UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 2, 1997 (November 18, 1997)
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Date of Report (Date of earliest event reported)
FORTUNE BRANDS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-9076 13-3295276
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
l700 East Putnam Avenue, Old Greenwich, Connecticut 06870-0811
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 698-5000
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
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On November 18, 1997, the Board of Directors of Registrant
declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of Common Stock, par value $3.125 per share (the "Common
Stock"), of Registrant. The dividend is payable as of December 24, 1997 to
stockholders of record on that date.
Each Right will entitle the registered holder thereof until
December 24, 2007 (or, if earlier, the redemption or exchange of the Rights) to
purchase from Registrant one one-hundredth (1/100) of a share of Series A Junior
Participating Preferred Stock, without par value (the "Preferred Shares"), of
Registrant at an exercise price of $150 per one one-hundredth of a Preferred
Share (the "Purchase Price"), subject to certain adjustments. The description
and terms of the Rights are set forth in a Rights Agreement, dated as of
November 19, 1997 (the "Rights Agreement"), between Registrant and First Chicago
Trust Company of New York, as Rights Agent.
The Rights will be represented by the Common Stock
certificates, and will not be exercisable or transferable apart from the Common
Stock, until the earlier of (i) the tenth day after the public announcement that
a person or group has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the Common Stock or (ii) the tenth business day
after the commencement of, or the announcement of an intention to commence, a
tender or exchange offer the consummation of which would result in beneficial
ownership by a person or group of 15% or more of the Common Stock (the earlier
of such dates being referred to herein as the "Distribution Date"). Separate
certificates representing the Rights will be mailed to holders of the Common
Stock as soon as practicable after the Distribution Date, unless earlier
redeemed or exchanged, and could then begin trading separately from the Common
Stock. The Rights will not have any voting rights or be entitled to dividends.
In the event that, after a person or group has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the Common
Stock, Registrant is acquired in a merger or other business combination
transaction or 50% or more of the assets or earning power of Registrant and its
subsidiaries (taken as a whole) are sold, each Right will entitle its holder to
purchase, at the Purchase Price, that number of shares of common stock of the
acquiring company which at the time of such transaction would have a market
value of two times the Purchase Price. Alternatively, if a person or group has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the Common Stock, each Right, other than Rights beneficially owned by the 15%
holder (which will thereafter be void), will become exercisable for the number
of shares of Common Stock which, at that time, would have a market value of two
times the Purchase Price.
The Rights are redeemable at $.01 per Right (the "Redemption
Price"), subject to adjustment, at any time prior to the time that a person or
group has acquired, or obtained the right to acquire, beneficial ownership of
15% or more of the Common Stock. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price. The Rights will
expire on December 24, 2007 (unless earlier redeemed or exchanged).
If a person or group has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more but less than 50% of the Common
Stock, the Board of Directors of Registrant may thereafter, at its option,
exchange the Rights (other than Rights owned by the 15% holder, which will have
become void), in whole or in part, for shares of the Common Stock at an exchange
ratio of one share of Common Stock for each Right, subject to adjustment.
The terms of the Rights may be amended by the Board of
Directors of Registrant without the consent of the holders of the Rights in any
manner consistent with the objectives of the Board of Directors in adopting the
Rights Agreement, including an amendment to lower the 15% threshold described
above to not less than the greater of (i) the sum of .001% and the largest
percentage of outstanding Common Stock then known by Registrant to be
beneficially owned by any person or group and (ii) 10%. From and after
such time as any person has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the Common Stock no amendment may
adversely affect the interests of the holders of the Rights.
The Purchase Price payable, and the number of Preferred Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Common Stock or
a stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $10 per share but will be entitled to
an aggregate dividend of 100 times the dividend declared per share of Common
Stock. In the event of liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made per share
of Common Stock. Each Preferred Share will have 100 votes, voting together with
the Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each Preferred Share
will be entitled to receive 100 times the amount received per share of Common
Stock. These rights are protected by customary antidilution provisions.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Preferred Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of Registrant, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
As of November 28, 1997 there were 171,776,210 shares of
Common Stock issued and outstanding (and 57,793,814 shares were held by
Registrant in its treasury). One Right will be distributed to stockholders of
Registrant for each share of Common Stock owned by them on December 24, 1997. As
long as the Rights are attached to the Common Stock, Registrant presently
intends to issue one Right with each new share of Common Stock so that all such
shares will have attached Rights. 2,500,000 Preferred Shares have been reserved
for issuance upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights may
cause substantial dilution to a person or group that attempts to acquire
Registrant on terms not approved by Registrant's Board of Directors, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors prior to the time that a person
or group has acquired, or has obtained the right to acquire, beneficial
ownership of 15% or more of the Common Stock because until such time the Rights
may be redeemed by Registrant at the Redemption Price.
The Rights Agreement, which specifies the terms of the Rights
and which includes as exhibits the form of Right Certificate and the form of
Summary of Rights to Purchase Preferred Shares, is filed herewith as Exhibit 4a.
A copy of the Amendment to Certificate of Designation, which specifies the terms
of the Preferred Shares and is to be filed with the Secretary of State of the
State of Delaware, is filed herewith as Exhibit 3a. Filed herewith as Exhibits
20a and 20b, respectively, are a press release of Registrant announcing the
declaration of the dividend of the Rights and a form of a letter dated December
24, 1997 to be mailed to stockholders of Registrant. The aforementioned exhibits
hereto are incorporated herein by reference and the foregoing description of the
Rights and the Preferred Shares is qualified in its entirety by reference to
such exhibits.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
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3a. Amendment to Certificate of Designation
specifying the terms of the Series A Junior
Participating Preferred Stock of Registrant,
to be filed with the Secretary of State of
the State of Delaware.
3b. Certificate of Incorporation of Registrant,
as to be amended upon the filing with the
Secretary of State of the State of Delaware
of the Amendment to Certificate of
Designation filed as Exhibit 3a hereto.
4a. Rights Agreement, dated as of November 19,
1997, between Registrant and First Chicago
Trust Company of New York, as Rights Agent,
which includes as exhibits thereto the form
of Right Certificate and the Summary of
Rights to Purchase Preferred Shares.
4b. Amendment to Certificate of Designation
specifying the terms of the Series A Junior
Participating Preferred Stock of Registrant,
to be filed with the Secretary of State of
the State of Delaware, is incorporated
herein by reference to Exhibit 3a hereto.
20a. Press release of Registrant dated
November 18, 1997.
20b. Form of letter dated December 24, 1997 to
be mailed to stockholders of Registrant.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, Registrant has duly caused this Current Report to be signed on
its behalf by the undersigned thereunto duly authorized.
FORTUNE BRANDS, INC.
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(Registrant)
By Gilbert L. Klemann, II
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Gilbert L. Klemann, II
Senior Vice President
and General Counsel
Date: December 2, 1997
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
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3a. Amendment to Certificate of Designation specifying the terms
of the Series A Junior Participating Preferred Stock of
Registrant, to be filed with the Secretary of State of the
State of Delaware.
3b. Certificate of Incorporation of Registrant, as to be amended
upon the filing with the Secretary of State of the State of
Delaware of the Amendment to Certificate of Designation filed
as Exhibit 3a hereto.
4a. Rights Agreement, dated as of November 19, 1997, between
Registrant and First Chicago Trust Company of New York, as
Rights Agent, which includes as exhibits thereto the form of
Right Certificate and the Summary of Rights to Purchase
Preferred Shares.
4b. Amendment to Certificate of Designation specifying the terms
of the Series A Junior Participating Preferred Stock of
Registrant, to be filed with the Secretary of State of the
State of Delaware, is incorporated herein by reference to
Exhibit 3a hereto.
20a. Press release of Registrant dated November 18, 1997.
20b. Form of letter dated December 24, 1997 to be mailed to
stockholders of Registrant.
EXHIBIT 3a
AMENDMENT TO
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
FORTUNE BRANDS, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Gilbert L. Klemann, II, Senior Vice President and General
Counsel of Fortune Brands, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), and Louis F.
Fernous, Jr., Vice President and Secretary of the Company, in accordance with
the provisions of Section 151 thereof, DO HEREBY CERTIFY:
1. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Company, the Board of
Directors on June 10, 1986 created a series of 600,000 shares of Preferred Stock
designated as Series A Junior Participating Preferred Stock, of which no shares
have been issued.
2. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation and the General Corporation Law of
the State of Delaware, the Board of Directors on December 13, 1987 amended the
Series A Junior Participating Preferred Stock.
3. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation and the General Corporation Law of
the State of Delaware, the Board of Directors on November 18, 1997 adopted the
following resolution further amending the Series A Junior Participating
Preferred Stock:
RESOLVED that, pursuant to the authority vested in the Board
of Directors of this Company in accordance with the provisions of its
Certificate of Incorporation and the General Corporation Law of the State of
Delaware, the designation and amount of the Series A Junior Participating
Preferred Stock created by the Board of Directors on June 10, 1986, as amended
by the Board of Directors on December 13, 1987, and the voting powers,
preferences and relative, participating, optional or other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereof, are hereby amended effective as of 5:00 p.m., New York City time, on
December 24, 1997 to read in their entirety as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" ("Series
A Preferred Stock") and the number of shares constituting such series shall be
2,500,000. Such number of shares may be adjusted by appropriate action of the
Board of Directors.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) cash dividends in an amount per share (rounded to
the nearest cent) equal to 100 times the aggregate per share amount of all cash
dividends contemporaneously declared on the Common Stock of the Company
presently of the par value of $3.125 per share ("Common Stock") and (ii) a
preferential cash dividend ("Preferential Dividends"), if any, on the tenth day
of March, June, September and December of each year (each a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount equal to $10 per share of Series A Preferred Stock less the
per share amount of all cash dividends declared on the Series A Preferred Stock
pursuant to clause (i) of this sentence since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Company shall, at any time after the
issuance of any share or fraction of a share of Series A Preferred Stock, make
any distribution on the shares of Common Stock of the Company, whether by way of
a dividend or a reclassification of stock, a recapitalization, reorganization or
partial liquidation of the Company or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other property
(other than cash dividends subject to the immediately preceding sentence and
other than a distribution of rights or warrants to acquire any such share,
including any debt security convertible into or exchangeable for any such share,
at a price less than the Current Market Price of such share), then and in each
such event the Company shall simultaneously pay on each then outstanding share
of Series A Preferred Stock of the Company a distribution, in like kind, of 100
times (subject to the provisions for adjustment hereinafter set forth) such
distribution paid on a share of Common Stock. The dividends and distributions on
the Series A Preferred Stock to which holders thereof are entitled pursuant to
clause (i) of the first sentence of this paragraph and pursuant to the second
sentence of this paragraph are hereinafter referred to as "Participating
Dividends" and the multiple of such cash and non-cash dividends on the Common
Stock applicable to the determination of the Participating Dividends, which
shall be 100 initially but shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Dividend Multiple". In the event
the Company shall at any time after November 19, 1997 declare or pay any
dividend or make any distribution on Common Stock payable in shares of Common
Stock, or effect a subdivision or split or a combination, consolidation or
reverse split of the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, then in each such case the Dividend Multiple
thereafter applicable to the determination of the amount of Participating
Dividends which holders of shares of Series A Preferred Stock shall be entitled
to receive shall be the Dividend Multiple applicable immediately prior to such
event multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Company shall declare each Participating Dividend at
the same time it declares any cash or non-cash dividend or distribution on the
Common Stock in respect of which a Participating Dividend is required to be
paid. No cash or non-cash dividend or distribution on the Common Stock in
respect of which a Participating Dividend is required to be paid shall be paid
or set aside for payment on the Common Stock unless a Participating Dividend in
respect of such dividend or distribution on the Common Stock shall be
simultaneously paid, or set aside for payment, on the Series A Preferred Stock.
(C) Preferential Dividends shall begin to accrue on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of any shares of Series A
Preferred Stock. Accrued but unpaid Preferential Dividends shall cumulate but
shall not bear interest. Preferential Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
Section 3. Voting Rights. The holders of shares of Series
A Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the stockholders of the
Company. The number of votes which a holder of Series A Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Vote Multiple". In the event the
Company shall at any time after November 19, 1997 declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or split
or a combination, consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common Stock, then in
each such case the Vote Multiple thereafter applicable to the determination of
the number of votes per share to which holders of shares of Series A Preferred
Stock shall be entitled after such event shall be the Vote Multiple immediately
prior to such event multiplied 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 shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) In the event that the Preferential Dividends accrued on
the Series A Preferred Stock for four or more quarterly dividend periods,
whether consecutive or not, shall not have been declared and paid or set apart
for payment, the holders of record of preferred stock of the Company of all
series (including the Series A Preferred Stock), other than any series in
respect of which the right is expressly withheld by the Certificate of
Incorporation or the authorizing resolutions included in the Certificate of
Designation therefor, shall have the right, at the next meeting of stockholders
called for the election directors, to elect two members of the Board of
Directors, which directors shall be in addition to the number required by the
By-laws prior to such event, to serve until the next annual meeting of the
stockholders and until their successors are elected and qualified or their
earlier resignation, removal or incapacity or until such earlier time as all
accrued and unpaid Preferential Dividends upon the outstanding shares of Series
A Preferred Stock shall have been paid (or set aside for payment) in full. The
holders of shares of Series A Preferred Stock shall continue to have the right
to elect directors as provided by the immediately preceding sentence until all
accrued and unpaid Preferential Dividends upon the outstanding shares of Series
A Preferred Stock shall have been paid (or set aside for payment) in full. Such
directors may be removed and replaced by such stockholders, and vacancies in
such directorships may be filled only by such stockholders (or by the remaining
director elected by such stockholders, if there be one) in the manner permitted
by law; provided, however, that any such action by stockholders shall be taken
at a meeting of stockholders and shall not be taken by written consent thereof.
(D) Except as otherwise required by law or set forth herein,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for the taking of any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Participating Dividends
are in arrears or the Company shall be in default of payment thereof, thereafter
and until all accrued and unpaid Preferential Dividends and Participating
Dividends, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid or set aside for payment in full, and in
addition to any and all other rights which any holder of shares of Series A
Preferred Stock may have in such circumstances, the Company 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 Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to
dividends with the Series A Preferred Stock, unless dividends are paid
ratably on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) except as permitted by subparagraph (iv) of this
paragraph 4(A), 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
Series A Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Company ranking junior (both
as to dividends and upon liquidation, dissolution or winding up) to the
Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock (either as to dividends or
upon liquidation, dissolution or winding up), except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
(C) The Company shall not issue any shares of Series A
Preferred Stock except upon exercise of Rights issued pursuant to that certain
Rights Agreement dated as of November , 1997 between the Company and First
Chicago Trust Company of New York, a copy of which is on file with the Secretary
of the Company at its principal executive office and shall be made available to
stockholders of record without charge upon written request therefor addressed to
the Secretary. Notwithstanding the foregoing sentence, nothing contained in the
provisions hereof shall prohibit or restrict the Company from issuing for any
purpose any series of preferred stock with rights and privileges similar to,
different from, or greater than, those of the Series A Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. The
Company shall cause all such shares upon their retirement and cancellation to
become authorized but unissued shares of preferred stock, without designation as
to a series, and such shares may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board of
Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
no distribution shall be made (i) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock unless the holders of shares of Series A
Preferred Stock shall have received, subject to adjustment as hereinafter
provided, (A) $100 per share plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (B) if greater than the amount specified in clause (i)(A) of
this sentence, the amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (ii) to the holders of
stock ranking on a parity upon liquidation, dissolution or winding up with the
Series A Preferred Stock, unless simultaneously therewith distributions are made
ratably on the Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of shares of
Series A Preferred Stock are entitled under clause (i)(A) of this sentence and
to which the holders of such parity shares are entitled, in each case upon such
liquidation, dissolution or winding up. The amount to which holders of Series A
Preferred Stock may be entitled upon liquidation, dissolution or winding up of
the Company pursuant to clause (i)(B) of the foregoing sentence is hereinafter
referred to as the "Participating Liquidation Amount" and the multiple of the
amount to be distributed to holders of shares of Common Stock upon the
liquidation, dissolution or winding up of the Company applicable pursuant to
such clause to the determination of the Participating Liquidation Amount, as
such multiple may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Liquidation Multiple". In the event the Company
shall at any time after November 19, 1997 declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Liquidation Multiple thereafter applicable to the determination of
the Participating Liquidation Amount to which holders of Series A Preferred
Stock shall be entitled after such event shall be the Liquidation Multiple
applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock of the
Company receive after November 19, 1997 in respect of their shares of Common
Stock any share of capital stock of the Company (other than any share of Common
Stock of the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise ("Transaction"),
then and in each such event the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall be adjusted so that after such event the holders
of Series A Preferred Stock shall be entitled, in respect of each share of
Series A Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such adjustment, to (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such Transaction multiplied by the additional dividends which the holder of a
share of Common Stock shall be entitled to receive by virtue of the receipt in
the Transaction of such capital stock, (ii) such additional voting rights as
equal the Vote Multiple in effect immediately prior to such Transaction
multiplied by the additional voting rights which the holder of a share of Common
Stock shall be entitled to receive by virtue of the receipt in the Transaction
of such capital stock and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such Transaction multiplied by the additional amount
which the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Company by virtue of the receipt
in the Transaction of such capital stock, as the case may be, all as provided by
the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the
Company receive after November 19, 1997 in respect of their shares of Common
Stock any right or warrant to purchase Common Stock (including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share less than the
Current Market Price (as hereinafter defined) of a share of Common Stock on the
date of issuance of such right or warrant, then and in each such event the
dividend rights, voting rights and rights upon the liquidation, dissolution or
winding up of the Company of the shares of Series A Preferred Stock shall be
adjusted so that after such event the Dividend Multiple, the Vote Multiple and
the Liquidation Multiple shall each be the product of the Dividend Multiple, the
Vote Multiple and the Liquidation Multiple, as the case may be, in effect
immediately prior to such event multiplied 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 maximum number of shares of Common
Stock which could be acquired upon exercise in full of all such rights or
warrants and the denominator 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 Current
Market Price of the Common Stock at the time of such issuance, by the maximum
aggregate consideration payable upon exercise in full of all such rights or
warrants.
(C) In event that holders of shares of Common Stock of the
Company receive after November 19, 1997 in respect of their shares of Common
Stock any right or warrant to purchase capital stock of the Company (other than
shares of Common Stock), including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for capital stock of
the Company (other than Common Stock), at a purchase price per share less than
the Current Market Price of such shares of capital stock on the date of issuance
of such right or warrant, then and in each such event the dividend rights,
voting rights and rights upon liquidation, dissolution or winding up of the
Company of the shares of Series A Preferred Stock shall each be adjusted to that
after such event each holder of a share of Series A Preferred Stock shall each
be entitled, in respect of each share of Series A Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such event, to receive (i) such additional dividends as
equal the Dividend Multiple in effect immediately prior to such event
multiplied, first, by the additional dividends to which the holder of a share of
Common Stock shall be entitled upon exercise of such right or warrant by virtue
of the stock capital which could be acquired upon such exercise and multiplied
again by the Discount Fraction (as hereinafter defined) and (ii) such additional
voting rights as equal the Vote Multiple in effect immediately prior to such
event multiplied, first, by the additional voting rights to which the holder of
a share of Common Stock shall be entitled upon exercise of such right or warrant
by virtue of the capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction and (iii) such additional
distributions upon liquidation, dissolution or winding up of the Company as
equal the Liquidation Multiple in effect immediately prior to such event
multiplied, first, by the additional amount which the holder of a share of
Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Company upon exercise of such right or warrant by virtue of
the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction. For purposes of this paragraph, the "Discount
Fraction" shall be a fraction the numerator of which shall be the difference
between the Current Market Price (as hereinafter defined) of a share of the
capital stock subject to a right or warrant distributed to holders of shares of
Common Stock of the Company as contemplated by this paragraph immediately after
the distribution thereof and the purchase price per share for such share of
capital stock pursuant to such right or warrant and the denominator of which
shall be the Current Market Price of a share of such capital stock immediately
after the distribution of such right or warrant.
(D) For purposes of this Section 7, the "Current Market Price"
of a share of capital stock of the Company (including a share of Common Stock)
on any date shall be deemed to be the average of the daily closing prices per
share thereof over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that, in the event
that such Current Market Price of any such share of capital stock is determined
during a period which includes any date that is within 30 Trading Days after the
ex-dividend date for (i) a dividend or distribution on stock payable in shares
of such stock or securities convertible into shares of such stock, or (ii) any
subdivision, split, combination, consolidation, reverse stock split or
reclassification of such stock, then, and in each such case, the Current Market
Price shall be appropriately adjusted by the Board of Directors of the Company
to reflect the Current Market Price of such stock to take into account
ex-dividend trading. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the shares
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
shares are listed or admitted to trading or, if the shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in
use, or if on any such date the shares are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the shares selected by the Board of Directors of
the Company. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares are listed or admitted to
trading is open for the transaction of business or, if the shares are not listed
or admitted to trading on any national securities exchange, on which the New
York Stock Exchange or such other national securities exchange as may be
selected by the Board of Directors of the Company is open. If the shares are not
publicly held or not so listed or traded on any day within the period of 30
Trading Days applicable to the determination of Current Market Price thereof as
aforesaid, "Current Market Price" shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors of the Company. In
either case referred to in the foregoing sentence, the determination of Current
Market Price shall be described in a statement filed with the Secretary of the
Company.
Section 8. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
securities, cash and/or any other property, then in any such case each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock required by
the provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(B) The Company shall give prompt written notice to each
holder of a share of Series A Preferred Stock of the effect of any adjustment to
the voting rights, dividend rights or rights upon liquidation, dissolution or
winding up of the Company of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
Section 10. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable at the option of the Company or any holder
thereof. Notwithstanding the foregoing sentence of this Section, the Company may
acquire shares of Series A Preferred Stock in any other manner permitted by law,
the provisions hereof and the Certificate of Incorporation of the Company.
Section 11. Ranking. Unless otherwise provided in the
Certificate of Incorporation of the Company or a Certificate of Designation
relating to a subsequent series of preferred stock of the Company, the Series A
Preferred Stock shall rank junior to all other series of the Company's preferred
stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up and senior to the Common Stock.
Section 12. Amendment. The provisions hereof and the
Certificate of Incorporation of the Company shall not be amended in any manner
which would materially affect the rights, privileges or powers of the Series A
Preferred Stock without, in addition to any other vote of stockholders required
by law, the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series A Preferred Stock, voting together as a single
class.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this day of December, 1997.
-----------------------------------------
Gilbert L. Klemann, II
Senior Vice President and General Counsel
----------------------------------------
Louis F. Fernous, Jr.
Vice President and Secretary
ATTEST:
------------------------------
Mark S. Lyon
Assistant Secretary
EXHIBIT 3b
Certificate of Incorporation
of
Fortune Brands, Inc.
(As Amended)
ARTICLE I
The name of the Corporation is Fortune Brands, Inc. (the "Company").
ARTICLE II
The address of the Company's registered office in the State of Delaware
is 32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent. The
name of its registered agent at such address is United States Corporation
Company.
ARTICLE III
The purpose of the Company is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
5-30-97
<PAGE>
2 CERTIFICATE OF INCORPORATION
ARTICLE IV
1. The total number of shares of all classes of stock that the Company
shall have authority to issue is eight hundred and ten million (810,000,000)
shares, of which seven hundred and fifty million (750,000,000) shares shall be
Common Stock, par value $3.125 per share, and sixty million (60,000,000) shares
shall be Preferred Stock, without par value. The designations and the powers,
preferences and rights of the Common Stock and the Preferred Stock, and the
qualifications, limitations or restrictions thereof, are as provided in or
pursuant to this Article IV.
2. (a) The rights of holders of Common Stock to receive dividends or to
share in the distribution of assets in the event of liquidation, dissolution or
winding up of the affairs of the Company shall be subject to the preferences and
other rights of the Preferred Stock as may be fixed in this Certificate of
Incorporation or in the resolution or resolutions of the Board of Directors
providing for the issue of such Preferred Stock.
(b) The holders of Common Stock shall be entitled to one vote
for each share of Common Stock held by them of record at the time for
determining the holders thereof entitled to vote.
3. Authority is hereby vested in the Board of Directors to issue from
time to time the Preferred Stock in one
5-10-90
<PAGE>
CERTIFICATE OF INCORPORATION 3
or more series and to fix by the resolution of resolutions providing for the
issue of shares of any such series the voting powers, designations, preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of such series to the full
extent permitted by this Certificate of Incorporation and the law of the State
of Delaware. The authority of the Board of Directors with respect to each such
series shall include, but not be limited to, determination of the following:
(i) The number of shares to constitute such series, and the
distinctive designations thereof;
(ii) The voting powers, full or limited, if any, of such
series;
(iii) The rate of dividends payable on shares of such series,
the conditions on which and the times when such dividends are payable,
the preference to, or the relations to, the payment of the dividends
payable on any other class, classes or series of stock, whether
cumulative or noncumulative, and, if cumulative, the dates from which
dividends on shares of such series shall be cumulative;
(iv) The right, if any, of the Company to redeem shares of
such series and the terms and conditions of such redemption;
<PAGE>
4 CERTIFICATE OF INCORPORATION
(v) The requirement of any sinking fund or funds to be
applied to the purchase or redemption of shares of such series and, if
so, the amount of such fund or funds and the manner of application;
(vi) The rights of shares of such series upon the
liquidation, dissolution or winding up of, or upon any distribution of
the assets of, the Company;
(vii) The rights, if any, of the holders of shares of such
series to convert such shares into, or to exchange such shares for,
shares of any other class, classes or series of stock and the price or
prices or rate or rates of exchange and the adjustments at which such
shares shall be convertible or exchangeable, and any other terms and
conditions of such conversion or exchange; and
(viii) Any other preferences and relative, participating,
optional or other special rights of shares of such series, and
qualifications, limitations or restrictions including, without
limitation, any restriction on an increase in the number of shares of
any series theretofore authorized and any qualifications, limitations
or restrictions of rights or powers to which shares of any future
series shall be subject;
<PAGE>
CERTIFICATE OF INCORPORATION 5
provided that the voting powers, designations, preferences and
relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, of the $2.75
Preferred Stock and $2.67 Convertible Preferred Stock are as set forth
in Sections 6 and 7 of this Article IV.
4. The number of authorized shares of any class or classes of stock of
the Company may be increased or decreased by the affirmative vote of the holders
of a majority of the stock of the Company that is entitled to vote, without a
separate class vote of any class or classes of stock of the Company, except as
may be otherwise provided in this Certificate of Incorporation or in the
resolution or resolutions fixing the voting rights of any series of the
Preferred Stock.
5. No holder of Common Stock or Preferred Stock, as such, shall have or
be entitled to any preemptive right whatsoever.
6. The shares of Preferred Stock are hereby divided to create a first
series of Preferred Stock, and it is hereby determined that such first series
shall consist of 4,514,459 shares, which shall have the following designation,
relative rights, preferences and limitations:
<PAGE>
6 CERTIFICATE OF INCORPORATION
(a) The distinctive designation of the first series is $2.75
Preferred Stock (hereinafter called "$2.75 Preferred").
(b) (1) Holders of shares of $2.75 Preferred shall be
entitled to one-quarter of a vote per share, and, except as provided in
subparagraphs (2), (3) and (4) of this paragraph (b) or by present or
future law otherwise specifically provided, shall not be entitled to
vote as a class.
(2) If payment of six or more quarterly dividends (whether or
not consecutive) payable on shares of $2.75 Preferred shall be in
default, in whole or in part, the holders of shares of $2.75 Preferred
(in addition to any other rights of holders of shares of any series of
Preferred Stock to vote, including any right to vote with the holders
of Common Stock for the election of directors) shall be entitled, until
such time as all such dividends in default have been paid in full, at
each annual meeting of stockholders, voting separately as a class, to
elect two of the directors then being elected, who shall not be
officers, employees or agents of the Company or any of its parents or
subsidiaries, but not any other directors to be elected by any other
series of Preferred Stock voting as a class. If, while the holders of
shares of $2.75 Preferred as a class are entitled to
<PAGE>
CERTIFICATE OF INCORPORATION 7
vote for the election of two directors, any vacancy occurs among the
directors elected by the holders of shares of $2.75 Preferred, the
remaining director so elected by the holders of the shares of $2.75
Preferred shall be entitled to nominate for election by the Board of
Directors a successor director to hold office for the unexpired term of
the director whose position has become vacant. If the vacancy is not
filled by nomination by the remaining director, or if there is then in
office no director who has been elected by the holders of shares of
$2.75 Preferred (whether or not prior to the initial election of any
such director), the Company shall, as soon as possible, call (on at
least 20 days' notice) a special meeting of the holders of shares of
$2.75 Preferred for the purpose of filling such vacancy or vacancies in
the Board of Directors. If the Company fails to call such a meeting
within 30 days after a written request by any three or more holders of
shares of $2.75 Preferred, then such three or more holders of shares of
$2.75 Preferred may call (on at least 20 days' notice) a special
meeting of the holders of shares of $2.75 Preferred and, if the vacancy
or vacancies are not theretofore filled as hereinabove provided, it or
they may be filled at such meeting by the holders of shares of $2.75
Preferred.
<PAGE>
8 CERTIFICATE OF INCORPORATION
(3) The affirmative vote of the holders of at least two-thirds
of the shares of $2.75 Preferred, voting separately as a class, given
in person or by proxy at any special or annual meeting called to take
action thereon, shall be necessary to (A) permit, effect or validate
any amendment of the Certificate of Incorporation of the Company, or
approve any agreement of merger or consolidation which contains any
provision, to (i) exclude or limit the right of the holders of shares
of $2.75 Preferred to vote on any matter, except as such right (other
than the right to vote as a series to elect two directors as provided
in subparagraph (2) of this paragraph (b)) may be limited by voting
rights given to new shares then being authorized of any existing or new
series of Preferred Stock, (ii) reduce the rate or change the time for
accumulation or payment of dividends on the shares of $2.75 Preferred,
(iii) cancel or otherwise adversely affect dividends which have been
accrued but have not been declared and set aside for payment on the
shares of $2.75 Preferred, (iv) effect a conversion, exchange or
reclassification of the shares of $2.75 Preferred, (v) change the
designation, preferences, limitations, call provisions, sinking fund
provisions or relative rights of the shares of $2.75 Preferred or (vi)
change shares of
<PAGE>
CERTIFICATE OF INCORPORATION 9
$2.75 Preferred then outstanding into a different number of shares, or
into the same number of shares of another class or series, or (B)
authorize the Company to merge or consolidate with any other
corporation or corporations unless the Company is the continuing
corporation after such merger or consolidation.
(4) The affirmative vote of the holders of at least two-thirds
of the shares of $2.75 Preferred, voting separately as a class, given
in person or by proxy at any special or annual meeting called to take
action thereon, shall be necessary to permit, effect or validate the
issuance (whether or not upon conversion or exchange of other
securities or upon exercise of rights) of any additional series of
Preferred Stock ranking prior to the $2.75 Preferred as to payment of
dividends or distribution of assets on any dissolution, liquidation or
winding up of the Company, or to increase rights or preferences of any
outstanding class or series of junior stock (which shall mean for the
purposes of this Section 6 the Common Stock and any other class or
series of stock of the Company hereafter authorized over which the
$2.75 Preferred has preference or priority in the payment of dividends
or in the distribution of assets on any dissolu-
<PAGE>
10 CERTIFICATE OF INCORPORATION
tion, liquidation or winding up of the Company) or stock ranking on a
parity with the $2.75 Preferred as to payment of dividends or
distribution of assets on any dissolution, liquidation or winding up of
the Company, so that such class or series ranks prior to the $2.75
Preferred as to payment of dividends or distribution of assets on any
dissolution, liquidation or winding up of the Company. The affirmative
vote of the holders of at least a majority of the shares of $2.75
Preferred, voting separately as a class, given in person or by proxy at
any special or annual meeting called to take action thereon, shall be
necessary to permit, effect or validate the issuance (whether or not
upon conversion or exchange of other securities or upon exercise of
rights) of any additional series of Preferred Stock ranking on a
parity, or to increase rights or preferences of any outstanding class
or series of junior stock so that such class or series ranks on a
parity, with the $2.75 Preferred as to payment of dividends or
distribution of assets on any dissolution, liquidation or winding up of
the Company, unless the combined Net Income of the Company and its
subsidiaries, after adjustment to include the equity in the Net Income
of any corporations, companies or groups of assets to be acquired in
whole or in part with the shares of such additional
<PAGE>
CERTIFICATE OF INCORPORATION 11
series, if any, for any four consecutive calendar quarters within the
six consecutive calendar quarters immediately preceding the
authorization of any such additional series or any increase or any
increase of such rights or preferences, shall have been at least 4.75
times the aggregate annual dividend requirements on all shares of
Preferred Stock of all series (other than series of Preferred Stock
which are junior stock) and 3 times the aggregate annual dividend
requirements on all shares of Preferred Stock of all series (including
series of Preferred Stock which are junior stock) to be outstanding
immediately after any issuance of shares of such additional series or
any increase of such rights and preferences. For the purposes of this
subparagraph (4), the Net Income of American Brands, Inc., a New Jersey
corporation organized under an Agreement of Consolidation in 1904
(hereinafter called "American") and its subsidiaries, calculated as
provided in this subparagraph (4), shall be deemed to be the Net Income
of the Company and its subsidiaries for any relevant period or periods
up to the date of issuance of the $2.75 Preferred. For the purposes of
this subparagraph (4), "Net Income" of a corporation, company or group
of assets for a calendar quarter means the net income (or loss) of such
corporation, company or group of
<PAGE>
12 CERTIFICATE OF INCORPORATION
assets as determined in accordance with generally accepted accounting
principles applicable during that quarter; provided that in determining
the Net Income there shall be (i) excluded from the net income (or
loss) of a corporation, company or group of assets extraordinary items
and gains or losses resulting from the sale or discontinuance of a
business segment of such corporation, company or group of assets, all
as determined in accordance with generally accepted accounting
principles, and (ii) added to such net income (or loss) an amount equal
to the effect on such net income (or loss) of any charge against
earnings resulting from any write-down or amortization of the excess of
cost over fair value of net assets acquired, except to the extent of
such charge as may be required by generally accepted accounting
principles in effect on December 31, 1977. In the event that financial
statements setting forth the net income of a corporation, company or
group of assets to be acquired by the Company have not been prepared
for three or more relevant calendar quarters in accordance with
generally accepted accounting principles and (i) the independent public
accountants of the Company state in writing to the Company that they
would be unable to give any unqualified opinion (or an opinion
qualified only as
<PAGE>
CERTIFICATE OF INCORPORATION 13
to litigation or claims or unasserted claims or matters relating to the
amounts at which assets are recorded) as to the financial statements of
such corporation, company or group of assets for three or more relevant
calendar quarters in accordance with generally accepted accounting
principals or (ii) the time estimated by the independent public
accountants of the Company as the time required for the preparation of
financial statements for such corporation, company or group of assets
on the basis of generally accepted accounting principles and their
examination of such financial statements could, in the opinion of the
Board of Directors, delay the issuance of such additional series of
Preferred Stock or the increase of rights or preferences of any
outstanding class of junior stock, if such preparation and examination
of such financial statements were a condition to such issuance or such
increase, then the Net Income of such corporation, company or group of
assets for each of such calendar quarters shall be deemed, if the Board
of Directors of the Company shall so elect, to be 2.5% of the purchase
price paid or to be paid by the Company for such corporation, company
or group of assets other than the purchase price which is attributable
to the purchase of a corporation, company or group of assets (i) having
<PAGE>
14 CERTIFICATE OF INCORPORATION
aggregate sales and other revenues of less than 15% of the purchase
price or (ii) which is in the development stage. A corporation, company
or group of assets shall be considered to be in the development stage
if, in the written opinion of the chief financial officer of the
Company, substantially all of the efforts (if any) devoted to such
corporation, company or group of assets are for the purpose of
establishing a new business and either of the following conditions
exists: (A) planned principal operations have not commenced or (B)
planned principal operations have commenced but there has been no
significant revenue therefrom. A determination of Net Income in good
faith by the Board of Directors shall be binding on the Company and the
holders of the shares of $2.75 Preferred. For the purposes of this
subparagraph (4), a subsidiary of the Company is a corporation or
company of which more than 50% of the outstanding voting shares are,
directly or indirectly, owned by or held for the Company. Nothing in
this Section 6 shall be deemed to restrict or limit, except as is
expressly provided in this subparagraph (4), the right of the Board of
Directors of the Company to create, or authorize the Board to create, a
new series of Preferred Stock having, or convertible into shares
having, rights or preferences equal,
<PAGE>
CERTIFICATE OF INCORPORATION 15
prior or superior to those of the shares of $2.75 Preferred; provided
that the Board of Directors of the Company shall not have the right to
issue any of the shares with equal, prior or superior rights to those
of the shares of $2.75 Preferred as a dividend or distribution on any
shares of junior stock.
(c)(1) The holders of shares of $2.75 Preferred shall be
entitled to receive, out of funds legally available therefor,
cumulative cash dividends of a limited and preferential nature at a
rate of $2.75 per share per annum, and no more, payable quarterly on
the tenth day of March, June, September and December commencing March
10, 1986, as and when declared by the Board of Directors. Dividends on
each share of $2.75 Preferred shall be cumulative and shall commence to
accrue from the date of the original issues of shares of this series.
Accumulations of dividends shall not bear interest.
(2) No dividends shall be paid or declared on any junior
stock, other than a dividend payable in junior stock, nor shall any
shares of junior stock be acquired for a consideration by the Company
or by any subsidiary (which shall mean any corporation or entity, the
majority of the voting power to elect directors of which is held
directly or indirectly by the
<PAGE>
16 CERTIFICATE OF INCORPORATION
Company), unless all dividends on the $2.75 Preferred accrued for all
past quarter-yearly dividend periods shall have been paid and unless,
in the case of dividends on any junior stock, the full dividends on the
$2.75 Preferred for the then current quarter-yearly dividend period
provided in accordance with subparagraph (1) of this paragraph (c)
shall have been or shall then be paid or declared. The foregoing
restriction on acquisition of shares of junior stock shall be
inapplicable to any payments in lieu of issuance of fractional shares
thereof whether upon any merger, conversion, stock dividend or
otherwise.
(d) (1) In the event of any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, the holder
of each share of $2.75 Preferred then outstanding shall be entitled to
be paid out of the assets of the Company available for distribution to
its stockholders before any distribution or payments shall be made to
the holders of any junior stock, an amount equal to the sum of (i)
$30.50 per share plus (ii) an additional sum computed at the rate of
$2.75 per share per annum, for the period from the date on which
dividends on such share became cumulative to and including the date
fixed for such payment, less the aggregate of divi-
<PAGE>
CERTIFICATE OF INCORPORATION 17
dends that on or before the date fixed for such payment shall have been
paid or declared and set aside for payment, but computed without
interest. If the assets of the Company available for distribution to
its stockholders shall be insufficient to pay in full all amounts to
which the holders of shares of $2.75 Preferred are entitled, the amount
available for distribution to holders of shares of $2.75 Preferred
shall be shared pro rata by them.
(2) Notice of any payment in full pursuant to subparagraph (1)
of this paragraph (d) shall be given by publication at least once in a
newspaper of general circulation in the Borough of Manhattan, The City
of New York, printed in the English language and customarily published
on each business day, such publication to be not more than 60 days and
not less than 30 days prior to the payment date. Notice of such payment
shall also be given in the same manner as provided for mailing notice
of redemption in subparagraph (5) of paragraph (e) as if the date for
payment were the date fixed for redemption referred to in said
subparagraph (5), except that such notice shall be mailed not less than
30 days prior to the date fixed for payment. Neither failure to publish
or mail such notice nor defect therein or in
<PAGE>
18 CERTIFICATE OF INCORPORATION
the publication or mailing thereof shall affect the validity of the
proceedings for such payment.
(3) For the purposes of this paragraph (d), a consolidation or
merger of the Company with any other corporation shall not constitute
or be deemed to constitute a liquidation, dissolution, or winding up of
the Company.
(e)(i) The Company may, at its option, at any time or from
time to time on or after March 10, 1989 redeem the whole or any part of
the $2.75 Preferred outstanding at the time of redemption, upon notice
given as hereinafter specified, by paying in cash the following
redemption prices per share:
If Redeemed during
the 12-month Period Redemption
Beginning March 10, Price per Share
------------------- ---------------
1989 ................... $31.88
1990 ................... 31.74
1991 ................... 31.60
1992 ................... 31.46
1993 ................... 31.33
1994 ................... 31.19
1995 ................... 31.05
1996 ................... 30.91
1997 ................... 30.78
1998 ................... 30.64
<PAGE>
CERTIFICATE OF INCORPORATION 19
and thereafter at a redemption price per share of $30.50; together with
an additional sum, for each share so to be redeemed, computed at the
rate of $2.75 per share per annum for the period from the date on which
dividends on such share became cumulative to and including the date
fixed for such redemption, less the aggregate of the dividends that on
or before the date fixed for such redemption shall have been paid or
declared and set aside for payment, but computed without interest.
Notwithstanding the foregoing, the Company may not redeem less than the
whole of the $2.75 Preferred at the time outstanding pursuant to this
subparagraph (1) unless all dividends on the $2.75 Preferred for all
past quarter-yearly dividend periods shall have been paid or declared
and set aside for payment.
(2) On or before each March 10 (each such March 10 being
hereinafter called a "Sinking Fund Redemption Date") so long as any
shares of $2.75 Preferred shall be outstanding and to the extent that
the Company shall have funds legally available for such payment, the
Company shall pay to the Transfer Agent, or other redemption agent, for
the $2.75 Preferred, or if there be no such agent then the Company
shall set aside, in trust, as and for a
<PAGE>
20 CERTIFICATE OF INCORPORATION
sinking fund for the $2.75 Preferred, a sum (hereinafter called the
"Sinking Fund Payment") sufficient in each instance to redeem at a
price equal to $30.50 per share, together with an additional sum, for
each share so to be redeemed, computed at the rate of $2.75 per share
per annum for the period from the date on which dividends on such share
became cumulative to and including the Sinking Fund Redemption Date,
less the aggregate of the dividends that on or before the Sinking Fund
Redemption Date shall have been paid or declared or set aside for
payment, but computed without interest, 165,226 shares of $2.75
Preferred; provided, however, that the Company may, at its
noncumulative option, in any year in which a Sinking Fund Payment is
due, increase the Sinking Fund Payment by an amount sufficient to
redeem at a price equal to $30.50 per share, together with an
additional sum, for each share so to be redeemed, computed at the rate
of $2.75 per share per annum for the period from the date on which
dividends on such share became cumulative to and including the Sinking
Fund Redemption Date, less the aggregate of the dividends that on or
before the Sinking Fund Redemption Date, less the aggregate of the
dividends that or before the Sinking Fund Redemption Date shall have
been paid or declared and set aside for payment, but computed without
interest, an additional number of shares of
<PAGE>
CERTIFICATE OF INCORPORATION 21
$2.75 Preferred not exceeding 165,226; and provided, further, that the
Company shall be entitled to credit against the number of shares
required to be redeemed on any Sinking Fund Redemption Date shares of
$2.75 Preferred theretofore acquired by the Company in any manner
whatsoever prior to the November 25 immediately preceding such Sinking
Fund Redemption Date and not previously credited against any such
redemption, and shares of $2.75 Preferred Stock of American acquired by
American in any manner whatsoever prior to the said November 25 and not
credited against any sinking fund redemption requirement applicable to
the $2.75 Preferred Stock of American.
(3) On the date of issuance of the $2.75 Preferred with
respect to the 1986 Sinking Fund Payment Date, and on the November 25
immediately preceding each succeeding Sinking Fund Payment Date, the
Company shall notify the Transfer Agent, or other redemption agent, if
any, of the amount of the Sinking Fund Payment to be made on the next
following Sinking Fund Redemption Date and the number of shares to be
redeemed thereon and such agent, or the Company if there be no such
agent, shall thereupon take action to redeem, in accordance
<PAGE>
22 CERTIFICATE OF INCORPORATION
with the notice and other provisions of this paragraph (e), the shares
of $2.75 Preferred to be redeemed on such Sinking Fund Redemption Date.
(4) During the continuance of any default by the Company
(because it does not have funds legally available to make a Sinking
Fund Payment or for other reasons) on any payment required under the
provisions of this paragraph (e), no sum shall be set aside for or
applied to the purchase or redemption (pursuant to any applicable
sinking fund or redemption provisions or otherwise) of any shares of
any class of stock ranking as to dividends or distribution upon
liquidation on a parity with or junior to the $2.75 Preferred and no
dividend shall be declared or paid or any other distribution ordered or
made upon any class of stock ranking as to dividends junior to the
$2.75 Preferred (other than a dividend payable in junior stock);
provided, however, that any moneys theretofore deposited in any sinking
fund with respect to any stock of the Company in compliance with the
provisions of such sinking fund may thereafter be applied to the
purchase or redemption of such stock in accordance with the terms of
such sinking fund whether or not at the time of such application such
default is continuing under the provisions of
<PAGE>
CERTIFICATE OF INCORPORATION 23
this paragraph (e). In the event that the Company shall not have funds
legally available to make any Sinking Fund Payment, the obligation to
make such payment shall be carried forward and fulfilled when such
funds are legally available.
(5) Notice of any redemption pursuant to this paragraph (e)
shall be deemed given if mailed by certified mail, return receipt
requested, not less than 90 days prior to the date fixed for
redemption, to each stockholder of record of shares to be redeemed at
his address as it appears on the books of the Company. Neither failure
to mail such notice nor defect therein or in the mailing thereof shall
affect the validity of the proceedings for the redemption of any shares
so to be redeemed. Any notice given by American to holders of shares of
$2.75 Preferred Stock of American prior to issuance of shares of $2.75
Preferred shall constitute notice by the Company in respect of the
$2.75 Preferred.
(6) If only part of the $2.75 Preferred at the time
outstanding is to be redeemed, the selection of the shares to be
redeemed may be made pro rata, by lot or in any other equitable manner.
The Board of Directors shall have the power to prescribe the manner in
which the selection is to be made.
<PAGE>
24 CERTIFICATE OF INCORPORATION
(7) When any shares of $2.75 Preferred are redeemed out of
capital, their redemption shall effect their retirement. When any
shares of $2.75 Preferred are otherwise redeemed or reacquired, the
Company shall retire such shares by resolution of the Board of
Directors. In either event, the Board of Directors shall cause to be
filed with the Office of the Secretary of State of Delaware an
appropriate certificate which shall have the effect of restoring such
shares to the status of authorized but unissued shares of Preferred
Stock without series designation.
(f)(1) If notice of payment in full to holders of shares of
$2.75 Preferred of the amounts to which they are entitled in accordance
with subparagraph (2) of paragraph (d) or notice of redemption in
accordance with subparagraph (5) or paragraph (e) shall have been given
or if the Company shall have given to the bank or trust company
hereinafter referred to irrevocable authority promptly to give or
complete such notice, and if on or before the payment date, or
redemption date specified therein, the funds necessary for such payment
or redemption shall have been deposited by the Company with a bank or
trust company in good standing, designated in such notice, organized
under the laws of the
<PAGE>
CERTIFICATE OF INCORPORATION 25
United States of America or of the State of New York, in trust for the
pro rata benefit of the holders of the shares entitled to such payment
or so called for redemption, as the case may be, then, notwithstanding
that any certificate for shares entitled to such payment or so called
for redemption, as the case may be, shall not have been surrendered for
retirement, from and after the time such notice to holders of $2.75
Preferred is given, whichever is later, all such shares shall be deemed
no longer to be outstanding and all rights appertaining to such shares
shall forthwith terminate, except only the right of the holders thereof
to receive from such bank or trust company the funds so deposited,
without interest. Any interest accrued on such funds shall be paid to
the Company from time to time.
(2) Any funds deposited by the Company pursuant to
subparagraph (1) of this paragraph (f) that have not been paid by the
end of five years from such payment or redemption date shall be
released and repaid to the Company forthwith, after which the holders
of the shares of $2.75 Preferred entitled to such payment or of the
shares of $2.75 Preferred so called for redemption, as the case may be,
shall be
<PAGE>
26 CERTIFICATE OF INCORPORATION
entitled to receive payment thereof only from the Company, but subject
to applicable law.
(7) The shares of Preferred Stock are hereby divided to create a second
series of Preferred Stock, and it is hereby determined that such second series
shall consist of 5,514,459 shares, which shall have the following designation,
relative rights, preferences and limitations and a stated capital at least equal
to the par value of the stock into which such shares are made convertible:
(a) The distinctive serial designation of the second series is
$2.67 Convertible Preferred Stock (hereinafter called "$2.67
Preferred").
(b)(1) Holders of shares of $2.67 Preferred shall be entitled
to three-tenths of a vote per share, and, except as provided in
subparagraphs (2) and (3) of this paragraph (b) or by present or future
law otherwise specifically provided, shall not be entitled to vote as a
class.
(2) If payment of six or more quarterly dividends (whether or
not consecutive) payable on Preferred Stock of any series shall be in
default, in whole or in part, the holders of shares of $2.67 Preferred
(in addition to any other rights of holders of shares of any series of
Preferred Stock to vote, including
<PAGE>
CERTIFICATE OF INCORPORATION 27
any right to vote with the holders of Common Stock for the election of
directors) shall be entitled, until such time as all such dividends in
default have been paid in full, at each annual meeting of stockholders,
voting separately as a class with all other holders of Preferred Stock
having the right to vote for directors at such meeting regardless of
series, to elect two of the directors then being elected. If, while the
holders of shares of Preferred Stock as a class are entitled to vote
for the election of such two directors, any vacancy occurs among the
directors elected by the holders of shares of Preferred Stock, the
remaining director so elected by the holders of shares of Preferred
Stock shall be entitled to nominate for election by the Board of
Directors a successor director to hold office for the unexpired term of
the director whose position has become vacant. If the vacancy is not
filled by nomination by the remaining director, or if there is then in
office no director who has been elected by the holders of shares of
Preferred Stock (whether or not prior to the initial election of any
such director), the Company shall, as soon as possible, call (on at
least 20 days' notice) a special meeting of the holders of shares of
Preferred Stock having the right to vote for directors at such meeting
for the purpose of filling such vacancy or vacancies in
<PAGE>
28 CERTIFICATE OF INCORPORATION
the Board of Directors. If the Company fails to call such a meeting
within 30 days after a written request by any three or more holders of
shares of Preferred Stock, then such three or more holders of shares of
Preferred Stock may call (on at least 20 days' notice) a special
meeting of the holders of shares of Preferred Stock having the right to
vote for directors at such meeting for such purpose and, if the vacancy
or vacancies are not theretofor filled as hereinabove provided, it or
they may be filled at such meeting by the holders of shares of
Preferred Stock, voting separately as a class regardless of series.
(3) The affirmative vote of the holders of at least two-thirds
of the shares of $2.67 Preferred, voting separately as a class, given
in person or by proxy at any special or annual meeting called to take
action thereon, shall be necessary to permit, effect or validate any
amendment of the Certificate of Incorporation of the Company, or
approve any agreement of merger or consolidation which contains any
provision, to (i) exclude or limit the right of the holders of $2.67
Preferred to vote on any matter, except as such right may be limited by
voting rights given to new shares then being authorized of any existing
or new series of Preferred Stock; (ii) reduce the rate or
<PAGE>
CERTIFICATE OF INCORPORATION 29
change the time for accumulation or payment of dividends on the shares of $2.67
Preferred; (iii) cancel or otherwise adversely affect dividends which have
accrued but have not been declared on the shares of $2.67 Preferred; (iv) effect
a conversion, exchange or reclassification of the shares of $2.67 Preferred; (v)
change the designation, preferences, limitations, conversion rate, call
provisions or relative rights of the shares of $2.67 Preferred; or (vi) change
shares of $2.67 Preferred then outstanding into a different number of shares, or
into the same number of shares of another class or series. Nothing herein shall
be deemed to restrict or limit the right of the Board of Directors of the
Company to create, or authorize the Board to create, a new series of Preferred
Stock having, or convertible into shares having, rights or preferences prior or
superior to those of the shares of $2.67 Preferred; provided that the Board of
Directors of the Company shall not have the right to issue any shares with
equal, prior or superior rights to those of the $2.67 Preferred as a dividend or
distribution on any junior stock (which shall mean for the purposes of this
Section 7 the Common Stock and any other class of stock of the Company hereafter
authorized over which the $2.67 Preferred has preference or priority in the
payment
<PAGE>
30 CERTIFICATE OF INCORPORATION
of dividends or in the distribution of assets on any dissolution,
liquidation or winding up of the Company).
(c)(1) The holders of shares of $2.67 Preferred shall be
entitled to receive, out of funds legally available therefor,
cumulative cash dividends of a limited and preferential nature at a
rate of $2.67 per share per annum, and no more, payable quarterly on
the tenth day of March, June, September and December commencing March
10, 1986, as and when declared by the Board of Directors. Dividends on
each share of $2.67 Preferred shall be cumulative and shall commence to
accrue from the date of the original issuance of shares of this series.
Accumulations of dividends shall not bear interest.
(2) No dividend shall be paid or declared on any junior stock,
other than a dividend payable in junior stock, nor shall any shares of
junior stock be acquired for a consideration by the Company or by any
subsidiary (which shall mean any corporation or entity, the majority of
the voting power to elect directors of which is held directly or
indirectly by the Company), unless all dividends on the $2.67 Preferred
accrued for all past quarter-yearly dividend periods shall have been
paid and unless, in the case
<PAGE>
CERTIFICATE OF INCORPORATION 31
of dividends on any junior stock, the full dividends on the $2.67
Preferred for the then current quarter-yearly dividend period provided
in accordance with subparagraph (1) of this paragraph (c) shall have
been or shall then be paid or declared. The foregoing restriction on
acquisition of shares of junior stock shall be inapplicable to any
payments in lieu of issuance of fractional shares thereof whether upon
any merger, conversion, stock dividend or otherwise.
(d)(1) In the event of any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, the holder
of each share of $2.67 Preferred then outstanding shall be entitled to
be paid out of the assets of the Company available for distribution to
its stockholders before any distribution or payment shall be made to
the holders of any junior stock, an amount equal to the sum of (i)
$30.50 per share plus (ii) an additional sum computed at the rate of
$2.67 per share per annum, for the period from the date on which
dividends on such share became cumulative to and including the date
fixed for such payment, less the aggregate of dividends that on or
before the date fixed for such payment shall have been paid or declared
and set aside for payment, but computed without interest. If
<PAGE>
32 CERTIFICATE OF INCORPORATION
the assets of the Company available for distribution to its
stockholders shall be insufficient to pay in full all amounts to which
the holders of $2.67 Preferred are entitled, the amount available for
distribution to the holders of shares of $2.67 Preferred shall be
shared pro rata by them.
(2) Notice of any payment in full pursuant to subparagraph (1)
of this paragraph (d) shall be given by publication at least once in a
newspaper of general circulation in the Borough of Manhattan, The City
of New York, printed in the English language and customarily published
on each business day, such publication to be not more than 60 days and
not less than 30 days prior to the payment date. Notice of such payment
shall also be given in the same manner as provided for mailing notice
of redemption in subparagraph (2) of paragraph (e) as if the date for
payment were the date fixed for redemption referred to in said
subparagraph (2), except that such notice shall be mailed not less than
30 days prior to the date fixed for payment. Neither failure to publish
or mail such notice nor defect therein or in the publication or mailing
thereof shall affect the validity of the proceedings for such payment.
<PAGE>
CERTIFICATE OF INCORPORATION 33
(3) For the purposes of this Paragraph (d), a consolidation or
merger of the Company with any other corporation shall not constitute
or be deemed to constitute a liquidation, dissolution or winding up of
the Company.
(e)(1) The Company may, at its option, at any time or
from time to time redeem the whole or any part of the $2.67 Preferred
outstanding at the time of redemption, upon notice given as hereinafter
specified, by paying in cash the following redemption prices per share:
If Redeemed during the
12-Month Period Redemption Price
Beginning March 10 per Share
---------------------- ----------------
1985 ................... $32.10
1986 ................... 31.70
1987 ................... 31.30
1988 ................... 30.90
and thereafter at a redemption price per share of $30.50; together with
an additional sum, for each share so to be redeemed, computed at the
rate of $2.67 per share per annum for the period from the date on which
dividends on such share became cumulative to and including the date
fixed for such redemption, less the aggregate of the dividends that on
or before the date fixed for such redemption shall
<PAGE>
34 CERTIFICATE OF INCORPORATION
have been paid or declared and set aside for payment, but computed
without interest. Notwithstanding the foregoing, the Company may not
redeem less than the whole of the $2.67 Preferred at the time
outstanding unless all dividends on the $2.67 Preferred for all past
quarter-yearly dividend periods shall have been paid or declared and
set aside for payment.
(2) Notice of any such redemption pursuant to this paragraph
(e) shall be deemed given if mailed by certified mail, return receipt
requested, not less than 90 days prior to the date fixed for
redemption, to each stockholder of record of shares so to be redeemed
at his address as it appears on the books of the Company. Neither
failure to mail such notice nor defect therein or in the mailing
thereof shall affect the validity of the proceedings for the redemption
of any shares so to be redeemed.
(3) If only part of the $2.67 Preferred at the time
outstanding is to be redeemed, the selection of the shares to be
redeemed may be made pro rata, by lot or in any other equitable manner.
The Board of Directors shall have the power to prescribe the manner in
which the selection is to be made.
<PAGE>
CERTIFICATE OF INCORPORATION 35
(4) When any shares of $2.67 Preferred are redeemed out of
capital, their redemption shall effect their retirement. When any
shares of $2.67 Preferred are otherwise redeemed or reacquired, the
Company shall retire such shares by resolution of the Board of
Directors. In either event, the Board of Directors shall cause to be
filed with the Office of the Secretary of State of Delaware an
appropriate certificate which shall have the effect of restoring such
shares to the status of authorized but unissued shares of Preferred
Stock without series designation.
(f)(1) If notice of payment in full to holders of shares of
$2.67 Preferred of the amounts to which they are entitled in accordance
with subparagraph (2) of paragraph (d) or notice of redemption in
accordance with subparagraph (2) of paragraph (e) shall have been given
or if the Company shall have given to the bank or trust company
hereinafter referred to irrevocable authority promptly to give or
complete such notice, and if on or before the payment date, or
redemption date specified therein, the funds necessary for such payment
or redemption shall have been deposited by the Company with a bank or
trust company in good standing, designated in such notice, organized
under the laws of the
<PAGE>
36 CERTIFICATE OF INCORPORATION
United States of America or of the State of New York, in trust for the
pro rata benefit of the holders of the shares entitled to such payment
or so called for redemption, as the case may be, then, notwithstanding
that any certificate for shares entitled to such payment or so called
for redemption, as they case may be, shall not have been surrendered
for retirement, from and after the time such notice to holders of $2.67
Preferred is given, whichever is later, all such shares shall be deemed
no longer to be outstanding and all rights appertaining to such shares
shall forthwith terminate, except only the right of the holders thereof
to receive from such bank or trust company the funds so deposited,
without interest, and the right to exercise on or before but not later
than the fifth day next preceding the date fixed for payment or
redemption, as the case may be, any privilege of conversion that has
not theretofore expired. Any interest accrued on such funds shall be
paid to the Company from time to time.
(2) Any funds deposited by the Company pursuant to
subparagraph (1) of this paragraph (f) that shall not be required for
such payment or redemption because of the exercise of any right of
conversion
<PAGE>
CERTIFICATE OF INCORPORATION 37
subsequent to the date of such deposit shall be released and repaid to
the Company forthwith. Any funds so deposited that have not been paid
by the end of five years from such payment or redemption date shall be
released and repaid to the Company forthwith, after which the holders
of the shares of $2.67 Preferred entitled to such payment or of the
shares of $2.67 Preferred so called for redemption, as the case may be,
shall be entitled to receive payment thereof only from the Company, but
subject to applicable law.
(g) (1) Subject to the provisions for adjustment hereinafter
set forth, each share of $2.67 Preferred shall be convertible, at the
option of the holder thereof, into 1.02 (1-2/100)* of a fully paid and
non-assessable share of Common Stock of the Company upon surrender to
any Transfer Agent for the $2.67 Preferred, or the Company if no such
Transfer Agent exists, of the certificate for the share so to be
converted, together with such form of notice of election to convert as
may be provided from time to time by the Company. The number of shares
of Common Stock deliverable upon conversion of a share of $2.67
Preferred is hereinafter sometimes called "the conversion rate."
*As of May 30, 1997, the 5-30-97
conversion ratio has been
increased to 6.205 reflecting
required adjustments.
<PAGE>
38 CERTIFICATE OF INCORPORATION
(2) Any share of $2.67 Preferred called for redemption or for
which payment is provided upon any liquidation, dissolution or winding
up of the Company may be converted as in this paragraph (g); provided
that it is converted at any time on or before but not later than the
fifth day next preceding the date fixed for redemption or payment, as
the case may be. No allowance or adjustment for dividends on either
class of stock shall be made upon conversion, except that where
conversion is made of any share of $2.67 Preferred called for
redemption or for which payment is provided upon any liquidation,
dissolution or winding up of the Company there shall be paid cumulative
cash dividends on the $2.67 Preferred prorated from the next preceding
date on which said cash dividends have been paid to the date the shares
of $2.67 Preferred shall be deemed to have been converted. Shares of
the $2.67 Preferred shall be deemed to have been converted as of the
date of the surrender for conversion of the certificates therefor,
together with the form of notice provided by the Company duly signed by
the holder thereof, and the person entitled to receive shares of Common
Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Common Stock on such date.
<PAGE>
CERTIFICATE OF INCORPORATION 39
(3) The number of shares of Common Stock deliverable upon
conversion of each share of $2.67 Preferred shall be subject to
adjustment from time to time as follows:
(A) In case the Company shall (i) declare a dividend
or other distribution on its Common Stock in shares of its
capital stock, (ii) subdivide or combine the outstanding
shares of Common Stock or (iii) issue by reclassification of
the change of its outstanding shares of Common Stock
(including any such reclassification or changes in connection
with a consolidation or merger in which the Company is the
continuing corporation) any capital stock (all shares so
issued to be included in the term "Common Stock" as used in
this subparagraph (3)), the conversion rate in effect at the
time of the record date for such dividend or distribution or
of the effective date of such subdivision, combination,
reclassification or change shall be adjusted so that the
holder of each share of $2.67 Preferred surrendered for
conversion after such time shall be entitled to receive the
number and kind of shares that he would have owned or have
been entitled to receive had such share of $2.67
<PAGE>
40 CERTIFICATE OF INCORPORATION
Preferred been converted immediately prior to such time. Such
adjustment shall be made successively whenever any event
listed above shall occur.
(B) In case the Company shall, while any shares of
$2.67 Preferred remain outstanding, enter into any
consolidation with or merger into any other corporation
wherein the Company is not the surviving corporation, or sell
or convey its property as an entirety or substantially as an
entirety, and in connection with such consolidation, merger,
sale or conveyance, shares of stock or other securities shall
be issuable or deliverable in exchange for the Common Stock of
the Company, proper provision shall be made that the holder of
any share of $2.67 Preferred may thereafter convert the same
into the same kind and amount of securities as may be issuable
by the terms of such consolidation, merger, sale or conveyance
with respect to the number of shares of Common Stock of the
Company into which such share of $2.67 Preferred is
convertible at the time of such consolidation, merger, sale or
conveyance.
<PAGE>
CERTIFICATE OF INCORPORATION 41
(C) In case the Company shall fix a record date for
the determination of stockholders entitled to receive rights
or warrants to be issued to holders of its Common Stock as
such entitling such holders (for a period expiring within 60
days after such record date) to subscribe for or purchase
Common Stock at a price per share less than the Current Market
Price per share of Common Stock (as defined in clause (E) of
this subparagraph (3)) on such record date, then in each such
case the conversion rate shall be changed so that on and after
such record date it shall be the product obtained by
multiplying the conversion rate immediately prior to such
record date by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on such record
date plus the number of additional shares of Common Stock
issuable upon exercise of such rights and warrants, and of
which the denominator shall be the number of shares of Common
Stock outstanding on such record date plus a number of shares
of Common Stock equal to that obtained by dividing the
aggregate consideration receivable on exercise of such rights
or warrants by such Current Market Price. For the purposes of
this
<PAGE>
42 CERTIFICATE OF INCORPORATION
clause (C), the issuance of rights or warrants (exercisable
for a period expiring within 60 days after the record date
with respect thereto) to purchase stock or securities
convertible into shares of Common Stock shall be deemed to be
the issuance of rights or warrants to purchase the maximum
number of shares of Common Stock into which such stock or
securities are convertible and the aggregate consideration
receivable on exercise of such rights or warrants shall be
deemed equal to the aggregate consideration receivable for
such securities when such rights or warrants are exercised
plus the minimum aggregate amount, if any, payable upon
conversion of such stock or securities into Common Stock. An
adjustment pursuant to this clause (C) shall be made whenever
any such rights or warrants are issued, and shall be made as
of the record date for the determination of stockholders
entitled to receive such rights or warrants. In the event that
such rights or warrants are not so issued, the conversion rate
shall again be adjusted, effective as of the date on which the
Board of Directors of the Company determines not to issue such
rights or warrants, as if such record date had not been fixed.
<PAGE>
CERTIFICATE OF INCORPORATION 43
(D) In case the Company shall fix a record date for
making a distribution (including any such distribution made in
connection with a consolidation or merger in which the Company
is the continuing corporation) on its Common Stock of
evidences of its indebtedness or corporate assets (excluding
dividends paid in, or distributions of, cash) or subscription
rights or warrants (excluding those referred to in clause (C)
of this subparagraph (3)), the conversion rate shall be
increased effective immediately following such record date to
a new conversion rate which shall be the product obtained by
multiplying the conversion rate immediately prior to such
record date by a fraction of which the numerator shall be the
Common Market Price per share of Common Stock (as defined in
clause (E) of this subparagraph (3)) on such record date and
of which the denominator shall be such Current Market Price
per share of Common Stock less the fair market value (as
determined by the Board of Directors, whose determination
shall be conclusive) of the portion of the assets or evidences
or indebtedness so distributed or of such subscription rights
or warrants applicable to one share of Common
<PAGE>
44 CERTIFICATE OF INCORPORATION
Stock. Such adjustment shall be made successively whenever
such a record date is fixed. In the event that such
distribution is not so made, the conversion rate shall again
be adjusted, effective as of the date on which the Board of
Directors determines not to make such distribution, as if such
record date had not been fixed.
(E) For the purpose of any computation under clauses
(C) and (D) of this subparagraph (3), the "Current Market
Price" per share of Common Stock on any record date shall be
deemed to be the average of the daily closing prices for the
30 consecutive full business days commencing 45 such business
days before such record date. For the purpose of this clause
(E), the "Current Market Price" per share of Common Stock of
American Brands, Inc., a New Jersey corporation organized
under an Agreement of Consolidation in 1904 (hereinafter
called "American") calculated as provided in this clause (E)
for Common Stock of the Company, shall be deemed to be the
"Current Market Price" per share of Common Stock of the
Company for any relevant period or periods up to the date of
issuance of the $2.67 Preferred.
<PAGE>
CERTIFICATE OF INCORPORATION 45
The "closing price" of the Common Stock for any day shall be
the last sale price regular way on such day, or in case no
such sale takes place on such day, the average of the closing
bid and asked prices regular way, in either case as officially
quoted on the New York Stock Exchange, or, if the Common Stock
is not listed or admitted to trading on such exchange, on the
principal national securities exchange on which the Common
Stock is listed or admitted to trading, or if the Common Stock
is not listed or admitted to trading on any national
securities exchange, the average of the bid and asked prices
as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors for that
purpose or, if such bid and asked prices are not available,
such other prices as may be selected by the Board of Directors
for the purpose.
(F) No adjustment pursuant to this subparagraph (3)
shall be required unless the particular event involved would
require an increase or decrease of at least 1% in the
conversion rate; provided, however, that any adjustments that
by reason of this clause (F) are not required to be
<PAGE>
46 CERTIFICATE OF INCORPORATION
made shall be carried forward and taken into account in any
subsequent adjustment, and provided further, however, that
such adjustment shall be made no later than the earlier of (i)
3 years after the date of the particular event involved, or
(ii) the date as to which the aggregate adjustments not
previously made would require a total increase or decrease of
1% in the conversion rate. For the purpose of this clause (F),
any adjustment not required to be made with respect to the
$2.67 Preferred Stock of American under the terms of
conversion rate adjustment provisions applicable thereto
because the particular event involved did not require an
increase or decrease of at least 1% in the conversion rate and
not carried forward and taken into account in any subsequent
adjustment pursuant to such terms at the date of issuance of
the $2.67 Preferred, shall be taken into account with respect
to adjustments required to be made pursuant to this clause
(F).
(G) In the event that at any time as a result of an
adjustment made pursuant to clause (A) of this subparagraph
(3), the holder of any share of $2.67 Preferred thereafter
surrendered
<PAGE>
CERTIFICATE OF INCORPORATION 47
for conversion shall become entitled to receive any shares of
capital stock of the Company other than Common Stock,
thereafter the number of such other shares so receivable upon
conversion of any share of $2.67 Preferred shall be subject to
adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in clauses (A) to (F) of
this subparagraph (3) and the other provisions of this
resolution fixing terms of the $2.67 Preferred with respect to
the Common Stock, to the extent they can appropriately apply
on like terms to such other shares.
(H) The Company shall, simultaneously with any action
that would require an adjustment pursuant to this subparagraph
(3), take all necessary action to make the aggregate amount of
state capital represented by the outstanding shares of $2.67
Preferred at least equal to the aggregate par value of the
shares of Common Stock into which such shares of $2.67
Preferred will be convertible as the result of such
adjustment.
<PAGE>
48 CERTIFICATE OF INCORPORATION
(I) Whenever any adjustment is required by
this subparagraph (3), the Company shall promptly file with
each Transfer Agent, if any, for the $2.67 Preferred a
statement describing in reasonable detail the adjustment and
the method of calculation used, and mail a copy of such
statement to each holder of shares of $2.67 Preferred of
record on the date as of which such adjustment was made.
(4) The Company shall at all times on and after the issuance
of the $2.67 Preferred keep available for delivery the full number of
issued or unissued shares of Common Stock into which all outstanding
shares of $2.67 Preferred are convertible.
(5) No certificate for a fraction of a share shall be
delivered upon the conversion, but, in lieu of any fractional share
that would otherwise be required to be delivered in accordance with the
foregoing provisions, the Company shall pay to the person otherwise
entitled to such fractional share a sum in cash equal to such fraction
multiplied by the closing price (as defined in clause (E) of
subparagraph (3) of this paragraph (g)) of the Common Stock on the day
prior to the day of the conversion.
<PAGE>
CERTIFICATE OF INCORPORATION 49
(6) The certificate of any independent firm of public
accountants selected by the Board of Directors shall be evidence of the
correctness of any adjustment made pursuant to this paragraph (g). All
calculations of adjustments under this paragraph (g) shall be made to
the nearest one-thousandth of a share.
(7) Conversion of shares of $2.67 Preferred shall effect their
retirement. Shares of $2.67 Preferred otherwise reacquired by the
Company shall be retired by resolution of the Board of Directors. In
either event, the Board of Directors shall cause to be filed with the
Office of the Secretary of State of Delaware an appropriate certificate
which shall have the effect of restoring such shares to the status of
authorized but unissued shares of Preferred Stock without series
designation.
ARTICLE V
The name and mailing address of the sole incorporator is as follows:
Name Mailing Address
---- ---------------
Thomas M. Ewing Chadbourne, Parke, Whiteside & Wolff
30 Rockefeller Plaza
New York, New York 10112
<PAGE>
50 CERTIFICATE OF INCORPORATION
ARTICLE VI
Except for any By-law that by its terms states that it may be amended
or repealed only by action of the stockholders, the Board of Directors is
authorized to adopt, amend or repeal the By-laws of the Company.
ARTICLE VII
Any action required or permitted to be taken by the stockholders of the
Company must be effected at a duly called annual or special meeting of
stockholders and may not be effected by any consent in writing by stockholders.
ARTICLE VIII
1. Except as otherwise provided in Section 2 of this Article VIII, in
addition to any affirmative vote required by law, this Certificate of
Incorporation or the By-laws of the Company, the affirmative vote of at least 66
2/3% of the votes cast by the stockholders of the Company, voting together as a
single class at a meeting at which a quorum is present, shall be required for
(i) the adoption of any amendment to, or repeal of any provision of, this
Certificate of Incorporation (other than the adoption of any amendment
authorized pursuant to Section 3 of Article
<PAGE>
CERTIFICATE OF INCORPORATION 51
IV of this Certificate of Incorporation or the increase or decrease of the
number of shares of any series of Preferred Stock or the elimination thereof by
action of the Board of Directors as authorized by the General Corporation Law of
Delaware), (ii) any merger or consolidation of the Company with or into any
other corporation, (iii) any sale or lease of all or substantially all of the
assets of the Company to any other corporation, person or other entity or (iv)
the dissolution of the Company. Except as otherwise provided in Section 2 of
this Article VIII, such affirmative vote shall be required notwithstanding the
fact that no vote may be required, or that a lesser percentage or separate class
vote may be specified, in other provisions of this Certificate of Incorporation,
by law, in any agreement with any national securities exchange or otherwise.
2. Nothing contained in Section 1 of this Article VIII shall require
the approval of the stockholders of the Company to authorize (i) a merger or
consolidation in which the Company is the surviving corporation if (A) the
agreement of merger does not amend in any respect this Certificate of
Incorporation, (B) each share of stock of the Company outstanding immediately
prior to the effective date of the merger is to be an identical outstanding or
treasury share of the Company after the effective
<PAGE>
52 CERTIFICATE OF INCORPORATION
date of the merger, and (C) either no shares of Common Stock of the Company and
no shares, securities or obligations convertible into such stock are to be
issued or delivered under the plan of merger, or the authorized unissued shares
or the treasury shares of Common Stock of the Company to be issued or delivered
under the plan of merger plus those initially issuable upon conversion of any
other shares, securities or obligations to be issued or delivered under such
plan do not exceed 20% of the shares of Common Stock of the Company outstanding
immediately prior to the effective date of the merger, or (ii) a merger into the
Company of any other corporation if at least 90% of the outstanding shares of
each class of stock of such other corporation is owned by the Company.
ARTICLE IX
1. Except as otherwise provided for, or fixed by, or pursuant
to the provisions of Article IV of this Certificate of Incorporation relating to
the rights of holders of any class or series of stock to the rights of holders
of any class or series of stock having a preference over the Common Stock, the
number of the directors of the Company shall be fixed from time to time by or
pursuant to the By-laws of the Company but shall not exceed 20. The director,
other than those who may be elected by the holders of any class or series of
stock having a preference
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<PAGE>
CERTIFICATE OF INCORPORATION 53
over the Common Stock, shall be classified, with respect to the time for which
they severally hold office, into three classes, as nearly equal in number as
reasonably possible, with the directors in each class to hold office until their
successors are elected and qualified. Each member of the Board of Directors in
the first class of directors shall hold office until the Annual Meeting of
stockholders in 1987, each member of the Board of Directors in the second class
of stockholders in 1988 and each member of the Board of Directors in the third
class of directors shall hold office until the Annual Meeting of stockholders in
1989. At each annual meeting of the stockholders of the Company, the successors
to the class of directors whose terms expire at that meeting shall be elected to
hold office for terms expiring at the later of the annual meeting of
stockholders held in the third year following the year of their election or the
election and qualification of the successors to such class of directors.
2. Subject to the rights of holders of any class or series of stock
having a preference over the Common Stock, nominations for the election of
directors may be made by the Board of Directors or by any record owner of stock
of the Company authorized to be issued from time to time under Article IV of
this Certificate of Incorporation and entitled to be voted generally in the
election of directors
6-9-86
<PAGE>
54 CERTIFICATE OF INCORPORATION
("Voting Stock"). Any such stockholder, however, may nominate one or more
persons for election as director at a meeting only if written notice of such
stockholder's intent to make such nomination or nominations has been given,
either by personal delivery or by United States mail, postage prepaid, to the
Secretary of the Company not later than (a) with respect to an election to be
held at an annual meeting of stockholders, one hundred twenty (120) days in
advance of such meeting, and (b) with respect to an election to be held at a
special meeting of stockholders for the election of directors, the close of
business on the seventh day following the earlier of (i) the date on which
notice of such meeting is first given to stockholders and (ii) the date on which
the public announcement of such meeting is first made. Each such notice shall
include: (1) the name and address of each stockholder of record who intends to
appear in person or by proxy to make the nomination and of the person or persons
to be nominated; (2) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (3) such other information regarding each nominee
proposed by such stockholder as would have been required to be included in a
proxy statement filed pursuant to the
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<PAGE>
CERTIFICATE OF INCORPORATION 55
proxy rules of the Securities and Exchange Commission; and (4) the consent of
each nominee to serve as a director of the Company if so elected. The chairman
of the meeting may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedure.
3. Except as otherwise provided for, or fixed by, or pursuant to the
provisions of Article IV of this Certificate of Incorporation relating to the
rights of the holders of any class or series of stock having a preference over
the Common Stock, newly created directorships resulting from any increase in the
number of directors or any vacancy on the Board of Directors resulting from
death, resignation, disqualification, removal or other cause shall be filled
solely by the affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum of the Board of Directors, or by a sole
remaining director. Any director elected in accordance with the preceding
sentence shall hold office for the remainder of the full term of the class of
directors in which the new directorship was created or the vacancy occurred and
until such director's successor shall have been elected and qualified. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
6-9-86
<PAGE>
56 CERTIFICATE OF INCORPORATION
4. Subject to the rights of holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation to
elect additional directors under specified circumstances, any one or more
directors of the Company may be removed, only for cause, only by the affirmative
vote of at least 80% of the combined voting power of the then outstanding shares
of Voting Stock, voting together as a single class, at any annual meeting of
stockholders of the Company or at any special meeting of stockholders of the
Company, the notice of which shall state that the removal of a director or
directors is among the purposes of the meeting.
5. Notwithstanding any other provision of this Certificate of
Incorporation or the By-laws of the Company (and notwithstanding the fact that
the lesser percentage or separate class vote may be specified by law, this
Certificate of Incorporation or the By-laws of the Company), the affirmative
vote of at least 80% of the combined voting power of the then outstanding shares
of Voting Stock, voting together as a single class, shall be required to amend
or repeal, or adopt any provisions inconsistent with, this Article IX; provided,
however, that the preceding provisions of this Section 5 shall not apply to any
amendment to this Article IX, and such amendment shall require only such
affirmative vote as is required by law and any other provisions of this
Certificate of Incorpora-
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<PAGE>
CERTIFICATE OF INCORPORATION 57
tion or the By-laws of the Company, if such amendment shall have been approved
by at least three-fourths of the members of the Board of Directors then in
office.
ARTICLE X
No director of the Company shall be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director; provided, however, that the foregoing clause shall not apply to any
liability of a director to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. Neither the amendment nor the repeal of
this Article X, nor the adoption of any provision of this Certificate of
Incorporation inconsistent with this Article X, shall be effective with respect
to any cause of action, suit, claim or other matter that, but for this Article
X, would accrue or arise prior to such amendment, repeal or adoption of an
inconsistent provision.
5-11-87
<PAGE>
58 CERTIFICATE OF INCORPORATION
ARTICLE XI
The Company reserves the right to amend, alter or repeal any provision
contained in this Certificate of Incorporation in the manner now or hereafter
prescribed by statute, and all rights of stockholders herein are subject to this
reservation.
THE UNDERSIGNED, being the sole incorporator above named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, has signed this instrument on the 30th day of September, 1985 and does
thereby acknowledge that it is his act and deed and that the facts stated herein
are true.
THOMAS M. EWING
Sole Incorporator
<PAGE>
59 CERTIFICATE OF INCORPORATION
The following endorsement appears on the Certificate of Incorporation
as originally filed with the Secretary of State of the State of Delaware:
"FILED
Oct 1 1985
11:50 A.M.
MICHAEL HARKINS
SECRETARY OF STATE."
<PAGE>
AMENDMENT TO
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
FORTUNE BRANDS, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Gilbert L. Klemann, II, Senior Vice President and General
Counsel of Fortune Brands, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), and Louis F.
Fernous, Jr., Vice President and Secretary of the Company, in accordance with
the provisions of Section 151 thereof, DO HEREBY CERTIFY:
1. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Company, the Board of
Directors on June 10, 1986 created a series of 600,000 shares of Preferred Stock
designated as Series A Junior Participating Preferred Stock, of which no shares
have been issued.
2. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation and the General Corporation Law of
the State of Delaware, the Board of Directors on December 13, 1987 amended the
Series A Junior Participating Preferred Stock.
3. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation and the General Corporation Law of
the State of Delaware, the Board of Directors on November 18, 1997 adopted the
following resolution further amending the Series A Junior Participating
Preferred Stock:
RESOLVED that, pursuant to the authority vested in the Board
of Directors of this Company in accordance with the provisions of its
Certificate of Incorporation and the General Corporation Law of the State of
Delaware, the designation and amount of the Series A Junior Participating
Preferred Stock created by the Board of Directors on June 10, 1986, as amended
by the Board of Directors on December 13, 1987, and the voting powers,
preferences and relative, participating, optional or other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereof, are hereby amended effective as of 5:00 p.m., New York City time, on
December 24, 1997 to read in their entirety as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" ("Series
A Preferred Stock") and the number of shares constituting such series shall be
2,500,000. Such number of shares may be adjusted by appropriate action of the
Board of Directors.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) cash dividends in an amount per share (rounded to
the nearest cent) equal to 100 times the aggregate per share amount of all cash
dividends contemporaneously declared on the Common Stock of the Company
presently of the par value of $3.125 per share ("Common Stock") and (ii) a
preferential cash dividend ("Preferential Dividends"), if any, on the tenth day
of March, June, September and December of each year (each a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount equal to $10 per share of Series A Preferred Stock less the
per share amount of all cash dividends declared on the Series A Preferred Stock
pursuant to clause (i) of this sentence since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Company shall, at any time after the
issuance of any share or fraction of a share of Series A Preferred Stock, make
any distribution on the shares of Common Stock of the Company, whether by way of
a dividend or a reclassification of stock, a recapitalization, reorganization or
partial liquidation of the Company or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other property
(other than cash dividends subject to the immediately preceding sentence and
other than a distribution of rights or warrants to acquire any such share,
including any debt security convertible into or exchangeable for any such share,
at a price less than the Current Market Price of such share), then and in each
such event the Company shall simultaneously pay on each then outstanding share
of Series A Preferred Stock of the Company a distribution, in like kind, of 100
times (subject to the provisions for adjustment hereinafter set forth) such
distribution paid on a share of Common Stock. The dividends and distributions on
the Series A Preferred Stock to which holders thereof are entitled pursuant to
clause (i) of the first sentence of this paragraph and pursuant to the second
sentence of this paragraph are hereinafter referred to as "Participating
Dividends" and the multiple of such cash and non-cash dividends on the Common
Stock applicable to the determination of the Participating Dividends, which
shall be 100 initially but shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Dividend Multiple". In the event
the Company shall at any time after November 19, 1997 declare or pay any
dividend or make any distribution on Common Stock payable in shares of Common
Stock, or effect a subdivision or split or a combination, consolidation or
reverse split of the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, then in each such case the Dividend Multiple
thereafter applicable to the determination of the amount of Participating
Dividends which holders of shares of Series A Preferred Stock shall be entitled
to receive shall be the Dividend Multiple applicable immediately prior to such
event multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Company shall declare each Participating Dividend at
the same time it declares any cash or non-cash dividend or distribution on the
Common Stock in respect of which a Participating Dividend is required to be
paid. No cash or non-cash dividend or distribution on the Common Stock in
respect of which a Participating Dividend is required to be paid shall be paid
or set aside for payment on the Common Stock unless a Participating Dividend in
respect of such dividend or distribution on the Common Stock shall be
simultaneously paid, or set aside for payment, on the Series A Preferred Stock.
(C) Preferential Dividends shall begin to accrue on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of any shares of Series A
Preferred Stock. Accrued but unpaid Preferential Dividends shall cumulate but
shall not bear interest. Preferential Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
Section 3. Voting Rights. The holders of shares of Series
A Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the stockholders of the
Company. The number of votes which a holder of Series A Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Vote Multiple". In the event the
Company shall at any time after November 19, 1997 declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or split
or a combination, consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common Stock, then in
each such case the Vote Multiple thereafter applicable to the determination of
the number of votes per share to which holders of shares of Series A Preferred
Stock shall be entitled after such event shall be the Vote Multiple immediately
prior to such event multiplied 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 shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) In the event that the Preferential Dividends accrued on
the Series A Preferred Stock for four or more quarterly dividend periods,
whether consecutive or not, shall not have been declared and paid or set apart
for payment, the holders of record of preferred stock of the Company of all
series (including the Series A Preferred Stock), other than any series in
respect of which the right is expressly withheld by the Certificate of
Incorporation or the authorizing resolutions included in the Certificate of
Designation therefor, shall have the right, at the next meeting of stockholders
called for the election directors, to elect two members of the Board of
Directors, which directors shall be in addition to the number required by the
By-laws prior to such event, to serve until the next annual meeting of the
stockholders and until their successors are elected and qualified or their
earlier resignation, removal or incapacity or until such earlier time as all
accrued and unpaid Preferential Dividends upon the outstanding shares of Series
A Preferred Stock shall have been paid (or set aside for payment) in full. The
holders of shares of Series A Preferred Stock shall continue to have the right
to elect directors as provided by the immediately preceding sentence until all
accrued and unpaid Preferential Dividends upon the outstanding shares of Series
A Preferred Stock shall have been paid (or set aside for payment) in full. Such
directors may be removed and replaced by such stockholders, and vacancies in
such directorships may be filled only by such stockholders (or by the remaining
director elected by such stockholders, if there be one) in the manner permitted
by law; provided, however, that any such action by stockholders shall be taken
at a meeting of stockholders and shall not be taken by written consent thereof.
(D) Except as otherwise required by law or set forth herein,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for the taking of any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Participating Dividends
are in arrears or the Company shall be in default of payment thereof, thereafter
and until all accrued and unpaid Preferential Dividends and Participating
Dividends, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid or set aside for payment in full, and in
addition to any and all other rights which any holder of shares of Series A
Preferred Stock may have in such circumstances, the Company 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 Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to
dividends with the Series A Preferred Stock, unless dividends are paid
ratably on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) except as permitted by subparagraph (iv) of this
paragraph 4(A), 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
Series A Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Company ranking junior (both
as to dividends and upon liquidation, dissolution or winding up) to the
Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock (either as to dividends or
upon liquidation, dissolution or winding up), except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
(C) The Company shall not issue any shares of Series A
Preferred Stock except upon exercise of Rights issued pursuant to that certain
Rights Agreement dated as of November , 1997 between the Company and First
Chicago Trust Company of New York, a copy of which is on file with the Secretary
of the Company at its principal executive office and shall be made available to
stockholders of record without charge upon written request therefor addressed to
the Secretary. Notwithstanding the foregoing sentence, nothing contained in the
provisions hereof shall prohibit or restrict the Company from issuing for any
purpose any series of preferred stock with rights and privileges similar to,
different from, or greater than, those of the Series A Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. The
Company shall cause all such shares upon their retirement and cancellation to
become authorized but unissued shares of preferred stock, without designation as
to a series, and such shares may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board of
Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
no distribution shall be made (i) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock unless the holders of shares of Series A
Preferred Stock shall have received, subject to adjustment as hereinafter
provided, (A) $100 per share plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (B) if greater than the amount specified in clause (i)(A) of
this sentence, the amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (ii) to the holders of
stock ranking on a parity upon liquidation, dissolution or winding up with the
Series A Preferred Stock, unless simultaneously therewith distributions are made
ratably on the Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of shares of
Series A Preferred Stock are entitled under clause (i)(A) of this sentence and
to which the holders of such parity shares are entitled, in each case upon such
liquidation, dissolution or winding up. The amount to which holders of Series A
Preferred Stock may be entitled upon liquidation, dissolution or winding up of
the Company pursuant to clause (i)(B) of the foregoing sentence is hereinafter
referred to as the "Participating Liquidation Amount" and the multiple of the
amount to be distributed to holders of shares of Common Stock upon the
liquidation, dissolution or winding up of the Company applicable pursuant to
such clause to the determination of the Participating Liquidation Amount, as
such multiple may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Liquidation Multiple". In the event the Company
shall at any time after November 19, 1997 declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Liquidation Multiple thereafter applicable to the determination of
the Participating Liquidation Amount to which holders of Series A Preferred
Stock shall be entitled after such event shall be the Liquidation Multiple
applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock of the
Company receive after November 19, 1997 in respect of their shares of Common
Stock any share of capital stock of the Company (other than any share of Common
Stock of the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise ("Transaction"),
then and in each such event the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall be adjusted so that after such event the holders
of Series A Preferred Stock shall be entitled, in respect of each share of
Series A Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such adjustment, to (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such Transaction multiplied by the additional dividends which the holder of a
share of Common Stock shall be entitled to receive by virtue of the receipt in
the Transaction of such capital stock, (ii) such additional voting rights as
equal the Vote Multiple in effect immediately prior to such Transaction
multiplied by the additional voting rights which the holder of a share of Common
Stock shall be entitled to receive by virtue of the receipt in the Transaction
of such capital stock and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such Transaction multiplied by the additional amount
which the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Company by virtue of the receipt
in the Transaction of such capital stock, as the case may be, all as provided by
the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the
Company receive after November 19, 1997 in respect of their shares of Common
Stock any right or warrant to purchase Common Stock (including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share less than the
Current Market Price (as hereinafter defined) of a share of Common Stock on the
date of issuance of such right or warrant, then and in each such event the
dividend rights, voting rights and rights upon the liquidation, dissolution or
winding up of the Company of the shares of Series A Preferred Stock shall be
adjusted so that after such event the Dividend Multiple, the Vote Multiple and
the Liquidation Multiple shall each be the product of the Dividend Multiple, the
Vote Multiple and the Liquidation Multiple, as the case may be, in effect
immediately prior to such event multiplied 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 maximum number of shares of Common
Stock which could be acquired upon exercise in full of all such rights or
warrants and the denominator 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 Current
Market Price of the Common Stock at the time of such issuance, by the maximum
aggregate consideration payable upon exercise in full of all such rights or
warrants.
(C) In event that holders of shares of Common Stock of the
Company receive after November 19, 1997 in respect of their shares of Common
Stock any right or warrant to purchase capital stock of the Company (other than
shares of Common Stock), including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for capital stock of
the Company (other than Common Stock), at a purchase price per share less than
the Current Market Price of such shares of capital stock on the date of issuance
of such right or warrant, then and in each such event the dividend rights,
voting rights and rights upon liquidation, dissolution or winding up of the
Company of the shares of Series A Preferred Stock shall each be adjusted to that
after such event each holder of a share of Series A Preferred Stock shall each
be entitled, in respect of each share of Series A Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such event, to receive (i) such additional dividends as
equal the Dividend Multiple in effect immediately prior to such event
multiplied, first, by the additional dividends to which the holder of a share of
Common Stock shall be entitled upon exercise of such right or warrant by virtue
of the stock capital which could be acquired upon such exercise and multiplied
again by the Discount Fraction (as hereinafter defined) and (ii) such additional
voting rights as equal the Vote Multiple in effect immediately prior to such
event multiplied, first, by the additional voting rights to which the holder of
a share of Common Stock shall be entitled upon exercise of such right or warrant
by virtue of the capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction and (iii) such additional
distributions upon liquidation, dissolution or winding up of the Company as
equal the Liquidation Multiple in effect immediately prior to such event
multiplied, first, by the additional amount which the holder of a share of
Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Company upon exercise of such right or warrant by virtue of
the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction. For purposes of this paragraph, the "Discount
Fraction" shall be a fraction the numerator of which shall be the difference
between the Current Market Price (as hereinafter defined) of a share of the
capital stock subject to a right or warrant distributed to holders of shares of
Common Stock of the Company as contemplated by this paragraph immediately after
the distribution thereof and the purchase price per share for such share of
capital stock pursuant to such right or warrant and the denominator of which
shall be the Current Market Price of a share of such capital stock immediately
after the distribution of such right or warrant.
(D) For purposes of this Section 7, the "Current Market Price"
of a share of capital stock of the Company (including a share of Common Stock)
on any date shall be deemed to be the average of the daily closing prices per
share thereof over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that, in the event
that such Current Market Price of any such share of capital stock is determined
during a period which includes any date that is within 30 Trading Days after the
ex-dividend date for (i) a dividend or distribution on stock payable in shares
of such stock or securities convertible into shares of such stock, or (ii) any
subdivision, split, combination, consolidation, reverse stock split or
reclassification of such stock, then, and in each such case, the Current Market
Price shall be appropriately adjusted by the Board of Directors of the Company
to reflect the Current Market Price of such stock to take into account
ex-dividend trading. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the shares
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
shares are listed or admitted to trading or, if the shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in
use, or if on any such date the shares are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the shares selected by the Board of Directors of
the Company. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares are listed or admitted to
trading is open for the transaction of business or, if the shares are not listed
or admitted to trading on any national securities exchange, on which the New
York Stock Exchange or such other national securities exchange as may be
selected by the Board of Directors of the Company is open. If the shares are not
publicly held or not so listed or traded on any day within the period of 30
Trading Days applicable to the determination of Current Market Price thereof as
aforesaid, "Current Market Price" shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors of the Company. In
either case referred to in the foregoing sentence, the determination of Current
Market Price shall be described in a statement filed with the Secretary of the
Company.
Section 8. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
securities, cash and/or any other property, then in any such case each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock required by
the provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(B) The Company shall give prompt written notice to each
holder of a share of Series A Preferred Stock of the effect of any adjustment to
the voting rights, dividend rights or rights upon liquidation, dissolution or
winding up of the Company of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
Section 10. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable at the option of the Company or any holder
thereof. Notwithstanding the foregoing sentence of this Section, the Company may
acquire shares of Series A Preferred Stock in any other manner permitted by law,
the provisions hereof and the Certificate of Incorporation of the Company.
Section 11. Ranking. Unless otherwise provided in the
Certificate of Incorporation of the Company or a Certificate of Designation
relating to a subsequent series of preferred stock of the Company, the Series A
Preferred Stock shall rank junior to all other series of the Company's preferred
stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up and senior to the Common Stock.
Section 12. Amendment. The provisions hereof and the
Certificate of Incorporation of the Company shall not be amended in any manner
which would materially affect the rights, privileges or powers of the Series A
Preferred Stock without, in addition to any other vote of stockholders required
by law, the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series A Preferred Stock, voting together as a single
class.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this day of December, 1997.
-----------------------------------------
Gilbert L. Klemann, II
Senior Vice President and General Counsel
----------------------------------------
Louis F. Fernous, Jr.
Vice President and Secretary
ATTEST:
------------------------------
Mark S. Lyon
Assistant Secretary
EXHIBIT 4a
FORTUNE BRANDS, INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK, as
Rights Agent
Rights Agreement
Dated as of November 19, 1997
TABLE OF CONTENTS
Page
Section 1. Certain Definitions.............................................1
Section 2. Appointment of Rights Agent.....................................7
Section 3. Issue of Right Certificates.....................................8
Section 4. Form of Right Certificates.....................................11
Section 5. Countersignature and Registration..............................11
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates...........................13
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights...................................14
Section 8. Cancellation and Destruction of Right Certificates.............17
Section 9. Availability of Preferred Shares...............................18
Section 10. Preferred Shares Record Date..................................19
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights........................................20
Section 12. Certificate of Adjusted Purchase Price or Number of Shares....35
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power....................................36
Section 14. Fractional Rights and Fractional Shares.......................38
Section 15. Rights of Action..............................................41
Section 16. Agreement of Right Holders....................................42
Section 17. Right Holder Not Deemed a Stockholder.........................43
Section 18. Concerning the Rights Agent...................................43
Section 19. Merger or Consolidation or Change of Name of Rights Agent.....45
Section 20. Duties of Rights Agent........................................46
Section 21. Change of Rights Agent........................................50
Section 22. Issuance of New Right Certificates............................52
Section 23. Redemption....................................................53
Section 24. Exchange......................................................54
Section 25. Notice of Certain Events......................................57
Section 26. Notices.......................................................59
Section 27. Supplements and Amendments....................................60
Section 28. Successors....................................................61
Section 29. Benefits of this Agreement....................................61
Section 30. Severability..................................................62
Section 31. Governing Law.................................................62
Section 32. Counterparts..................................................62
Section 33. Descriptive Headings..........................................63
Signatures ..............................................................63
Exhibit A - Form of Amendment to Certificate
of Designation of Series A Junior
Participating Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
RIGHTS AGREEMENT
Agreement, dated as of November 19, 1997, between Fortune
Brands, Inc., a Delaware corporation (the "Company"), and First Chicago Trust
Company of New York, a limited purpose trust company chartered under the laws of
the State of New York (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding on December 24,
1997 (the "Record Date"), each Right representing the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the Common Shares of the Company then outstanding, but
shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company or any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan. Notwithstanding
the foregoing, no Person shall become an "Acquiring Person" as the
result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of
the Common Shares of the Company then outstanding; provided, however,
that if a Person shall become the Beneficial Owner of 15% or more of
the Common Shares of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Shares of
the Company, then such Person shall be deemed to be an "Acquiring
Person". Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that a Person who would otherwise
be an "Acquiring Person", as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and
such Person divests as promptly as practicable a sufficient number of
Common Shares so that such Person would no longer be an "Acquiring
Person", as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with respect to
a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other
than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant
to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement
or understanding to vote such security (1) arises solely from
a revocable proxy or consent given to such Person in response
to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section l(c)(ii)(B)) or
disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in New York are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York City time,
on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $3.125 per share, of
the Company. "Common Shares" when used with reference to any Person
other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(h) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(i) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise)
of such entity.
(j) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock of the Company having the rights and
preferences set forth in the form of Amendment to Certificate of
Designation attached to this Agreement as Exhibit A.
(k) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(l) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(m) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly,
by such Person.
(n) "Voting Stock" shall mean (i) the Common Shares and (ii)
any other shares of capital stock of the Company entitled to vote
generally in the election of directors or entitled to vote together
with the Common Shares in respect of any merger, consolidation, sale of
all or substantially all of the Company's assets, liquidation,
dissolution or winding up.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the registered holders of the Common Shares) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier
of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth
Business Day (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) of, or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms of any such plan)
to commence, a tender or exchange offer the consummation of which would result
in any Person becoming the Beneficial Owner of Common Shares aggregating 15% or
more of the then outstanding Common Shares (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced by the certificates for Common Shares and not by
separate Right Certificates and the registered holders of the Common Shares
shall be deemed to be the registered holders of the associated Rights, and (y)
the Rights will be transferable only in connection with the transfer of the
associated Common Shares. On the Record Date or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of Exhibit C hereto (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Record Date, at the address of such
holder shown on the records of the Company.
(b) As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Right Certificate,
in substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right for each Common Share so held. As of the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them
substantially the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Fortune Brands, Inc. and First Chicago Trust Company of New
York, dated as of November 19, 1997 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive
offices of Fortune Brands, Inc. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be
evidenced by this certificate. Fortune Brands, Inc. will mail
to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the
Rights Agreement, Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement) may
become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(d) In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed cancelled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. Subject to the
provisions of Section 22 hereof, the Right Certificates (and the forms of
election to purchase Preferred Shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board and Chief Executive Officer, its President, or any Vice President, either
manually or by facsimile signature, shall have affixed thereto the Company's
seal or a facsimile thereof, and shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be manually or by facsimile signature countersigned
by the Rights Agent and shall not be valid for any purpose unless countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, DestroySection 6. Transfer, Split Up, Combination
and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 14 hereof, at any time after
the close of business on the Distribution Date, and at or prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder of the Rights evidenced thereby to
purchase a like number of one one-hundredths of a Preferred Share as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) Each Right (other than Rights that have become void pursuant to
Section 11(a)(ii) hereof or have been exchanged pursuant to Section 24 hereof)
shall initially entitle the holder thereof to purchase one one-hundredth of a
Preferred Share, subject to adjustment from time to time as provided in Section
11 or 13 hereof. The purchase price (the "Purchase price") for each one
one-hundredth of a Preferred Share purchasable pursuant to the exercise of a
Right shall initially be $150, and shall be subject to adjustment from time to
time as provided in Section 11 or 13 hereof and shall be payable in lawful money
of the United States of America in accordance with paragraph (c) below.
(b) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate evidencing such Rights, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the principal
office of the Rights Agent, together with payment of the Purchase Price for each
one one-hundredth of a Preferred Share as to which the Rights are exercised, at
or prior to the earliest of (i) the close of business on December 24, 2007 (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), or (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of the Rights evidenced by such Right Certificate in accordance with Section 9
hereof by certified check, cashier's check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of the Rights evidenced
by such Right Certificate, registered in such name or names as may be designated
by such holder and (iv) when appropriate, after receipt, deliver such cash to or
upon the order of the registered holder of the Rights evidenced by such Right
Certificate.
(d) In case the registered holder of the Rights evidenced by
any Right Certificate shall exercise less than all the Rights evidenced thereby,
a new Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Rights or to his duly authorized assigns, subject to the provisions of Section
14 hereof.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7 hereof.
The Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights or the Right
Certificates or of any Preferred Shares upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights or Right Certificates to a person
other than, or the issuance or delivery of certificates or depositary receipts
for the Preferred Shares in a name other than that of, the registered holder of
the Rights evidenced by the Right Certificates surrendered for exercise or to
issue or to deliver any certificates or depositary receipts for Preferred Shares
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Rights at the time of surrender of
the related Right Certificates) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose
name any certificate for Preferred Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares transfer books of the Company
are closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Shares transfer books of the Company are open. Prior to
the exercise of any Rights, the holder thereof shall not be entitled to any
rights of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of Preferred Shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person, each holder of a Right, except as provided
below, shall thereafter have a right to receive, upon exercise thereof at a
price equal to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of the Company as shall equal the result obtained
by (x) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share market price of
the Company's Common Shares (determined pursuant to Section 11(d) hereof) on the
date of the occurrence of such event. In the event that any Person shall become
an Acquiring Person and the Rights shall then be outstanding, the Company shall
not take any action which would eliminate or diminish the benefits intended to
be afforded by the Rights.
From and after the occurrence of such event, any Rights that
are or were acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any holder of
such Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be issued pursuant to
Section 3 hereof that evidences Rights beneficially owned by an Acquiring Person
whose Rights would be void pursuant to the preceding sentence or any Associate
or Affiliate thereof and any Right Certificate evidencing Rights beneficially
owned by any such Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) shall be void; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate thereof
or to any nominee of such Acquiring Person, Associate or Affiliate; and any
Right Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be void pursuant to the preceding sentence shall be
cancelled.
(iii) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing subparagraph
(ii), the Company shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the Rights. In the event
the Company shall, after good faith effort, be unable to take all such action
as may be necessary to authorize such additional Common Shares, the Company
shall substitute, for each Common Share that would otherwise be issuable upon
exercise of a Right, a number of Preferred Shares or fraction thereof such that
the current per share market price of one Preferred Share multiplied by such
number or fraction is equal to the current per share market price of one Common
Share as of the date of issuance of such Preferred Shares or fraction thereof.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share market price of
the Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such shares,
or (B) any subdivision, combination or reclassification of such Security and
prior to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Security selected by the
Board of Directors of the Company. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share
market price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one one-millionth
of a Preferred Share or one ten-thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to registered holders
of Rights on such record date Right Certificates evidencing, subject to Section
14 hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such registered holders in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the registered holders of the Rights on the record date specified
in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the registered holder of any Right exercised after such
record date of the Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Preferred Shares
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each registered holder of a Right in accordance with Section
25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event, directly or indirectly, at any time after
a Person has become an Acquiring Person, (a) the Company shall consolidate with,
or merge with and into, any other Person, (b) any Person shall consolidate with
the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each registered holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise thereof at a price
equal to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Shares shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights. The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such issuer shall have
executed and delivered to the Rights Agent a supplemental agreement so
providing. The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights with regard
to which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Rights at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For the purposes of
this Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect
of this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of the
Rights and any registered holder of any Right, without the consent of the Rights
Agent or of the holder of any other Right, may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights in the manner provided in the Right Certificate and
in this Agreement. Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights are transferable
only on the registry books of the Rights Agent upon surrender of the Right
Certificates evidencing such Rights at the principal office of the Rights Agent,
duly endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary, except as required by law.
Section 17. Right Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
such Rights, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, instruction, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the stock transfer or corporate trust powers of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases the
Rights evidenced by such Right Certificates shall have the full force provided
in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases the Rights
evidenced by such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Rights, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board and
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board and Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the registered holders of the Rights by first-class mail.
The Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Shares or Preferred
Shares by registered or certified mail, and to the registered holders of the
Rights by first-class mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the registered holder of a Right
(who shall, with such notice, submit his Right Certificate, if any, or his
certificate for the associated Common Shares for inspection by the Company),
then the registered holder of any Right may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation, or an affiliate of such a corporation, organized and doing business
under the laws of the United States or of the State of New York (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of New York), in good standing,
having an office in the State of New York, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares or Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Rights. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Right
Certificates to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
upon exercise of a Right made in accordance with the provisions of this
Agreement.
Section 23. Redemption. (a) The Board of Directors of the
Company may, at its option, at any time prior to such time as any Person becomes
an Acquiring Person, redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board of Directors of
the Company may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give or any defect in any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the registered holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the
Company may, at its option, at any time after such time as any Person becomes an
Acquiring Person exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Common Shares at an exchange ratio
of one Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of the Rights pursuant to paragraph (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall promptly mail a notice
of any such exchange to all of the registered holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exchange
of a Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Rights with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company
shall propose (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Preferred Shares rights or warrants to subscribe for
or to purchase any additional Preferred Shares or shares of stock of any class
or any other securities, rights or options, (iii) to effect any reclassification
of its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each registered holder of a
Right, in accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 1l(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each registered holder of a Right, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Fortune Brands, Inc.
1700 East Putnam Avenue
Old Greenwich, Connecticut 06870
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right to or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
First Chicago Trust Company of New York
525 Washington Boulevard
Suite 4660
Jersey City, New Jersey 07310
Attention: Tenders and Exchanges
Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company or the registry books of the holders of Rights maintained by the Rights
Agent after the Distribution Date as herein provided.
Section 27. Supplements and Amendments. The Company may from
time to time supplement or amend this Agreement without the approval of any
holders of Rights in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable,
any such supplement or amendment to be evidenced by a writing signed by the
Company and the Rights Agent; provided, however, that from and after such time
as any Person becomes an Acquiring Person, this Agreement shall not be amended
in any manner which would adversely affect the interests of the holders of
Rights. Without limiting the foregoing, the Company may at any time prior to
such time as any Person becomes an Acquiring Person amend this Agreement (i) to
lower the thresholds set forth in Sections 1(a) and 3(a) to not less than the
greater of (A) the sum of .001% and the largest percentage of the outstanding
Common Shares then known by the Company to be beneficially owned by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan) and (B) 10%, or
(ii) to change the Purchase Price hereunder.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Rights any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights.
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Signatures
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and attested, all as of the day and year
first above written.
FORTUNE BRANDS, INC.
Attest:
By Louis F. Fernous, Jr. By Dudley L. Bauerlein, Jr.
---------------------------- ----------------------------
Title: Vice President Title: Senior Vice
and Secretary President and Chief
Financial Officer
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Attest:
By Jerry O'Leary By James R. Kuzmich
---------------------------- ----------------------------
Title: Vice President Title: Assistant
Vice President
<PAGE>
Exhibit A
FORM OF AMENDMENT TO
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
FORTUNE BRANDS, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Gilbert L. Klemann, II, Senior Vice President and General
Counsel of Fortune Brands, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), and Louis F.
Fernous, Jr., Vice President and Secretary of the Company, in accordance with
the provisions of Section 151 thereof, DO HEREBY CERTIFY:
1. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Company, the Board of
Directors on June 10, 1986 created a series of 600,000 shares of Preferred Stock
designated as Series A Junior Participating Preferred Stock, of which no shares
have been issued.
2. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation and the General Corporation Law of
the State of Delaware, the Board of Directors on December 13, 1987 amended the
Series A Junior Participating Preferred Stock.
3. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation and the General Corporation Law of
the State of Delaware, the Board of Directors on November 18, 1997 adopted the
following resolution further amending the Series A Junior Participating
Preferred Stock:
RESOLVED that, pursuant to the authority vested in the Board
of Directors of this Company in accordance with the provisions of its
Certificate of Incorporation and the General Corporation Law of the State of
Delaware, the designation and amount of the Series A Junior Participating
Preferred Stock created by the Board of Directors on June 10, 1986, as amended
by the Board of Directors on December 13, 1987, and the voting powers,
preferences and relative, participating, optional or other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereof, are hereby amended effective as of 5:00 p.m., New York City time, on
December 24, 1997 to read in their entirety as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" ("Series
A Preferred Stock") and the number of shares constituting such series shall be
2,500,000. Such number of shares may be adjusted by appropriate action of the
Board of Directors.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) cash dividends in an amount per share (rounded to
the nearest cent) equal to 100 times the aggregate per share amount of all cash
dividends contemporaneously declared on the Common Stock of the Company
presently of the par value of $3.125 per share ("Common Stock") and (ii) a
preferential cash dividend ("Preferential Dividends"), if any, on the tenth day
of March, June, September and December of each year (each a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount equal to $10 per share of Series A Preferred Stock less the
per share amount of all cash dividends declared on the Series A Preferred Stock
pursuant to clause (i) of this sentence since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Company shall, at any time after the
issuance of any share or fraction of a share of Series A Preferred Stock, make
any distribution on the shares of Common Stock of the Company, whether by way of
a dividend or a reclassification of stock, a recapitalization, reorganization or
partial liquidation of the Company or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other property
(other than cash dividends subject to the immediately preceding sentence and
other than a distribution of rights or warrants to acquire any such share,
including any debt security convertible into or exchangeable for any such share,
at a price less than the Current Market Price of such share), then and in each
such event the Company shall simultaneously pay on each then outstanding share
of Series A Preferred Stock of the Company a distribution, in like kind, of 100
times (subject to the provisions for adjustment hereinafter set forth) such
distribution paid on a share of Common Stock. The dividends and distributions on
the Series A Preferred Stock to which holders thereof are entitled pursuant to
clause (i) of the first sentence of this paragraph and pursuant to the second
sentence of this paragraph are hereinafter referred to as "Participating
Dividends" and the multiple of such cash and non-cash dividends on the Common
Stock applicable to the determination of the Participating Dividends, which
shall be 100 initially but shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Dividend Multiple". In the event
the Company shall at any time after November 19, 1997 declare or pay any
dividend or make any distribution on Common Stock payable in shares of Common
Stock, or effect a subdivision or split or a combination, consolidation or
reverse split of the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, then in each such case the Dividend Multiple
thereafter applicable to the determination of the amount of Participating
Dividends which holders of shares of Series A Preferred Stock shall be entitled
to receive shall be the Dividend Multiple applicable immediately prior to such
event multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Company shall declare each Participating Dividend at
the same time it declares any cash or non-cash dividend or distribution on the
Common Stock in respect of which a Participating Dividend is required to be
paid. No cash or non-cash dividend or distribution on the Common Stock in
respect of which a Participating Dividend is required to be paid shall be paid
or set aside for payment on the Common Stock unless a Participating Dividend in
respect of such dividend or distribution on the Common Stock shall be
simultaneously paid, or set aside for payment, on the Series A Preferred Stock.
(C) Preferential Dividends shall begin to accrue on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of any shares of Series A
Preferred Stock. Accrued but unpaid Preferential Dividends shall cumulate but
shall not bear interest. Preferential Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
Section 3. Voting Rights. The holders of shares of Series
A Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the stockholders of the
Company. The number of votes which a holder of Series A Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Vote Multiple". In the event the
Company shall at any time after November 19, 1997 declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or split
or a combination, consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common Stock, then in
each such case the Vote Multiple thereafter applicable to the determination of
the number of votes per share to which holders of shares of Series A Preferred
Stock shall be entitled after such event shall be the Vote Multiple immediately
prior to such event multiplied 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 shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) In the event that the Preferential Dividends accrued on
the Series A Preferred Stock for four or more quarterly dividend periods,
whether consecutive or not, shall not have been declared and paid or set apart
for payment, the holders of record of preferred stock of the Company of all
series (including the Series A Preferred Stock), other than any series in
respect of which the right is expressly withheld by the Certificate of
Incorporation or the authorizing resolutions included in the Certificate of
Designation therefor, shall have the right, at the next meeting of stockholders
called for the election directors, to elect two members of the Board of
Directors, which directors shall be in addition to the number required by the
By-laws prior to such event, to serve until the next annual meeting of the
stockholders and until their successors are elected and qualified or their
earlier resignation, removal or incapacity or until such earlier time as all
accrued and unpaid Preferential Dividends upon the outstanding shares of Series
A Preferred Stock shall have been paid (or set aside for payment) in full. The
holders of shares of Series A Preferred Stock shall continue to have the right
to elect directors as provided by the immediately preceding sentence until all
accrued and unpaid Preferential Dividends upon the outstanding shares of Series
A Preferred Stock shall have been paid (or set aside for payment) in full. Such
directors may be removed and replaced by such stockholders, and vacancies in
such directorships may be filled only by such stockholders (or by the remaining
director elected by such stockholders, if there be one) in the manner permitted
by law; provided, however, that any such action by stockholders shall be taken
at a meeting of stockholders and shall not be taken by written consent thereof.
(D) Except as otherwise required by law or set forth herein,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for the taking of any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Participating Dividends
are in arrears or the Company shall be in default of payment thereof, thereafter
and until all accrued and unpaid Preferential Dividends and Participating
Dividends, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid or set aside for payment in full, and in
addition to any and all other rights which any holder of shares of Series A
Preferred Stock may have in such circumstances, the Company 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 Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to
dividends with the Series A Preferred Stock, unless dividends are paid
ratably on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) except as permitted by subparagraph (iv) of this
paragraph 4(A), 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
Series A Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Company ranking junior (both
as to dividends and upon liquidation, dissolution or winding up) to the
Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock (either as to dividends or
upon liquidation, dissolution or winding up), except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
(C) The Company shall not issue any shares of Series A
Preferred Stock except upon exercise of Rights issued pursuant to that certain
Rights Agreement dated as of November , 1997 between the Company and First
Chicago Trust Company of New York, a copy of which is on file with the Secretary
of the Company at its principal executive office and shall be made available to
stockholders of record without charge upon written request therefor addressed to
the Secretary. Notwithstanding the foregoing sentence, nothing contained in the
provisions hereof shall prohibit or restrict the Company from issuing for any
purpose any series of preferred stock with rights and privileges similar to,
different from, or greater than, those of the Series A Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. The
Company shall cause all such shares upon their retirement and cancellation to
become authorized but unissued shares of preferred stock, without designation as
to a series, and such shares may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board of
Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
no distribution shall be made (i) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock unless the holders of shares of Series A
Preferred Stock shall have received, subject to adjustment as hereinafter
provided, (A) $100 per share plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (B) if greater than the amount specified in clause (i)(A) of
this sentence, the amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (ii) to the holders of
stock ranking on a parity upon liquidation, dissolution or winding up with the
Series A Preferred Stock, unless simultaneously therewith distributions are made
ratably on the Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of shares of
Series A Preferred Stock are entitled under clause (i)(A) of this sentence and
to which the holders of such parity shares are entitled, in each case upon such
liquidation, dissolution or winding up. The amount to which holders of Series A
Preferred Stock may be entitled upon liquidation, dissolution or winding up of
the Company pursuant to clause (i)(B) of the foregoing sentence is hereinafter
referred to as the "Participating Liquidation Amount" and the multiple of the
amount to be distributed to holders of shares of Common Stock upon the
liquidation, dissolution or winding up of the Company applicable pursuant to
such clause to the determination of the Participating Liquidation Amount, as
such multiple may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Liquidation Multiple". In the event the Company
shall at any time after November 19, 1997 declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Liquidation Multiple thereafter applicable to the determination of
the Participating Liquidation Amount to which holders of Series A Preferred
Stock shall be entitled after such event shall be the Liquidation Multiple
applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock of the
Company receive after November 19, 1997 in respect of their shares of Common
Stock any share of capital stock of the Company (other than any share of Common
Stock of the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise ("Transaction"),
then and in each such event the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall be adjusted so that after such event the holders
of Series A Preferred Stock shall be entitled, in respect of each share of
Series A Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such adjustment, to (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such Transaction multiplied by the additional dividends which the holder of a
share of Common Stock shall be entitled to receive by virtue of the receipt in
the Transaction of such capital stock, (ii) such additional voting rights as
equal the Vote Multiple in effect immediately prior to such Transaction
multiplied by the additional voting rights which the holder of a share of Common
Stock shall be entitled to receive by virtue of the receipt in the Transaction
of such capital stock and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such Transaction multiplied by the additional amount
which the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Company by virtue of the receipt
in the Transaction of such capital stock, as the case may be, all as provided by
the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the
Company receive after November 19, 1997 in respect of their shares of Common
Stock any right or warrant to purchase Common Stock (including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share less than the
Current Market Price (as hereinafter defined) of a share of Common Stock on the
date of issuance of such right or warrant, then and in each such event the
dividend rights, voting rights and rights upon the liquidation, dissolution or
winding up of the Company of the shares of Series A Preferred Stock shall be
adjusted so that after such event the Dividend Multiple, the Vote Multiple and
the Liquidation Multiple shall each be the product of the Dividend Multiple, the
Vote Multiple and the Liquidation Multiple, as the case may be, in effect
immediately prior to such event multiplied 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 maximum number of shares of Common
Stock which could be acquired upon exercise in full of all such rights or
warrants and the denominator 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 Current
Market Price of the Common Stock at the time of such issuance, by the maximum
aggregate consideration payable upon exercise in full of all such rights or
warrants.
(C) In event that holders of shares of Common Stock of the
Company receive after November 19, 1997 in respect of their shares of Common
Stock any right or warrant to purchase capital stock of the Company (other than
shares of Common Stock), including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for capital stock of
the Company (other than Common Stock), at a purchase price per share less than
the Current Market Price of such shares of capital stock on the date of issuance
of such right or warrant, then and in each such event the dividend rights,
voting rights and rights upon liquidation, dissolution or winding up of the
Company of the shares of Series A Preferred Stock shall each be adjusted to that
after such event each holder of a share of Series A Preferred Stock shall each
be entitled, in respect of each share of Series A Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such event, to receive (i) such additional dividends as
equal the Dividend Multiple in effect immediately prior to such event
multiplied, first, by the additional dividends to which the holder of a share of
Common Stock shall be entitled upon exercise of such right or warrant by virtue
of the stock capital which could be acquired upon such exercise and multiplied
again by the Discount Fraction (as hereinafter defined) and (ii) such additional
voting rights as equal the Vote Multiple in effect immediately prior to such
event multiplied, first, by the additional voting rights to which the holder of
a share of Common Stock shall be entitled upon exercise of such right or warrant
by virtue of the capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction and (iii) such additional
distributions upon liquidation, dissolution or winding up of the Company as
equal the Liquidation Multiple in effect immediately prior to such event
multiplied, first, by the additional amount which the holder of a share of
Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Company upon exercise of such right or warrant by virtue of
the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction. For purposes of this paragraph, the "Discount
Fraction" shall be a fraction the numerator of which shall be the difference
between the Current Market Price (as hereinafter defined) of a share of the
capital stock subject to a right or warrant distributed to holders of shares of
Common Stock of the Company as contemplated by this paragraph immediately after
the distribution thereof and the purchase price per share for such share of
capital stock pursuant to such right or warrant and the denominator of which
shall be the Current Market Price of a share of such capital stock immediately
after the distribution of such right or warrant.
(D) For purposes of this Section 7, the "Current Market Price"
of a share of capital stock of the Company (including a share of Common Stock)
on any date shall be deemed to be the average of the daily closing prices per
share thereof over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that, in the event
that such Current Market Price of any such share of capital stock is determined
during a period which includes any date that is within 30 Trading Days after the
ex-dividend date for (i) a dividend or distribution on stock payable in shares
of such stock or securities convertible into shares of such stock, or (ii) any
subdivision, split, combination, consolidation, reverse stock split or
reclassification of such stock, then, and in each such case, the Current Market
Price shall be appropriately adjusted by the Board of Directors of the Company
to reflect the Current Market Price of such stock to take into account
ex-dividend trading. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the shares
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
shares are listed or admitted to trading or, if the shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in
use, or if on any such date the shares are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the shares selected by the Board of Directors of
the Company. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares are listed or admitted to
trading is open for the transaction of business or, if the shares are not listed
or admitted to trading on any national securities exchange, on which the New
York Stock Exchange or such other national securities exchange as may be
selected by the Board of Directors of the Company is open. If the shares are not
publicly held or not so listed or traded on any day within the period of 30
Trading Days applicable to the determination of Current Market Price thereof as
aforesaid, "Current Market Price" shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors of the Company. In
either case referred to in the foregoing sentence, the determination of Current
Market Price shall be described in a statement filed with the Secretary of the
Company.
Section 8. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
securities, cash and/or any other property, then in any such case each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock required by
the provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(B) The Company shall give prompt written notice to each
holder of a share of Series A Preferred Stock of the effect of any adjustment to
the voting rights, dividend rights or rights upon liquidation, dissolution or
winding up of the Company of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
Section 10. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable at the option of the Company or any holder
thereof. Notwithstanding the foregoing sentence of this Section, the Company may
acquire shares of Series A Preferred Stock in any other manner permitted by law,
the provisions hereof and the Certificate of Incorporation of the Company.
Section 11. Ranking. Unless otherwise provided in the
Certificate of Incorporation of the Company or a Certificate of Designation
relating to a subsequent series of preferred stock of the Company, the Series A
Preferred Stock shall rank junior to all other series of the Company's preferred
stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up and senior to the Common Stock.
Section 12. Amendment. The provisions hereof and the
Certificate of Incorporation of the Company shall not be amended in any manner
which would materially affect the rights, privileges or powers of the Series A
Preferred Stock without, in addition to any other vote of stockholders required
by law, the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series A Preferred Stock, voting together as a single
class.
<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this day of December, 1997.
-----------------------------------------
Gilbert L. Klemann, II
Senior Vice President and General Counsel
----------------------------------------
Louis F. Fernous, Jr.
Vice President and Secretary
ATTEST:
------------------------------
Mark S. Lyon
Assistant Secretary
<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER DECEMBER 24, 2007 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
FORTUNE BRANDS, INC.
This certifies that ________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of November 19, 1997 (the "Rights Agreement"),
between Fortune Brands, Inc., a Delaware corporation (the "Company"), and First
Chicago Trust Company of New York (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., New York City time, on December 24,
2007 at the principal office of the Rights Agent, or at the office of its
successor as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock (the "Preferred Shares"),
of the Company, at a purchase price of $150 per one one-hundredth of a Preferred
Share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one one-hundredths
of a Preferred Share which may be purchased upon exercise hereof) set forth
above, and the Purchase Price set forth above, are the number and Purchase Price
as of December 24, 1997, based on the Preferred Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a Preferred Share which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights. Copies of the
Rights Agreement are on file at the principal executive offices of the Company
and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If the
Rights evidenced by this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or in part
for Preferred Shares or shares of the Company's Common Stock, par value $3.125
per share.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of Rights evidenced by this Right Certificate shall
be entitled to vote or receive dividends or be deemed for any purpose the holder
of the Preferred Shares or of any other securities of the Company which may at
any time be issuable on the exercise thereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder of any
Rights evidenced hereby, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ____________.
ATTEST: FORTUNE BRANDS, INC.
____________________ By:______________________
Countersigned:
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
as Rights Agent
By:__________________________
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights evidenced by this Right
Certificate.)
FOR VALUE RECEIVED _______________________________ hereby
sells, assigns and transfers unto ____________________________________________
(Please print name and address of transferee)
Rights evidenced by this Right Certificate, together with
all right, title and interest therein, and does hereby irrevocably constitute
and appoint __________________ attorney, to transfer the said Rights on the
books of the within-named Company, with full power of substitution.
Dated:________________
---------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- ------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
---------------------------
Signature
- ------------------------------------------------------------------------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights evidenced by the Right Certificate.)
To: FORTUNE BRANDS, INC.
The undersigned hereby irrevocably elects to exercise
___________________ Rights evidenced by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
------------------------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
------------------------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------------------------
Dated: ____________
-----------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
<PAGE>
Form of Reverse Side of Right Certificate -- continued
- ------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
___________________________Signature
- ------------------------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On November 18, 1997, the Board of Directors of Fortune
Brands, Inc. (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $3.125
per share (the "Common Shares"), of the Company. The dividend is payable on
December 24, 1997 (the "Record Date") to the stockholders of record on that
date. Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock (the
"Preferred Shares") of the Company, at a price of $150 per one one-hundredth of
a Preferred Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and First Chicago Trust Company of New York, as
Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding Common Shares or (ii) 10 business days following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a person
or group of 15% or more of such outstanding Common Shares (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificate.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Common Shares. Until
the Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date, upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares, outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on December 24, 2007 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then current market price of the Preferred Shares or (iii) upon
the distribution to holders of the Preferred Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Common Shares or
a stock dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $10 per share but will be entitled to
an aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be entitled
to a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preferred Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
Preferred Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
In the event that, after a person has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right. In the event that any Person
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Preferred Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
outstanding Common Shares, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
At any time after the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more but less
than 50% of the outstanding Common Shares, the Board of Directors of the Company
may exchange the Rights (other than Rights owned by such person or group which
have become void), in whole or in part, at an exchange ratio of one Common Share
per Right, subject to adjustment.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights in any
manner consistent with the objectives of the Board of Directors in adopting the
Rights Agreement, including an amendment to lower the 15% threshold described
above to not less than the greater of (i) the sum of .001% and the largest
percentage of outstanding Common Shares then known by the Company to be
beneficially owned by any person or group of affiliated or associated persons
and (ii) 10%. From and after such time as any person becomes an Acquiring
Person no amendment may adversely affect the interests of the holders of the
Rights.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated December , 1997. A copy of the Rights Agreement is available free
of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by reference.
EXHIBIT 20a
NEWS RELEASE
NEWS RELEASE
Fortune Brands, Inc., 1700 East Putnam Avenue, Old Greenwich, CT 06870
NEWS RELEASE
Media Relations: Investor Relations:
Roger W. W. Baker Daniel A. Conforti
(203)698-5148 (203)698-5132
FORTUNE BRANDS ADOPTS
REPLACEMENT PREFERRED SHARE PURCHASE RIGHTS PLAN
Old Greenwich, CT, November 18, 1997 -- Fortune Brands, Inc.
(NYSE-FO) today adopted a revised preferred share purchase rights
plan to replace the Company's existing rights plan when it
expires December 24, 1997. Like the existing rights plan, the
new rights plan is designed to protect stockholders against
abusive and unfair takeover tactics and prevent an acquirer from
gaining control of the Company without paying a full and fair
price to the stockholders. The new rights plan was not adopted
in response to any specific effort to acquire control of Fortune
Brands.
The new rights plan will continue the terms of the existing
rights plan, adopted in 1987, for another ten years with few
modifications. To implement the new plan, the Board declared a
dividend distribution of one preferred share purchase right on
each outstanding share of Fortune Brands Common stock of record
on December 24, 1997. Each right, when exercisable, will entitle
the holder to buy one one-hundredth of a share of a series of
junior participating preferred stock of Fortune Brands at an
exercise price of $150. Initially, the rights will be attached
to the shares of Common stock and are not exercisable. The
rights will become exercisable only in the event that a person or
group acquires 15% or more of Fortune Brands Common stock or
makes, or announces its intention to make, a tender offer for 15%
or more of Fortune Brands Common stock.
If a person or group acquires 15% or more of Fortune Brands
Common stock, each right will entitle its holders (other than
such person or members of such group) to purchase, at the right's
then-current exercise price, a number of Fortune Brands Common
shares having a market value of twice such price. If Fortune
Brands is acquired in a merger or other business combination or
Fortune sells 50% or more of its assets or earning power after a
person has acquired 15% or more of Fortune Brands Common stock,
each right will entitle its holders to purchase, at the right's
then-current exercise price, a number of the acquiring company's
Common shares having a market value of twice such price. Prior
to the acquisition by a person or group of 15% or more of Fortune
Brands Common stock, the rights are redeemable for one cent per
right at the option of the Board of Directors.
The issuance of the Rights will have no dilutive effect,
will not affect reported earnings per share, and will not be
taxable to the Company or its stockholders.
Additional information regarding the preferred share
purchase rights plan will be mailed to stockholders of record on
December 24, 1997.
Fortune Brands, Inc. is an international consumer products
company with headquarters in Old Greenwich, Connecticut.
# # # #
EXHIBIT 20b
[Fortune Brands Letterhead]
December 24, 1997
Dear Stockholder:
The Board of Directors has declared a dividend distribution
of new Preferred Share Purchase Rights, which will have the effect of
renewing, with certain modifications, the Company's old Preferred Share
Purchase Rights Plan. The Company's old Preferred Share Purchase Rights
Plan expired on December 24, 1997. A detailed summary of the new Rights is
enclosed with this letter.
Like the predecessor Rights, the new Rights are designed
to protect stockholders against abusive takeover tactics, which the
Board believes are not in the best interests of stockholders. Abusive
takeover tactics can deprive stockholders of the full value of their
shares and squeeze them out of their investment without giving them any
real choice. The Board considers the Rights to be an integral component in
protecting our stockholder's right to retain an equity investment in
Fortune Brands and the full value of that investment, while not foreclosing a
fair acquisition bid for the company.
The new Rights have been declared as a dividend to
stockholders of record as of the close of business on December 24, 1997.
Unless certain circumstances occur, however, certificates representing the
new Rights will not be sent to you and the new Rights will automatically
accompany and trade with the shares of Common Stock. Please see the enclosed
detailed summary for a description of the circumstances in which separate
certificates representing the new Rights would be distributed and the
new Rights would begin trading independently. The issuance of the new
Rights is not taxable to you under the federal income tax laws.
Over the past several years, we have been taking aggressive
steps to further sharpen our focus on our core businesses and to enhance
stockholder value. In this respect, we have invested nearly $2 billion to
reduce fully diluted shares by 20%, divested several non-core businesses
and most recently spun-off to our stockholders the capital stock of
Gallaher, the leading U.K. tobacco company. We believe Fortune Brands has
a bright future as a premier international consumer products company.
The new Rights we are issuing today reflect our determination that you, our
stockholders, be given every opportunity to participate fully in that future.
On behalf of the Board of Directors,
Thomas C. Hays
Chairman of the Board and
Chief Executive Officer
Enclosure
