________________________________________________________________________________
Commercial Intertech Corp.
and
ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent
Rights Agreement
Dated as of November 23, 1999
________________________________________________________________________________
TABLE OF CONTENTS
Page
Section 1. Certain Definitions................................................ 1
Section 2. Appointment of Rights Agent........................................ 4
Section 3. Issuance of Rights Certificates.................................... 4
Section 4. Form of Rights Certificates........................................ 6
Section 5. Countersignature and Registration.................................. 7
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or
Stolen Rights; Certificates........................................ 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.......................................................... 9
Section 8. Cancellation and Destruction of Rights Certificates................ 11
Section 9. Authorization, Listing of Common Shares; Transfer Taxes............ 11
Section 10. Common Shares Record Date.......................................... 12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights................................................... 13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......... 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power................................................... 20
Section 14. Fractional Rights and Fractional Shares............................ 23
Section 15. Rights of Action................................................... 24
Section 16. Agreement of Rights Holders........................................ 25
Section 17. Rights Certificate Holder Not Deemed a Shareholder................. 25
Section 18. Concerning the Rights Agent........................................ 26
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......... 26
Section 20. Duties of Rights Agent............................................. 27
Section 21. Change of Rights Agent............................................. 29
Section 22. Issuance of New Rights Certificates................................ 30
Section 23. Redemption......................................................... 30
Section 24. Exchange........................................................... 31
Section 25. Notice of Certain Events........................................... 33
Section 26. Notices............................................................ 33
Section 27. Supplements and Amendments......................................... 34
Section 28. Determination and Actions by the Board of Directors, etc........... 35
Section 29. Successors......................................................... 36
Section 30. Benefits of this Agreement......................................... 36
Section 31. Severability....................................................... 36
Section 32. Governing Law...................................................... 36
Section 33. Counterparts....................................................... 36
Section 34. Descriptive Headings............................................... 36
Signatures........................................................................ 37
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Page
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Exhibit A - Form of Rights Certificate.............................. A-1
Exhibit B - Summary of Rights....................................... B-1
ii
RIGHTS AGREEMENT
----------------
Agreement, dated as of November 23, 1999, between Commercial Intertech
Corp., an Ohio corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company (the "Rights Agent").
The Board of Directors of the Company (the "Board of Directors") has
authorized and declared a dividend distribution of one right (a "Right") for
each Common Share (as hereinafter defined) of the Company outstanding on
December 8, 1999 (the "Record Date"), each Right representing the right to
purchase one Common Share, upon the terms and subject to the conditions herein
set forth, and has further authorized and directed the issuance of one Right
with respect to each Common Share that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
-------------------
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 20% or more
of the Common Shares of the Company then outstanding, but shall not include
(i) the Company, (ii) any Subsidiary (as such term is hereinafter defined)
of the Company, (iii) any employee benefit plan of the Company or any
Subsidiary of the Company, or (iv) any entity organized, appointed or
established by the Company, for or pursuant to the terms of, any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person"
as the result of (a) an acquisition of Common Shares by the Company which,
by reducing the number of Common Shares outstanding, increases the
proportionate number of Common Shares beneficially owned by such Person to
20% or more of the Common Shares of the Company then outstanding or (b) the
acquisition by such Person of newly issued Common Shares directly from the
Company (it being understood that a purchase from an underwriter or other
intermediary is not directly from the Company); provided, however, that if
a Person shall become the Beneficial Owner of 20% or more of the Common
Shares of the Company then outstanding by reason of share purchases by the
Company or the receipt of newly-issued Common Shares directly from the
Company and shall, after such share purchases or direct issuance by the
Company, become the Beneficial Owner of any additional Common Shares of the
Company, then such Person shall be deemed to be an "Acquiring Person".
Notwithstanding the foregoing, if the Board of Directors determines in good
faith that a Person who would otherwise be an "Acquiring Person", as
defined pursuant to the foregoing provisions of this Section
1(a), has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would
no longer be an Acquiring Person, as defined pursuant to the foregoing
provisions of this Section 1(a), then such Person shall not be deemed to be
an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act (as hereinafter defined) as in effect on the date of
this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own", any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, (x) securities tendered pursuant to
a tender or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (y) securities
issuable upon exercise of Rights at any time prior to the occurrence
of a Triggering Event (as hereinafter defined) or (z) securities
issuable upon exercise of Rights from, and after the occurrence of, a
Triggering Event which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights; or (B) the sole
or shared right to vote or dispose pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D or Schedule 13G under the Exchange Act
(or any comparable or successor report); or (C) "beneficial ownership"
of
2
(as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which
such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding, whether written or oral
(other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), for the purpose of acquiring, holding, voting (except to
the extent contemplated by the proviso to Section 1(c)(ii)(B)) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of Ohio or the State of
New Jersey are authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
Youngstown, Ohio time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Youngstown, Ohio time, on
the next succeeding Business Day.
(f) "Common Shares", when used in reference to the Company, shall
mean the shares of common stock, $1.00 par value, of the Company, and when
the context refers to "Common Shares" of any Person other than the Company
such term shall mean the capital stock (or equity interest) of such other
Person with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management of such
Person.
(g) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board, who
is not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative of an Acquiring Person or of any such Affiliate
or Associate, and was a member of the Board prior to the date of this
Agreement, or (ii) any Person who subsequently becomes a member of the
Board, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or
3
Associate, if such Person's nomination for election or election to the
Board is recommended or approved by a majority of the Continuing Directors.
(h) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(k) "Person" shall mean any individual, trust, firm, corporation,
partnership, limited liability company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
(l) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(m) "Section 11(a)(ii) Event" shall mean an event described in
Section 11(a)(ii) hereof.
(n) "Shares Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
(o) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
(p) "Triggering Event" shall mean a Section 11(a)(ii) Event or an
event described in Section 13(a) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints
---------------------------
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and
in no event shall be liable for, the acts or omissions of any such co-Rights
Agent.
Section 3. Issuance of Rights Certificates.
-------------------------------
(a) Until the earlier of (i) the Close of Business on the tenth day
after the Shares Acquisition Date or (ii) the Close of Business on the
tenth Business Day (or such
4
later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any Subsidiary
of the Company or any person or entity organized, appointed or established
by the Company for, or pursuant to the terms of, any such plan) of, or of
the first public announcement of the intention of any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company or any person or entity
organized, appointed or established by the Company for, or pursuant to the
terms of, any such plan) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the Beneficial
Owner of Common Shares aggregating 20% or more of the then outstanding
Common Shares (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights; the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be certificates for
Rights) and not by separate certificates, (y) the Rights will be
transferable only in connection with the transfer of Common Shares and (z)
each transfer of Common Shares (including a transfer to the Company) shall
constitute a transfer of the Rights associated with such Common Shares. As
soon as practicable after the Distribution Date, the Company will promptly
notify the Rights Agent thereof and will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and
the Rights Agent will, if requested and if provided with a list of record
holders of Common Shares, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares as of the Close of Business on
the Distribution Date, at the address of such holder shown on the records
of the Company, a Rights Certificate, in substantially the form of Exhibit
A hereto (a "Rights Certificate"), evidencing one Right for each Common
Share so held. As of the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights, in substantially the form
of Exhibit B hereto (the "Summary of Rights"), by first-class, postage-
prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights attached
thereto. Until the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
5
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the
last sentence of this Section 3 (c)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights
Agreement between Commercial Intertech Corp. and
ChaseMellon Shareholder Services, L.L.C., dated as of
November 23, 1999 (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 Commercial Intertech Corp. Under
certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. Commercial Intertech Corp. will mail to
the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written
request therefor. As described in the Rights Agreement,
Rights issued to any Person who becomes an Acquiring
Person or any Associate or Affiliate thereof (as such
terms are defined in the Rights Agreement) shall become
null and void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires
any Common Shares after the Record Date but prior to the Distribution Date,
any Rights associated with such Common Shares shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Section 4. Form of Rights Certificates.
---------------------------
(a) The Rights 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, and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement and which do not affect the rights, duties or
responsibilities of the Rights Agent, 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
6
Rights may from time to time be listed, or to conform to usage. Subject to
the terms, provisions and restrictions elsewhere herein, the Rights
Certificates shall entitle the holders thereof to purchase such number of
Common Shares as shall be set forth therein at the price set forth therein
(the "Purchase Price"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person became an Acquiring
Person, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming an Acquiring Person and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding, whether written or oral, regarding
the transferred Rights or (B) a transfer which the Board of Directors has
determined in good faith is part of a plan, arrangement or understanding,
whether written or oral, which has as a primary purpose or effect avoidance
of the second paragraph of Section 11(a)(ii) hereof, and, provided that the
Company shall have notified the Rights Agent that this Section 4(b)
applies, any Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are
or were beneficially owned by a Person who was or became
an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in the second paragraph of Section
11(a)(ii) of the Rights Agreement.
The provisions of the second paragraph of Section 11(a)(ii) shall apply
whether or not any Rights Certificate actually contains the foregoing legend.
Section 5. Countersignature and Registration. The Rights Certificates
---------------------------------
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned by
the Rights
7
Agent and shall not be valid for any purpose unless countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights 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 Rights Certificates had not ceased to be such officer of the Company; and
any Rights Certificate may be signed on behalf of the Company by any Person who,
at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate (as described in
the first sentence of Section 5), although at the date of the execution of this
Rights Agreement any such Person was not such an officer.
Following the Distribution Date and receipt by the Rights Agent of all
relevant information, the Rights Agent will keep or cause to be kept, at its
office designated for such purpose, books for registration and transfer of the
Rights Certificates of each series issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the date of each of the Rights Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
------------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
----------------------------------------------------------------------
(a) Subject to the provisions of Sections 4(b), 14 and 24 hereof, at
any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Redemption Date or the
Final Expiration Date, any Rights Certificate or Rights Certificates (other
than Rights Certificates representing Rights that have become null and void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant
to Section 24 hereof) may be transferred, split-up, combined or exchanged
for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of Common Shares (or other
securities or property, as the case may be) as the Rights Certificate or
Rights Certificates surrendered then entitle such holder to purchase. Any
registered holder desiring to transfer, split-up, combine or exchange any
Rights Certificate or Rights Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split-up, combined or
exchanged at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have properly
completed and signed the certificate contained in the form of assignment on
the reverse side of such Rights 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 or the
Rights Agent shall reasonably request. Thereupon, the Rights Agent shall,
subject to Sections 4 and 11(a)(ii) hereof, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights
8
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split-up, combination or
exchange of Rights Certificates. The Rights Agent shall have no duty or
obligation under this Section 6 unless and until it is satisfied that all
such taxes and/or charges have been paid in full.
(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 Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security satisfactory to them, and, at the
Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate, if mutilated, the Company
will make and deliver a new Rights Certificate of like tenor to the Rights
Agent for delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
------------------------------------------------------
Rights.
------
(a) Subject to Section 11(a)(ii) hereof, the registered holder of any
valid Rights Certificate may exercise the Rights evidenced thereby (except
as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c) hereof) in whole
or in part at any time after the Distribution Date upon surrender of the
Rights Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, to the Rights Agent
at the office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price (as defined below) for each Common Share
(or Common Shares, other securities, cash or property, as the case may be)
as to which the Rights are exercised, at or prior to the earliest of (i)
the close of business on November 23, 2009 (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each Common Share to be issued upon
exercise of a Right shall initially be $60.00, shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in
accordance with Section 7(c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate on the
reverse side of the Rights Certificate duly executed, accompanied by
payment of the aggregate Purchase Price for the shares (or other securities
or property, as the case may be) to be purchased and an amount equal to any
applicable tax or governmental charge required to be paid by the holder of
such Rights Certificate in accordance with Section 9 hereof by wire
transfer,
9
certified check, cashier's check or money order payable to the order of the
Company, or such other payment method reasonably required by the Company,
the Rights Agent shall thereupon promptly (i) (A) requisition from any
transfer agent of the Common Shares (or make available if the Rights Agent
is the transfer agent of the Common Shares) certificates for the number of
Common Shares to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests or (B) requisition from
the depositary agent depositary receipts as provided in Section 14(b)
hereof, representing such number of Common Shares as are to be purchased
(in which case certificates for the Common Shares represented by such
receipts shall be deposited by the transfer agent with the depositary agent
and the Company hereby directs the depositary agent to comply with such
request, (ii) when necessary to comply with this Agreement, requisition
from the Company or such other entity the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the
same to be delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) when necessary to comply with this
Agreement, after receipt, deliver such cash to, or upon the order of, the
registered holder of such Rights Certificate. In the event that the Company
elects or is obligated to issue other securities of the Company, pay cash
and/or distribute other property pursuant to Section 11(a)(iii) hereof, the
Company will make all arrangements necessary so that such other securities,
cash and/or property are available for distribution by the Rights Agent, if
and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Rights Certificate or to his duly authorized assigns, subject to the
provisions of Section 6 and Section 14 hereof.
(e) 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 exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side
of the Rights Certificate surrendered for such 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 or the
Rights Agent shall reasonably request.
(f) Notwithstanding any statement to the contrary contained in this
Agreement or in any Rights Certificate, if the Distribution Date or the
Shares Acquisition Date shall occur prior to the Record Date, the
provisions of this
10
Agreement, including (without limitation) Sections 3 and 11(a)(ii), shall
be applicable to the Rights upon their issuance to the same extent such
provisions would have been applicable if the Record Date were the date of
this Agreement.
Section 8. Cancellation and Destruction of Rights Certificates. All
---------------------------------------------------
Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Authorization, Listing of Common Shares; Transfer Taxes.
-------------------------------------------------------
(a) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Common Shares (or Common
Shares and/or other securities, as the case may be) delivered upon exercise
of Rights shall be, at the time of delivery of the certificates for such
Common Shares (or Common Shares and/or other securities, as the case may
be) (subject to any necessary payment of the Purchase Price), duly and
validly authorized and issued and fully paid and nonassessable shares.
(b) The Company further covenants and agrees that it will pay when
due and payable any and all taxes and governmental charges which may be
payable in respect of the issuance or delivery of the Rights Certificates
or of any Common Shares (or Common Shares and/or other securities, as the
case may be) upon the exercise of Rights. The Company shall not, however,
be required to pay any tax or governmental charge which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person
other than, or the issuance or delivery of certificates or depositary
receipts for the Common Shares (or Common Shares and/or other securities,
as the case may be) in a name other than that of, the registered holder of
the Rights Certificate evidencing Rights surrendered for exercise or to
issue or to deliver any certificates or depositary receipts for Common
Shares (or Common Shares and/or other securities, as the case may be) upon
the exercise of any Rights until any such tax or charge shall have been
paid (any such tax or charge being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to
the Company's reasonable satisfaction that no such tax or charge is due.
11
(c) So long as the Common Shares (and, following the occurrence of a
Distribution Date, Common Shares and/or other securities, as the case may
be) issuable and deliverable upon the exercise of the Rights may be listed
on any inter-dealer quotation system or stock exchange, the Company shall
use its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be listed on
one such system or exchange upon official notice of issuance upon such
exercise.
(d) The Company shall use its best efforts to (i) file on the
appropriate form, as soon as practicable following the earliest date after
the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the Rights
has been determined hereunder, a registration statement under the
Securities Act of 1933, as amended (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 Final Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of
this Section 9(d), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective. Upon
any such suspension, the Company shall promptly notify the Rights Agent
thereof and 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 (with prompt notice
thereof to the Rights Agent). In addition, if the Company shall determine
that a registration statement is required following the Distribution Date,
the Company may temporarily suspend the exercisability of the Rights until
such time as a registration statement has been declared effective. The
Company shall issue a public announcement of such suspension and promptly
notify the Rights Agent thereof. The Company will also take such action as
may be appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the exercisability
of the Rights. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained,
the exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.
Section 10. Common Shares Record Date. Each Person in whose name any
-------------------------
certificate for Common Shares (or Common Shares and/or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Common Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the
12
applicable Purchase Price (and any applicable taxes and governmental charges)
was made (or Rights were duly surrendered in exchange for Common Shares pursuant
to Section 24 hereof); provided, however, that if the date of such surrender and
payment is a date upon which the Common Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
Common Shares (or Common Shares and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a holder of Common Shares (or Common Shares and/or other
securities, as the case may be) for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
----------------------------------------------------------
Number of Rights. The Purchase Price, the number and kind of shares covered by
----------------
and obtainable 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 and Section 13 hereof of this Agreement.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Common Shares
payable in Common Shares, (B) subdivide the outstanding Common Shares,
(C) combine the outstanding Common Shares into a smaller number of
Common Shares or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the
Common Shares transfer books of the Company were open, such holder
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of
one Right. If an event occurs which would require adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, 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
Section 11(a)(ii) hereof.
13
(ii) Subject to Section 24 hereof, in the event any
Person shall become an Acquiring Person, each holder of a valid Right
shall thereafter have a right to receive, upon exercise thereof at a
price equal to the then current Purchase Price multiplied by the
number of Common Shares for which a Right was exercisable immediately
prior to the first occurrence of a Triggering Event, in accordance
with the terms of this Agreement, and in lieu of the number of Common
Shares for which a Right was theretofore exercisable, such number of
Common Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of Common
Shares for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event and dividing that product by
(y) 50% of the then current per share market price of the Company's
Common Shares (determined pursuant to Section 11(d) hereof) on the
date of the occurrence of the event described above. In the event that
any Person shall become an Acquiring Person and the Rights shall then
be outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the
Rights.
From and after the time when a Person becomes an Acquiring
Person (a "Section 11(a)(ii) Event") any Rights that are or were
acquired or beneficially owned by (i) any Acquiring Person or any
Associate or Affiliate of such Acquiring Person, (ii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person became an Acquiring
Person or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming an Acquiring Person
and receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from such Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or
understanding, whether written or oral, regarding the transferred
Rights or (B) a transfer which the Board of Directors has determined
in good faith is part of a plan, arrangement or understanding, whether
written or oral, which has as a primary purpose or effect the
avoidance of this second paragraph of this Section 11(a)(ii), shall
each be null and void and any holder of such Rights shall thereafter
have no exercise or any other rights whatsoever with respect to such
Rights under any provision of this Agreement or otherwise. No Rights
Certificate shall be issued pursuant to Section 3, this Section
11(a)(ii) or Section 24 that represents Rights beneficially owned by
an Acquiring Person or any Associate or Affiliate thereof whose Rights
would be null and void pursuant to the preceding sentence; no Rights
Certificate shall be issued at any time upon the transfer of any
Rights to an Acquiring Person or any Associate or Affiliate thereof
whose Rights would be null and void pursuant to the preceding sentence
or to any nominee of such Acquiring Person, Associate or Affiliate;
and any Rights Certificate delivered to the Rights Agent for transfer
14
to an Acquiring Person, Associate or Affiliate thereof whose Rights
would be null and void pursuant to the preceding sentence shall be
cancelled.
(iii) In lieu of issuing Common Shares of the Company
in accordance with Section 11(a)(ii) hereof, the Company may, in the
sole discretion of the Board of Directors, elect to (and, in the event
that the Board of Directors has not exercised the exchange right
contained in Section 24 hereof and there are not sufficient issued but
not outstanding and authorized but unissued Common Shares to permit
the exercise in full of the Rights in accordance with Section
11(a)(ii) hereof, the Company shall) take all such action as may be
necessary to authorize, issue or pay, upon the exercise of the Rights,
cash (including by way of a reduction of the Purchase Price),
property, other securities or any combination thereof having an
aggregate value equal to the value of the Common Shares of the Company
which otherwise would have been issuable pursuant to Section
11(a)(ii), which aggregate value shall be determined by the Board of
Directors. For purposes of the preceding sentence, the value of the
Common Shares shall be determined pursuant to Section 11(d) hereof and
the value of any equity securities which the Board of Directors
determines to be a "common stock equivalent" shall be deemed to have
the same value as the Common Shares. Any such election by the Board of
Directors must be made and publicly announced within 60 days following
the date on which the event described in Section 11(a)(ii) shall have
occurred. Following the occurrence of the event described in Section
11(a)(ii), the Board of Directors may suspend the exercisability of
the Rights for a period of up to 60 days following the date on which
the event described in Section 11(a)(ii) shall have occurred to the
extent that the Board of Directors has not determined whether to
exercise the Company's right of election under this Section
11(a)(iii). In the event of any such suspension, the Company shall
promptly notify the Rights Agent thereof and issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Shares (or having a conversion price per
share, if a security convertible into Common Shares) less than the then
current per share market price of the Common Shares (as defined in Section
11(d)) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Common Shares outstanding on such record date plus
the number of Common Shares which could be purchased at the current per
share market price for the aggregate offering price of the total number of
Common Shares (and/or the aggregate initial conversion price of the
convertible securities so to be offered) and the
15
denominator of which shall be the number of Common Shares outstanding on
such record date plus the number of additional Common Shares to be offered
for subscription or purchase (or into which the convertible securities so
to be offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a
form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent. Common
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed; and in the event
that such rights, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Common Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price
to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share market
price of the Common Shares on such record date, less the fair market value
(as determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent) of the
portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one Common Share and
the denominator of which shall be such current per share market price of
the Common Shares; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of
this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices (determined as provided in the next sentence) per
share of such Security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to, but not including, such date,
and for the purpose of any computation under Section
16
11(a)(iii) hereof, the "current per share market price" of a Security on
any date shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days immediately
following, but not including, such date; provided, however, that in the
event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security
of (A) a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares (other than the
Rights), or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of 30 Trading Days after the ex-
dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security as
if such dividend, distribution, combination or reclassification has not
been declared. 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 on the Nasdaq National Market or, if the
Security is listed or admitted for trading on a national exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading, or, if the Security
is not listed on the Nasdaq National Market or 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 any other system then in use, or,
if on any such date the Security is not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the
Board of Directors. The term "Trading Day" shall mean a day on which the
inter-dealer quotation system or principal national securities exchange on
which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to
trading on any inter-dealer quotation system or national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Common Shares shall be determined in
accordance with the method set forth in Section 11(d)(i) hereof. If the
Common Shares are not publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share as determined in
good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent
17
adjustment. All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one ten-thousandth of a Common Share or any
other share or security, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of
the transaction which requires such adjustment or (ii) the Final Expiration
Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Common
Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Shares contained in Sections 11(a), 11(b) and
11(c), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Common Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
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) hereof, upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and 11(c) hereof, 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 Common Shares (calculated to the nearest one ten-thousandth
of a Common Share) obtained by (i) multiplying (x) the number of Common
Shares 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 Common Shares 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 Common Shares 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
promptly notify the Rights Agent
18
thereof and 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 Rights Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Rights 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 Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for
herein and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Common Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of Common Shares which were
expressed in the initial Rights Certificates issued hereunder, without
prejudice to the validity of such Rights Certificate(s) or the application
of the provisions hereof.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the Common Shares
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue fully paid and nonassessable
Common Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer (and shall promptly
notify the Rights Agent of any such election) until the occurrence of such
event the issuing to the holder of any Right exercised after such record
date of the Common Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Common
Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver
to such holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
19
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Common
Shares, issuance wholly for cash of any Common Shares at less than the
current market price, issuance wholly for cash of Common Shares or
securities which by their terms are convertible into or exchangeable for
Common Shares, dividends on Common Shares payable in Common Shares or
issuance of rights, options or warrants referred to in Section 11(b),
hereafter made by the Company to holders of its Common Shares shall not be
taxable to such stockholders.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief, reasonably detailed statement of the facts and computations
accounting for such adjustment, (b) file with the Rights Agent and with each
transfer agent for the Common Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Rights Certificate in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment contained therein, and shall have no duty
with respect to and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
-------------
(a) If, after the Shares Acquisition Date, directly or indirectly,
(w) the Company shall consolidate with, or merge with and into, any other
Person, (x) any Person shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger or
consolidation all or part of the outstanding Common Shares are changed into
or exchanged for stock or other securities of any other Person (or the
Company) or cash or any other property, (y) the Company shall sell,
mortgage or otherwise transfer (or one or more of its Subsidiaries shall
sell, mortgage or otherwise transfer), in one or more transactions, assets
or earning power aggregating 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any Person other
than the Company or one or more of its wholly-owned Subsidiaries, or (z)
any Acquiring Person or any Associate or Affiliate of any such Acquiring
Person, at any time after the date of this Agreement, directly or
indirectly, (A) shall, in one transaction or a series of transactions,
transfer any assets to the Company or to any of its Subsidiaries in
exchange (in whole or in part) for Common Shares, for shares of other
equity securities of the Company or for securities exercisable for or
convertible into shares of equity securities of the Company (Common Shares
or otherwise) or otherwise obtain from the Company, with or without
consideration, any additional shares of such equity securities or
securities exercisable
20
for or convertible into shares of such equity securities (other than
pursuant to a pro rata distribution to all holders of Common Shares), (B)
shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of assets, in one transaction or a series of
transactions, to, from or with the Company or any of its Subsidiaries
without obtaining a written opinion from a nationally recognized investment
banking firm that the terms of such transaction or arrangement are no less
favorable to the Company than the Company would be able to obtain in arm's-
length negotiation with an unaffiliated third party, (C) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise acquire
or dispose of in one transaction or a series of transactions, to, from or
with the Company or any of the Company's Subsidiaries (other than
incidental to the lines of business, if any, engaged in as of the date
hereof between the Company and such Acquiring Person or Associate or
Affiliate) assets having an aggregate fair market value of more than
$5,000,000, (D) shall receive any compensation from the Company or any of
the Company's Subsidiaries other than compensation for full-time employment
as a regular employee at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (E) shall receive the benefit, directly
or indirectly (except proportionately as a stockholder and except if
resulting from a requirement of law or governmental regulation), 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, then, and in each such case, (i) each holder of a Right
(except as otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of Common Shares for which a Right
was exercisable immediately prior to the first occurrence of a Triggering
Event in accordance with the terms of this Agreement, and in lieu of the
number of Common Shares for which a Right was theretofore exercisable, such
number of validly authorized and issued, fully paid, non-assessable and
freely tradable Common Shares of the Principal Party (as hereinafter
defined) not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall equal the result obtained by (A) multiplying
the then current Purchase Price by the number of Common Shares for which a
Right was exercisable immediately prior to the first occurrence of a
Triggering Event and dividing that product by (B) 50% of the then current
per share market price of the Common Shares of the Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation
of such consolidation, merger, sale or transfer; (ii) such 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; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party; and (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to the Common Shares thereafter
deliverable upon the exercise of the Rights.
21
(b) "Principal Party" shall mean:
(i) In the case of any transaction described in (w) or (x) of
the first sentence of Section 13(a) hereof, the Person that is the
issuer of any securities into which Common Shares of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the surviving entity of such merger or
consolidation (including the Company if applicable); and
(ii) in the case of any transaction described in (y) or (z) of
the first sentence in Section 13(a) hereof, the Person that is the
party receiving the greatest portion of the assets, securities,
earning power or other benefit transferred pursuant to such
transaction or transactions;
provided, however, that in any such case described in clauses (b)(i) and
-------- -------
(b)(ii): (1) if the Common Shares of such Person are not at such time and
have not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Shares of which are and
have been so registered, "Principal Party" shall refer to such other
Person; (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one person, the Common Shares of two or more of which are and
have been so registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Shares having the greatest aggregate
market value; and (3) in case such Person is owned, directly or indirectly,
by a joint venture formed by two or more Persons that are not owned,
directly or indirectly, by the same person, the rules set forth in (1) and
(2) above shall apply to each of the chains of ownership having an interest
in such joint venture as if such party were a "Subsidiary" of both or all
of such joint venturers and the Principal Parties in each such chain shall
bear the obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have sufficient Common
Shares authorized to permit the full exercise of the Rights and 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 13(b) hereof and further providing
that, as soon as practicable after the date of any consolidation, merger,
sale or transfer mentioned in Section 13(a) hereof, the Principal Party
will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B)
22
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Final Expiration Date;
(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; and
(iii) take such actions as may be necessary or appropriate under
the blue sky laws of the various states.
The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements
or arrangements which, as a result of the consummation of such transaction,
would eliminate or substantially diminish the benefits intended to be
afforded by the Rights. The provisions of this Section 13 shall similarly
apply to successive mergers, consolidations, sales or transfers.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights 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 principal national
securities exchange or the Nasdaq National Market 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 or the Nasdaq National
Market, 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 any
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 as determined in good faith by the Board of Directors shall be
used.
23
(b) The Company shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares. In lieu of fractional Common Shares,
the Company shall pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one Common Share.
For the purposes of this Section 14(b), the current market value of a
Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
(d) The Rights Agent shall have no duty or obligation with respect
to this Section 14 and Section 24(e) unless and until it has received
specific instructions (and sufficient cash, if required) from the Company
with respect to its duties and obligations under such Sections.
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, its right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of 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 Common Shares;
24
(b) after the Distribution Date, the Rights Certificates will be
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with
appropriate forms and certificates fully executed;
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Rights Certificate (or, prior to the Distribution Date,
the associated certificate for Common Shares) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the
associated certificate for Common Shares 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 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, judgment or
ruling (whether interlocutory or final) 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.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
--------------------------------------------------
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights 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 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
25
Section 18. Concerning the Rights Agent.
---------------------------
(a) 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 preparation, delivery,
administration, execution and amendment 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, damage, judgment, fine, penalty, claim, demand, settlement, cost
or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, (as finally determined by a
court of competent jurisdiction), for any action taken, suffered or omitted
by the Rights Agent in connection with the acceptance and administration of
this Agreement, or the exercise or performance of its duties hereunder,
including, without limitation, the costs and expenses of defending against
any claim of liability arising, directly or indirectly, therefrom. The
indemnity provided herein shall survive the termination of this Agreement
and the termination and the expiration of the Rights. The costs and
expenses incurred in enforcing this right of indemnification shall be paid
by the Company.
(b) Anything in this Agreement to the contrary notwithstanding, in
no case shall the Rights Agent be liable for special, indirect, punitive,
incidental or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has
been advised of the possibility of such loss or damage.
(c) The Rights Agent shall be authorized to rely on, shall be
protected and shall incur no liability for, or in respect of any action
taken, suffered or omitted by it in connection with, the acceptance and
administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or
other paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice or opinion of counsel as
set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services 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
26
part of any of the parties hereto, provided that such Person would be
eligible for appointment as a successor Rights Agent under the provisions
of Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Rights
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 Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
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 Rights
Certificates shall have the full force provided in the Rights Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations, and only the duties and obligations, imposed by this
Agreement (and no implied duties or obligations) upon the following terms and
conditions, by all of which the Company and the holders of Rights 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 advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent, and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted by it in good faith and in accordance
with such advice or 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, suffering
or omitting any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be
full authorization and protection to the Rights Agent, and the Rights Agent
shall incur no liability for or in respect of any action taken, suffered or
omitted in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
27
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own gross negligence, bad faith or willful
misconduct (as finally determined by a court of competent jurisdiction).
(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
Rights 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 have any liability for, nor be
under any responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Rights
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 Rights Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including
the Rights becoming null and void pursuant to Section 11(a)(ii) hereof) or
any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, or the
ascertaining of the existence of facts that would require any such change
or adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Common Shares or other securities to be issued pursuant to this agreement
or any Rights Certificate or as to whether any Common Shares or other
securities will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept,
prior to the Shares Acquisition Date, instructions with respect to the
performance of its duties hereunder from any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and such advice
or instructions shall be full authorization and protection to the Rights
Agent and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted by it in good faith in accordance
with the advice or instructions of any such officer or for any delay in
acting while waiting for such advice or instructions.
28
(h) The Rights Agent and any Affiliate, stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company, or become pecuniarily interested
in any transaction in which the Company may be interested, or contract with
or lend money to the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company
or for any other Person.
(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 or any other
Person resulting from any such act, default, neglect or misconduct, absent
gross negligence or willful misconduct in the selection and continued
employment thereof.
(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 it believes that repayment of such funds or adequate
indemnification against such risk or liability is not assured it.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and thereafter be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Shares by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the registered holder of any Rights
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 either (A) a Person organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, and subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $50 million or (B) an affiliate of
such a Person. 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
29
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Shares, and mail a notice thereof in writing to the registered holders of the
Rights 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 Rights Certificates. Notwithstanding any of
-----------------------------------
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption.
----------
(a) The Rights may be redeemed by action of the Board of Directors
pursuant to Section 23(b) hereof and shall not be redeemed in any other
manner.
(b) The Board of Directors may, at its option, at any time prior
to such time as any Person becomes an Acquiring Person, redeem all, but not
less than all, of the then outstanding Rights at a redemption price of $.01
per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price");
provided, however, if the Board of Directors of the Company authorizes
redemption of the Rights on or after the date of a change (resulting from a
proxy or consent solicitation) in a majority of the directors in office at
the commencement of such solicitation if any Person who is a participant in
such solicitation has stated (or, if upon the commencement of such
solicitation, a majority of the Board of Directors of the Company has
determined in good faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which would cause the
occurrence of a Triggering Event, then the redemption is not effective for
a period of 180 days following such date, unless there are Continuing
Directors then in office and such authorization receives the concurrence of
a majority of such Continuing Directors. The redemption of the Rights by
the Board of Directors may be made effective at such time on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. If redemption of the Rights is to be effective as of a future
date, the Rights shall continue to be exercisable, subject to Section
11(a)(ii) hereof, until the effective date of the redemption, provided that
nothing contained herein shall preclude
30
the Board of Directors from subsequently causing the Rights to be redeemed
at a date earlier than the previously scheduled effective date of the
redemption. The Company may, at its option, pay the Redemption Price in
cash, Common Shares (based on the current per share market price of the
Common Shares at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(c) Immediately upon the action of the Board of Directors ordering
the redemption of the Rights pursuant to Section 23(b) (or at the effective
time of such redemption established by the Board of Directors pursuant to
Section 23(b) hereof), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption
Price. The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any defect in,
any such notice shall not affect the validity of such redemption. Within 10
days after such action of the Board of Directors ordering the redemption of
the Rights pursuant to Section 23(b) hereof or if later, the effectiveness
of the redemption of the rights pursuant to the last sentence of Section
23(b), the Company shall mail a notice of redemption to all the holders of
the then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made. The Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights, (ii) depositing with a
bank or trust company having a capital and surplus of at least $100
million, funds necessary for such redemption, in trust, to be applied to
the redemption of the Rights so called for redemption and (iii) arranging
for the mailing of the Redemption Price to the registered holders of the
Rights; then, and upon such action, all outstanding Rights Certificates
shall be null and void without further action by the Company. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Shares prior to the
Shares Acquisition Date.
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 Rights that
have become null and void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof.
31
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or any such Subsidiary, or any entity holding Common Shares for
or pursuant to the terms of any such plan), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more
of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to Section 24(a) hereof and without any
further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of holders of such Rights
shall be to receive that number of Common Shares equal to the number of
valid Rights held by such holders. The Company shall promptly notify the
Rights Agent and give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which
have become null and void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute for any Common Share exchangeable for a Right,
(i) cash, (ii) debt securities of the Company, (iii) other assets, or (iv)
any combination of the foregoing, in any event having an aggregate value
which the Board of Directors shall have determined in good faith to be
equal to the current market value of one Common Share. For the purposes of
this paragraph (c), the current market value of one Common Share shall be
the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior
to the date of exchange pursuant to this Section 24.
(d) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such
32
fractional Common Shares, the Company shall pay to the registered holders
of the Rights Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Common Share. For the
purposes of this Section 24(e), the current market value of a whole Common
Share shall be the closing price of a Common Share (as determined pursuant
to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
------------------------
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Common Shares or to
make any other distribution to the holders of its Common Shares (other than
a regular quarterly cash dividend), (ii) to offer to the holders of its
Common Shares rights or warrants to subscribe for or to purchase any
additional Common Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Common Shares (other than a reclassification involving only the subdivision
of outstanding Common Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person, or
(v) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to the Rights Agent and
each holder of a Rights Certificate, in accordance with Section 26 hereof,
a notice of such proposed action, which shall specify the record date for
such event, and the date of participation therein by the holders of the
Common Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at
least 10 days prior to the record date for determining holders of the
Common Shares for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares, whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give
to the Rights Agent and each holder of a Rights Certificate, in accordance
with Section 26 hereof, a notice of the occurrence of such event, which
notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to
-------
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
33
Commercial Intertech Corp.
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: General Counsel and Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
One Mellon Bank Center
000 Xxxxx Xxxxxx
Xxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attention: Relationship Manager
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
--------------------------
time supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the Rights Agent or the holders of Rights
(except the interests of any Acquiring Person and its Affiliates and
Associates), which amendment shall be effective only if there are Continuing
Directors and shall require the occurrence of a majority of such Continuing
Directors. 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 27 and, provided such supplement or
amendment does not change or increase the Rights Agent's duties, liabilities or
obligations hereunder, the Rights Agent shall execute such supplement or
amendment.
Section 28. Determination and Actions by the Board of Directors, etc..
---------------------------------------------------------
(a) The Board of Directors shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and
powers specifically granted to
34
the Board of Directors, or the Company, or as may be necessary or advisable
in the administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement, and (ii)
make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement
and whether any proposed amendment adversely affects the interests of the
holders of Rights Certificates). For all purposes of this Agreement, any
calculation of the number of Common Shares or other securities outstanding
at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares or any other
securities of which any Person is the Beneficial Owner, shall 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 as in effect on the date of
this Agreement. All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) which are done or made by the Board of
Directors in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights Certificates and all
other parties unless the Board of Directors specifically states that such
action, calculations, interpretation or determination is not final,
conclusive and binding, and (y) not subject the Board of Directors to any
liability to the holders of the Rights Certificates. The Rights Agent shall
always be entitled to assume that the Board of Directors acted in good
faith and shall be fully protected and incur no liability in reliance
thereon.
(b) It is understood that the Independent Directors Committee (as
defined below) of the Board of Directors shall review and evaluate this
Agreement in order to consider whether the maintenance of this Agreement
continues to be in the interests of the Company, its shareholders and any
other relevant constituencies of the Company, at least every three years,
or sooner than that if any Person shall have made a proposal to the
Company, or taken any such other action, that, if effective, could cause
such Person to become an Acquiring Person hereunder, if a majority of the
members of the Independent Directors Committee shall deem such review and
evaluation appropriate after giving due regard to all relevant
circumstances. Following each such review, the Independent Directors
Committee will communicate its conclusions to the full Board of Directors,
including any recommendation in light thereof as to whether this Agreement
should be modified or the Rights should be redeemed. The Independent
Directors Committee shall be comprised of the Directors of the Company who
are not officers or employees of the Company.
Section 29. 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.
35
Section 30. 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 valid Rights Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
valid Rights Certificates (and, prior to the Distribution Date, the Common
Shares).
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.
Section 32. Governing Law. This Agreement and each Rights Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Ohio and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State; provided, however, that all provisions
regarding the rights, duties and obligations of the Rights Agent shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be 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.
36
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.
COMMERCIAL INTERTECH CORP.
Attest:
By: /s/ Xxxxxxx X. Manchester By: /s/ Xxxxxx X. Xxxxxx
------------------------- --------------------------------
Name: Xxxxxxx X. Manchester Name: Xxxxxx X. Xxxxxx
Title: Vice President and Title: Senior Vice President and
General Counsel Chief Financial Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
Attest:
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxx
------------------ -------------------------------
Name: Xxxxxxx Xxxxxx Name: Xxxxx Xxxxxxx
Title: Vice President Title: Assistant Vice President
37
Exhibit A
---------
Form of Rights Certificate
Certificate No. ____ _____ Rights
NOT EXERCISABLE AFTER NOVEMBER 23, 2009 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT, AND ARE VOIDABLE AND SUBJECT TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN THE SECOND PARAGRAPH OF SECTION
11(a)(ii) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
Commercial Intertech Corp.
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of November 23, 1999, 1999 (the "Rights Agreement") between
Commercial Intertech Corp., an Ohio corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company (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.,
Youngstown, Ohio time on November 23, 2009 at the office of the Rights Agent
designated for such purpose, or at the office of its successor as Rights Agent,
one fully paid nonassessable share of common stock, $1.00 par value (the "Common
Shares"), of the Company, at a purchase price of $60.00 per Common Share (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and the Certificate duly executed. The
number of Rights evidenced by this Rights Certificate (and
___________________
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
A-1
the number of Common Shares which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of November 23, 1999, based on the Common Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the number of
Common Shares which may be purchased upon the exercise of the Rights evidenced
by this Rights Certificate are subject to modification and adjustment upon the
happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of Common Shares as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to purchase. If
this Rights Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for Common Shares on
the terms set forth in the Rights Agreement.
No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Common Shares or of any
other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
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 stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
A-2
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _________________, ______.
ATTEST: COMMERCIAL INTERTECH CORP.
____________________________ By: ____________________
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: ______________________
Authorized Signature
A-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, ______________________________ hereby sells, assigns
and transfers unto __________________________________________________________
_____________________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________
(Please print social security or other identifying number of transferee)
this Rights Certificate, together with all interest therein, and does hereby
irrevocably constitute and appoint ___________________ Attorney, to transfer the
within Rights Certificate on the books of the within-named Company, with full
power of substitution.
Dated: _________________________
________________________________________
Signature
Signature Guaranteed: _______________________________________________________
Signature must be guaranteed by an Eligible Guarantor Institution as
defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
A-4
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement);
(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 an Affiliate or Associate of any such Person.
Dated: _________________________
___________________________________________
Signature
Signature Guaranteed: _______________________________________________________
NOTICE
------
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
The signature must be guaranteed by an Eligible Guarantor Institution
as defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
A-5
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Rights Certificate.)
To: Commercial Intertech Corp.
The undersigned hereby irrevocably elects to exercise _____________ Rights
represented by this Rights Certificate to purchase the Common Shares 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 Common Shares be issued in the name of:
______________________________________________________________________________
______________________________________________________________________________
(Please print name and address)
_______________________________________________________
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
______________________________________________________________________________
______________________________________________________________________________
(Please print name and address)
_______________________________________________________
(Please insert social security or other identifying number)
Dated: _________________________
___________________________________________
Signature
Signature Guaranteed: ________________________________________________________
Signatures must be guaranteed by an Eligible Guarantor Institution as
defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
A-6
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights 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 Person (as such terms are
defined in the Rights Agreement);
(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
an Affiliate or Associate of any such Person.
Dated: _________________________
___________________________________________
Signature
Signature Guaranteed: _________________________________________________________
NOTICE
------
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
The signature must be guaranteed by an Eligible Guarantor Institution
as defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
A-7
NOTICE
------
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
A-8
Exhibit B
---------
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES UNDER PLAN ADOPTED BY
COMMERCIAL INTERTECH CORP.
On November 17, 1999, the Board of Directors of Commercial Intertech Corp.
(the "Company") declared a dividend distribution of one Right for each
outstanding share of common stock (a "Right"), $1.00 par value (the "Common
Shares"), of the Company. The dividend is payable on December 8, 1999 (the
"Record Date") to the shareholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one Common Share of the
Company at a price of $60.00 per Common Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
Until the earlier of (i) the close of business on the tenth day after the
first public announcement that a person or group of affiliated or associated
persons have acquired beneficial ownership of 20% or more of the outstanding
Common Shares (an "Acquiring Person"), or (ii) the close of business on the
tenth day (or such later date as may be determined by action of the Company's
Board of Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership of such person or group of 20% or more of such outstanding Common
Shares (the earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced by the Common Share certificates, will be transferable
only by the transfer of the Common Shares associated with such Rights and any
transfer of the Common Shares (including a transfer to the Company) will
constitute a transfer of the Rights. As described below, after a person or
group becomes an Acquiring Person, the Rights may not be redeemed and may only
be amended in limited circumstances.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record Date, upon
transfer or new issuance of Common Shares, will contain a legend incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date, even without
such notation or a copy of this Summary of Rights being attached, will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Rights
Certificates alone will evidence the Rights.
B-1
The Rights are not exercisable until a person, entity or group becomes an
Acquiring Person. The Rights will expire on November 23, 2009 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless the
Rights are redeemed earlier by the Company, in each case, as described below.
If a person or group of affiliated or associated persons becomes an
"Acquiring Person" by obtaining beneficial ownership of more than 20% of the
then outstanding Common Shares, each holder of a Right (other than those
described in the next sentence) will thereafter have the right to receive, upon
exercise, Common Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the Purchase Price
of the Right. All Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will be
null and void.
At any time after the first date of public announcement by the Company or
an Acquiring Person than an Acquiring Person has become such (a "Shares
Acquisition Date"), if (i) the Company is the surviving corporation in a merger
with any other company or entity, (ii) the Company is acquired in a merger or
other business combination transaction, (iii) 50% or more of the Company's
consolidated assets or earning power are sold, or (iv) an Acquiring Person
engages in certain "self-dealing" transactions with the Company, each holder of
a Right or a (other than those whose rights have become null and void) will
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the surviving or acquiring company which at the time of such transaction will
have a market value of two times the Purchase Price of such Right.
At any time after a person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which have become null and
void), in whole or in part, without any additional payment, for Common Shares at
an exchange ratio of one Common Share (or cash, debt securities of the Company
or other assets having a market price of one Common Share), per Right (subject
to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Shares on the last trading day prior to the date of exercise.
At any time prior to the Shares Acquisition Date, the Board of Directors of
the Company may redeem all, but not less than all, of the Rights at a price of
$.01 per Right (the "Redemption Price"). Under certain circumstances set forth
in the Rights Agreement, the decision to redeem shall require the concurrence of
a majority of the Continuing Directors. The redemption of the Rights may be
made effective at such time, on such basis and with such conditions as the Board
of Directors in its sole discretion may establish.
B-2
Immediately upon any redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The term "Continuing Director" means any member of the Board of Directors
of the Company who was a member of the Board prior to the date of the Rights
Agreement, and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Continuing Directors, but
shall not include an Acquiring Person, or an affiliate or associate of an
Acquiring Person, or any representative of the foregoing entities.
Any of the provisions of the Rights may be amended by the Board of
Directors of the Company prior to the Shares Acquisition Date. After the Shares
Acquisition Date, the provisions of the Rights Agreement may be amended by the
Board to make changes which do not adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person) which amendment shall
require the concurrence of a majority of the Continuing Directors.
The Independent Directors Committee of the Company will review the Rights
Plan at least every three years and, it a majority of the members of the
Independent Directors Committee deems it appropriate, may recommend a
modification or termination of the Rights Plan.
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
November 24, 1999. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
B-3
