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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
THE SHERWIN-WILLIAMS COMPANY
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(Exact name of registrant as specified in its charter)
Ohio 34-0526850
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(State of incorporation or organization) (IRS Employer Identification No.)
101 Prospect Avenue, N.W., Cleveland, Ohio 44115
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(Address of principal executive offices) (zip code)
If this form relates to the registration If this form relates to the
of a class of debt securities and is registration of a class of debt
effective upon filing pursuant to securities and is to become
General Instruction A(c)(1) please effective simultaneously with the
check the following box. [ ] effectiveness of a concurrent
registration statement under the
Securities Act of 1933 pursuant
to General Instruction A(c)(2)
please check the following box.[ ]
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Preferred Stock Purchase Rights New York Stock Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the Act:
None
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Title of class
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Item 1. Description of Securities to be Registered.
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On April 23, 1997, the Board of Directors of The Sherwin-Williams
Company, an Ohio corporation (the "Company"), authorized and declared a dividend
distribution, payable on May 6, 1997, of one right (a "Right") to purchase one
one-hundredth (1/100th) of a share of Cumulative Redeemable Serial Preferred
Stock, without par value (the "Preferred Stock), of the Company, or in certain
circumstances Common Stock, par value $1.00 per share, of the Company ("Common
Stock"), for each share of Common Stock outstanding at the close of business on
May 6, 1997 (the "Record Date"), or that become outstanding for any reason
between the Record Date and the earlier of the Distribution Date (or thereafter
in connection with certain convertible securities or employee stock options) or
the Expiration Date (as such terms are defined in the Rights Agreement). The
Rights will be issued pursuant to the terms of a Rights Agreement, dated as of
April 23, 1997, between the Company and KeyBank National Association, as Rights
Agent (the "Rights Agreement"). When exercisable, each Right entitles the
registered holder to purchase one one-hundredth (1/100th) of a share of
Preferred Stock, or in certain circumstances Common Stock, for one hundred ten
dollars ($110.00), subject to adjustment. The Rights are in all respects subject
to and governed by the provisions of the Rights Agreement, a copy of which
(including all exhibits thereto) is filed as Exhibit 1 hereto and incorporated
herein by reference. A summary description of the Rights is attached as Exhibit
B to the Rights Agreement. This summary of the Rights is intended only as a
summary and is qualified in its entirety by reference to the Rights Agreement.
Item 2. Exhibits.
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Exhibit
Number Exhibit
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1 Rights Agreement (including a Form of Right
Certificate as Exhibit A thereto and a
Summary of Rights to Purchase Preferred
Shares as Exhibit B thereto).
2 Press Release, dated April 23, 1997.
3 Form of Letter to Shareholders, dated May 9,
1997, including attached Summary of Rights
to Purchase Preferred Shares.
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SIGNATURE
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Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
THE SHERWIN-WILLIAMS COMPANY
April 24, 1997 By: /s/ L.E. Stellato
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L.E. Stellato
Vice President, General Counsel and
Secretary
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INDEX TO EXHIBITS
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EXHIBIT NO. EXHIBIT
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1 Rights Agreement (including a Form of Right
Certificate as Exhibit A thereto and a Summary of
Rights to Purchase Preferred Shares as Exhibit B
thereto).
2 Press Release, dated April 23, 1997.
3 Form of Letter to Shareholders, dated May 9, 1997,
including attached Summary of Rights to Purchase
Preferred Shares.
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EXHIBIT 1
RIGHTS AGREEMENT
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This RIGHTS AGREEMENT, dated as of April 23, 1997 (this "Agreement"),
is between The Sherwin-Williams Company, an Ohio corporation (the "Company"),
and KeyBank National Association (the "Rights Agent").
RECITALS
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WHEREAS, on April 23, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one right ("Right") for each
share of Common Stock (as such term is hereinafter defined) of the Company
outstanding as of the close of business on May 6, 1997 (the "Record Date"), each
Right initially representing the right to purchase one one-hundredth of a share
of Preferred Stock (as such term is hereinafter defined), upon the terms and
subject to the conditions herein set forth, and further authorized and directed
the issuance of one Right with respect to each share of Common Stock that shall
become outstanding for any reason between the Record Date and the earlier of the
Distribution Date (or, in the case of Common Stock issued upon conversion of
existing or future convertible securities issued by the Company, or upon
exercise of existing or future employee stock options, prior to the fifteenth
day after the Distribution Date) or the Expiration Date (as such terms are
hereinafter defined), or as provided in Section 22.
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or that, together with
all Affiliates and Associates of such Person, after the Record Date, is
the Beneficial Owner of ten percent or more of the shares of Common
Stock then outstanding; provided, however, that an Acquiring Person
shall not include:
(i) the Company;
(ii) any Subsidiary of the Company;
(iii) any employee benefit or stock ownership plan of the
Company or any trustee or fiduciary with respect to such a
plan acting in such capacity; or
(iv) any such Person who has reported or may, pursuant to Rule
13d-1(b)(1) of the General Rules and Regulations under the
Exchange Act, report such ownership (but only as long as such
Person is the Beneficial Owner of less than fifteen percent of
the shares of Common Stock then outstanding) on Schedule 13G
(or any comparable or successor report) under the Exchange
Act.
Notwithstanding the foregoing, (A) no Person shall become an Acquiring
Person solely as the result of an acquisition of Common Stock by the
Company that, by reducing the number
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of shares outstanding, increases the proportionate number of shares
beneficially owned by a Person to ten percent or more (fifteen percent
or more in the case of any Person identified in clause (iv) of this
Section 1(a)) of the shares of Common Stock then outstanding; provided,
however, that if a Person becomes the Beneficial Owner of ten percent
or more (fifteen percent or more in the case of any Person identified
in clause (iv) of this Section 1(a)) of the shares of Common Stock
solely by reason of purchases of Common Stock by the Company and shall,
after such purchases by the Company, become the Beneficial Owner of any
additional shares of Common Stock which has the effect of increasing
such Person's percentage ownership of the then-outstanding shares of
Common Stock by any means whatsoever, then such Person shall be deemed
to be an Acquiring Person, and (B) if the Board of Directors determines
that a Person who would otherwise be an Acquiring Person has become
such inadvertently (including, without limitation, because (1) such
Person was unaware that it Beneficially Owned ten percent or more
(fifteen percent or more in the case of any Person identified in clause
(iv) of this Section 1(a)) of the shares of Common Stock or (2) such
Person was aware of the extent of such Beneficial Ownership but such
Person acquired Beneficial Ownership of such shares of Common Stock
without the intention to change or influence the control of the
Company) and such Person divests itself as promptly as practicable of a
sufficient number of shares of Common Stock so that such Person would
no longer be an Acquiring Person, then such Person shall not be deemed
to be, or have been, an Acquiring Person for any purposes of this
Agreement, and no Share Acquisition Date shall be deemed to have
occurred. All questions as to whether a Person who would otherwise be
an Acquiring Person has become such inadvertently shall be determined
by the Board of Directors.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2, as in effect on the date of this
Agreement, of the General Rules and Regulations under the Exchange Act,
as in effect on the date hereof.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule
13d-3 of the General Rules and Regulations under the Exchange
Act, as in effect on the date hereof;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has or shares the right
to acquire, hold, vote (except pursuant to a revocable proxy
as described in the proviso to this paragraph (d)) or dispose
of such securities (whether any such right is exercisable
immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not
in writing), 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
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such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or
exchange; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate of such other
Person) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), with respect to
acquiring, holding, voting (except as described below) or
disposing of any securities of the Company;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, nor to beneficially own, any security if such Person has the
right to vote such security pursuant to an agreement, arrangement or
understanding which (A) arises solely from a revocable proxy 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 under the Exchange Act and (B) is not also then reportable
on Schedule 13D (or any comparable or successor report) under the
Exchange Act; and provided, further, that nothing in this paragraph (d)
shall cause a Person engaged in business as an underwriter of
securities to be the Beneficial Owner of, or to beneficially own, any
securities acquired through such Person's participation in good faith
in a firm commitment underwriting until the expiration of forty days
after the date of such acquisition or such later date as the Board of
Directors may determine in any specific case.
(e) "Board of Directors" shall mean the Board of Directors of the
Company.
(f) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next
succeeding Business Day.
(h) "Common Stock" shall mean, unless specifically referenced
otherwise, the shares of common stock, $1.00 par value, of the Company;
provided, however, that, if the Company is the continuing or surviving
corporation in a transaction described in Section 13(a), "Common Stock"
shall mean the capital stock with the greatest aggregate voting power
of the Company, or, if the Company is a subsidiary of another
corporation or business trust, the corporation or business trust which
ultimately controls the Company. "Common Stock" when used with
reference to any corporation or business trust, other than the Company,
shall mean the capital stock with the greatest aggregate voting power
of such corporation or business trust, or, if such corporation or
business trust is a subsidiary of another corporation or business
trust, the corporation or business trust which ultimately controls such
first-mentioned corporation or business trust.
(i) "Company" shall have the meaning set forth in the Preamble.
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(j) "Distribution Date" shall mean the earlier of:
(i) the Close of Business on the Share Acquisition Date; or
(ii) the Close of Business on the tenth Business Day (or such
later date as may be specified by the Board of Directors)
after the date of the commencement of a tender or exchange
offer (as determined by reference to Rule 14d-2(a) under the
Exchange Act) by any Person (other than any Person identified
in clauses (i), (ii) or (iii) of Section 1(a)), the
consummation of which would result in beneficial ownership by
such Person of ten percent or more of outstanding Common
Stock.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(l) "Exchange Ratio" shall mean the ratio of one share of Common Stock
per one Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the Record Date.
(m) "Expiration Date" shall mean the earlier of (i) the date on which
the Rights are redeemed or exchanged, and (ii) the Final Expiration
Date.
(n) "Final Expiration Date" shall mean April 22, 2007.
(o) "NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotation System.
(p) "Person" shall mean any individual, firm, corporation, partnership,
joint venture or other enterprise or entity of any kind, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act, and shall include any successor (by merger or otherwise)
of such Person.
(q) "Preferred Stock" shall mean shares of Cumulative Redeemable Serial
Preferred Stock, without par value, of the Company.
(r) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (i) or
(ii) of Section 13(a), (A) the Person that is the issuer of
any securities into which shares of Common Stock are converted
in such merger or consolidation, or, if there is more than one
issuer, the issuer of Common Stock that has the highest
aggregate current per share market price (determined pursuant
to Section 11(d)(i)) and (B) if no securities are so issued,
the Person that is the other party to such merger or
consolidation, or, if there is more than one such Person, the
Person the Common Stock of which has the highest aggregate
current per share market price (determined pursuant to Section
11(d)(i)); and
(ii) in the case of any transaction described in clause (iii)
of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power
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(including, without limitation, securities creating any
obligation on the part of the Company and/or any of its
Subsidiaries) transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the
assets or earning power transferred pursuant to such
transaction or transactions or if the Person receiving the
greatest portion of the assets or earning power cannot be
determined, whichever Person the Common Stock of which has the
highest aggregate current per share market price (determined
pursuant to Section 11(d)(i));
provided, however, that in any such case, (A) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve-month period registered under Section 12 of the
Exchange Act, or such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, then "Principal Party" shall refer
to such other Person, (B) if the Common Stock of such Person is not and
has not been so registered, or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person but is
not a direct or indirect Subsidiary of another Person the Common Stock
of which is and has been so registered, then "Principal Party" shall
refer to the ultimate parent entity of such first-mentioned Person, (C)
if the Common Stock of such Person is and has not been so registered,
or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and one or more of such
other Persons has Common Stock which is and has been so registered,
then "Principal Party" shall refer to whichever of such other Persons
is the issuer of Common Stock having the highest aggregate current per
share market price (determined pursuant to Section 11(d)(i)), and (D)
if the Common Stock of such Person is and has not been so registered,
or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and none of such other
Persons have Common Stock which is or has been so registered, then
"Principal Party" shall refer to whichever ultimate parent entity is
the corporation having the greatest shareholders equity or, if no such
ultimate parent entity is a corporation, shall refer to whichever
ultimate parent entity has the greatest net assets.
(s) "Purchase Price" shall be the price for each one one-hundredth of a
share of Preferred Stock pursuant to the exercise of a Right as set
forth in Section 7(b).
(t) "Record Date" shall have the meaning set forth in the Whereas
Clause.
(u) "Redemption Price" shall be $.005 per Right, subject to adjustment
by the Board of Directors to reflect any stock split, stock dividend or
similar transaction occurring after the Record Date.
(v) "Right" shall have the meaning set forth in the Whereas Clause.
(w) "Right Certificate" shall be a certificate, in substantially the
form of Exhibit A attached hereto, evidencing the Rights.
(x) "Rights Agent" shall have the meaning set forth in the Preamble.
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(y) "Share Acquisition Date" shall mean the first date of public
announcement by the Company (by press release or filing made with the
Securities and Exchange Commission) that an Acquiring Person has become
such.
(z) "Subsidiary" of any Person shall mean any other Person of which a
majority of the voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by such first Person;
provided, however, that for purposes of Section 13(b), "Subsidiary" of
any Person shall mean any other Person of which at least twenty percent
of the voting power of the voting equity securities or equity interests
is owned, directly or indirectly, by such first Person.
(aa) "Summary of Rights" shall mean a Summary of Rights to Purchase
Preferred Stock in substantially the form of Exhibit B attached hereto.
(bb) "Trading Day" shall mean any day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day.
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
(which holders, in accordance with Section 3, shall also be, prior to the
Distribution Date, holders of Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of the New York Stock
Exchange governing transfer agents and registrars. The Company may from time to
time act as co-Rights Agent or appoint such other co-Rights Agents as it may
deem necessary or desirable. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any such co-Rights
Agent. To the extent that any co-Rights Agent takes any action pursuant to this
Agreement, such co-Rights Agent shall be entitled to all of the rights and
protections of, and subject to all of the applicable duties and obligations
imposed on, the Rights Agent pursuant to the terms of this Agreement.
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) From and after the Record Date and until the Distribution Date, (i)
the Rights will be evidenced (subject to the provisions of Section
3(b)) by the certificates representing shares of Common Stock
registered in the names of the record holders thereof (which
certificates representing shares of Common Stock shall also be deemed
to be Rights Certificates) and not by separate Right Certificates
(whether or not such certificates representing shares of Common Stock
include the legend set forth in Section 3(c)), (ii) the Rights will be
transferable only in connection with the transfer of shares of Common
Stock on the stock transfer books of the Company maintained by the
Company or its appointed transfer agent and (iii) the surrender for
transfer of any certificates representing shares of Common Stock in
respect of which Rights have been issued shall also constitute the
surrender for transfer of the Rights associated with the shares of
Common Stock evidenced by such certificate. As soon as practicable
after the Distribution Date, the Rights Agent will send, by
first-class,
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insured, postage prepaid mail, to each record holder of Common Stock as
of the Close of Business on the Distribution Date (and in the case of
Common Stock issued upon conversion of existing or future convertible
securities issued by the Company or upon the exercise of existing or
future employee stock options, to each record holder of Common Stock at
any time after the Distribution Date and prior to the fifteenth day
following the Distribution Date) (other than such holders whose Rights
have become null and void and nontransferable pursuant to Section
7(e)), at the address of such holder shown on the records of the
Company, a Right Certificate, evidencing one Right for each share of
Common Stock so held, subject to adjustment as herein provided,
together with a notice setting forth the Purchase Price as in effect on
the Distribution Date. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) As soon as practicable following the Record Date, the Company will
send a copy of a Summary of Rights, by first-class, postage prepaid
mail, to each record holder of Common Stock as of the Close of Business
on the Record Date, at the address of such holder shown on the records
of the Company as of such date. With respect to certificates
representing shares of Common Stock outstanding as of the Record Date,
until the Distribution Date, (i) the Rights will be evidenced by such
certificates for shares of Common Stock registered in the names of the
record holders thereof (which certificates representing shares of
Common Stock shall also be deemed to be Rights Certificates) and not by
separate Right Certificates (whether or not such certificates
representing shares of Common Stock include the legend set forth in
Section 3(c)), (ii) the Rights will be transferable only in connection
with the transfer of shares of Common Stock on the stock transfer books
of the Company maintained by the Company or its appointed transfer
agent and (iii) the surrender for transfer of any certificate
representing shares of Common Stock outstanding as of the Record Date
shall also constitute the surrender for transfer of the Rights
associated with the shares of Common Stock evidenced by such
certificate.
(c) Certificates representing shares of Common Stock issued (including,
without limitation, any certificates representing shares of Common
Stock issued upon conversion of existing or future convertible
securities issued by the Company, or upon exercise of existing or
future employee stock options) or surrendered for transfer or exchange
after the Record Date but prior to the earlier of the Distribution Date
or the Expiration Date, shall have stamped on, impressed on, printed
on, written on or otherwise affixed to them the following legend or
such similar legend as the Company may deem appropriate and as is not
inconsistent with 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:
This Certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
The Sherwin-Williams Company and KeyBank National Association,
dated as of April 23, 1997, as the same may be amended from
time to time in accordance with its terms (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 The
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Sherwin-Williams Company. The Rights are not exercisable prior
to the occurrence of certain events specified in the Rights
Agreement. Under certain circumstances, as set forth in the
Rights Agreement, such Rights may be redeemed, may be
exchanged, may expire, may be amended, or may be evidenced by
separate certificates. The Sherwin-Williams Company will mail
to the holder of this Certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without
charge, promptly after receipt of a written request therefor.
Under certain circumstances, as set forth in the Rights
Agreement, Rights that may become, are or were beneficially
owned by an Acquiring Person, or any Affiliate or Associate of
such Person, (as such terms are defined in the Rights
Agreement) may become null and void and nontransferable.
Section 4. RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit A hereto with such changes, 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 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 Sections 11 and 22, the Right Certificates, whenever
issued, shall be dated as of the Record Date, and on their face shall
entitle the holders thereof to purchase such number of one
one-hundredths of a share of Preferred Stock as shall be set forth
therein at the Purchase Price per one one-hundredth of a share set
forth therein, but the number of such shares and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant hereto that represents Rights
that are or were beneficially owned by:
(i) a Person (or any Associate or Affiliate of such Person)
who commences a tender or exchange offer (as determined by
reference to Rule 14d-2(a) under the Exchange Act) (other than
any Person identified in clauses (i), (ii) or (iii) of Section
1(a)), the consummation of which would result in beneficial
ownership by such Person of ten percent or more of outstanding
Common Stock;
(ii) an Acquiring Person (or any Associate or Affiliate of
such Person);
(iii) a transferee of an Acquiring Person (or of any Associate
or Affiliate of such Person) which becomes a transferee after
the Acquiring Person becomes such; or
(iv) a transferee of an Acquiring Person (or of any Associate
or Affiliate of such Person) which becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and
which receives such Rights pursuant to either (A) a
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transfer (whether or not for consideration) from the Acquiring
Person (or any Associate or Affiliate of such Person) to
holders of equity interests in such Acquiring Person (or any
Associate or Affiliate of such Person) or to any Person with
whom such Acquiring Person (or any Associate or Affiliate of
such Person) has any continuing agreement, arrangement or
understanding regarding either the transferred Rights or
shares of Common Stock, or (B) a transfer which the Board of
Directors has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the
avoidance of Section 7(e);
shall, upon the written direction of the Company, contain (to the
extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who may become, is or was an
Acquiring Person, or an Affiliate or Associate of any such
Person, (as such terms are defined in the Rights Agreement).
This Right Certificate and the Rights represented hereby may
become null and void and nontransferable in the circumstances
specified in Section 7(e) of the Rights Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, Chief Executive Officer, President, Chief
Operating Officer, Chief Financial Officer, any Senior Vice President
or any Vice President, either manually or by facsimile signature, and
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 so 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. 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, is
a proper officer of the Company as set forth in this Section 5 to sign
such Right Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Right Certificates upon exercise or
transfer, 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.
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Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to Section 14, at any time after the Close of Business on
the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to
purchase a like amount of shares of Preferred Stock (or other
securities) as the Right Certificate or Right Certificates representing
exercisable Rights surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing 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 or at any other office of the Rights Agent designated
for such purpose. Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and shall have
provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request. Thereupon, or as promptly as
practicable thereafter, 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 satisfy or discharge any tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will
execute and deliver a new Right Certificate of like tenor to the Rights
Agent for countersignature and 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 and prior to
the Expiration 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 or at
any other office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price in accordance with the
terms of Section 7(c) for each one one-hundredth of a share of
Preferred Stock (or other securities)
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as to which such surrendered Rights are exercised, at or prior to the
close of business on the Expiration Date.
(b) The Purchase Price shall initially be $110.00, subject to
adjustment from time to time as provided in Sections 11 and 13 and
shall be payable in lawful money of the United States of America in
accordance with Section 7(c).
(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) in cash,
or by certified check or bank draft payable to the order of the
Company, the Rights Agent shall thereupon promptly: (i) (A) requisition
from any transfer agent of the Preferred Stock (or make available, if
the Rights Agent is the transfer agent) certificates representing the
number of shares of Preferred Stock to be purchased (and the Company
hereby irrevocably authorizes its transfer agent to comply with all
such requests), or (B) if the Company shall have elected to deposit the
total number of shares of Preferred Stock issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a share of Preferred Stock as are to be purchased (in
which case certificates for the Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct 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 the issuance of fractional shares
in accordance with Section 14 or the amount of cash to be paid in lieu
of the issuance of Common Stock in accordance with Sections 11(a)(iii),
13 or 24; (iii) after receipt of such certificates (or depositary
receipts, when appropriate), 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. In the
event that the Company is obligated to issue other securities
(including Common Stock) of the Company pursuant to Sections 11 or 24,
the Company will make all arrangements necessary so that such other
securities are available for distribution by the Rights Agent, if and
when appropriate.
(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 Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the earlier of (i) the Distribution Date or (ii) the
occurrence of any of the events specified in Section 11(a)(ii) or
Section 13, any Rights beneficially owned by:
(A) an Acquiring Person (or any Associate or Affiliate of such
Person), regardless of whether such Acquiring Person,
Associate or Affiliate beneficially owned such Rights on the
Distribution Date or the date of the first occurrence of any
of the events
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<PAGE> 12
described in Section 11(a)(ii) or Section 13, or whether such
Rights were first beneficially owned at any time thereafter,
(B) a transferee of an Acquiring Person (or of any Associate
or Affiliate of such Person) which becomes a transferee after
the Acquiring Person becomes such, or
(C) a transferee of an Acquiring Person (or of any Associate
or Affiliate of such Person) which becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and
which receives such Rights pursuant to either (1) a transfer
(whether or not for consideration) from the Acquiring Person
(or any Associate or Affiliate of such Person) to holders of
equity interests in such Acquiring Person (or any Associate or
Affiliate of such Person) or to any Person with whom the
Acquiring Person (or Associate or Affiliate of such Person)
has any continuing agreement, arrangement or understanding
regarding either the transferred Rights or shares of Common
Stock, or (2) a transfer which the Board of Directors has
determined to be part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this
Section 7(e),
shall be null and void and nontransferable without any further action,
and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement
or otherwise. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and Section 4(b) are complied
with, but shall have no liability to any holder of Rights or any other
Person as a result of its failure to make any determination under this
Section 7(e) and Section 4(b) with respect to any Person, any Acquiring
Person, or any Affiliate, Associate or transferee of any such Person or
Acquiring Person.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported transfer or exercise unless such registered holder shall have
(i) completed and signed the certificate following the form of
assignment or election to purchase set forth on the reverse side of the
Right Certificate surrendered for such assignment or exercise and (ii)
provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
transfer 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 this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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<PAGE> 13
Section 9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available, out of its authorized and unissued shares of
Preferred Stock, the number of shares of Preferred Stock that will be
sufficient to permit the exercise pursuant to Section 7 of all
outstanding Rights. Such number of shares of Preferred Stock reserved
and kept available shall be adjusted from time to time, if and to the
extent required, upon the occurrence of any of the events described in
Section 11.
(b) So long as the Company's Preferred Stock may be listed on a
national securities exchange, the Company shall endeavor to cause, from
and after such time as the Rights become exercisable, all shares of
Preferred Stock reserved for issuance upon exercise of the Rights to be
listed on such exchange upon official notice of issuance.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock
delivered upon exercise of Rights shall be, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase
Price and otherwise in compliance with Section 7), duly and validly
authorized and issued, fully paid, nonassessable and freely tradeable
shares, free and clear of any liens, encumbrances or other adverse
claims other than the Company's right to redeem the shares of Preferred
Stock in accordance with the terms of the Preferred Stock.
(d) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state documentary, stamp or
transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any shares of
Preferred Stock upon the exercise of Rights. The Company shall not,
however, be required to pay any documentary, stamp or transfer tax that
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 representing the shares of
Preferred Stock in a name other than that of, the registered holder of
the Right Certificate evidencing Rights surrendered for exercise, or to
issue or deliver any certificates for shares of Preferred Stock 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
satisfaction that no such tax is due.
(e) The Company shall use its best efforts to (i) file on an
appropriate form, as soon as is required by law following the later of
the Share Acquisition Date or the Distribution Date, a registration
statement under the Act with respect to the securities purchasable upon
exercise of the Rights, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and (iii)
cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date. The
Company will also use its best efforts to take such action as may be
appropriate under the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The Company
may temporarily suspend the exercisability of the Rights in each
relevant jurisdiction in which the Company determines a registration
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<PAGE> 14
statement is required to be filed under applicable law in order to
prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained.
Section 10. RECORD HOLDER. Each Person in whose name any certificate
representing shares of Preferred Stock (or other securities) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the shares of Preferred Stock (or other securities) represented
thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and an amount equal to any applicable transfer tax required to
be paid by the holder of such Right Certificate in accordance with Section 9)
was made; provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Stock (or other securities) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such securities on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or other securities) transfer books
of the Company are open; and further provided that if delivery of the shares of
Preferred Stock is delayed pursuant to Section 9(e), such Person shall be deemed
to have become the record holder of such shares of Preferred Stock only when
such shares first become deliverable. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate, as such, shall not be
entitled to any rights of a shareholder of the Company with respect to
securities 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 pursuant to such
Rights to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND TYPE OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of securities issuable
upon exercise of 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 that the Company shall at any time after the
date of this Agreement (A) declare a dividend on the shares of
Preferred Stock payable in shares of Preferred Stock, (B)
subdivide the outstanding shares of Preferred Stock, (C)
combine the outstanding shares of Preferred Stock into a
smaller number of shares, or (D) issue any shares of its
capital stock in a reclassification of the shares of Preferred
Stock (including any such reclassification in connection with
a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise
provided in this Section 11(a) or in Section 13, 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/or the number and/or kind
of shares of Preferred Stock and/or 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
Preferred Stock and/or capital stock which,
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<PAGE> 15
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of
the Company were open, such holder would have owned upon such
exercise (and, in the case of a reclassification, would have
retained after giving effect to such reclassification) and
been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event
occurs which would require an adjustment under both this
Section 11(a)(i) and either Section 11(a)(ii) or Section 13,
the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment
required pursuant to either Section 11(a)(ii) or Section 13.
(ii) Subject to the provisions of Sections 23 and 24, in
the event that:
(A) any Person shall become an Acquiring Person;
(B) any Acquiring Person (or any Associate or
Affiliate of such Person) at any time after the date
of this Agreement, directly or indirectly, shall (1)
merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or
surviving corporation of such merger or combination,
other than in a transaction subject to Section 13(a),
(2) merge or otherwise combine with any Subsidiary of
the Company, (3) in one or more transactions (other
than in connection with the exercise of Rights or the
exercise or conversion of securities exercisable or
convertible into capital stock of the Company or any
of its Subsidiaries) transfer any assets to the
Company or any of its Subsidiaries in exchange (in
whole or in part) for shares of any class of capital
stock of the Company or any of its Subsidiaries or
for securities exercisable for or convertible into
shares of any class of capital stock of the Company
or any of its Subsidiaries, or otherwise obtain from
the Company or any of its Subsidiaries, with or
without consideration, any additional shares of any
class of capital stock of the Company or any of its
Subsidiaries or securities exercisable for or
convertible into shares of any class of capital stock
of the Company or any of its Subsidiaries (other than
as part of a pro rata distribution to all holders of
such shares of any class of capital stock of the
Company, or any of its Subsidiaries), (4) sell,
purchase, lease, exchange, mortgage, pledge, transfer
or otherwise acquire or dispose of (in one or more
transactions), to, from, with or of, as the case may
be, the Company or any of its Subsidiaries, or any
employee benefit plan maintained by the Company or
any of its Subsidiaries or any trustee or fiduciary
with respect to such a plan acting in such capacity,
(other than in a transaction subject to Section
13(a)) any assets, properties or rights, tangible or
intangible, on terms and conditions less favorable
than the Company would be able to obtain in an arm's
length transaction with an unaffiliated third party,
(5) receive, or any designee, agent or representative
of such Acquiring Person (or any Affiliate or
Associate of such Person) shall receive, any
compensation from the Company or any of its
Subsidiaries other than compensation as a director or
for full-time employment as a regular employee, in
either case, at rates in accordance with the
Company's (or its
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<PAGE> 16
Subsidiaries') past practices, or (6) receive the
benefit, directly or indirectly (except
proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage
provided by the Company or any of its Subsidiaries or
any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or
fiduciary with respect to such a plan acting in such
capacity; or
(C) during such time as there is an Acquiring Person,
there shall be any reclassification of securities
(including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its
Subsidiaries (whether or not with or into or
otherwise involving, directly or indirectly, an
Acquiring Person), other than a transaction subject
to Section 13(a), which has the effect, directly or
indirectly, of increasing by more than one percent
the proportionate share of the outstanding shares of
any class of equity securities or of securities
exercisable for or convertible into equity securities
of the Company or any of its Subsidiaries that is
directly or indirectly beneficially owned by an
Acquiring Person (or any Associate or Affiliate of
such Person);
then, and in each such case, each holder of a Right (other
than with respect to any Rights which have become null and
void and nontransferable pursuant to Section 7(e)) shall no
longer have the right to receive shares of Preferred Stock
upon exercise, but shall have a right to receive, upon
exercise thereof in accordance with the terms of this
Agreement at an exercise price per Right equal to the product
of the then current Purchase Price multiplied by the number of
one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the date of the
first occurrence of a Section 11(a)(ii) event, in lieu of
shares of Preferred Stock, such number of shares of Common
Stock as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the number of one
one-hundredths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the date of the first
occurrence of a Section 11(a)(ii) event and (y) dividing that
product by fifty percent of the current per share market price
(determined pursuant to section 11(d)(i)) of the shares of
Common Stock. The Company shall not enter into or consummate
any transaction of the kind listed in this subparagraph (ii)
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 transactions, would substantially
diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(iii) Upon the first occurrence of a Section 11(a)(ii) event,
if there shall not be sufficient authorized but unissued
shares of Common Stock or authorized and issued shares of
Common Stock held in treasury 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 shares of Common Stock for
issuance upon exercise of the Rights; provided, however, if
the Company is unable
16
<PAGE> 17
to cause the authorization of additional shares of Common
Stock, then, notwithstanding any other provision of this
Agreement, in lieu of issuing such additional newly authorized
shares of Common Stock and requiring payment therefor, upon
exercise of the Rights, the Company shall, with respect to
each Right (other than Rights which have become null and void
and nontransferable pursuant to Section 7(e)) issue Common
Stock to the extent such Common Stock is available and then
shall pay, to the extent permitted by applicable law and any
agreements or instruments in effect on the Share Acquisition
Date to which it is a party, cash at a rate per Right equal to
the product of the Purchase Price in effect at the time of
exercise multiplied by the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of any of the events
specified in the foregoing subparagraph (ii). To the extent
that any legal or contractual restrictions prevent the Company
from paying the full amount of cash payable in accordance with
the foregoing sentence, the Company shall pay to holders of
the Rights as to which such payments are being made all
amounts which are not then restricted on a pro rata basis. The
Company shall continue to make payments on a pro rata basis as
funds become available until such payments have been paid in
full.
(b) (i) In the event that the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
the shares of Preferred Stock entitling them (for a period
expiring within forty-five calendar days after such record
date) to subscribe for or purchase shares of Preferred Stock
(or shares having the same rights, privileges and preferences
as the Preferred Stock ("equivalent preferred stock")) or
securities convertible into shares of Preferred Stock or
equivalent preferred stock at a price per share of Preferred
Stock or equivalent preferred stock (or having a conversion
price per share, if a security convertible into shares of
Preferred Stock or equivalent preferred stock) less than the
current per share market price (determined pursuant to Section
11(d)(ii)) of the shares of Preferred Stock on such record
date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the
number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred
Stock and/or equivalent preferred stock to be offered (and/or
the aggregate initial conversion price of the convertible
securities to be offered) would purchase at such current
market price of such shares of Preferred Stock and/or
equivalent preferred stock and the denominator of which shall
be the number of shares of Preferred Stock outstanding on such
record date plus the number of additional shares of Preferred
Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible
securities to be offered are initially convertible). In case
such subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of
such consideration shall be as determined by the Board of
Directors, whose determination shall be described in a
statement filed with the Rights Agent. Shares of Preferred
Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such
computation.
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<PAGE> 18
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.
(ii) In the event that, after the Distribution Date, the
Company shall fix a record date for the issuance of rights,
options or warrants to all holders of the shares of Common
Stock entitling them (for a period expiring within forty-five
calendar days after such record date) to subscribe for or
purchase shares of Common Stock (or shares having the same
rights, privileges and preferences as the shares of Common
Stock ("equivalent common stock")) or securities convertible
into shares of Common Stock or equivalent common stock at a
price per share of Common Stock or equivalent common stock (or
having a conversion price per share, if a security convertible
into shares of Common Stock or equivalent common stock) less
than the current per share market price (determined pursuant
to Section 11(d)(i)) of the shares of Common Stock on such
record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on such record date plus the
number of shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock and/or
equivalent common stock to be offered (and/or the aggregate
initial conversion price of the convertible securities to be
offered) would purchase at such current market price of such
shares of Common Stock and/or equivalent common stock and the
denominator of which shall be the number of shares of Common
Stock outstanding on such record date plus the number of
additional shares of Common Stock and/or equivalent common
stock to be offered for subscription or purchase (or into
which the convertible securities to be offered are initially
convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be determined
by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent. Shares
of Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that
such rights, 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) (i) In the event that the Company shall fix a record date for
the making of a distribution to all holders of the shares of
Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company
is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a periodic cash dividend at a
rate not in excess of one hundred and twenty-five percent of
the rate of the last cash dividend theretofore paid), assets,
stock (other than a dividend payable in shares of Preferred
Stock) or subscription rights, options or warrants (excluding
those referred to in Section 11(b)(i)), the Purchase Price to
be in effect after such record date shall be determined by
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<PAGE> 19
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall
be the current per share market price (determined pursuant to
Section 11(d)(ii)) of the shares of Preferred Stock on such
record date, less the fair market value (determined by the
Board of Directors) of the portion of the evidences of
indebtedness, cash, assets, or stock to be distributed (in the
case of periodic cash dividends at a rate in excess of one
hundred and twenty-five percent of the rate of the last cash
dividend theretofore paid, only that portion in excess of one
hundred twenty-five percent of such rate) or of such
subscription rights, options or warrants applicable to one
share of Preferred Stock, and the denominator of which shall
be such current per share market price of the shares of
Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be
in effect if such record date had not been fixed.
(ii) In the event that, after the Distribution Date, the
Company shall fix a record date for the making of a
distribution to all holders of the shares of Common Stock
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness, cash
(other than a periodic cash dividend at a rate not in excess
of one hundred and twenty-five percent of the rate of the last
cash dividend theretofore paid), assets, stock (other than a
dividend payable in Common Stock) or subscription rights,
options or warrants (excluding those referred to in Section
11(b)(ii)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current per
share market price (determined pursuant to Section 11(d)(i))
of the shares of Common Stock on such record date, less the
fair market value (determined by the Board of Directors) of
the portion of the evidences of indebtedness, cash, assets, or
stock to be distributed (in the case of periodic cash
dividends at a rate in excess of one hundred twenty-five
percent of the rate of the last cash dividend theretofore
paid, only that portion in excess of one hundred twenty-five
percent of such rate) or of such subscription rights, options
or warrants applicable to one share of Common Stock, and the
denominator of which shall be such current per share market
price of the shares of Common Stock. Such adjustments shall be
made successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been
fixed.
(d) (i) The "current per share market price" of shares of Common
Stock on any date prior to the occurrence of any of the events
specified in Section 11(a)(ii) or Section 13(a) shall be
deemed to be the average of the daily closing prices per share
of such shares of Common Stock for the thirty consecutive
Trading Days immediately prior to such date, and, the "current
per share market price" of shares of Common Stock on the date
of or any date following the occurrence of any of the events
specified in Section 11(a)(ii) or Section 13(a) shall be
deemed to be the least of:
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(A) the average of the daily closing prices per share
of such shares of Common Stock for the thirty
consecutive Trading Days immediately prior to the
occurrence of such event;
(B) the average of the daily closing prices per share
of such shares of Common Stock for the thirty
consecutive Trading Days immediately prior to the
earlier of (1) the Share Acquisition Date, or (2) the
date of the commencement of a tender or exchange
offer (as determined by reference to Rule 14d-2(a)
under the Exchange Act) by any Person (other than any
Person identified in clauses (i), (ii) or (iii) of
Section 1(a)), the consummation of which would result
in beneficial ownership by such Person of ten percent
or more of outstanding Common Stock; or
(C) the average of the daily closing prices per share
of such shares of Common Stock for the thirty
consecutive Trading Days immediately prior to the
date any Person proposes or announces or otherwise
discloses an intent to propose, or enters into or
agrees to enter into (1) any form of business
combination, acquisition or other transaction
relating to the Company or any Affiliate thereof, or
to which the Company or any such Affiliate is party,
or (2) any form of restructuring, recapitalization or
similar transaction with respect to the Company or
any such Affiliate, the consummation of which would
result in beneficial ownership by such Person of ten
percent or more of the then-outstanding shares of
Common Stock;
provided, however, that in the event that the current per
share market price of the shares of Common Stock is determined
during a period following the announcement by the issuer of
such Common Stock of (x) a dividend or distribution on such
Common Stock payable in such shares of Common Stock or
securities convertible into shares of Common Stock (other than
the Rights), or (y) any subdivision, combination or
reclassification of shares of Common Stock, and in each such
case, prior to the expiration of thirty 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
take into account ex-dividend trading or to reflect the
current market price per share of Common Stock equivalent. 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 shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of Common
Stock 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
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<PAGE> 21
or such other system then in use, or, if on any such date the
shares of Common Stock 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 Common Stock selected by the Board of Directors. If the
shares of Common Stock are not publicly held or not so listed
or traded, or not the subject of available bid and asked
quotes, "current per share market price" shall mean the fair
value per share determined by the Board of Directors, whose
determination shall be described in a statement filed with the
Rights Agent.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of shares of Preferred Stock
shall be determined in the same manner as set forth above for
shares of Common Stock in Section 11(d)(i) (other than the
last sentence thereof). If the current per share market price
of the shares of Preferred Stock cannot be determined in the
manner provided above, the "current per share market price" of
the shares of Preferred Stock shall be conclusively deemed to
be the current per share market price of the shares of Common
Stock multiplied by one hundred (as such may be appropriately
adjusted to reflect any stock split, stock dividend,
recapitalization or similar transaction relating to the Common
Stock occurring after the date of this Agreement). If neither
the Common Stock nor the Preferred Stock are publicly held or
so listed or traded, or the subject of available bid and asked
quotes, "current per share market price" of the shares of
Preferred Stock shall mean the fair value per share as
determined by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent.
For all purposes of this Agreement, the "current per share
market price" of one one-hundredth of a share of Preferred
Stock shall be equal to the "current per share market price"
of one share of Preferred Stock divided by one hundred.
(e) Except as set forth below, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or
decrease of at least one percent in such 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 ten-thousandth of a share of
Common Stock or other share or one-millionth of a share of Preferred
Stock, 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 Expiration
Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company
other than shares of Preferred Stock, thereafter the number of such
other shares so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to such shares
contained in this Section 11 and the provisions of Sections 7, 9, 10,
13 and 14 with respect to the shares of Preferred Stock shall apply on
like terms to any such other shares.
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<PAGE> 22
(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 shares
of Preferred Stock 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 share of Preferred Stock
(calculated to the nearest one one-millionth of a share of Preferred
Stock) obtained by (i) multiplying (x) the number of one one-hundredths
of a share of Preferred Stock 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 shares of Preferred Stock purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number
of one one-hundredths of a share of Preferred Stock 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 ten calendar 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, the additional Rights
to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number or kind of shares issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price per one one-hundredth of a
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<PAGE> 23
share and the number of shares which were expressed in the initial
Right Certificate 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 shares of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of
Preferred Stock 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 the shares of Preferred Stock or other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Stock or 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 Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock, (iii)
combine the outstanding shares of Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock, the number
of Rights associated with each share of Common Stock then outstanding,
or issued or delivered thereafter but prior to the Distribution Date,
shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any
such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to
such event by a fraction the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
(n) Anything in this Section 11 or in Section 13 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 the Company in
its sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the shares of Preferred Stock, issuance
wholly for cash of any of the shares of Preferred Stock at less than
the current market price, issuance wholly for cash of Preferred Stock
or securities which by their terms are convertible into or exchangeable
for shares of Preferred Stock, stock dividends or issuance of rights,
options or warrants referred to hereinabove in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall
not be taxable to such shareholders.
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<PAGE> 24
(o) Notwithstanding any other provision of this Agreement, no
adjustment to the Purchase Price, the number of shares of capital stock
(or fractions of a share) for which a Right is exercisable or the
number of Rights outstanding shall be made or be effective if such
adjustment would have the effect of reducing or limiting the benefits
which the holders of the Rights would have had absent such adjustment
including, without limitation, the benefits under Section 11(a)(ii) and
Section 13, unless the terms of this Agreement are amended so as to
preserve such benefits.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company shall promptly prepare a certificate setting forth such adjustment
(which may include a description of any Rights which have become void as a
result thereof), and a brief statement of the facts accounting for such
adjustment and promptly file a copy of such certificate with the Rights Agent
and with each transfer agent for the Preferred Stock and Common Stock.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Share Acquisition Date, directly
or indirectly,
(i) the Company shall consolidate with, or merge with or into,
any other Person and the Company shall not be the continuing
or surviving corporation of such consolidation or merger,
(ii) any Person shall consolidate with the Company, or merge
with or into the Company and the Company shall be the
continuing or surviving corporation of such consolidation or
merger and, in connection with such consolidation or merger,
all or part of the shares of Common Stock shall be converted
into or exchanged for stock or other securities of any other
Person or cash or any other property, or
(iii) 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
fifty percent or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person
or Persons;
then, and in each such case, proper provision shall be made so that:
(A) except as provided below, each holder of a Right (other than such
holders whose Rights have become null and void and nontransferable
pursuant to Section 7(e)) shall no longer have the right to receive
shares of Preferred Stock upon exercise, but shall thereafter have the
right to receive, upon the exercise thereof in accordance with the
terms of this Agreement at an exercise price per Right equal to the
product of the then current Purchase Price multiplied by the then
number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the Share Acquisition Date,
in lieu of shares of Preferred Stock, such number of validly authorized
and issued, fully paid, nonassessable and freely tradeable shares of
Common Stock of the Principal Party, free and clear of any liens,
encumbrances, rights of first refusal, transfer restrictions and other
adverse claims and not subject to any rights of call, as shall be equal
to the result obtained by (x) multiplying the then current Purchase
Price
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<PAGE> 25
by the number of one one-hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to the Share
Acquisition Date and (y) dividing that product by fifty percent of the
current per share market price (determined pursuant to Section
11(d)(i)) of the shares of Common Stock of such Principal Party on the
date of the consummation of such consolidation, merger, sale or
transfer; (B) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to
this Agreement; (C) the term "Company" shall thereafter be deemed to
refer to such Principal Party; (D) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient
number of its shares of Common Stock to permit the exercise of all
outstanding Rights (other than Rights which have become null and void
and nontransferable pursuant to Section 7(e)) in connection with the
consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be possible, in relation to its Common Stock thereafter
deliverable upon the exercise of the Rights; and (E) the provisions of
Section 11(a)(ii) shall be of no further effect following the first
occurrence of any such consolidation, merger, sale or transfer.
(b) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13, and unless prior thereto the
Company and such Principal Party shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set
forth in Section 13(a) and further providing that the Principal Party
will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration
statement under the Act with respect to the Common Stock that
may be acquired upon exercise of the Rights, (B) cause such
registration statement to remain effective (and to include a
prospectus complying with the requirements of the Act) until
the Expiration Date, and (C) as soon as practicable following
the execution of such agreement, take such action as may be
required to ensure that any acquisition of such Common Stock
upon the exercise of the Rights complies with any applicable
state security or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
(c) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other
instruments governing its corporate affairs, which provision would have
the effect of (i) causing such Principal Party to issue, in connection
with or as a consequence of, the consummation of a transaction referred
to in this Section 13, shares of Common Stock of such Principal Party
at less than the then current market price per share (determined
pursuant to Section 11(d)(i)) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at less than
such then current market price (other than
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<PAGE> 26
to holders of Rights pursuant to this Section 13) or (ii) providing for
any special payment, tax or similar provisions in connection with the
issuance of the Common Stock of such Principal Party pursuant to the
provisions of this Section 13; then, in such event, the Company shall
not consummate any such transaction unless prior thereto the Company
and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been cancelled, waived or
amended, or that the authorized securities shall be redeemed, so that
the applicable provision will have no effect in connection with, or as
a consequence of, the consummation of the proposed transaction.
(d) The provisions of this Section 13 shall similarly apply to
successive consolidations or mergers or sales or other transfers. In
the event that any consolidation, merger, sale or transfer described in
Section 13(a) shall occur at any time after the occurrence of any
transaction described in Section 11(a)(ii), the Rights which have not
theretofore been exercised shall thereafter become exercisable in the
manner described in Section 13(a).
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, the Company may pay as promptly as
practicable 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. 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 shall be determined by the Board of Directors and such fair
value shall be used for all purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the
Rights or to distribute certificates which evidence fractional shares
of Preferred Stock (other than fractions which are integral multiples
of one
26
<PAGE> 27
one-hundredth of a share of Preferred Stock). Fractions of shares of
Preferred Stock in integral multiples of one one-hundredth of a share
of Preferred Stock may, at the election of the Company, be evidenced by
depositary receipts pursuant to an appropriate agreement between the
Company and a depositary selected by it, provided that such agreement
shall provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences to which they are entitled
as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-hundredth of a share of
Preferred Stock, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current per share
market price (determined pursuant to Section 11(d)(ii)) of one
one-hundredth of a share of Preferred Stock.
(c) Following the occurrence of an event described in Section 11(a)(ii)
or Section 13(a) the Company shall not be required to issue fractions
of shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu
of fractional shares of Common Stock, the Company may pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the current per
share market price (determined pursuant to Section 11(d)(i)).
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as otherwise provided by this
Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
shares of Common Stock); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, any registered holder of the shares of Common
Stock), without the consent of the Rights Agent or of the registered holder of
any other Right Certificate (or, prior to the Distribution Date, of the
registered holder of shares of Common Stock), may 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
registered holders of Rights, it is specifically acknowledged that the
registered 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 this Agreement, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to this
Agreement.
Section 16. AGREEMENT OF RIGHTS 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 shares of Common Stock;
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<PAGE> 28
(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 designated for
such purpose, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates duly executed;
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate or the
associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder
of a Right or to any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use
its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Preferred
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised or exchanged in accordance with the
provisions of this Agreement.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, suit, action, proceeding 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 arising
therefrom, directly or indirectly.
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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 shares of Preferred Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
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 corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. In case at the time such
successor Rights Agent 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
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<PAGE> 30
conclusively proved and established by a certificate signed by any one
of the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Senior Vice President, the
Chief Financial Officer, 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 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 and delivery 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 adjustment required under the provisions of Section 11
(including any adjustment which results in Rights becoming void) or
responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment or
voidance); 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 or other securities to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Preferred
Shares or other securities will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company shall 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, the Chief Operating Officer, the Chief Financial
Officer, any Senior Vice 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 to be taken by it in good
faith in accordance with instructions of any such officer.
(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
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<PAGE> 31
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. The Rights Agent shall not be under any duty or
responsibility to insure compliance with any applicable federal or
state securities laws in connection with the issuance, transfer or
exchange of Right Certificates.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of
its rights if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to
clause 1 or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without
first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon sixty days' notice in writing delivered to the Company and mailed to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail and, if following the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty days' notice in writing, delivered to
the Rights Agent or successor Rights Agent, as the case may be, and mailed to
each transfer agent of the Common Stock and Preferred Stock by registered or
certified mail and, if following the Distribution Date, 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 thirty 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 any state thereof, in good standing, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment
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<PAGE> 32
as Rights Agent a combined capital and surplus of at least $100,000,000 and
which shall otherwise meet any requirements imposed by the New York Stock
Exchange on transfer agents and registrars. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and Preferred Stock, 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 per share 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 may, at their option, at any time prior to
the Close of Business on the earlier of (i) the Share Acquisition Date
or (ii) the Final Expiration Date, redeem all but not less than all of
the then-outstanding Rights at the Redemption Price, appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof. The Company, at its
option, may pay the Redemption Price in either cash or shares of Common
Stock (based on the current per share market price as determined
pursuant to Section 11(d)(i)) or other securities of the Company deemed
by the Board of Directors, in the exercise of its sole discretion, to
be at least equivalent in value to the Redemption Price.
(b) Immediately upon the effective date of the action of the Board of
Directors ordering the redemption of the Rights, 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 for each Right so held.
Promptly after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
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<PAGE> 33
Section 24. EXCHANGE.
(a) The Board of Directors may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the
then-outstanding and exercisable Rights (which shall not include any
Rights that have become null and void and nontransferable pursuant to
the provisions of this Agreement) for shares of Common Stock at the
Exchange Ratio. Any such exchange shall be effective immediately upon
the action of the Board of Directors ordering the same, unless such
action by the Board of Directors expressly provides that such exchange
shall be effective at a subsequent time or upon the occurrence or
nonoccurrence of one or more specified events (in which case such
exchange shall be effective in accordance with the provisions of such
action of the Board of Directors). Notwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such exchange at
any time after any Person (other than any Person identified in clauses
(i), (ii) or (iii) of Section 1(a)), who or that, together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner
of fifty percent or more of the then-outstanding Common Stock.
(b) Immediately upon the effectiveness of the exchange of any Rights as
provided in Section 24(a), 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 shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company
shall promptly mail a notice of any such exchange to all of the 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 will be deemed given, whether or not the holder
receives the notice. Each such notice of exchange shall state the
method by which the exchange of the Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have
become null and void and nontransferable pursuant to the provisions of
this Agreement) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute for any share of Common Stock exchangeable for a
Right (i) cash, (ii) other securities of the Company, (iii) debt
securities of the Company, (iv) other assets, or (v) any combination of
the foregoing, having an aggregate value, determined by the Board of
Directors, equal to the current per share market price (determined
pursuant to Section 11(d)(i)) of the shares of Common Stock on the
Trading Day immediately preceding the date of the effectiveness of the
exchange pursuant to this Section 24.
(d) The Company shall not be required to issue fractional shares of
Common Stock upon exchange of the Rights pursuant to this Section 24 or
to distribute certificates which evidence fractional shares of Common
Stock. In lieu of fractional shares of Common Stock, the Company may
pay to the registered holders of Rights at the time such Rights are
exchanged as herein provided an amount in cash equal to the same
fraction of the current per share market price (determined pursuant to
Section 11(d)(i)) of one share of Common Stock. The
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<PAGE> 34
holder of a Right by the acceptance of the Right expressly waives his
right to receive any fractional shares of Common Stock in any exchange
pursuant to this Section 24, except as otherwise provided by this
Section 24.
Section 25. NOTICE OF CERTAIN EVENTS. In case, after the Distribution
Date, the Company shall propose (a) to pay any dividend payable in stock of any
class to the holders of shares of Preferred Stock or to make any other
distribution to the holders of shares of Preferred Stock (other than a periodic
cash dividend at a rate not in excess of one hundred and twenty-five percent of
the rate of the last periodic cash dividend theretofore paid), (b) to offer to
the holders of shares of Preferred Stock rights, options or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, (c) to effect
any reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding Preferred Stock), (d) to effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than fifty percent of the
assets or earning power of the Company and its Subsidiaries, taken as a whole,
to any other Person or Persons, or (e) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26, a notice of
such proposed action, which shall specify the record date for the purposes of
such stock dividend or distribution or offering of rights, options 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 shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given, in the case of any
action covered by clause (a) or (b) above, at least ten calendar days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and, in the case of any such other action, at least ten
calendar days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock,
whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) or Section
13(a) shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to the Rights Agent and each holder of a Right
Certificate, in accordance with Section 26, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights.
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 effective upon receipt, and shall be addressed
(until another address is filed in writing with the Rights Agent) as follows:
The Sherwin-Williams Company
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115
Attention: Secretary
Subject to the provisions of Section 21, 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
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<PAGE> 35
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:
KeyBank National Association
127 Public Square, 15th Floor
Cleveland, Ohio 44114
Attention: B. William Bedy
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to or on 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 Rights Agent.
Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the time at which the
Rights cease to be redeemable pursuant to Section 23, and subject to the last
sentence of this Section 27, the Company may in its sole and absolute
discretion, and the Rights Agent shall if the Company so directs, supplement or
amend any provision of this Agreement in any respect without the approval of any
holders of Rights or Common Stock. From and after the time at which the Rights
cease to be redeemable pursuant to Section 23, and subject to the last sentence
of this Section 27, the Company may, and the Rights Agent shall if the Company
so directs, supplement or amend this Agreement without the approval of any
holders of Rights or Common Stock in order (a) to cure any ambiguity, (b) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, (c) to shorten or lengthen any
time period hereunder, or (d) to supplement or amend the provisions hereunder in
any manner which the Company may deem desirable; provided that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Persons or an Affiliate or Associate of
such Person), and no such supplement or amendment shall cause the Rights again
to become redeemable or cause this Agreement again to become supplementable or
amendable otherwise than in accordance with the provisions of this sentence or
Section 31. Without limiting the generality or effect of the foregoing, this
Agreement may be supplemented or amended to provide for such voting powers of
the Rights and such procedures for the exercise thereof, if any, as the Board of
Directors may determine to be appropriate. Upon the delivery of a certificate
from an officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment; provided, however, that the failure
or refusal of the Rights Agent to execute such supplement or amendment will not
affect the validity of any supplement or amendment adopted by the Board of
Directors, any of which will be effective in accordance with the terms thereof.
Notwithstanding anything in this Agreement to the contrary, no supplement or
amendment may be made which decreases the stated Redemption Price to an amount
less than $.005 per Right.
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.
The Company covenants and agrees that it shall not, from and after the Share
Acquisition Date, (a) consolidate with, (b) merge with or into, or (c) sell or
transfer to, in one or more transactions, assets or earning power aggregating
more than fifty percent of the assets or earning power of the Company and its
Subsidiaries, taken as a whole, any Acquiring Person
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<PAGE> 36
(or any Affiliate or Associate of such Person) if at the time of or after such
consolidation, merger, sale or transfer there would be any charter or by-law
provisions or any rights, options, warrants or other instruments or securities
outstanding or agreements in effect or any other actions taken which would
eliminate or otherwise diminish the benefits intended to be afforded by the
Rights. The Company shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such other Person shall have
executed and delivered to the Rights Agent a supplemental agreement evidencing
compliance with this Section.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of the shares of Common Stock) 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 registered holders of the shares of Common Stock).
Section 30. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Stock of which
any Person is the Beneficial Owner, will be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors will have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Company, or as may be necessary or
advisable in the administration of this Agreement including, without limitation,
the right and power to (a) interpret the provisions of this Agreement and (b)
make all determinations deemed necessary or advisable for the administration of
this Agreement (including any determination as to whether particular Rights
shall have become null and void and nontransferable). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, any omission with respect to any of the foregoing) which are
done or made by the Board of Directors shall be done and/or made in good faith
and shall (x) be final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other Persons for all purposes and (y) not
subject the Board of Directors to any liability to any Person including, without
limitation, the Rights Agent and the holders of the Rights.
Section 31. 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;
provided however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors determines that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement and the Rights
shall not then be redeemable, then the right of redemption set forth in Section
23 shall be reinstated and shall not expire until the Close of Business on the
tenth Business Day following the date of such determination by the Board of
Directors.
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<PAGE> 37
Section 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the substantive
laws of the State of Ohio and for all purposes shall be governed by and
construed in accordance with the substantive laws of such State applicable to
contracts to be made and performed entirely within such State.
Section 33. 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 34. 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.
THE SHERWIN-WILLIAMS COMPANY
Attest:
By: By: /s/ L.J. Pitorak
-------------------- -------------------------------
Secretary L.J. Pitorak
Senior Vice President-Finance, Treasurer
and Chief Financial Officer
KEYBANK NATIONAL ASSOCIATION
Attest:
By: By: /s/ B. William Bedy
-------------------- -------------------------------
Secretary B. William Bedy
Vice President
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EXHIBIT A
---------
[Form of Right Certificate]
Certificate No. R- ____________Rights
NOT EXERCISABLE AFTER APRIL 22, 2007 OR EARLIER IF REDEEMED OR
EXCHANGED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT A REDEMPTION PRICE
OF $.005 PER RIGHT, AND ARE SUBJECT TO EXCHANGE, AT THE COMPANY'S
OPTION, FOR SHARES OF COMMON STOCK OF THE COMPANY, ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO IS OR WAS AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT(1)] THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
AND NONTRANSFERABLE IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF
THE RIGHTS AGREEMENT.
Right Certificate
THE SHERWIN-WILLIAMS COMPANY
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 April 23, 1997 (the "Rights Agreement") between
The Sherwin-Williams Company, an Ohio corporation (the "Company"), and KeyBank
National Association (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (New York time) on April 22, 2007 at the
principal office of the Rights Agent designated for such purpose, one
one-hundredth of a fully paid, nonassessable share of Cumulative Redeemable
Serial Preferred Stock, without par value, of the Company (the "Preferred
Stock"), at a purchase price of $110.00 per one one-hundredth of a share of
Preferred Stock (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of shares
which may be purchased upon exercise thereof) set forth above, and the Purchase
Price per one one-hundredth of a share of Preferred Stock set forth above, are
the number and Purchase Price as of April 23, 1997, based on the Preferred
Shares as constituted at such date.
- --------
1 The portion of the legend in brackets shall be inserted only if
applicable.
<PAGE> 39
From and after the earlier of the Distribution Date or the first
occurrence of certain events specified in Sections 11(a)(ii) and 13 of the
Rights Agreement, if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person, or any Affiliate or Associate of
an Acquiring Person, (as such terms are defined in the Rights Agreement),
regardless of whether such Acquiring Person, Associate or Affiliate beneficially
owned such Rights on the Distribution Date or the date of the first occurrence
of any of the events specified in Sections 11(a)(ii) and 13, or whether such
Rights were first beneficially owned at any time thereafter, (ii) a transferee
of an Acquiring Person, or of any Affiliate or Associate of an Acquiring Person,
which becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person, or of any Associate or Affiliate thereof, who
becomes a transferee prior to or concurrently with such Acquiring Person having
become such, where such transferee has received such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person, or
any Affiliate or Associate of an Acquiring Person, to holders of equity
interests in such Acquiring Person, or any such Affiliate or Associate, or to
any person with whom the Acquiring Person, or any such Affiliate or Associate,
has any continuing agreement, arrangement or understanding regarding either the
transferred Rights or shares of Common Stock or (B) a transfer which the Board
of Directors has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of Section 7(e) of the
Rights Agreement, such Rights shall become null and void and nontransferable
without any further action, and no such holder shall have any rights whatsoever
with respect to such Rights from and after the occurrence of such specified
events.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of capital shares or other securities which may be purchased or
received upon the exercise or exchange of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the occurrence 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. Reference to the
Rights Agreement is hereby made for a full description of the terms, provisions,
conditions, rights, limitations of rights, obligations, duties and immunities of
the Rights, the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the office of the
Rights Agent and are available from the Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
As provided in and subject to the provisions of the Rights Agreement,
the Rights evidenced by this Certificate may be redeemed at a redemption price
of $.005 per Right and may be exchanged for shares of Common Stock of the
Company, both at the option of the Company.
<PAGE> 40
The Company shall not be required to issue fractions of shares of
Preferred Stock or to distribute certificates which evidence fractional shares
of Preferred Stock upon the exercise of the Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof, a cash payment may be made as
provided in the Rights Agreement. The Company shall not be required to issue
fractions of shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock upon the exchange of the Rights evidenced
hereby, but in lieu thereof, a cash payment may 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 shares of
Preferred Stock, shares of Common Stock or of any other securities of the
Company that may at any time be issuable on the exercise or exchange hereof, nor
shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised or
exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _________________, 19__.
ATTEST: THE SHERWIN-WILLIAMS COMPANY
By
- --------------------------- ------------------------
Secretary Title:
Countersigned:
By
-------------------------
Authorized signature
<PAGE> 41
[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: ____________________, 19__
-----------------------------------
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any person who is, was or subsequently became an Acquiring Person, or any
Affiliate or Associate of any Acquiring Person.
Dated: ______________________, 19__
-----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE> 42
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To The Sherwin-Williams Company:
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of such Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such 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:_________________, 19__
-----------------------------------
Signature
Signature Guaranteed:
<PAGE> 43
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any person who is, was or subsequently became an Acquiring Person, or any
Affiliate or Associate of any Acquiring Person.
Dated:_________________, 19__
-----------------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 44
EXHIBIT B
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
The Board of Directors of The Sherwin-Williams Company
("Sherwin-Williams"), on April 23, 1997, declared a dividend distribution
consisting of one right (a "Right") to purchase one one-hundredth (1/l00) of a
share of Cumulative Redeemable Serial Preferred Stock, without par value, of
Sherwin-Williams ("Preferred Stock"), for each share of common stock, $1.00 par
value, of Sherwin-Williams ("Common Stock") outstanding as of March 6, 1997 (the
"Record Date"). When exercisable, each Right entitles the registered holder to
purchase one one-hundredth (1/l00) of a share of the Preferred Stock for one
hundred ten dollars ($110.00), subject to adjustment (the "Purchase Price").
The Rights will become exercisable after the "Distribution Date" which
shall be the earlier of: (1) the first date of public announcement by
Sherwin-Williams that a person or group of affiliated persons ("Acquiring
Person") has become the beneficial owner of ten percent (10%) or more (fifteen
percent (15%) or more in the case of any person or group of affiliated persons
who has reported or may report such ownership on Schedule 13G under the
Securities Exchange Act of 1934, as amended) of the outstanding Common Stock, or
(2) ten business days, or such later date as specified by the Board of
Directors, after the commencement of a tender offer or exchange offer by a
person or group of affiliated persons that would result in such person or a
group of affiliated persons beneficially owning ten percent (10%) or more of the
outstanding Common Stock.
Until the Rights become exercisable, the Rights will (1) be evidenced
by the certificates representing shares of Common Stock, (2) trade with the
Common Stock, and any transfer of shares of Common Stock will also constitute a
transfer of the associated Rights, and (3) be surrendered for transfer with any
shares of Common Stock, with which such Rights are associated, surrendered for
transfer. Prior to the Distribution Date (or, if earlier, the expiration,
redemption or exchange of the Rights as described below), share certificates
issued after the Record Date upon the transfer or new issuance of Common Stock
shall reference the Rights by appropriate notation. When the Rights become
exercisable, they will detach and trade separately from the shares of Common
Stock. As soon as practicable thereafter, separate certificates representing the
Rights will be mailed to registered holders.
The Rights will "flip-in" and entitle the holder to purchase at the
Purchase Price that number of shares of Common Stock having a market value of
two times such Purchase Price (or, under certain circumstances, an amount of
cash equal to two times such Purchase Price) upon the occurrence of any or all
of the following events: (1) a person or group of affiliated persons becomes an
Acquiring Person; (2) an Acquiring Person engages in certain self-dealing
transactions with Sherwin-Williams; or (3) Sherwin-Williams consummates a
capital restructuring that has the effect of increasing by more than one percent
(1%) the proportionate share of the
<PAGE> 45
equity of Sherwin-Williams or a subsidiary thereof owned by an Acquiring Person.
Upon the occurrence of any of the events listed in clauses (1) through (3) (or
the Distribution Date, if earlier), Rights held by an Acquiring Person (from and
after the date upon which the Acquiring Person became such) shall become null
and void and nontransferable.
If (1) Sherwin-Williams is acquired in a merger or other business
combination by an Acquiring Person and Sherwin-Williams is not the surviving
corporation, (2) an Acquiring Person merges with Sherwin-Williams and
Sherwin-Williams is the surviving corporation, but its shares of Common Stock
are changed or exchanged, or (3) fifty percent (50%) or more of its assets or
earning power are sold to an Acquiring Person, then each of the Rights will
"flip-over" and will entitle the holder to purchase that number of shares of
common or other capital stock of the acquiring entity which at the time of such
transaction would have a market value of two times the Purchase Price (or, under
certain circumstances, an amount of cash equal to two times such Purchase
Price). Upon the occurrence of any such event (or the Distribution Date, if
earlier), Rights held by the Acquiring Person (from and after the date upon
which the Acquiring Person became such) engaging in the transactions set forth
in the preceding sentence shall become null and void and nontransferable.
At any time after a person or group of affiliated persons becomes an
Acquiring Person and until any person or group of affiliated persons
beneficially owns 50% or more of the then-outstanding Common Stock, the Board of
Directors may exchange all or part of the then-outstanding Rights for shares of
Common Stock at an exchange ratio of one share of Common Stock per one Right. In
such event, the right to exercise the Rights terminates and the only right
thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder
multiplied by the exchange ratio.
The Purchase Price and the number of shares of Preferred Stock or
Common Stock (or common shares of an acquiror) to be purchased or received upon
exercise or exchange of the Rights are subject to adjustment from time to time.
The Board of Directors may redeem the Rights in whole, but not in part,
at a price of $.005 per Right (the "Redemption Price") at any time prior to the
earlier of: (1) the first date of public announcement by Sherwin-Williams that
an Acquiring Person has become an Acquiring Person; or (2) April 22, 2007 (the
"Final Expiration Date").
The terms of the Rights are set forth in a Rights Agreement between
Sherwin-Williams and KeyBank National Association (the "Rights Agent"). Prior to
the date the Rights cease to be redeemable, the provisions of the Rights
Agreement may be supplemented or amended by the Board of Directors and the
Rights Agent, without the approval of any holders of the Rights or Common Stock,
in any manner, except for a supplement or amendment which decreases the stated
Redemption Price to an amount less than $.005 per Right. From and after the date
the Rights cease to be redeemable, the Rights Agreement may be supplemented or
amended without the approval of any holders of the Rights or Common Stock to (1)
cure any ambiguity, (2) correct or supplement defective or inconsistent
provisions, (3) shorten or lengthen any time period under the Rights Agreement,
or (4) supplement or amend any other provision as the Board of Directors
<PAGE> 46
may deem necessary or desirable, provided, that such supplement or amendment
shall not decrease the stated Redemption Price to an amount less than $.005 per
Right or otherwise adversely affect the interests of the Rights holders.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
April 24, 1997. A copy of the Rights Agreement is available from
Sherwin-Williams free of charge upon the written request therefor. This summary
of the Rights is intended only as a summary and is qualified in its entirety by
reference to the Rights Agreement.
<PAGE> 1
EXHIBIT 2
[LOGO] FOR IMMEDIATE RELEASE
Contact: Conway G. Ivy
Vice President, Corporate
Planning and Development
NEWS: 216-566-2102
<TABLE>
<CAPTION>
<S> <C> <C> <C>
The Sherwin-Williams Company 101 Prospect Avenue, N.W. Cleveland, Ohio 44115 (216) 566-2140
</TABLE>
CLEVELAND, OHIO -- April 23, 1997 -- The Board of Directors of The
Sherwin-Williams Company (NYSE: SHW) today announced a quarterly dividend of
$0.10 per share on common stock, payable June 6, 1997 to shareholders of record
on May 6, 1997.
The Board of Directors today also adopted a new shareholder rights
plan, declaring a dividend of one preferred stock purchase right for each
outstanding share of common stock, $1.00 par value, of the Company, to replace
the original shareholder rights plan in effect since January 25, 1989. The
rights will be distributed to shareholders of record at the close of business on
May 6, 1997.
The new rights plan is intended to assure that all shareholders receive
fair value for their investment in the Company and to provide the directors with
sufficient time to evaluate fully any takeover offers. The new rights plan was
not adopted in response to any specific takeover threat, and the Board of
Directors is not aware of any efforts to acquire the Company.
In connection with the adoption of the new rights plan, the Board of
Directors today also approved and ordered the redemption of the rights
outstanding under the original shareholder rights plan adopted in 1989. Holders
of record of the Company's common stock at the close of business on May 6 1997,
will receive $.01 for each right being redeemed. As a result of stock splits
effected since the adoption of the original rights plan, this redemption price
translates to $.0025 per share of common stock outstanding as of the record
date. Shareholders of record on May 6, 1997 will receive the redemption payment
along with the regular quarterly dividend payable on June 6, 1997.
<PAGE> 1
[LOGO] EXHIBIT 3
THE SHERWIN-WILLIAMS COMPANY
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115
Phone: (216) 566-2101
John G. Breen
Chairman and Chief Executive Officer
May 9, 1997
Dear Shareholder:
On April 23, 1997, the Board of Directors of The Sherwin-Williams Company
adopted a new shareholder rights plan to replace the original shareholder rights
plan in effect since January 25, 1989. The Board of Directors adopted the new
rights plan to protect your interests in the event that the Company is
confronted with coercive, unfair or inadequate takeover bids.
The rights being granted under the new rights plan are designed to assure that
all of the Company's shareholders receive fair and equitable treatment in any
unsolicited bid for the Company. The rights are not intended to preclude
legitimate offers to acquire the Company; however, they are intended to
encourage anyone seeking to acquire the Company to negotiate with the Board of
Directors prior to attempting a takeover. The new rights plan was not adopted in
response to any specific takeover threat.
Under the new rights plan, shareholders of record on May 6, 1997 shall receive a
dividend of one right for each share of Sherwin-Williams common stock. Rights
granted to you as a record holder of the Company's common stock on May 6, 1997
initially will be represented by, and will trade together with, the common
stock. A brief description of the rights and the new rights plan accompanies
this letter.
Adoption of the new rights plan and the issuance of the rights do not affect the
financial strength of the Company or the reported earnings per share, are not
taxable to the shareholders or to the Company, and will not be dilutive.
In connection with the adoption of the new rights plan, the Board of Directors
has ordered, effective April 23, 1997, the redemption of the rights outstanding
under the original rights plan. All shareholders of record on May 6, 1997 will
receive the redemption price of $.01 per right. As a result of stock splits
effected since the adoption of the original rights plan, this redemption price
translates to $.0025 per share of common stock outstanding as of the record
date. Payment of the redemption price will be included with your regular
dividend payable on June 6, 1997. The redemption is being treated as a dividend
by the Company for tax purposes and will be reported on your Form 1099 at the
end of the year.
The Board of Directors believes that the new rights plan represents a prudent
means of addressing the current takeover climate and enabling the Board of
Directors to ensure that you as a shareholder of Sherwin-Williams are treated
fairly. The adoption of the new rights plan is consistent with our goal to focus
on creating long-term value for our shareholders and is designed to preserve the
full value of your investment in Sherwin-Williams. The new rights plan and the
rights are described in detail in the enclosed Summary of Rights to Purchase
Preferred Stock. Please review this summary carefully.
Very truly yours,
Enc.
<PAGE> 2
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
The Board of Directors of The Sherwin-Williams Company
("Sherwin-Williams"), on April 23, 1997, declared a dividend distribution
consisting of one right (a "Right") to purchase one one-hundredth (1/l00) of a
share of Cumulative Redeemable Serial Preferred Stock, without par value, of
Sherwin-Williams ("Preferred Stock"), for each share of common stock, $1.00 par
value, of Sherwin-Williams ("Common Stock") outstanding as of March 6, 1997 (the
"Record Date"). When exercisable, each Right entitles the registered holder to
purchase one one-hundredth (1/l00) of a share of the Preferred Stock for one
hundred ten dollars ($110.00), subject to adjustment (the "Purchase Price").
The Rights will become exercisable after the "Distribution Date" which
shall be the earlier of: (1) the first date of public announcement by
Sherwin-Williams that a person or group of affiliated persons ("Acquiring
Person") has become the beneficial owner of ten percent (10%) or more (fifteen
percent (15%) or more in the case of any person or group of affiliated persons
who has reported or may report such ownership on Schedule 13G under the
Securities Exchange Act of 1934, as amended) of the outstanding Common Stock, or
(2) ten business days, or such later date as specified by the Board of
Directors, after the commencement of a tender offer or exchange offer by a
person or group of affiliated persons that would result in such person or a
group of affiliated persons beneficially owning ten percent (10%) or more of the
outstanding Common Stock.
Until the Rights become exercisable, the Rights will (1) be evidenced
by the certificates representing shares of Common Stock, (2) trade with the
Common Stock, and any transfer of shares of Common Stock will also constitute a
transfer of the associated Rights, and (3) be surrendered for transfer with any
shares of Common Stock, with which such Rights are associated, surrendered for
transfer. Prior to the Distribution Date (or, if earlier, the expiration,
redemption or exchange of the Rights as described below), share certificates
issued after the Record Date upon the transfer or new issuance of Common Stock
shall reference the Rights by appropriate notation. When the Rights become
exercisable, they will detach and trade separately from the shares of Common
Stock. As soon as practicable thereafter, separate certificates representing the
Rights will be mailed to registered holders.
The Rights will "flip-in" and entitle the holder to purchase at the
Purchase Price that number of shares of Common Stock having a market value of
two times such Purchase Price (or, under certain circumstances, an amount of
cash equal to two times such Purchase Price) upon the occurrence of any or all
of the following events: (1) a person or group of affiliated persons becomes an
Acquiring Person; (2) an Acquiring Person engages in certain self-dealing
transactions with Sherwin-Williams; or (3) Sherwin-Williams consummates a
capital restructuring that has the effect of increasing by more than one percent
(1%) the proportionate share of the
<PAGE> 3
equity of Sherwin-Williams or a subsidiary thereof owned by an Acquiring Person.
Upon the occurrence of any of the events listed in clauses (1) through (3) (or
the Distribution Date, if earlier), Rights held by an Acquiring Person (from and
after the date upon which the Acquiring Person became such) shall become null
and void and nontransferable.
If (1) Sherwin-Williams is acquired in a merger or other business
combination by an Acquiring Person and Sherwin-Williams is not the surviving
corporation, (2) an Acquiring Person merges with Sherwin-Williams and
Sherwin-Williams is the surviving corporation, but its shares of Common Stock
are changed or exchanged, or (3) fifty percent (50%) or more of its assets or
earning power are sold to an Acquiring Person, then each of the Rights will
"flip-over" and will entitle the holder to purchase that number of shares of
common or other capital stock of the acquiring entity which at the time of such
transaction would have a market value of two times the Purchase Price (or, under
certain circumstances, an amount of cash equal to two times such Purchase
Price). Upon the occurrence of any such event (or the Distribution Date, if
earlier), Rights held by the Acquiring Person (from and after the date upon
which the Acquiring Person became such) engaging in the transactions set forth
in the preceding sentence shall become null and void and nontransferable.
At any time after a person or group of affiliated persons becomes an
Acquiring Person and until any person or group of affiliated persons
beneficially owns 50% or more of the then-outstanding Common Stock, the Board of
Directors may exchange all or part of the then-outstanding Rights for shares of
Common Stock at an exchange ratio of one share of Common Stock per one Right. In
such event, the right to exercise the Rights terminates and the only right
thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder
multiplied by the exchange ratio.
The Purchase Price and the number of shares of Preferred Stock or
Common Stock (or common shares of an acquiror) to be purchased or received upon
exercise or exchange of the Rights are subject to adjustment from time to time.
The Board of Directors may redeem the Rights in whole, but not in part,
at a price of $.005 per Right (the "Redemption Price") at any time prior to the
earlier of: (1) the first date of public announcement by Sherwin-Williams that
an Acquiring Person has become an Acquiring Person; or (2) April 22, 2007 (the
"Final Expiration Date").
The terms of the Rights are set forth in a Rights Agreement between
Sherwin-Williams and KeyBank National Association (the "Rights Agent"). Prior to
the date the Rights cease to be redeemable, the provisions of the Rights
Agreement may be supplemented or amended by the Board of Directors and the
Rights Agent, without the approval of any holders of the Rights or Common Stock,
in any manner, except for a supplement or amendment which decreases the stated
Redemption Price to an amount less than $.005 per Right. From and after the date
the Rights cease to be redeemable, the Rights Agreement may be supplemented or
amended without the approval of any holders of the Rights or Common Stock to (1)
cure any ambiguity, (2) correct or supplement defective or inconsistent
provisions, (3) shorten or lengthen any time period under the Rights Agreement,
or (4) supplement or amend any other provision as the Board of Directors
<PAGE> 4
may deem necessary or desirable, provided, that such supplement or amendment
shall not decrease the stated Redemption Price to an amount less than $.005 per
Right or otherwise adversely affect the interests of the Rights holders.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
April 24, 1997. A copy of the Rights Agreement is available from
Sherwin-Williams free of charge upon the written request therefor. This summary
of the Rights is intended only as a summary and is qualified in its entirety by
reference to the Rights Agreement.
