AMENDMENT NO. 1 TO RIGHTS AGREEMENT
AMENDMENT NO. 1 dated as of September 23, 1998 to
the Rights Agreement dated as of December 6, 1995 (the
"Rights Agreement") between Masco Corporation, a
Delaware corporation (the "Company"), and The Bank of
New York, as Rights Agent (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the parties hereto desire to amend the
Rights Agreement in certain respects;
NOW, THEREFORE, the parties hereto agree as
follows:
Section 1. Defined Terms; References. (a)
Unless otherwise specifically defined herein, each term
used herein which is defined in the Rights Agreement
has the meaning assigned to such term in the Rights
Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other
similar reference contained in the Rights Agreement
shall, after this Amendment becomes effective, refer to
the Rights Agreement as amended hereby.
(b) Section 1 of the Rights Agreement is hereby
amended by deleting the definition of "Continuing
Directors" contained therein.
(c) Section 1 of the Rights Agreement is hereby
amended by restating in its entirety the following
definition to read in full as follows:
"Acquiring Person" means any Person who,
together with all Affiliates and Associates
of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Common Stock
then outstanding, but shall not include the
Company, any of its Subsidiaries, any
employee benefit plan of the Company or any
of its Subsidiaries or any Person organized,
appointed or established by the Company or
any of its Subsidiaries for or pursuant to
the terms of any such plan; provided,
however, that
(a) if the majority of Directors
determines (whether prior to or after
the date that in the absence of such
determination would be a Distribution
Date) in good faith that a Person who
otherwise would be an "Acquiring Person"
became such inadvertently, and if such
Person as
promptly as practicable divests itself
of Beneficial Ownership of a sufficient
number of shares of Common Stock so that
such Person is no longer an "Acquiring
Person," then such Person shall not be
deemed to be or to have become an
"Acquiring Person" for any purposes of
this Agreement; and
(b) no Person shall become an
"Acquiring Person" solely as a result of
an acquisition of shares of Common Stock
by the Company which, by reducing the
number of shares of Common Stock
outstanding, increases the proportionate
number of shares of Common Stock
beneficially owned by such Person
(together with any Affiliate and
Associate of such Person) to 15% or more
of the shares of Common Stock then
outstanding; provided, however, that if
a Person shall become the Beneficial
Owner of 15% or more of the shares of
Common Stock then outstanding by reason
of such share acquisition by the Company
and shall thereafter (together with any
Affiliate and Associate) become the
Beneficial Owner of any additional
shares of Common Stock (other than
pursuant to a stock dividend, stock
split, recapitalization or similar
transaction that does not affect the
percentage of outstanding Common Stock
beneficially owned by such Person) which
causes the proportionate number of
shares of Common Stock beneficially
owned by such Person to increase to 15%
or more of the shares of Common Stock
then outstanding, then such Person shall
be deemed to be an "Acquiring Person".
(d) Section 1 of the Rights Agreement is hereby
amended by deleting from the definition of
"Distribution Date" both instances of the word
"Continuing".
Section 2. Exercise of Rights; Expiration Date of
Rights. Section 7(d) of the Rights Agreement is hereby
amended by inserting the words "a majority of" after
the words "a transfer which" and deleting the word
"Continuing" from clause (iii)(B) in the first sentence
thereof.
Section 3. Adjustment of Purchase Price, Number
and Kind of Shares or Number of Rights. Section 11 of
the Rights Agreement is hereby amended by:
2
(a) replacing the words "a majority of the
Continuing Directors has determined to be" in the first
sentence of subsection (a)(iii) thereof with the word
"are";
(b) replacing each instance of the words "(as
determined by the Continuing Directors based upon the
advice of a nationally recognized investment banking
firm selected by the Continuing Directors)" in
subsection (a)(iii) thereof with the words "(based upon
the advice of a nationally recognized investment
banking firm)";
(c) deleting the second sentence of subsection
(a)(iii) thereof;
(d) replacing the words "first and/or second
sentence of this Section 11(a)(iii)" in the third
sentence of subsection (a)(iii) thereof with the words
"preceding sentence";
(e) replacing the words "Substitution Period in
order to seek any authorization of additional shares
and/or" in the third sentence of subsection (a)(iii)
thereof with the words "30-day period set forth above
in order";
(f) replacing the words "such first and/or
second" in the third sentence of subsection (a)(iii)
thereof with the words "the preceding";
(g) deleting the words ", or, if at the time of
such selection there is an Acquiring Person, by a
majority of the Continuing Directors" from the second
sentence of subsection (d)(i) thereof;
(h) replacing the words "majority of the
Continuing Directors" in the third sentence of
subsection (d)(i) thereof with the words "nationally
recognized investment banking firm";
(i) deleting the words "by a majority of the
Continuing Directors, or, if there are no Continuing
Directors," from the fourth sentence of subsection
(d)(i) thereof;
(j) deleting the words "selected by the Board of
Directors" from the fourth sentence of subsection
(d)(i) thereof;
(k) deleting the words "by a majority of the
Continuing Directors then in office, or, if there are
no Continuing Directors," from subsection (d)(iii)
thereof; and
3
(l) deleting the words "selected by the Board of
Directors" from subsection (d)(iii) thereof.
Section 4. Fractional Rights and Fractional
Shares. Section 14(a) of the Rights Agreement is
hereby amended by:
(a) deleting the words ", or, if at the time of
such selection there is an Acquiring Person, by a
majority of the Continuing Directors" from the
penultimate sentence thereof; and
(b) replacing the words "majority of the
Continuing Directors" in the last sentence thereof with
the words "nationally recognized investment banking
firm".
Section 5. Redemption. Section 23(a) of the
Rights Agreement is hereby amended by:
(a) deleting the word "Continuing" in the first
sentence thereof; and
(b) deleting the proviso from the first sentence
thereof and the semicolon immediately preceding such
proviso.
Section 6. Exchange. (a) Section 24(a) of the
Rights Agreement is hereby amended by deleting the word
"Continuing" in the first sentence thereof.
(b) Section 24(b) of the Rights Agreement is
hereby amended by replacing the word "Continuing" in
the first sentence thereof with the words "majority of
the".
Section 7. Supplements and Amendments. Section
27 of the Rights Agreement is hereby amended in its
entirety to read in full as follows:
Prior to the Distribution Date, the Company may,
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
certificates representing shares of Common Stock. At
any time when the Rights are no longer redeemable, 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 Right Certificates in
order to cure any ambiguity or correct or supplement
any provision contained herein which may be defective
or inconsistent with any other provisions herein;
provided that no such supplement or amendment may (a)
adversely affect the interests of the holders of Rights
as such (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person), (b) cause
4
this Agreement again to become amendable other than in
accordance with this sentence, or (c) cause the Rights
again to become redeemable. Upon the delivery of a
certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment
is in compliance with the terms of this Section, the
Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the
interest of the holders of Rights shall be deemed
coincident with the interests of the holders of Common
Stock.
Section 8. Determination and Actions by the
Board of Directors, Etc . Section 29 of the Rights
Agreement is hereby amended by:
(a) deleting the first parenthetical clause from
the second sentence thereof; and
(b) deleting the second parenthetical clause and
the words "or the Continuing Directors" from the last
sentence thereof.
Section 9. Severability. Section 31 of the
Rights Agreement is hereby amended by deleting the
proviso contained therein and the semicolon that
immediately precedes such proviso.
Section 10. Form of Right Certificate. Exhibit B
to the Rights Agreement is hereby amended by deleting
the word "Continuing" in subparagraph (a) of the
seventh paragraph thereof.
Section 11. Summary of Terms. Exhibit C to the
Rights Agreement is hereby amended by:
(a) deleting the words "Continuing" from the
first sentence of the footnote thereto;
(b) deleting the second and third sentences of
the footnote thereto;
(c) deleting the word "Continuing" under the
heading "Exchange";
(d) deleting both instances of the word
"Continuing" under the heading "Redemption".
(e) restating the language under the heading
"Amendments" in its entirety to read in full as
follows:
Prior to the Distribution Date, the Rights
Agreement may be amended in any respect.
5
After the Distribution Date, the Rights Agreement
may be amended by the Board of Directors in any respect
that does not (i) adversely affect the Rights holders
(other than any Acquiring Person and certain affiliated
persons), (ii) cause the Rights Agreement again to
become amendable other than in accordance with this
paragraph or (iii) cause the Rights again to become
redeemable.
Section 12. Governing Law. This Amendment shall
be governed by and construed in accordance with the
laws of the State of Delaware without regard to any
applicable conflicts of law rules, except that the
rights and obligations of the Rights Agent shall be
governed by the laws of the State of New York.
Section 13. Counterparts. This Amendment may be
signed in any number of counterparts, each of which
shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same
instrument.
Section 14. Effectiveness. This Amendment shall
become effective upon execution by each of the parties
hereto of a counterpart hereof.
6
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first
above written.
MASCO CORPORATION
By: /s/Richard A. Manoogian
Name: Richard A. Manoogian
Title: Chairman
THE BANK OF NEW YORK
By:/s/John Sivertsen
Name: John Sivertsen
Title: Vice President
7