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
Date of Report (Date of earliest event reported): November 6,
1996
PREMARK INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-19256 36-3461320
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
Incorporation)
1717 Deerfield Road, Deerfield, Illinois 60015
(Address of principal executive offices) (Zip Code)
(847) 405-6000
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
On November 6, 1996, the Board of Directors of
Premark International, Inc. (the "Company") declared a
dividend of one preferred share purchase right (a "Right") for
each outstanding share of common stock, par value $1 per share
(the "Common Shares"), of the Company. The dividend is
payable on December 16, 1996 (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, par value $1 per share (the "Preferred
Shares"), of the Company at a price of $80.00 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 Norwest Bank Minnesota, N.A., 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 (or such later date as may be
determined by action of the Board of Directors prior to such
time as any person or group of affiliated persons becomes an
Acquiring Person) 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
the 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 with a copy of this Summary of Rights attached
thereto.
The Rights Agreement provides that, until the
Distribution Date (or earlier redemption or expiration of the
Rights), the Rights will be transferred with and only with the
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 Distribu-
tion Date. The Rights will expire on November 6, 2006 (the
"Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
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 $1 per share but will be entitled to an aggregate dividend
of 100 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preferred Shares will
be entitled to a minimum preferential liquidation 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 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
after a person or group has become an Acquiring Person, 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 or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so
that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void),
will thereafter have the right to receive upon exercise that
number of Common Shares having a market value of two times the
exercise price of the Right.
At any time after any person or group becomes an
Acquiring Person and prior to the acquisition by such person
or group of 50% or more of the outstanding Common Shares, the
Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio
of one Common Share, or one one-hundredth of a Preferred Share
(or of a share of a class or series of the Company's preferred
stock having equivalent rights, preferences and privileges),
per Right (subject to adjustment).
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"). The redemption of the Rights may be made
effective at such time on such basis with such conditions as
the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the holders
of the Rights, including an amendment to lower certain
thresholds described above to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstanding
Common Shares then known to the Company to be beneficially
owned by any person or group of affiliated or associated
persons and (ii) 10%, except that from and after such time as
any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
The Rights have certain anti-takeover effects. The
Rights will cause substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by
the Company's Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired.
The Rights should not interfere with any merger or other
business combination approved by the Board of Directors since
the Rights may be redeemed by the company at the Redemption
Price prior to the time that a person or group has acquired
beneficial ownership of 15% or more of the Common Shares.
The Rights Agreement, dated November 6, 1996 between
the Company and Norwest Bank Minnesota N.A., as Rights Agent,
specifying the terms of the Rights and the form of press
release announcing the declaration of the rights are attached
hereto as exhibits and are incorporated herein by reference.
The foregoing description of the Rights is qualified in its
entirety by reference to the Rights Agreement in the exhibit
attached hereto.
On November 6, 1996 the Board of Directors of the
Company approved changes to the employment agreements (the
"Agreements") with its executive officers, to make them
consistent with the new Rights Agreement. The provisions of
the employment agreements would become effective for a period
of three years upon a Change of Control, as defined in the
Agreements. Such Agreements require that the executive
officer continue to be employed in a position and with terms
and conditions of employment that are substantially identical
to those before the Change of Control. Specified benefits
would be paid in the event that, following a Change of
Control, the employment of the executive officer is terminated
or the executive officer terminates employment within the 30-
day period following the one year anniversary of the Change of
Control for any reason, or at any time for the reason that
there occurs one or more significantly unfavorable changes in
the terms and conditions of his or her employment. Under such
Agreements, each of the executive officers would be eligible
to receive (a) 3 times the sum of the Executive's annual base
salary and the greater of (i) the Executive's incentive awards
for the last three period and (ii) the sum of the annual
incentive award and the most recent long-term incentive award
for the most recent period, plus (b) a prorated amount for the
year of termination. The amount of any other severance
payments would be offset from the amount payable under the
Agreements. If any payments to be made pursuant to such
Agreements, either alone or together with payments under any
other plans, policies or arrangements, would subject the
recipient to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, the Company will
pay such recipient an additional amount equal to the excise
tax plus a further amount as shall equal the income tax
payable with respect to the payment of such excise tax amount
and such income tax amount. The Company will also enter into
Agreements with future executive officers. The Agreements are
substantially the same and a copy of the form of the Agreement
is filed as an exhibit and is incorporated herein by
reference. The foregoing description of the Agreements is
qualified in its entirety by reference to the Agreement in the
exhibit attached hereto.
Item 6. Exhibits
1. Rights Agreement, dated November 6, 1996, between Premark
International, Inc. and Norwest Bank Minnesota, N.A.,
with exhibits.
2. Press release dated November 6, 1996.
3. Form of Employment Agreement.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereto
duly authorized.
PREMARK INTERNATIONAL, INC.
Dated: November 22, 1996 By /s/ JOHN M. COSTIGAN
Name: John M. Costigan
Title: Senior Vice President,
General Counsel and
Assistant Secretary
EXHIBIT LIST
1. Rights Agreement, dated November 6, 1996, between Premark
International, Inc. and Norwest Bank Minnesota, N.A.,
with exhibits.
2. Press release dated November 6, 1996.
3. Form of Employment Agreement.
<PAGE>
PREMARK INTERNATIONAL, INC.
and
NORWEST BANK MINNESOTA, N.A.
Rights Agent
Rights Agreement
Dated as of November 6, 1996
____________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Right Certificates 7
Section 4. Form of Right Certificates 10
Section 5. Countersignature and Registration 11
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates 12
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 14
Section 8. Cancellation and Destruction of
Right Certificates 16
Section 9. Availability of Common Shares 17
Section 10. Preferred Shares Record Date 18
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights 19
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares 33
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power 33
Section 14. Fractional Rights and Fractional Shares 36
Section 15. Rights of Action 38
Section 16. Agreement of Right Holders 39
Section 17. Right Certificate Holder Not Deemed a
Stockholder 40
Section 18. Concerning the Rights Agent 41
Section 19. Merger or Consolidation or Change of
Name of Rights Agent 42
Section 20. Duties of Rights Agent 43
Section 21. Change of Rights Agent 47
Section 22. Issuance of New Right Certificates 49
Section 23. Redemption 49
Section 24. Exchange 51
Section 25. Notice of Certain Events 53
Section 26. Notices 55
Section 27. Supplements and Amendments 56
Section 28. Successors 57
Section 29. Benefits of this Agreement 57
Section 30. Severability 58
Section 31. Governing Law 58
Section 32. Counterparts 58
Section 33. Descriptive Headings 58
Signatures 59
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred
Shares
<PAGE>
Agreement, dated as of November 6, 1996, between
Premark International, Inc., a Delaware corporation (the
"Company"), and Norwest Bank Minnesota, N.A. (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 16, 1996 (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,
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 Af-
filiates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's Af-
filiates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with respect
to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote
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
holding, voting (except to the extent contemplated by the
proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then
outstanding," when used with reference to a Person's Beneficial
Ownership of securities of the Company, shall mean the number of
such securities then issued and outstanding together with the
number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder.
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in
Minnesota 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., Minneapolis, Minnesota time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 P.M., Minneapolis, Minnesota 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 $1 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, par value $1 per share, of
the Company having the rights and preferences set forth in the
Form of Certificate of Designations 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.
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 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 (subject to the provisions of Section 3(b) hereof) by
the certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and
(y) the right to receive Right Certificates will be transferable
only in connection with the transfer of Common Shares. As soon
as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will,
if requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such 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.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights
to Purchase Preferred Shares, in substantially the form of
Exhibit C hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of
such holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto.
Until the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), the surrender for transfer of
any certificate for Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with
the Common Shares represented thereby.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement
between Premark International, Inc. and Norwest Bank
Minnesota, N.A., dated as of November 6, 1996 (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal executive offices of Premark International, 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. Premark International, 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. 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. 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. Subject to the provisions of Section 22 hereof, the
Right Certificates shall entitle the holders thereof to purchase
such number of one one-hundredths of a Preferred Share as shall
be set forth therein at the price per one one-hundredth of a
Preferred Share set forth therein (the "Purchase Price"), but the
number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer, either
manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested
by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall
be manually countersigned by the Rights Agent and shall not be
valid for any purpose unless countersigned. In case any officer
of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf
of the Company by any person who, at the actual date of the
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, 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 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) The registered holder of any
Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any
time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the 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 November 6, 2006 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), or (iii)
the time at which such Rights are exchanged as provided in
Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share purchasable pursuant to the exercise of a Right
shall initially be $80.00, and shall be subject to adjustment
from time to time as provided in Section 11 or 13 hereof and
shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the
shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 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 such Right Certificate,
registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such
cash to or upon the order of the registered holder of such Right
Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of Section
14 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.
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. 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 Right Certificates or of any Preferred Shares
upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates or
depositary receipts for the Preferred Shares in a name other than
that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Preferred
Shares upon the exercise of any Rights until any such tax shall
have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such
tax is due.
Section 10. Preferred Shares Record Date. Each person
in whose name any certificate for Preferred Shares is issued upon
the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Preferred
Shares transfer books of the Company are closed, such person
shall be deemed to have 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 the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled
to any rights of a holder of Preferred Shares for which the
Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other 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 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 that represents Rights beneficially owned by an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof; no
Right Certificate shall be issued at any time upon the transfer
of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights
Agent for transfer to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence shall be cancelled.
(iii) In the event that there shall not be 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 (as defined in Section
11(d)) on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number
of 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 to be issued upon exercise
of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
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 holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Right Certificates held
by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so
to be distributed shall be issued, executed and countersigned in
the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of 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
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 reclas-
sification 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 holder of a Right Certificate in
accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. In the event, directly or
indirectly, at any time after a Person has become an 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 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 Right Certificates
with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this
Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes
place 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 Right
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one 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 Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise
act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it
is 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 Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office of the Rights
Agent, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the 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.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. 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, li-
ability, 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, 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 such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the 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, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and such
certificate shall be full 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, the
Chief Executive Officer, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in 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 holders of the Right Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within
a period of 30 days after giving notice of such removal or after
it has been notified in writing of such resignation or incapacity
by the resigning or incapacitated Rights Agent or by the holder
of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and
doing business under the laws of the United States or of the
State of Minnesota (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 Minnesota), in good standing,
having an office in the State of Minnesota, 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 ap-
pointment the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the
Common Shares or Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the 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 under the
Right Certificates 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 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 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 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 any Rights
pursuant to paragraph (a) of this Section 24 and without any
further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares
equal to the number of such Rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure
to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the
method by which 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 Right Certificates with regard to which such fractional
Common Shares would otherwise be issuable an amount in cash equal
to the same fraction of the current market value of a whole
Common Share. For the purposes of this paragraph (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 holder of a
Right Certificate, in accordance with Section 26 hereof, a notice
of such proposed action, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to
the date of the taking of such proposed action or the date of
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 11(a)(ii)
hereof shall occur, then the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of
such event, which 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 Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Premark International, Inc.
1717 Deerfield Road
Deerfield, Illinois 60015
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Norwest Bank Minnesota, N.A.
161 North Concord Exchange
South St. Paul, MN 55075
Attention: Corporate Secretary
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments. The Company
may from time to time supplement or amend this Agreement without
the approval of any holders of Right Certificates in order to
cure any ambiguity, to correct or supplement any provision
contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions with
respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a
writing signed by the Company and the Rights Agent; provided,
however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any
manner which would 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 to lower the thresholds set forth in
Sections 1(a) and 3(a) to not less than the greater of (i) the
sum of .001% and the largest percentage of the outstanding Common
Shares then known by the Company to be beneficially owned by any
Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to
the terms of any such plan) and (ii) 10%.
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the 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 Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, 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.
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.
PREMARK INTERNATIONAL, INC.
Attest:
By By
Title: Title:
Attest: NORWEST BANK MINNESOTA, N.A.
By By
Title: Title:
<PAGE>
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
PREMARK INTERNATIONAL, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Premark International, Inc., a corporation organized
and existing under the General Corporation Law of the State of
Delaware (hereinafter called the "Corporation"), hereby certifies
that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on
November 6, 1996:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation (hereinafter
called the "Board of Directors" or the "Board") in accordance
with the provisions of the Certificate of Incorporation, the
Board of Directors hereby creates a series of Preferred Stock,
par value $1 per share (the "Preferred Stock"), of the
Corporation and hereby states the designation and number of
shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series A Junior Participating
Preferred Stock" (the "Series A Preferred Stock") and the number
of shares constituting the Series A Preferred Stock shall be one
million. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to
a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible
into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares
of any series of Preferred Stock (or any similar stock)
ranking prior and superior to the Series A Preferred Stock
with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common
Stock, par value $1 per share (the "Common Stock"), of the
Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of
March, June, September and December in each year (each such
date being referred to herein as a "Quarterly 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 per
share (rounded to the nearest cent) equal to the greater of
(a) $1 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares
a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1 per share
on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A 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. The Board of Directors may
fix a record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date
shall be not more than 60 days prior to the date fixed for
the payment thereof.
Section 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting rights:
(A) Subject to the provision 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
Corporation. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred
Stock or any similar stock, or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of
the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking
any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares of stock
ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends, or make any
other distributions, on any shares of stock
ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and
all such parity stock on which dividends are
payable or in arrears in proportion to the total
amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire
for consideration any shares of Series A Preferred
Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in ac-
cordance with a purchase offer made in writing or
by publication (as determined by the Board of
Directors) to all holders of such shares upon such
terms as the Board of Directors, after
consideration of the respective annual dividend
rates and other relative rights and preferences of
the respective series and classes, shall determine
in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of
Series A Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized
but unissued shares of Preferred Stock and may be reissued
as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in
the Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preferred
Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding
Up. Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the
holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock unless, prior thereto, the
holders of shares of Series A Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the
holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject
to the provision for adjustment hereinafter set forth, equal
to 100 times the aggregate amount to be distributed per
share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made
ratably on the Series A Preferred Stock and all such parity
stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case
the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Com-
mon Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case each share of Series A Preferred Stock shall at the
same time be similarly exchanged or changed into an amount
per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount
set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A
Preferred Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock
shall rank, with respect to the payment of dividends and the
distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of
Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, this Certificate of Designa-
tions is executed on behalf of the Corporation by its Chair-
man of the Board and attested by its Secretary this 6th day
of November, 1996.
______________________________
Chairman of the Board
Attest:
Secretary
<PAGE>
Form of Right Certificate
Certificate No. R- Rights
NOT EXERCISABLE AFTER NOVEMBER 6, 2006 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
PREMARK INTERNATIONAL, 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 6, 1996 (the "Rights Agreement"), between
Premark International, Inc., a Delaware corporation (the
"Company"), and Norwest Bank Minnesota, N.A. (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., Minneapolis, Minnesota time,
on November 6, 2006 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, par value $1 per share (the
"Preferred Shares"), of the Company, at a purchase price of
$80.00 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
November 6, 1996, 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
Right Certificates. Copies of the Rights Agreement are on file
at the principal executive offices of the Company and the
above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate
or Right Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may be redeemed by the
Company at a redemption price of $.01 per Right or (ii) may be
exchanged in whole or in part for Preferred Shares or shares of
the Company's Common Stock, par value $1 per share.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be 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 hereof, nor
shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions 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.
B-2
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:_________________
ATTEST: PREMARK INTERNATIONAL, INC.
By
Countersigned:
NORWEST BANK MINNESOTA, N.A.
By
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with
full power of substitution.
Dated: , ______
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations
and credit unions with membership in an approved signature
guarantee Medallion program), pursuant to SEC Rule 17Ad-15.
- - ------------------------------------------------------------
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 represented by the Right Certificate.)
To: , INC.
The undersigned hereby irrevocably elects to exercise
Rights represented 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: , 1995
Signature
Signature Guaranteed:
Form of Reverse Side of Right Certificate -- continued
Signatures must be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations
and credit unions with membership in an approved signature
guarantee Medallion program), pursuant to SEC Rule 17Ad-15.
- - -------------------------------------------------------------
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 6, 1996, the Board of Directors of Premark
International, Inc. (the "Company") declared a dividend of one
preferred share purchase right (a "Right") for each outstanding
share of common stock, par value $1 per share (the "Common
Shares"), of the Company. The dividend is payable on December
16, 1996 (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, par value $1 per share (the
"Preferred Shares"), of the Company at a price of $80.00 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 Norwest Bank Minnesota, N.A., 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 ben-
eficial ownership of 15% or more of the outstanding Common Shares
or (ii) 10 business days (or such later date as may be determined
by action of the Board of Directors prior to such time as any
person or group of affiliated persons becomes an Acquiring
Person) 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 the 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 with a copy of this Summary of Rights
attached thereto.
The Rights Agreement provides that, until the Dis-
tribution Date (or earlier redemption or expiration of the
Rights), 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 November 6, 2006 (the "Final
Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed or exchanged by the
Company, in each case, as described below.
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
$1 per share but will be entitled to an aggregate dividend of 100
times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled
to a minimum preferential liquidation 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' div-
idend, 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 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 after a person or
group has become an Acquiring Person, 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 or group of
affiliated or associated persons becomes an Acquiring Person,
proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right
to receive upon exercise that number of Common Shares having a
market value of two times the exercise price of the Right.
At any time after any person or group becomes an
Acquiring Person and prior to the acquisition by such person or
group of 50% or more of the outstanding Common Shares, the Board
of Directors of the Company may exchange the Rights (other than
Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one Common
Share, or one one-hundredth of a Preferred Share (or of a share
of a class or series of the Company's preferred stock having
equivalent rights, preferences and privileges), per Right
(subject to adjustment).
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").
The redemption of the Rights may be made effective at such time
on such basis with such conditions as the Board of Directors in
its sole discretion may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of
the Rights, including an amendment to lower certain thresholds
described above to not less than the greater of (i) the sum of
.001% and the largest percentage of the outstanding Common Shares
then known to the Company to be beneficially owned by any person
or group of affiliated or associated persons and (ii) 10%, except
that from and after such time as any person or group of
affiliated or associated persons becomes an Acquiring Person no
such amendment may adversely affect the interests of the holders
of the Rights.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
A copy of the Rights Agreement will be filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement. 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.
Release: Immediate
Contact: Isabelle Goossen (847) 405-6218
PREMARK INTERNATIONAL ADOPTS SHARE PURCHASE RIGHTS PLAN
DEERFIELD, Ill., November 6, 1996 -- Premark International,
Inc. today adopted a new share purchase rights plan that is
designed to assure fair and equal treatment of all shareholders
in the event of any proposed takeover attempt. The plan involves
the distribution of one purchase right for a new series of junior
preferred stock for each outstanding share of the company's
common stock.
Premark will redeem common share purchase rights declared
under a ten-year rights agreement adopted in March 1989. A
redemption payment of $0.00147 per share of Premark
International, Inc. common stock will be distributed to holders
of record as of December 16, 1996. The distribution is expected
to occur with Premark's quarterly dividend payment on January 6,
1997.
"The new rights plan is designed to strengthen previous
provisions aimed at fair and equal treatment for all shareholders
in the event of any proposed takeover of the company," said James
M. Ringler, Premark's Chief Executive Officer. "It guards
against partial tender offers, squeeze outs, open market
accumulations and other tactics to gain control of the company
without paying all shareholders an adequate premium value."
"The rights are not intended to prevent a takeover of the
company, and will not do so," Ringler continued. "The plan
encourages anyone seeking to acquire the company to negotiate
with the Board prior to attempting a takeover and helps to
maximize the shareholders' long-term investment in the company."
Ringler added, "The rights are not being distributed in response
to any effort to acquire the company, and the Board is not aware
of any such effort."
As a response to unwelcome takeover tactics, the rights plan
allows holders of rights to purchase shares in either Premark or
an acquiror at discounts from market value, or permits Premark to
exchange common stock for the rights. The plan has four basic
provisions.
First, if an acquiror buys 15 percent or more of Premark's
stock, the plan allows other shareholders to buy, with each
right, additional Premark shares at a 50 percent discount.
Second, if Premark is acquired in a merger or other business
combination transaction, rights holders will be entitled to buy
shares of the acquiring company at a 50 percent discount. Third,
if an acquiror buys between 15 percent and 50 percent of
Premark's outstanding stock, the company can exchange part or all
of the rights of other holders for shares of the company's stock
on a one-for-one basis, or shares of the new junior preferred
stock on a one-for-one-hundredth basis. Fourth, before an
acquiror buys 15 percent or more of Premark's common stock, the
rights are redeemable for one cent per right at the option of the
Board of Directors. This provision permits the Board to enter
into an acquisition transaction that is determined to be in the
best interest of shareholders. The Board is authorized to reduce
the 15 percent threshold to not less than 10 percent.
The new rights plan will become effective on December 16,
1996, and will expire on November 6, 2006. The rights
distribution is not taxable to shareholders.
Premark International, Inc., a $2.2 billion multinational
company, markets premium products in more than 100 countries
under leading brand names such as Hobart , Wilsonart , West
Bend , Florida Tile and Precor . Premark stock is listed on the
New York, Pacific and London Stock Exchanges under the symbol
"PMI."
# # #
EMPLOYMENT AGREEMENT
AGREEMENT by and between PREMARK INTERNATIONAL, INC., a
Delaware corporation (the "Company") and _____________________ (the
"Executive"), dated as of the ____ day of ________________, 1996.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Term of Agreement. (a) The term of this Agreement
shall commence on the date hereof and shall terminate, except to
the extent that any obligation of the Company hereunder remains
unpaid, three years from the date hereof, subject to extension as
provided in Section 1(b) below; provided, however, that if a Change
of Control shall have occurred prior to such date of termination
this Agreement shall continue in effect until three years beyond
the Effective Date (as defined in Section 1(c))and for such
additional period as any obligation of the company under this
Agreement shall remain unpaid.
(b) Commencing one year from the date hereof, and
on each subsequent anniversary of such date (such date and each
subsequent anniversary thereof is hereinafter referred to as a
"Renewal Date"), the term of this Agreement shall be automatically
extended so as to terminate three years thereafter, unless at least
60 days prior to the next Renewal Date the Company shall give
written notice to the Executive that the term of this Agreement
shall not be so extended.
(c) The "Effective Date" shall be the first date
during the term of this Agreement (as defined in Section 1(b)) on
which a Change of Control occurs. Anything in this Agreement to
the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Company is terminated or the
Executive ceases to be an officer of the Company prior to the date
on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment
or cessation of status as an officer of the Company (i) was at the
request of a third party who has taken steps reasonably calculated
to effect the Change of Control or (ii) otherwise arose in
connection with or anticipation of the Change of Control, then for
all purposes of this Agreement the "Effective Date" shall mean the
date immediately prior to the date of such termination of
employment or cessation of status as an officer employed by the
Company.
(d) Nothing contained in this Agreement shall
impair or interfere in any way with the right of the Executive to
terminate the Executive's employment or the right of the Company or
any affiliated company to terminate the employment of the Executive
with or without cause prior to the Effective Date. Nothing
contained in this Agreement shall be construed as a contract of
employment between the Company or any affiliated company and the
Executive or as a right of the Executive to continue in the employ
of the Company or any affiliated company, or as a limitation of the
right of the Company or any affiliated company to discharge the
Executive with or without cause prior to a Change of Control.
Moreover, if prior to the Effective Date, (i) the Executive's
employment with the Company terminates or (ii) the Executive ceases
to be an officer of the Company, then the Executive shall have no
further rights under this Agreement.
2. Change of Control. For the purpose of this
Agreement, a "Change of Control" shall mean:
(a) The acquisition, other than from the Company,
by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
securities representing 20% or more of the combined voting power of
the Company's securities entitled to vote in the election of
directors; provided, however, that any acquisition by the Company
or any of its subsidiaries, or by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries, or any merger or acquisition following which more
than 60% of the combined voting power of the securities of the
resulting parent corporation is held by the holders of the combined
voting power of the Company's securities in substantially the
same proportion as their ownership immediately prior to such
transaction and the Incumbent Board still constitutes at least a
majority of the Board, shall not constitute a Change of Control; or
(b) Individuals who, as of November 6, 1996,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to November 6, 1996,
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the Company, or (ii)
the sale or other disposition of all or substantially all of the
assets of the Company, or (iii) a reorganization, merger or
consolidation of the Company, provided that such transaction shall
not constitute a Change of Control if, following such transaction,
the holders of the combined voting power of the Company's
securities own more than 60% of the combined voting power of the
securities of the corporation which acquires the assets in (ii)
above or the parent corporation which results from the
reorganization, merger or consolidation in (iii) above and the
Incumbent Board still constitutes at least a majority of such
entities; or
(d) The sale or other disposition, in response to
a pending or threatened Change of Control, of a majority of the
voting stock or all or substantially all of the assets of the
corporations comprising the decorative laminate business or the
food equipment business, if the sales or operating income of such
business constituted at least 20% of the Company's consolidated
sales or operating income during the most recently completed fiscal
year; provided that, if such an event takes place, the Executive
will not have the right to terminate employment for any reason or
for no reason during the Window Period under Section 5(c) and
receive the benefits set forth in Section 6, but will have the
right to terminate employment for Good Reason under Section 5(c)
and receive such benefits. The Board of Directors of the Company
shall determine, in its sole discretion, whether the sale or other
disposition of such businesses is in response to a pending or
threatened Change of Control. If the Board determines that such
transaction is not in response to a pending or threatened Change of
Control, the Executive shall have no right to the benefits set
forth in this Agreement; provided, however, that the Board shall
review the circumstances of such transaction, including
management's role in initiating the transaction, its effect on
shareholder value, and its effect on the Executive's
responsibilities and terms of employment, and shall determine, in
its sole discretion, whether all or any part of the benefits set
forth in this Agreement shall be awarded to the Executive.
3. Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company, for the period
commencing on the Effective Date and ending on the third
anniversary of such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or
any office or location less than 35 miles from such location.
For purposes of Section 4(a)(i) (A) such position,
authority, duties and responsibilities shall be regarded as not
commensurate if, as a result of a Change of Control, (I) the
Company becomes a direct or indirect subsidiary of another
corporation or becomes controlled, directly or indirectly, by an
unincorporated entity (such ultimate parent corporation or
unincorporated entity is hereinafter referred to as a "parent
company"), or (II) all or substantially all of the assets of the
Company are acquired by another corporation or corporations or
unincorporated entity or entities owned or controlled, directly or
indirectly, by another corporation or unincorporated entity (such
ultimate parent corporation or unincorporated entity is also
hereinafter referred to as a "parent company"), unless, in each
case, (x) Section 12(b) of this Agreement shall have been complied
with by any such parent company and (y) the Executive shall have
assumed a position with such parent company and the Executive's
position, authority, duties and responsibilities with such parent
company are at least commensurate in all material respects with the
most significant of those held, exercised and assigned with the
Company at any time during the 90-day period immediately preceding
the Effective Date.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business affairs of the
Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it
shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive an annual base
salary ("Annual Base Salary"), which shall be paid at a monthly
rate, at least equal to twelve times the highest monthly base
salary paid or payable to the Executive by the Company and its
affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be
reviewed at least annually and shall be increased at any time and
from time to time as shall be substantially consistent with
increases in base salary generally awarded in the ordinary course
of business to other peer executives of the Company and its
affiliated companies. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) Incentive Awards. In addition to Annual Base
Salary, the Executive shall be paid, for each fiscal year ending
during the Employment Period, an annual incentive award (the
"Annual Incentive Award") and a long-term incentive award (the
"Long-Term Incentive Award" and together with the Annual Incentive
Award, the "Incentive Awards") in cash at least equal to the
average annual incentive award and the average long-term incentive
award, respectively paid or payable, including by reason of any
deferral, to the Executive by the Company and its affiliated
companies in respect of the three fiscal years immediately
preceding the fiscal year in which the Effective Date occurs
(together, the "Recent Incentive Awards"). In cases where the
Executive received or deferred a pro rata award because his or her
participation was for less than the full Annual Incentive Award
fiscal year or Long-Term Incentive Award performance period, the
Recent Incentive Awards shall be recalculated by increasing the
awards for which a pro rata payment was received or deferred to the
level they would have been had the Executive participated for the
full fiscal year and performance period. The recalculation is
solely for purposes of defining the term Recent Incentive Awards,
and shall not entitle the Executive to any increase in awards paid
or payable prior to the Effective Date. Each such Annual Incentive
Award and Long-Term Incentive Award shall be paid no later than
the end of the third month of the year next following the years for
which the Annual Incentive Award or the Long-Term Incentive Award,
as the case may be, is awarded, unless the Executive shall elect to
defer the receipt of such Annual Incentive Award or Long-Term
Incentive Award.
(iii) Profit Sharing, Thrift, Savings and Pension
Plans. In addition to Annual Base Salary and Incentive Awards
payable as hereinabove provided, the Executive shall be entitled to
participate during the Employment Period in all profit sharing,
thrift, savings, supplemental plans and pension plans, practices,
policies and programs generally applicable to other peer executives
of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive
with profit sharing opportunities (measured with respect to both
regular and special profit sharing opportunities), thrift
opportunities, savings opportunities and pension benefits
opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices,
policies and programs as in effect at any time during the 90-day
period immediately preceding the Effective Date.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case
may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs)
to the extent generally applicable to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide benefits which are
less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive
at any time during the 90-day period immediately preceding the
Effective Date.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive at
any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies.
(vi) Perquisites. During the Employment Period, the
Executive shall be entitled to perquisites in accordance with the
most favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the Executive at
any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to exclusive personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided to the
Executive by the Company and its affiliated companies at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided at any time
thereafter generally with respect to other peer executives of the
Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the
most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive
at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies.
5. Termination of Employment. (a) Death or
Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of "Disability" set forth
below), it may give to the Executive written notice in accordance
with Section 12(b) of this Agreement of its intention to terminate
the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, "Disability" means the absence of the Executive from the
Executive's duties with the Company on a substantially full-time
basis for 180 consecutive business days as a result of incapacity
due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be
withheld unreasonably).
(b) Cause. The Company may terminate the
Executive's employment during the Employment Period for Cause. For
purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the Board
or Chief Executive Officer believes that the Executive has not
substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act on the
part of the Executive shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board
(after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of
the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) Good Reason; Window Period. The Executive's
employment may be terminated (i) during the Employment Period by
the Executive for Good Reason or (ii) during the Window Period by
the Executive for any reason or for no reason (except as set forth
in Section 2(d)). For purposes of this Agreement, the "Window
Period" shall mean that 30-day period immediately following the
first anniversary of the Effective Date. For purposes of this
Agreement, "Good Reason" shall mean:
(A) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(B) any failure by the Company to comply with any
of the provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(C) the Company's requiring the Executive to be
based at any office or location other than that described in
Section 4(a)(i)(B) hereof;
(D) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(E) any failure by the Company or any successor to
comply with and satisfy Section 11(c) of this Agreement, provided
that such successor has received at least ten days prior written
notice from the Company or the Executive of the requirements of
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive during the Window Period or
for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of
such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause, as the case may
be, shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination"
shall mean (i) if the Executive's employment is terminated by the
Company for Cause, or by the Executive during the Window Period or
for Good Reason, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be, (ii) if
the Executive's employment is terminated by the Company other than
for Cause, Disability or death, the Date of Termination shall be
the date on which the Company notifies the Executive of such
termination, and (iii) if the Executive's employment is terminated
by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective
Date, as the case may be.
6. Obligations of the Company upon Termination. (a)
Good Reason or during the Window Period; Other than for Cause or
Disability. If, during the Employment Period, the Company shall
terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for
Good Reason or for any reason or for no reason during the Window
Period, the Company shall have the following obligations:
(i) The Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
(A) the amount equal to the product of (x) three
and (y) the sum of the Executive's Annual Base Salary and
the greater of (i) the Executive's Recent Incentive
Awards and (ii) the sum of the Annual Incentive Award and
the Long-Term Incentive Award paid or payable, including
by reason of any deferral, to the Executive for the most
recently completed fiscal year in the case of the Annual
Incentive Award and the most recently completed
performance period in the case of the Long-Term Incentive
Award ("Most Recent Incentive Awards"). In cases where
the Executive received or deferred a pro rata award
because his or her participation was for less than the
full Annual Incentive Award fiscal year or Long-Term
Incentive Award performance period, the Most Recent
Incentive Awards shall be recalculated by increasing the
awards for which a pro rata payment was received or
deferred to the level they would have been had the
Executive participated for the full fiscal year and
performance period. The recalculation is solely for
purposes of defining the term Most Recent Incentive
Awards. Such amount shall be paid in lieu of, and the
Executive hereby waives the right to receive, any other
amount of severance relating to salary or bonus
continuation to be received by the Executive upon such
termination of employment under any severance plan,
policy or arrangement of the Company; and
(B) the amount equal to the product of (x) the sum
of the maximum Annual Incentive Award and the maximum
Long-Term Incentive Award that would have applied to the
Executive under the applicable incentive plans of the
Company and the policies and procedures thereunder for
the fiscal year of the Company in which the Date of
Termination occurs, and (y) a fraction, the numerator of
which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of
which is 365; and
(C) the amount of the Executive's Annual Base
Salary through the Date of Termination to the extent not
theretofore paid and the amount of any compensation
previously deferred by the Executive (together with any
accrued interest thereon) and not yet paid by the Company
and any accrued vacation pay of the Executive not yet
paid by the Company.
For purposes of this Agreement, the aggregate of the amounts
described in clauses (A), (B) and (C) of this Section 6(a) shall
hereafter be referred to as the "Special Termination Amount".
(ii) For the remainder of the Employment Period, or
such longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive and,
where applicable, the Executive's family at least equal to those
which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section
4(b)(iv) of this Agreement if the Executive's employment had not
been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated
companies generally applicable to other peer executives and their
families during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their
families (for purposes of determining eligibility of the Executive
for retiree benefits pursuant to such plans, practices, programs
and policies, the Executive shall be considered to have remained
employed until the end of the Employment Period and to have retired
on the last day of such period); provided, however, that with
respect to medical benefits, the Company shall continue, for the
lifetime of the Executive, medical benefits for the Executive and
the Executive's family no less favorable than the medical benefits
provided to the Executive under the Premark International, Inc.
health care plans (or any successor plans thereto) during the 90-
day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
generally with respect to any other peer executives of the Company
and its affiliated companies and their families; and, provided,
further, that, in the event the Executive becomes reemployed with
another employer and is eligible to receive medical or other
welfare benefits under any employer provided plan, the medical and
other welfare benefits described herein shall not be provided by
the Company during such applicable period of eligibility, but shall
resume if such period of eligibility shall terminate.
(iii) To the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive
any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is
terminated by reason of the Executive's death during the Employment
Period, this Agreement shall terminate without further obligations
to the Executive's legal representatives under this Agreement,
other than the payment by the Company of the Special Termination
Amount, provided however, that the amount of such payment
determined under Section 6(a)(i)(A) shall be adjusted as follows.
The amount set forth in clause (A) shall be offset in all cases by
the basic Company life insurance benefit paid or payable in respect
of the Executive's death and, in addition, if the death occurs
after the one year anniversary following the Change of Control, it
shall be offset by the amount of any salary payments made to the
Executive for any periods of employment following the Change of
Control. The adjusted Special Termination Amount shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the Executive's
family shall be entitled to receive benefits at least equal to the
most favorable benefits provided generally by the Company and any
of its affiliated companies to surviving families of peer
executives of the Company and such affiliated companies under such
plans, programs, practices and policies relating to family death
benefits, if any, as in effect generally with respect to other peer
executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive and/or the Executive's family, as in effect on the
date of the Executive's death generally with respect to other peer
executives of the Company and its affiliated companies and their
families.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than the payment by the Company
of the Special Termination Amount. The Special Termination Amount
shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. Anything in this Agreement to the
contrary notwithstanding, the Executive shall be entitled after the
Disability Effective Date to receive disability and other benefits
at least equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled executives
and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families
at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter through the
Date of Termination generally with respect to other peer executives
of the Company and its affiliated companies and their families.
(d) Cause; Other than for Good Reason or during the
Window Period. If the Executive's employment shall be terminated
for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than
the obligation to pay to the Executive Annual Base Salary through
the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during
the Employment Period, excluding a termination either for Good
Reason or for any reason or for no reason during the Window Period,
this Agreement shall terminate without further obligations to the
Executive, other than for the following obligations: (i) payment
of the Executive's Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (ii) payment of the
product of (x) the greater of the Recent Incentive Awards and the
Most Recent Incentive Awards and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365 and (iii)
payment of any compensation previously deferred by the Executive
(together with any accrued interest thereon) and not yet paid by
the Company and any accrued vacation pay of the Executive not yet
paid by the Company (the amounts described in paragraphs (i), (ii)
and (iii) shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination).
7. Non-exclusivity. Except as explicitly modified or
otherwise explicitly provided by this Agreement, (i) nothing in
this Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or other
plans, programs, policies or practices provided by the Company or
any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any other agreements with
the Company or any of its affiliated companies and (ii) amounts
which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of
the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with
such plan, policy, practice or program except as explicitly
modified by this Agreement.
8. Full Settlement. The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-
off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others.
In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement and, except as provided in Section 6(a)(ii) of this
Agreement, such amounts shall not be reduced whether or not the
Executive obtains other employment. With the exception of any
disputes regarding determinations made by the Board of Directors of
the Company under Section 2(d) of this Agreement, the Company
agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company,
the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee
of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section 7872(f)(2)(A)
of the Internal Revenue Code of 1986, as amended (the"Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that as a
result, directly or indirectly, of any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (a "Payment"), the Executive would be
subject to the excise tax imposed by Section 4999 of the Code or
any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to promptly
receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, but excluding any income taxes on the
Payment, the Executive is in the same after-tax position as if no
Excise Tax had been imposed upon the Executive.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether or when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in
arriving at such determinations, shall be made by the Company's
public accounting firm (the "Accounting Firm"). All fees and
expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this
Section 9, shall be paid to the Executive within five days of the
receipt of the Accounting Firm's determination.
(c) The Executive shall notify the Company as soon
as possible in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of
the Gross-Up Payment. If the Company notifies the Executive in
writing within 30 days that it desires to contest such claim, the
Executive shall cooperate with the Company in good faith in order
effectively to contest such claim.
The Company shall control all proceedings taken in connection with
such contest; provided, however, that the Company shall bear and
pay directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such representation
and payment of costs and expenses and advances; and further
provided that any extension of the statute of limitations is
limited solely to such contested amount; and the Company's control
of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.
10. Confidential Information. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive
in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not,
without prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under
this Agreement.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of
Illinois, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
____________________
____________________
____________________
If to the Company:
Premark International, Inc.
1717 Deerfield Road
Deerfield, Illinois 60015
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof shall not
be deemed to be a waiver of such provision or any other provision
of this Agreement.
13. Acknowledgement. The Executive acknowledges that he
or she is a "bona fide executive" within the meaning of the Age
Discrimination in Employment Act and may be involuntarily retired
at age 65.
14. Termination of Prior Agreement. The Employment
Agreement dated _______________ between the Executive and the
Company regarding rights and obligations following a change of
control is hereby terminated.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board
of Directors, the Company has caused these presents to be executed
in its name on its behalf, all as of the day and year first above
written.
______________________________
(Executive)
PREMARK INTERNATIONAL, INC.
By ____________________________
