE>
(e) The term "Agreement" as used in the Rights Agreement
shall mean and refer to the Rights Agreement as amended hereby.
3. Defined Terms. All capitalized terms used in this
Agreement and not defined herein shall be defined as set forth in
the Rights Agreement.
4. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
5. Binding Agreement. This Agreement shall be binding
upon, and shall inure to the benefit of, the successors and assigns
of the parties hereto, and the Rights Agreement, as amended hereby,
shall remain in full force and effect in accordance therewith and
herewith and shall be binding upon the parties thereto.
6. Effectiveness of this Agreement. This Agreement
shall take effect at the Effective Time of the Share Exchange
Agreement; provided, however, that this Agreement shall be null and
void and of no effect if the Share Exchange does not become
effective at the Effective Time in accordance with the applicable
provisions of the laws of the State of New York.
7. Counterparts. This Agreement may be executed in any
number of counterparts, all of which when taken together shall
constitute one and the same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
THE MAY DEPARTMENT STORES COMPANY
a New York corporation
By:
Name:
Title:
THE MAY DEPARTMENT STORES COMPANY
a Delaware corporation
By:
Name:
Title:
THE BANK OF NEW YORK
a New York banking company
By:
Name:
Title:
4
<PAGE>
EXHIBIT 10.1
RESTRICTED STOCK PLAN FOR NON-MANAGEMENT DIRECTORS
(Amended Effective as of May 24, 1996)
I. GENERAL
1. Purpose. The purpose of the Plan is to provide certain
compensation to eligible directors of the Corporation and to
encourage the highest level of performance of non-management
directors by providing those directors with a proprietary
interest in the Corporation's success and progress by granting
them shares of the Corporation's common stock which are
restricted in accordance with the terms and conditions set forth
below.
2. Definitions. Whenever used herein, the following terms
shall have the meanings set forth below:
(a) "Annual Grant" means an annual grant of restricted
Stock to an eligible director, as described in Section 5 of
Part I of the Plan.
(b) "Board" means the Board of Directors of the
Corporation.
(c) "Committee" means a committee designated by the
Board, which shall consist of not less than three members of
the Board who shall be appointed by and serve at the
pleasure of the Board and who shall be "disinterested"
within the meaning of Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934. No
person who is a Participant may be a member of that
committee. Any person who is appointed a member of that
committee and who accepts such appointment shall, by virtue
thereof, be ineligible thereafter to be made a Restricted
Stock Grant under the Plan.
(d) "Corporation" means The May Department Stores
Company.
(e) "Disability" means a medically determinable
physical or mental impairment which renders a Participant
substantially unable to function as a director of the
Corporation.
(f) "Initial Grant" means the initial grant of
restricted Stock to an individual who first becomes an
eligible director after the effective date of the Plan, as
described in Section 5 of Part I of the Plan.
<PAGE>
(g) "Participant" means a member of the Board (i) who
is not at the time of grant and has not previously been an
officer of the Corporation or of any Subsidiary and (ii) to
whom a Restricted Stock Grant is made under the Plan.
(h) "Plan" means the Restricted Stock Plan for Non-
Management Directors of The May Department Stores Company.
(i) "Restricted Period" means the period from the
Restricted Stock Grant until the earlier of (i) the
cessation of the Participant's membership on the board by
reason of death or Disability and (ii) the later of (a) the
expiration of the six month period immediately following the
Restricted Stock Grant or (b) the date on which the
Participant's service as a director of the Corporation
terminates (other than by reason of death or Disability).
(j) "Restricted Stock Grant" means a grant described
in Part II of the Plan which is made by the Corporation
pursuant to the Plan.
(k) "Stock" means the common stock of the Corporation.
(l) "Subsidiary" means a subsidiary of the Corporation
or an unincorporated organization controlled, directly or
indirectly, by the Corporation.
(m) "Year of Service" means (i) each full annual
period from the date of the first annual meeting at which
the Participant was elected as a director (which may include
service before or after the Participant became a
Participant, as determined by the Committee) to the date of
the last annual meeting through which the Participant served
continually as a director, and (ii) if the Participant was
first elected to become a member of the Board by the Board
during the last six calendar months of the year, the period
from the date of such election until the first annual
meeting of shareholders next following such election.
3. Administration. The Plan shall be administered by the
Committee. Subject to all the applicable provisions of the Plan,
the Committee is authorized to construe and interpret the Plan,
to prescribe, amend and rescind rules and regulations relating to
the Plan and to make all determinations and take all actions
necessary or advisable for the Plan's administration; provided,
however, that the Committee shall have no discretion with respect
to granting any shares of Stock to any Participant, it being the
intent that the granting of shares of Stock hereunder shall be
automatic, pursuant to the formula set forth in Paragraph 5 of
this Part I of the Plan. The Committee shall act by vote or
written consent of a majority of its members. Whenever the Plan
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<PAGE>
authorizes or requires the Committee to take any action, make any
determination or decision or form any opinion, then any such
action, determination, decision or opinion by or of the Committee
shall be conclusive and binding on all persons. The Committee
may obtain such advice or assistance as it deems appropriate from
persons not serving on the Committee.
4. Shares of Stock Which May Be Granted. There may be
granted under the Plan an aggregate of not more than 200,000
shares of Stock, subject to adjustment as provided in Section 3
of Part III of the Plan. Shares of Stock granted under the Plan
shall be treasury shares. If any shares of Stock shall be
returned to the Corporation pursuant to the termination
provisions described in Section 1 of Part II of the Plan or in
the instruments evidencing the making of Restricted Stock Grants,
such shares may again be granted under the Plan.
5. Participants. The individuals who are eligible to
receive Restricted Stock Grants hereunder shall be limited to
members of the Board who are not at the time of the grant and
have not previously been officers of the Corporation or any
Subsidiary. Each eligible director on the effective date of the
Plan shall be granted 1,000 shares of restricted Stock. Each
individual who first becomes an eligible director after the
effective date of the Plan shall be granted 2,000 shares of
restricted Stock on the date of first becoming an eligible
director (the "Initial Grant"). Each individual who is an
eligible director on the date of any annual meeting of
shareholders held on or after May 24, 1996 and who will continue
to be an eligible director after the date of such annual meeting
of shareholders shall be granted a number of shares of restricted
Stock with a fair market value equal to $40,000 (valued on the
average of the high and low trading prices of the Stock on the
New York Stock Exchange on the day of such annual meeting).
6. Rights with Respect to Shares of Stock. A Participant
shall have, after a certificate or certificates for the number of
shares of Stock granted have been issued in his or her name,
absolute ownership of such shares including the right to vote the
same and receive dividends thereon, subject, however, to the
terms, conditions and restrictions described in the Plan and in
the instrument evidencing the making of the Restricted Stock
Grant to such Participant.
II. RESTRICTED STOCK GRANTS
Each Restricted Stock Grant made under the Plan shall
contain the following terms, conditions and restrictions and such
additional terms, conditions and restrictions as may be
determined by the Committee from time to time hereafter.
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<PAGE>
1. Restrictions. Shares of Stock granted to a Participant
pursuant to a Restricted Stock Grant shall not be sold, assigned,
conveyed, transferred, pledged, hypothecated, or otherwise
disposed of until the end of the Restricted Period, but only to
the extent of the shares which had vested on or prior to the end
of the Restricted Period in accordance with Section 2 or 3 of
this Part II. If the restrictions shall not have lapsed at the
end of the Restricted Period as to any of the shares, then,
except as provided in Section 3 of this Part II, the shares as to
which the restrictions shall not have lapsed shall be returned to
the Corporation forthwith, and all the rights of the Participant
to such shares shall immediately terminate without any payment or
consideration by the Corporation. Such return of such Stock
shall be accomplished by the Participant's delivering or causing
to be delivered to the Secretary or any Assistant Secretary of
the Corporation the certificates, if any, previously delivered to
the Participant for such shares of stock, accompanied by such
endorsements and instruments of transfer as may be requested by
the Secretary or any Assistant Secretary of the Corporation.
2. Vesting. Except as set forth in Section 3 of this Part
II, during the Restricted Period, a Participant will be vested
with respect to one-fifth of the shares granted in the Initial
Grant to that Participant for each Year of Service the
Participant has then completed. Notwithstanding the foregoing,
the Committee may accelerate the vesting of shares under such
terms and conditions as may be appropriate. A Participant will
be vested with respect to all of the shares granted in any Annual
Grant to that Participant on the date of such Annual Grant.
3. Termination of Membership on Board by Reason of Death
or Disability. Any provision of Section 2 of this Part II to the
contrary notwithstanding, if a Participant who has been a member
of the Board continuously since the date as of which a Restricted
Stock Grant was made to such Participant shall cease to be such a
member by reason of such death or Disability, then the
Participant shall become fully vested on the date of such event
as to all shares of Stock granted to such Participant pursuant to
such Restricted Stock Grant.
4. Agreement by Participant Regarding Withholding Taxes.
Each Participant shall agree that, subject to the provisions of
Section 5 of this Part II:
(i) such Participant will timely pay to the
Corporation, or make arrangements satisfactory to the
Committee regarding payment of, any federal, state or local
taxes of any kind required by law to be withheld with
respect to the shares of Stock subject to such Restricted
Stock Grant, and
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<PAGE>
(ii) the Corporation and its Subsidiaries shall, to the
extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Participant any
federal, state or local taxes of any kind required by law to
be withheld with respect to the shares of Stock subject to
such Restricted Stock Grant.
5. Election to Recognize Income in the Year of Grant. If
any Participant properly elects, within thirty days of the date
of grant, to include in gross income for federal income tax
purpose an amount equal to the fair market value of the shares of
Stock granted on the date of grant, such Participant shall pay to
the Corporation, or make arrangements satisfactory to the
Committee to pay to the Corporation in the year of such grant,
any federal, state or local taxes required to be withheld with
respect to such shares. If such Participant shall fail to make
such payments, the Corporation and its Subsidiaries shall, to the
extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Participant any federal,
state or local taxes of any kind required by law to be withheld
with respect to such shares.
6. Restrictive Legend; Certificates May be Held in
Custody. Each certificate evidencing shares of Stock granted
pursuant to a Restricted Stock Grant shall bear an appropriate
legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock Grant. Any attempt to
dispose of such shares of Stock in contravention of such terms,
conditions and restrictions shall be ineffective. The Committee
may adopt rules which provide that the certificates evidencing
such shares may be held in custody by a bank or other
institution, or that the Corporation may itself hold such shares
in custody, until the restrictions thereon shall have lapsed.
7. Restrictions upon Making of Restricted Stock Grants.
The listing upon the New York Stock Exchange or the registration
or qualification under any federal or state law of any shares of
Stock to be granted pursuant to Restricted Stock Grants (whether
to permit the making of Restricted Stock Grants or the resale or
other disposition of any such shares of Stock by or on behalf of
the Participants receiving such shares) may be necessary or
desirable as a condition of or in connection with such Restricted
Stock Grants and if, in any such event, the Committee in its sole
discretion so determines, delivery of the certificates for such
shares of Stock shall not be made until such listing,
registration or qualification shall have been completed. In such
connection, the Corporation agrees that it will use its best
efforts to effect any such listing, registration or
qualification; provided, however, the Corporation shall not be
required to use its best efforts to effect such registration
under the Securities Act of 1933 other than on Form S-3 or Form
S-8, as in effect on the effective date of the Plan, or such
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<PAGE>
other forms as may be in effect from time to time calling for
information comparable to that required to be furnished under
Form S-3 and Form S-8 as in effect on the effective date of the
Plan. The Corporation shall not be obligated to issue or deliver
any shares of Restricted Stock if the issuance or delivery of
such shares shall constitute a violation of any provision of any
law or of any regulation of any governmental authority or any
national securities exchange.
8. Restrictions upon Resale of Stock. If the shares of
Stock that have been granted to a Participant pursuant to the
terms of the Plan are not registered under the Securities Act of
1933 pursuant to an effective registration statement, such
Participant, if the Committee shall deem it advisable, may be
required to represent and agree in writing (i) that any shares of
Stock acquired by such Participant pursuant to the Plan will not
be sold except pursuant to an effective registration statement
under the Securities Act of 1933 or pursuant to an exemption from
registration under said Act and (ii) that such Participant is
acquiring such shares of Stock for the Participant's own account
and not with a view to the distribution thereof.
III. MISCELLANEOUS
1. Effective Date. The Plan shall become effective on
June 20, 1986, provided that the Corporation's shareholders shall
have approved the adoption of the Plan at the Corporation's 1986
annual meeting of shareholders.
2. Duration of Plan. Unless terminated pursuant to
Section 5 of Part III, the Plan shall remain in effect.
3. Changes in Capital Structure. In the event that there
is any change in the capital structure of the Corporation through
merger, consolidation, reorganization, recapitalization or
otherwise, or if there shall be any dividend on the Stock,
payable in such Stock, or if there shall be a stock split with
respect to the Stock or combination of shares, then:
(a) the number of shares of Stock reserved for grants
under the Plan shall be proportionately adjusted by the
Committee as it deems equitable, in its absolute discretion,
to prevent dilution or enlargement of the rights of
Participants,
(b) any shares issued pursuant thereto shall be
subject to the same terms, conditions and restrictions as
the shares of Stock with respect to which such newly issued
shares are issued, and
(c) any cash which is issued pursuant thereto shall be
deemed free from any restrictions.
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The issuance of Stock for consideration and the issuance of stock
rights with respect to the Stock shall not be considered a change
in the Corporation's capital structure.
4. Expenses of Plan. The expenses of the Plan shall be
borne by the Corporation.
5. Amendment or Termination. The Corporation, by the
action of any individual authorized to act generally on behalf of
the Corporation, may amend or terminate the Plan at time;
provided, however, that subject to the provisions of Section 3 of
this Part III, the Corporation may not, without approval by the
holders of a majority of the outstanding shares of stock entitled
to vote thereon and actually voting thereon, increase the number
of shares of Stock which may be granted under the Plan, change
the class of individuals eligible to participate in the Plan or
otherwise materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements
with respect to eligibility for participation in the Plan; and
provided further that the provisions of Section 5 of Part I of
the Plan and the provision of Section 2 of Part II of the Plan
relating to Initial Grants and to Annual Grants may not be
amended more than once every six months, other than to comport
with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules and regulations
promulgated thereunder. In the event that a Restricted Stock
Grant has been made to a Participant, then no amendment of the
Plan after the date as of which such Restricted Stock Grant was
made shall, unless otherwise required by law, adversely affect
any right of such Participant with respect to such Restricted
Stock Grant without the written consent of such Participant.
Termination of the Plan shall not affect any Restricted Stock
Grants previously made or shares of Stock previously granted
pursuant thereto; the terms, conditions and restrictions
applicable to such shares shall remain in effect until such
terms, conditions and restrictions shall have lapsed, all in
accordance with their terms.
6. Nothing in this Plan shall be deemed to create any
obligation on the part of the Board to nominate any director for
reelection as a director by the shareholders of the Corporation.
7
<PAGE>
EXHIBIT 10.2
DEFERRED COMPENSATION PLAN FOR NON-MANAGEMENT DIRECTORS
Section 1. Purpose.
The purpose of this Plan is to provide an additional
incentive to the non-management directors of The May Department
Stores Company and its subsidiaries to achieve superior
performance.
Section 2. Definitions.
(a) "Board" means the Board of Directors of May, as hereinafter
defined.
(b) "Committee" means the Committee appointed to administer the
Plan, as hereinafter defined, as provided in Section 8 hereof.
(c) "Common Stock" means the Common Stock of May, as hereinafter
defined.
(d) "Compensation" means cash payable to Non-Management
Directors, as hereinafter defined, with respect to annual fees
(the cash paid annually to such directors for their services as
members and as non-management chairpersons of committees of the
Board), meeting fees (cash payable to such directors for
attending Board meetings) or any other cash remuneration payable
to such individuals.
(e) "Corporation" means May, as hereinafter defined.
(f) "Deferred Cash" means Compensation which has been deferred
hereunder in a Deferred Cash Account, as hereinafter defined.
(g) "Deferred Cash Account" means an account on the records of
the Corporation in respect of Deferred Cash which has been and/or
may be deferred by a Participant in the manner hereinafter set
forth.
(h) "May" means The May Department Stores Company, a New York
corporation, its successors and assigns.
(i) "Non-Management Director" means those members of the Board
who are not also employees of May.
(j) "Participant" means a Non-Management Director who has elected
to participate in the Plan, as hereinafter defined.
(k) "Phantom Stock" means an accounting equivalent of one share
of Common Stock.
<PAGE>
(l) "Phantom Stock Account" means an account on the records of
the Corporation in respect of units of Phantom Stock which have
been and/or may be allocated to a Participant in the manner
hereinafter set forth.
(m) "Plan" means the Deferred Compensation Plan for Non-
Management Directors of the Corporation, as described herein.
Section 3. Types of Deferral.
(a) Except as hereinafter provided, prior to the
commencement of a calendar year, each Participant shall be
afforded the opportunity of making one of the following elections
with respect to all or a part of any portion of Compensation of
which such Participant shall be the recipient in respect of the
Participant's service on the Board during such calendar year:
(i) Current Payment Alternative: receive payment of any
such Compensation when such Compensation is otherwise
payable.
(ii) Deferred Cash Alternative: have one unit of Deferred
Cash credited to the Participant's Deferred Cash Account
for each dollar of Compensation the Participant elects to
defer under this alternative. Payment from the Deferred
Cash Account at a deferred date or dates may be made either
in a lump sum or in annual installments, as may be
determined by the Committee. Such payment when made shall
include interest, as hereinafter provided, from the first
day of January next following the calendar year in respect
of which the Compensation was payable to the date of
payment.
(iii) Phantom Stock Alternative: have units of Phantom
Stock credited to the Participant's Phantom Stock Account
that are equivalent in value to the Compensation the
Participant elects to defer under this alternative.
Payment from the Phantom Stock Account at a deferred date
or dates may be made either in a lump sum or in annual
installments, as may be determined by the Committee.
Except as hereinafter provided, such payments may be either
in cash or in Common Stock or in both cash and Common
Stock, as may be determined by the Committee, in respect of
the units of Phantom Stock allocated to the Participant as
hereinafter provided.
The Deferred Cash Alternative and the Phantom Stock
Alternative are hereafter collectively referred to as the
"Deferral Alternatives". If any Participant shall fail to make
an election with respect to any year, the Participant shall be
deemed to have elected not to defer any portion of Compensation
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for such year. Notwithstanding the requirements imposed by this
paragraph (a) with respect to the time by which an election must
be made, a Non-Management Director who becomes such for the first
time or who becomes such after a period of not serving as a
member of the Board may, within 60 days thereafter, make any
election otherwise permitted under this paragraph (a) with
respect to the Participant's Compensation in respect of service
on the Board subsequent to the date on which the election is
made.
(b) In connection with all determinations to be made by the
Committee as respects the Deferred Cash Alternative and, except
for the determination of whether payment thereunder is to be made
in cash or in Common Stock or in both cash and Common Stock
(which determination shall be in the absolute discretion to the
Committee), the Phantom Stock Alternative, the Participant shall
be given an opportunity at the time of election of indicating his
or her preferences with respect to his or her payment schedule
(i.e., a lump sum payment or payments in annual installments),
which preferences shall be taken into account by the Committee in
making its determinations. Except as provided in Section 12 and
Section 13, in no event shall payments under the Deferral
Alternatives commence prior to the earliest of the Participant's
retirement, termination of Board service or death (or prior to
the occurrence of a severe financial hardship, as provided
below).
The Committee shall make its determination with respect to
the payment schedule under the Deferral Alternatives prior to the
commencement of the calendar year for which either of such
alternatives is elected. Except in the event of a severe
financial hardship, as provided below, the Committee's
determination with respect to a payment schedule shall become
irrevocable as of the first day of the calendar year for which
the determination is made. However, upon the written request of
the Participant (or if applicable, the beneficiary or
distributee) the payment schedule may be revised by the
Committee, in its absolute discretion, in the event that the
Participant (or, if applicable, the beneficiary or distributee)
incurs a severe financial hardship. Such severe financial
hardship must have been caused by an accident, illness or other
event which was beyond the control of the Participant (or, if
applicable, the beneficiary or distributee); and the Committee
shall revise the payment schedule that it had previously
established only to the extent that the Committee considers
necessary to eliminate the severe financial hardship.
Notwithstanding the requirements imposed by this paragraph (b)
regarding the date by which the Committee must make a
determination with respect to the payment schedule under the
Deferral Alternatives and the date as of which such determination
shall become irrevocable (except in the event of a severe
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financial hardship), when a Participant makes an election to
defer Compensation pursuant to the last sentence of paragraph (a)
of this Section 3, the Committee shall make its determination
with respect to the payment schedule at any time prior to the
date as of which the Participant's election becomes effective,
and its determination shall become irrevocable (except in the
event of a severe financial hardship) as of such effective date.
(c) Except as provided in Section 14, in the case of a
Participant who elects to defer all or any part of Compensation
for a particular calendar year under the Phantom Stock
Alternative, units of Phantom Stock shall be allocated to such
Participant by crediting the same to his or her Phantom Stock
Account, and the number of units of Phantom Stock to be so
credited for such calendar year shall be the sum of the
following:
(i) the quotient, disregarding fractions, resulting from
dividing the dollar amount of such portion of the
Participant's Compensation as is to be so deferred under
the Phantom Stock Alternative by the average closing price
of the Common Stock on the New York Stock Exchange during
the month of November in the calendar year in respect of
which such Compensation was payable; plus
(ii) the quotient, disregarding fractions, resulting from
dividing the aggregate dollar amount of cash dividends
which would have been paid to the Participant during such
calendar year had the units of Phantom Stock standing in
such Participant's Phantom Stock Account from time to time
during such calendar year been shares of Common Stock by
the average closing price of the Common Stock on the New
York Stock Exchange during the month of November in the
calendar year in respect of which such dividends would have
been paid; plus
(iii) the number of shares of Common Stock, disregarding
fractions, which would have been received by the
Participant as stock dividends during such calendar year
had the units of Phantom Stock standing in such
Participant's Phantom Stock Account at the date or dates of
payment of such stock dividend(s) been shares of Common
Stock.
Any allocation of units of Phantom Stock to a Participant's
Phantom Stock Account required to be made pursuant to this
paragraph (c) shall be made as of the first day of January next
following the calendar year in respect of which such Compensation
was payable or such dividends would have been paid, as the case
may be. The aggregate value of the fraction or fractions
remaining after making the applicable calculations referred to in
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sub-paragraphs (c)(i), (c)(ii) and (c)(iii) of this Section 3
shall not be converted into units of Phantom Stock but shall be
allocated and added to the amount elected by the Participant to
be deferred under the Deferred Cash Alternative, or, if the
Participant shall have made no such election under the Deferred
Cash Alternative, then such remaining amount shall be paid to the
Participant as if he or she had made an election under the
Current Payment Alternative to be so paid.
(d) Notwithstanding the provisions of Section 3(c) to the
contrary, in the event of a recapitalization of May pursuant to
which the outstanding shares of Common Stock shall be changed
into a greater or smaller number of shares (including, without
limitation, a stock split or a stock dividend of 25% or more of
the number of outstanding shares of Common Stock), the number of
units of Phantom Stock credited to a Participant's Phantom Stock
Account shall be appropriately adjusted as of the effective date
of such recapitalization.
(e) Any allocation of units of Deferred Cash to a
Participant's Deferred Cash Account required to be made pursuant
to an election under the Deferred Cash Alternative shall be made
as of the first day of January next following the calendar year
in respect of which such Compensation was payable. Interest to
be paid on the Deferred Cash in the Participant's Deferred Cash
Account shall be credited annually as of January 1 of each year,
and
(i) for interest credited prior to January 1, 1997, such
interest shall be calculated at the rate equal to the
average yield on long-term United States Government Bonds
(as determined by the Board of Governors of the Federal
Reserve Board and published in the Federal Reserve
Bulletin) for the calendar year prior to said January 1,
compounded annually, and
(ii) for interest credited as of January 1, 1997 and
thereafter, such interest shall be calculated at the rate
equal to the average yield on long-term United States
Government Bonds (as determined by the Board of Governors
of the Federal Reserve Board and published in the Federal
Reserve Bulletin) for the twelve month period ending
November 30 prior to said January 1, compounded annually,
provided, however, that if the method of calculation of such
average yield shall be changed, or if the determination and/or
the publication thereof be discontinued, then the Committee shall
substitute therefor such alternative method of determining such
interest rate as it, in its discretion, shall deem appropriate.
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Section 4. Limitation of Phantom Stock.
In no event shall the aggregate number of units of Phantom
Stock allocated under this Plan in respect of Compensation for
any calendar year exceed a number equal to 1/2 of 1% of the total
number of shares of Common Stock outstanding at the close of such
calendar year. In no event shall the aggregate number of shares
of Common Stock distributed under this Plan during a calendar
year equal or exceed 1% of the total number of shares of Common
Stock outstanding at the time of such distribution.
Section 5. Distributions.
(a) Distributions from a Participant's Deferred Cash
Account shall be made in accordance with the determinations made
by the Committee, as in this Plan provided.
(b) Distribution from a Participant's Phantom Stock Account
shall be made in accordance with the determinations made by the
Committee, as in this Plan provided. The Committee may determine
from time to time whether a distribution shall be in cash or in
Common Stock or in both cash and Common Stock (except, however,
for distributions with respect to amounts deferred pursuant to
Section 14, which distributions will be made in cash). The number
of units of Phantom Stock in a Phantom Stock Account shall be
adjusted from time to time in accordance with this Plan until all
distributions to which a Participant is entitled hereunder shall
have been made.
(c) If the Committee determines that distribution from a
Participant's Deferred Cash Account or Phantom Stock Account to a
Participant is to be made in a lump sum payment, that payment
will be distributed as soon as practicable after the date of the
Participant's retirement, termination of Board service or death.
If the Committee determines that distribution from a
Participant's Deferred Cash Account or Phantom Stock Account is
to be made in installments, the first such installment shall be
distributed as soon as practicable after the date of the
Participant's retirement, termination of Board service or death
and subsequent installments shall be distributed annually
thereafter as soon as practicable after January 1. The amounts
of Deferred Cash and the cash and/or numbers of shares of Common
Stock to be paid and/or distributed with respect to units of
Phantom Stock in connection with any lump sum payment or first
installment payment shall be determined by the Committee so as to
reflect fairly and equitably appropriate interest and dividends
since the preceeding January 1 and so as to reflect fairly and
equitably such other facts and circumstances as the Committee
deems appropriate, including, without limitation, the recent
price of the Common Stock.
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<PAGE>
(d) If the Committee determines that a distribution from a
Participant's Phantom Stock Account to a Participant is to be
made in a lump sum in Common Stock, the number of shares of
Common Stock to be so distributed to such Participant shall equal
the number of units of Phantom Stock then in the Participant's
Phantom Stock Account. If the Committee determines that a
distribution from a Participant's Phantom Stock Account to a
Participant is to be made in installments in Common Stock, for
the purpose of determining the number of shares of Common Stock
to be distributed on a particular installment distribution date,
the Committee shall make its calculations as if that installment
and all subsequent installments were in fact to be made in shares
of Common Stock, as follows: the number of shares of Common Stock
which would be then so distributable, except in the case of the
last distribution, shall be equal to the product, disregarding
fractions, of the total number of units of Phantom Stock then
credited to the Participant's Phantom Stock Account, multiplied
by a fraction, the numerator of which shall be one and the
denominator of which shall be the number of remaining
installments; and in the case of the last distribution, shall be
the number of shares of Common Stock equal to the units of
Phantom Stock then remaining in the Participant's Phantom Stock
Account. The Participant's Phantom Stock Account shall be
decreased by one unit of Phantom Stock for each share of Common
Stock distributed to a Participant.
(e) If the Committee determines that a particular
distribution from a Participant's Phantom Stock Account to a
Participant is to be made in cash, a computation shall first be
made of the number of shares of Common Stock which would then be
distributable pursuant to paragraph (d) of this Section 5 if such
distribution were to be made in shares of Common Stock. The
number of shares thus determined shall then be converted into
cash in respect of each such distribution by valuing such shares
at the average of the high and low trading prices of the Common
Stock on the New York Stock Exchange on the last trading day
before the date on which the distribution is to be made, and the
resulting amount of cash shall be distributed to the Participant.
The Participant's Phantom Stock Account shall then be decreased
by one unit of Phantom Stock for each share of Common Stock which
would have been distributed to the Participant had such cash
distribution been made in shares of Common Stock.
(f) If the Committee determines that a distribution from a
Participant's Phantom Stock Account is to be made in part in
Common Stock and in part in cash, paragraphs (d) and (e) of this
Section 5 shall be applied separately to the respective parts of
such distribution and to the respective parts of the Phantom
Stock Account with respect to which the distribution is to be
made.
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Section 6. Death of Participant.
In the event of the death of a Participant prior to
complete distribution of amounts deferred under the Deferral
Alternatives hereof, all Deferred Cash and/or units of Phantom
Stock then remaining undistributed, or which shall thereafter
become distributable to such Participant pursuant to such
Deferral Alternatives, shall be distributed to such beneficiary
as the Participant shall have designated in writing to the
Corporation, or, in the absence of such designation, to the
Participant's personal representative. Such distribution shall be
made at such date or dates either in a lump sum or in annual
installments, as may be determined by the Committee prior to the
beginning of the calendar year that includes the day for which
the Deferral Alternative is elected (or, where applicable, the
date specified by the last sentence of Section 3 (b)); provided,
however, that in the event of a severe financial hardship, the
Committee may subsequently revise its determination in accordance
with the applicable provisions of Section 3(b).
Section 7. Participant's Right Unsecured; Investments.
The right of a Participant to receive any distribution
hereunder shall be an unsecured claim against the general assets
of the Corporation. Nothing in this Agreement shall require the
Corporation to invest any amount which has been deferred under
the Phantom Stock Alternative in Common Stock or in any other
medium.
Section 8. Administration of the Plan - Committee.
(a) The Plan shall be administered by a Committee of not
less than two nor more than five persons designated by the
Corporation, all of whom shall be employee directors of the
Corporation and shall serve at the pleasure of the Board. In no
event shall any member of the Committee be a Participant. The
Committee shall act by vote or written consent of a majority of
its members. The Plan may be amended, modified or terminated by
the Corporation at any time, provided, however, that no
amendment, modification or termination will adversely affect
amounts previously deferred without the consent of the
Participants.
(b) The Committee shall prescribe such forms as it
considers appropriate for the administration of the Plan. The
forms shall set forth such terms and conditions not inconsistent
with the terms of the Plan as the Committee may determine and
shall designate:
(i) the Current Payment Alternative or the Deferral
Alternatives elected by the Participant pursuant to Section
3(a);
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(ii) the Committee's determination of the time or times
when payment of such Compensation will be made to the
Participant pursuant to Section 3(b) (in the absence of a
severe financial hardship);
(iii) the beneficiary (if any) designated by the
Participant pursuant to Section 6; and
(iv) the Committee's determination of the time or times
when payment of such Compensation will be made after the
Participant's death pursuant to Section 6 (in the absence
of a severe financial hardship).
Section 9. Successors.
The provisions of the Plan with respect to each Participant
shall bind the legatees, heirs, executors, administrators or
other successors in interest of such Participant.
Section 10. Alienation.
(a) Subject to the provisions of Section 6 and paragraph
(b) of this Section 10, no amount, the payment of which has been
deferred under the Deferral Alternatives, shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, levy or charge, and any attempt to so
anticipate, alienate, sell, transfer, assign, pledge, encumber,
levy or charge the same shall be void; nor shall any such amount
be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the person entitled to such
benefit.
(b) Nothing in this Section 10 shall prohibit the personal
representative of a Participant from designating that any amount
be distributed in accordance with the terms of the Participant's
will or pursuant to the laws of descent and distribution.
Section 11. Withholding.
There shall be deducted from all amounts paid under this
Plan any taxes required to be withheld by any federal, state or
local government. The Participants and their beneficiaries,
distributees and personal representatives will bear any and all
federal, foreign, state, local or other income or other taxes
imposed on amounts paid under this Plan as to which no amounts
are withheld, irrespective of whether withholding is required.
Section 12. Discretionary Payment.
(a) Notwithstanding any other provision in any other
Section of the Plan to be contrary, except as provided in Section
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14 hereof, the Committee may, in its sole and absolute
discretion, direct the immediate distribution of amounts deferred
under the Deferral Alternatives if the Committee determines that
such action is in the best interests of May, the Participants and
their beneficiaries.
(b) In the event that the Committee shall so direct an
immediate distribution in accordance with Section 12(a), then
(i) the amounts of Deferred Cash and the cash and/or
numbers of shares of Common Stock to be so paid and/or
distributed with respect to units of Phantom Stock shall be
determined by the Committee so as to reflect fairly and
equitably appropriate interest and dividends since the
preceding January 1 and so as to reflect fairly and
equitably such other facts and circumstances as the
Committee deems appropriate, including, without limitation,
recent price of the Common Stock;
(ii) amounts which were otherwise deferred or to be
deferred with respect to the calendar year in which such
payment or distribution occurs shall be paid when otherwise
payable (such amounts which would otherwise have been
payable prior to the date of such payment or distribution
shall be paid as soon as practicable thereafter);
(iii) in the event that Deferred Cash is not paid or made
available to a Participant when otherwise due or that cash
is not paid or shares of Common Stock are not distributed
or otherwise made available to a Participant with respect
to units of Phantom Stock when otherwise due, then such
Participant may file a claim for such payment or
distribution and, if such Participant is successful, then
the Corporation shall reimburse such Participant for
reasonable attorneys' fees actually paid by such
Participant in enforcing such Participant's rights to such
payment or distribution; and
(iv) in the event that Deferred Cash or cash with respect
to units of Phantom Stock is not paid or made available to
a Participant when otherwise due, then interest will accrue
with respect to such unpaid amount from the date it was
otherwise due until the date it is actually paid at a rate
equal to two percentage points over the prime rate as in
effect from time to time, as determined in good faith by
the Committee based on the prime rate charged from time to
time by major banks in the City of New York.
Section 13. Change in Control.
Notwithstanding any other provision in any other Section of
this Plan to the contrary, except as provided in Section 14
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hereof, (i) the value of all amounts deferred by a Participant
which have not yet been credited to the Participant's Deferred
Cash Account and Phantom Stock Account under this Plan and (ii)
the value of all of such Participant's accounts under this Plan
shall be paid to such Participant in each case in a lump sum cash
payment on the occurrence of a Change in Control of the
Corporation or as soon thereafter as practicable, but in no event
later than five days after the Change in Control of the
Corporation. The amounts of cash credited to each Participant's
accounts prior to determining the amount of cash to be paid from
these accounts shall be determined by the Committee (which, for
this purpose, shall be comprised of employee members of the Board
prior to the Change in Control of the Corporation) so as to
reflect fairly and equitably appropriate interest and dividends
since the preceding January 1 and so as to reflect fairly and
equitably such other facts and circumstances as the Committee
deems appropriate, including, without limitation, recent price of
the Common Stock. For purposes of payments under this Section 13,
the value of a unit of Phantom Stock shall be computed as the
greater of (a) the closing price of shares of Common Stock as
reported on the New York Stock Exchange on or nearest the date on
which the Change in Control is deemed to occur (or, if not listed
on such exchange, on a nationally recognized exchange or
quotation system on which trading volume in the Common Stock is
highest) or (b) the highest per share price for shares of Common
Stock actually paid in connection with any Change in Control.
For purposes of this Plan, a "Change in Control of the
Corporation" shall be deemed to have occurred if:
(a) any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Corporation, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Corporation, or any company owned, directly or indirectly, by
the shareowners of the Corporation in substantially the same
proportions as their ownership of Common Stock of the
Corporation), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under Exchange Act), directly or indirectly of
securities of the Corporation representing 50% or more of the
combined voting power of the Corporation's then outstanding
securities;
(b) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in clause (a), (c) or (d) of this Section)
whose election by the Board or nomination for election by the
Corporation's shareowners was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either
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were directors at the beginning of the period or whose election
or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof;
(c) the shareowners of the Corporation approve a merger or
consolidation of the Corporation with any other corporation,
other than (1) a merger or consolidation which would result in
the voting securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of
the voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation or (2)
a merger or consolidation effected to implement a
recapitalization of the Corporation (or similar transaction) in
which no "person" (as hereinabove defined) acquires more than 50%
of the combined voting power of the Corporation's then
outstanding securities; or
(d) the shareowners of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the
sale or disposition by the Corporation of all or substantially
all of the Corporation's assets.
Section 14. Special Retirement Plan Termination Deferrals.
On March 15, 1996, the Board voted to terminate the
Corporation's Retirement Plan for Non-Management Directors. The
present value of the actuarially determined accrued retirement
benefit for each Non-Management Director as of April 15, 1996,
shall be deferred as Deferred Cash under the Deferred Cash
Alternative or as units of Phantom Stock under the Phantom Stock
Alternative or in a combination of Deferred Cash and Phantom
Stock, as the Non-Management Director may elect. If any
Participant fails to make an election prior to April 15, 1996
with respect to the accrued retirement benefit, the Participant
shall be deemed to have elected to defer such benefit under the
Phantom Stock Alternative.
(a) In the case of a Participant who elects to defer all or
any part of the accrued retirement benefit under the Phantom
Stock Alternative, the number of units of Phantom Stock to be
credited to his or her Phantom Stock Account shall be that number
of units of Phantom Stock, disregarding fractions, resulting from
dividing the dollar amount of such portion of the accrued
retirement benefit as is to be so credited by the average of the
high and low trading prices of the Common Stock on the New York
Stock Exchange on each of the business days in the week of April
15, 1996. The aggregate value of any fractions shall not be
converted into units of Phantom Stock, but shall be allocated and
added to the amount elected by the Participant to be deferred
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under the Deferred Cash Alternative above, or, if the Participant
shall have made no such election under the Deferred Cash
Alternative, then such remaining amount shall be paid to the
Participant as if he or she had made an election under the
Current Payment Alternative above to be so paid.
(b) With respect to amounts deferred under this Section 14
pursuant to the Deferred Cash Alternative, all payments of such
amounts will include interest, as provided in Section 3(e), from
April 15, 1996 to the date of payment.
(c) With respect to amounts deferred under this Section 14
pursuant to the Phantom Stock Alternative, all such amounts will
be paid only in cash. The amount of cash to be paid shall be
computed in accordance with Section 5(e).
All payments of cash with respect to units of Phantom Stock
credited to a Participant's Phantom Stock Account pursuant to
this Section 14 shall include the aggregate amount of cash
dividends, converted into units of Phantom Stock as provided in
Section 3(c) and allocated to the Participant's Phantom Stock
Account, from April 15, 1996 to the date of payment.
(d) Notwithstanding any other provisions of the Plan,
including, without limitation, the provisions of Sections 3(b),
12 and 13, in no event shall any payments of amounts deferred
under this Section 14 commence prior to the earliest of the
Participant's retirement, termination of Board service or death.
March 1996
13
