SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) or (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ZURN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1040754
(State of incorporation or organization) (IRS Employer
Identification No.)
One Zurn Place, Erie, Pennsylvania 16505
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Preferred Share Purchase Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered.
Effective May 28, 1996, Zurn Industries, Inc. (the "Company") declared a
dividend of one preferred share purchase right (a "Right") for each
outstanding share of Common Stock, $.50 par value (the "Common Shares"), of
the Company, payable to shareholders of record on May 28, 1996. Each Right
will entitle the holder thereof until the earlier of May 26, 2006 or the
redemption of the Rights to buy one one-fourth of a share of Second Series
Junior Participating Preferred Stock, $1.00 par value (the "Preferred
Shares"), at an exercise price of $90 per one one-fourth of a share, subject
to adjustment. The Rights will be represented by the certificates for Common
Shares, will not be exercisable, and will not be transferable apart from the
Common Shares, until the earlier of the tenth day after the announcement that
a person or group has acquired beneficial ownership of 15% or more of the
Common Shares or the tenth day after a person commences, or announces an
intention to commence, an offer the consummation of which would result in a
person beneficially owning 15% or more of the Common Shares (the earlier of
such dates being the "Distribution Date"). Separate certificates for the
Rights will be mailed to holders of record of the Common Shares as of such
date. The Rights could then begin trading separately from the Common Shares.
In the event that the Company is acquired in a merger or other business
combination transaction, each Right will entitle its holder to purchase, at
the then-current exercise price of the Right, that number of shares of common
stock of the surviving company which at the time of such transaction would
have a market value of two times the then-current exercise price of the Right.
Alternatively, if a person were to become the beneficial owner of 15% or more
of the Company's Common Stock (an "Acquiring Person"), each Right not owned by
such holder would become exercisable for that number of Common Shares which,
at that time, would have a market value of two times the then current exercise
price of the Right.
The preceding paragraph will not be applicable to a transaction where
all the outstanding shares of Common Stock are acquired at a uniform price to
be paid to all shareholders with the form of consideration being uniform as to
all shareholders.
The Board of Directors may in its sole discretion defer the distribution
of Right Certificates and the exercisability of Rights if it deems the
interest of the Acquiring Person not to be adverse to the Company and its
shareholders. The determination of whether an interest is "adverse" is based
on the finding that (x) the Acquiring Person is involved in any court or
agency proceedings such that the market for Common Stock of the Company could
be subject to false or misleading influences, (y) the interest of the
Acquiring Person is intended to cause the Company to repurchase the Common
Stock held by the Acquiring Person or to cause pressure on the Company to
enter into a transaction intended to provide the Acquiring Person with short-
term financial gain or other advantage under circumstances in which the Board
determines that the best long-term interests of the Company and its
shareholders would not be served by such a transaction or (z) the interest of
the Acquiring Person will cause a material adverse impact (including an
impairment of relationships with customers or the Company's ability to
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compete) on the business of the Company. This discretion of the Board,
however, is not operative once an Acquiring Person holds beneficially 20% or
more of the Common Stock of the Company.
The Rights are redeemable in whole, but not in part, at $.01 per Right
at any time up to ten business days after the acquisition by a person or group
of beneficial owner of 15% or more of the Common Shares. The right to exercise
the Rights terminates at the time that the Board of Directors elects to redeem
the Rights. The redemption may be made effective at such time, on such basis
and with such conditions as the Board may establish. Notice of redemption
shall be given by mailing such notice to the registered holders of the Rights.
The Rights will expire on May 26, 2006 (unless sooner redeemed). At no time
will the Rights have any voting rights. The Rights Agent is Society National
Bank (the "Rights Agent").
The exercise price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) as a result of the grant to holders of the Preferred
Shares of certain rights or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred Shares with a
conversion price, less than the then current market price of the Preferred
Shares or (iii) as a result of the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings or dividends payable in
Preferred Shares) or of subscription rights or warrants (other than those
referred to above). The number of Rights and number of Preferred Shares
issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split or stock dividend on, or combination of, the Common
Shares prior to the Distribution Date. With certain exceptions, no adjustment
in the exercise price will be required until cumulative adjustments require an
adjustment of at least 1% in such exercise price.
Upon exercise of the Rights, no fractional Preferred Shares will be
issued (other than fractions which are integral multiples of one-quarter of a
share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof an adjustment in cash will be made.
As of May 17, 1996 there were 12,341,309 Common Shares issued (excluding
229,026 Common Shares held in the Company's treasury). As of such date an
additional 1,578,800 Common Shares were reserved for issuance pursuant to the
Company's stock option plans. One Right will became attached to each Common
Share owned of record on May 28, 1996. Until the Distribution Date, all
outstanding Common Shares will have attached Rights. The Company has reserved
3,500,000 Preferred Shares for issuance upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors of the Company, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
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combination approved by the Board of Directors since the Rights may be
redeemed by the Company at $.01 per Right up to ten business days after the
time that a person or group has acquired beneficial ownership of 15% or more
of the Common Shares, which event may be deferred, as hereinbefore described,
if the interest of the person or group is not deemed to be adverse up to the
point where such ownership reaches a level of 20% or more.
The Preferred Shares purchasable upon exercise of the Rights will be
junior to the Company's outstanding series of Preferred Stock and redeemable
at a price of $360 per share. Each Preferred Share will have a minimum
preferential quarterly dividend of $.20 per share, but will be entitled to
receive, in the aggregate, a dividend of four times the dividend declared per
Common Share. In the event of liquidation, the holders of the Preferred
Shares will be entitled to receive a minimum liquidation payment of $2 per
share, but will be entitled to receive an aggregate liquidation payment equal
to four times the payment made per Common Share. Each Preferred Share will
have one vote, voting together with the Common Shares. In the event of any
merger, consolidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive four times the
amount and type of consideration received per Common Share. The rights of the
Preferred Shares as to dividends and liquidation, and in the event of mergers
and consolidations, are protected by customary anti-dilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and
redemption rights, the value of the interest in a Preferred Share purchasable
upon the exercise of each Right should approximate the value of one Common
Share.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B thereto the
form of Right Certificate, is attached hereto as an exhibit and incorporated
herein by reference. The foregoing description of the Rights is qualified by
reference to such exhibit.
Item 2. Exhibit.
1. Form of Rights Agreement dated as of May 28, 1996, between
Zurn Industries, Inc. and Society National Bank, as Rights
Agent, which includes as Exhibit B thereto the form of Right
Certificate.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized.
ZURN INDUSTRIES, INC.
Date: May ___, 1996 By______________________________
Dennis Haines
General Counsel and Secretary
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EXHIBIT 1
______________________________________________________________________________
ZURN INDUSTRIES, INC.
and
SOCIETY NATIONAL BANK
Rights Agent
______________________________
Rights Agreement
Dated as of May 28, 1996
______________________________________________________________________________
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 28, 1996 (the "Agreement"),
between ZURN INDUSTRIES, INC., a Pennsylvania corporation (the "Company"), and
SOCIETY NATIONAL BANK, a national banking association (the "Rights Agent").
WITNESSETH
WHEREAS, the Board of Directors of the Company, effective as of
May 28, 1996 (the "Rights Dividend Declaration Date"), authorized and
declared a dividend distribution of one Right (as such term is hereinafter
defined) for each share of common stock, par value $.50 per share, of the
Company (the "Common Stock") outstanding at the close of business on May 28,
1996 (the "Record Date"), and authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(p)
hereof) for each share of Common Stock of the Company issued between the
Record Date (whether originally issued or delivered from the Company's
treasury) and the Distribution Date (as such term is defined in Section 3
hereof), each Right representing the right to purchase quarter shares of
Second Series Junior Participating Preferred Stock of the Company, par value
$1.00 per share, having the rights, powers and preferences set forth in the
form of Statement with Respect to Second Series Junior Participating Preferred
Stock attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term
is hereinafter defined) and Associates (as such term is hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 15% or more of the shares of Common Stock then outstanding, but
shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii)
any employee benefit plan of the Company or of any Subsidiary of the Company,
or (iv) any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
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(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 the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange;
(iii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or "beneficial ownership" (as determined pursuant to Rule 13d-3 of
the General Rules and Regulations under the Exchange Act) of (including
pursuant to any agreement, arrangement or understanding, whether or not in
writing); provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," any security under this subparagraph
(iii) as a result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A) arises solely
from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act, and
(B) is not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iv) 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 or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (iii) of this paragraph (c)) or
disposing of any voting securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
New York City time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(f) "Common Stock" shall mean the common stock, par value $.50
per share, of the Company, except that "Common Stock" when used with reference
to any Person other than the Company shall mean the capital stock of such
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.
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(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, who is not
an Acquiring Person, or an Affiliate or Associate of 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, if such person's
nomination for election or election to the Board is recommended or approved by
a majority of the Continuing Directors.
(h) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(i) "Preferred Stock" shall mean shares of Series Two, Junior
Participating Preferred Stock, par value $1.00 per share, of the Company.
(j) "Stock 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.
(k) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at
least a majority of the directors of such corporation is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such
Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Stock) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
(a) Until the earlier of (i) the close of business on the tenth
Business Day after the Stock Acquisition Date, or (ii) the close of business
on the tenth Business Day (or such later date as may be determined by the
Board of Directors of the Company) after the date that a tender or exchange
offer 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) is first published or sent or given
within the meaning of Rule 14e-2(a) of the General Rules and Regulations under
the Exchange Act, if upon consummation thereof, such Person would be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding
(the earlier of (i) and (ii) being herein referred to as the "Distribution
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Date"), (x) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the Common Stock
registered in the names of the holders of the Common Stock (which certificates
for Common Stock shall be deemed also to be certificates for Rights) and not
by separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock
(including a transfer to the Company). The Board of Directors (with the
concurrence of a majority of those directors who are Continuing Directors then
in office) may defer the date set forth in clause (ii) of the preceding
sentence and, in the circumstances described in Section 11(a)(ii)(B) herein,
the date set forth in clause (i) of the preceding sentence to a specified
later date or to an unspecified later date to be determined by the Board. As
soon as practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more right
certificates, in substantially the form of Exhibit B hereto (the "Right
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to
Section 11(p) hereof, at the time of distribution of the Right Certificates,
the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Right Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the
close of business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock shall be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration Date (as
such term is defined in Section 7 hereof), the transfer of any certificates
representing shares of Common Stock in respect of which Rights have been
issued shall also constitute the transfer of the Rights associated with such
shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing such
shares of Common Stock shall also be deemed to be certificates for Rights, and
shall bear the following legend:
This certificate also evidences and entitles the
holders hereof to certain Rights as set forth in the Rights
Agreement between Zurn Industries, Inc., and Society
National Bank, dated as of May 28, 1996, (the "Rights
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Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which
is on file at the principal office of Zurn Industries,
Inc. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced
by this certificate. Zurn Industries, Inc., will mail
to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written
request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associates
thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become
null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of Section 11 and Section 22 the Right Certificates, whenever
distributed, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of quarter shares of
Preferred Stock 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 thereof shall be subject to
adjustment as provided herein.
(b) Any Right 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 such Associate or Affiliate) who becomes
a transferee after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or such Associate or Affiliate) who becomes a transferee
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prior to or concurrently with the Acquiring Person becoming such 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 the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Continuing Directors have determined is
part of a plan, arrangement or understanding which has as a primary purpose or
effect avoidance of Section 7(e) hereof, and any Right Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Right 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 Right Certificate and the
Rights represented hereby may become void in the
circumstances specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
President or any Vice President, either manually or by facsimile signature,
and shall have affixed thereto the Company's seal or a facsimile thereof which
shall be attested by the Secretary or an Assistant Secretary, or the Treasurer
or an Assistant Treasurer, of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same force and effect
as though the person who signed such Right Certificates had not ceased to be
such officer of the Company; and any Right Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Company to sign
such Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Right Certificates upon exercise or
transfer, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face
by each of the Right Certificates, the certificate number and the date of each
of the Right Certificates.
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Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14
hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of shares of Preferred Stock (or
Common Stock, other securities or property, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office or
offices 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 Right Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Right Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent shall, subject
to Section 4(b) and 7(e) hereof, countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may
be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Right Certificates.
(b) Subject to the provisions of Sections 4(b), 7(e) and 14
hereof, upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will execute and deliver a new Right
Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any
Right 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), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to Purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
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at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of quarter shares (or other securities or property, as the
case may be) as to which such surrendered Rights are then exercisable, at or
prior to the earlier of (i) the close of business on May 26, 2006 (the "Final
Expiration Date"), or (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the earlier of (i) and (ii) being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each quarter share of Preferred Stock
pursuant to the exercise of a Right shall initially be $90, and shall be
subject to adjustment from time to time as provided in Section 11 hereof and
shall be payable as provided in paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to Purchase and the certificate duly
executed, accompanied by payment, with respect to each Right so exercised, of
the Purchase Price per quarter share of Preferred Stock (or other shares,
securities or property, as the case may be) to be purchased as set forth below
and an amount equal to any applicable transfer tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from
any transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the
number of shares of Preferred Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the shares of Preferred Stock
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent, depositary receipts representing such
number of quarter shares of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent)
and the Company will direct the depositary agent to comply with such request,
(ii) requisition from the Company the amount of cash, if any, to be paid in
lieu of fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Right Certificate. The payment of
the Purchase Price may be made (x) in cash or by certified check or
bank draft payable to the order of the Company, or (y) by delivery of a
certificate or certificates (with appropriate stock powers executed in blank
attached thereto) evidencing a number of shares of Common Stock equal to the
then Purchase Price divided by the current market price (as determined
pursuant to Section 11(d) hereof) per share of Common Stock on the date of
such exercise. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) 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 Right Certificate shall
-13-<PAGE>
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to the registered holder of such
Right Certificate or to his duly authorized assigns, subject to the provisions
of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the occurrence of an event described in Section 11(a)(ii) any
Rights beneficially owned by (i) an Acquiring Person or an 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 becomes such; or (iii) a transferee of an acquiring Person
(or such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such 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 the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Continuing Directors have determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action, and any holder of such Rights shall thereupon have no rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates of Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or any
of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all cancelled Right Certificates to the Company, or
shall, at the written request of the Company, destroy such cancelled Right
-14-<PAGE>
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the Stock Acquisition Date, out of its
authorized and unissued shares of Common Stock and/or other securities or out
of its authorized and issued shares held in its treasury), the number of
shares of Preferred Stock (and, following the Stock Acquisition Date, Common
Stock and/or other securities) that, except as provided in Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock (and, following the
Stock Acquisition Date, Common Stock and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities 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 such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the Stock Acquisition Date as
of which the consideration to be delivered by the Company upon exercise of the
Rights has been determined pursuant to this Agreement (including in accordance
with Section 11(a)(iii) hereof), or as soon as is required by law following
the Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933 (the "Act"), with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (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 date of the expiration of the Rights. The
Company will also take such action as may be appropriate under the securities
or "blue sky" laws of the various states. 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 preceding sentence, the exercisability of the
Rights in order to prepare and file such registration statement. Upon any
such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock (and,
following the Stock Acquisition Date, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be
-15-<PAGE>
duly and validly authorized and issued and fully paid and nonassessable
shares.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates and of any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of the shares
of Preferred Stock (or Common Stock and/or other securities, as the case may
be) in respect of a name other than that of, the registered holder of the
Right Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have
been paid (any such tax being payable by the holder of such Right Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose
name any certificate for shares of Preferred Stock (or Common Stock 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
shares of Preferred Stock (or Common Stock and/or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock 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
Preferred Stock (or Common Stock 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 Right Certificate shall not be entitled to
any rights of a stockholder of the Company with respect to shares for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of shares,
-16-<PAGE>
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and Section
7(e) hereof, 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 Preferred Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii), 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).
(ii) (A) Subject to Sections 7(e), 11(a)(ii)(B), 13(d)
and 23(a) of this Agreement, in the event any Person shall become an Acquiring
Person, each holder of a Right shall thereafter have a right to receive, upon
exercise thereof at a price equal to the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of Preferred Stock, such
number of Common Shares of the Company as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then number of quarter
shares of Preferred Stock for which a Right is then exercisable and dividing
that product (which, following such event, shall be referred to as the
"Purchase Price" for all purposes of this Agreement) 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 such Person became an Acquiring
Person (such number of shares, the "Adjustment Shares). 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.
(B) Notwithstanding anything in the provisions of
the foregoing Section 11(a)(ii)(A) or elsewhere in this Agreement to the
contrary, if a Person becomes an Acquiring Person, the Board of Directors,
acting with the concurrence of a majority of those directors of the Company
who are Continuing Directors then in office, may in its sole discretion defer
the Distribution Date for the distribution of Right Certificates and the
exercisability of Rights if in the judgment of the Board the interest of the
Acquiring Person does not constitute an interest which is adverse to the
Company and its shareholders, and the Board may continue the deferment of such
Distribution Date and exercisability of Rights until such time as it deems, in
the exercise of its best judgment, that the interest is adverse. For purposes
of the preceding sentence an interest is "adverse" if (x) the Acquiring Person
is the subject of any order or decree of any federal, state or other
governmental authority or is a defendant in or a target of any action,
proceeding or investigation brought by any federal, state or other
governmental authority, and, in light of the subject matter of such order,
-17-<PAGE>
decree, action, proceeding or investigation, such Acquiring Person, or any
other such Acquiring Person's, Affiliate's or Associate's, affiliation with
the Company (as a substantial shareholder, director or officer of the Company
or otherwise) could subject the market for the Common Stock to false or
misleading influences or is otherwise not in the best interest of the Company
and its shareholders, (y) the interest of the Acquiring Person is intended to
cause the Company to repurchase the Common Stock beneficially owned by such
Acquiring Person or to cause pressure on the Company to take action or enter
into a transaction or series of transactions intended to provide such
Acquiring Person with short-term financial gain or other advantage under
circumstances where the Board of Directors of the Company (with the
concurrence of a majority of the Continuing Directors) determine that the best
long-term interests of the Company and its shareholders would not be served by
taking such action or entering into such transaction or series of transactions
at that time or (z) the interest of the Acquiring Person is causing or
reasonably likely to cause a material adverse impact (including, but not
limited to, impairment of relationships with customers or impairment of the
Company's ability to maintain its competitive position) on the business or
prospects of the Company. The discretion of the Board to defer the
Distribution Date and exercisability of Rights shall not be operative,
however, if the Acquiring Person becomes Beneficial Owner of 20% or more of
the shares of outstanding Common Stock of the Company.
(iii) (A) In the event that the number of shares of Common
Stock that are authorized by the Company's Articles are not sufficient to
permit the exercise in full of the Rights in accordance with Section 11(a)(ii)
hereof, the Company shall take the actions set forth in the following
sentence, or (B) if the Board of Directors determines in good faith that such
actions are necessary or appropriate and not contrary to the interests of
holders of Rights, the Company may take the actions set forth in the following
sentence. In lieu of issuing shares of Common Stock in accordance with
Section 11(a)(ii) hereof, the Company shall, under the circumstances set forth
in the previous sentence, issue or pay, upon the exercise of the Rights, cash,
property, shares of Common Stock, other securities or any combination thereof
having an aggregate value equal to the value of the shares of Common Stock
which otherwise would have been issuable pursuant to Section 11(a)(ii), which
value shall be determined by a nationally recognized investment banking firm
selected by the Board of Directors. Any such election by the Board of
Directors must be made and publicly announced within (60) days of the date on
which the first of the events described in Section 11(a)(ii) occurs.
Following the occurrence of one of the events 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 occurrence of such event to the extent
that the Board of Directors have not determined whether to exercise their
rights of election under this paragraph (a)(iii). In the event of any such
suspension, the Company shall 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 Preferred
Stock entitling them to subscribe for or purchase (for a period expiring
within forty-five (45) calendar days after such record date) Preferred Stock
-18-<PAGE>
(or shares having the same rights, privileges and preferences as the shares of
Preferred Stock ("equivalent preferred stock")) or securities convertible into
Preferred Stock or equivalent preferred stock at a price per share of
Preferred Stock or per share of equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the current market price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on such record date, plus the number of
shares of Preferred Stock which the aggregate offering price of the total
number of shares of Preferred Stock and/or equivalent preferred stock so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and
the denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares of
Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be
paid by delivery of consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights 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
a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in stock other than Preferred Stock)
or subscription rights or warrants (excluding those referred to in Section
11(b)), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the portion
of the cash, assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to a share of Preferred Stock
and the denominator of which shall be such current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
-19-<PAGE>
Price shall be adjusted to be the Purchase Price which would have been in
effect if such record dated had not been fixed.
(D) (i) For the purpose of any computation
hereunder, other than computations made pursuant to Section 11(a)(iii) hereof,
the "current market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such Common
Stock for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for purposes of
computations made pursuant to section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for ten (10)
consecutive Trading Days immediately following such date; provided, however,
that in the event that the current market price per share of the Common Stock
is determined during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock payable in
shares of Common Stock or securities convertible into shares of such Common
Stock (other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, 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 market price" shall be properly adjusted to
take into account exdividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such
other system then in use, or, if on any such date the shares of Common Stock
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the fair
value of such shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, a Business Day. If the Common
Stock is not publicly held or not so listed or traded, "current market price"
per share shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes.
-20-<PAGE>
(ii)For the purpose of any computation
hereunder, the "current market price" per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common Stock in
clause (i) of this Section 11(d) (other than the last sentence thereof). If
the current market price per share of Preferred Stock cannot be determined in
the manner provided above or if the Preferred Stock is not publicly held,
listed or traded in a manner described in clause (i) of this Section 11(d),
the "current market price" per share of Preferred Stock shall be conclusively
deemed to be an amount equal to four (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and recapitaliza-
tions with respect to the Common Stock occurring after the date of this
Agreement) multiplied by the current market price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held
or so listed or traded, "current market price" per share shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(E) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth
of a share of Common Stock or other share or share of Preferred Stock, as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three (3) years from the date of the transaction which mandates such
adjustment, or (ii) the Expiration Date.
(F) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock other
than Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Section 11(a), (b), (c), (d), (e), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10 13 and 14 hereof with respect to the Preferred
Stock 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
shares of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(H) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Section 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment shall
-21-<PAGE>
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of quarter shares of Preferred Stock (calculated to the nearest
ten-thousandth) obtained by (i) multiplying (x) the number of one one-fourth
of a share covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(I) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the
number of quarter shares of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to
this Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the
public announcement.
(J) Irrespective of any adjustment or change in the
Purchase Price or the number of quarter shares of Preferred Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per share and the
number of shares which were expressed in the initial Right Certificates issued
hereunder.
(K) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated value, if any, of
the shares of Preferred Stock issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
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counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Preferred Stock at such adjusted
Purchase Price.
(L) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised
after such record date the shares of Preferred Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise over and
above the shares of Preferred Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares or securities
upon the occurrence of the event requiring such adjustment.
(M) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board
of Directors of the Company shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Stock, (ii) issuance wholly
for cash of any shares of Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of shares of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
shares of Preferred Stock, (iv) stock dividends, or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to such
stockholders or shall otherwise be equitable to the holders of the Rights and
in accordance with the purpose and intent of this Rights Agreement.
(N) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate with, (ii) merge
with or into, or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one or more transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person if at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
(O) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section
26 hereof, take (or permit any Subsidiary to take) any action which at the
time it is reasonably foreseeable will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(P) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i)
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declare a dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine
the outstanding Common Stock into a smaller number of shares, the number of
Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail
a brief summary thereof to each holder of a Right Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment
therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the
Company) shall consolidate with, or merge with or into, the Company, and the
Company shall be the Continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property,
or (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in a single transaction or a
series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any Person or Persons (other than the Company or any Subsidiary
of the Company), then, and in each such case (except as may be contemplated by
Section 13(d) hereof), proper provision shall be made so that (i) each holder
of a Right (except as otherwise provided in Section 7(e) hereof) shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as hereinafter
-24-<PAGE>
defined, not subject to any rights of first refusal, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the
number of quarter shares of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of an event (the "Section 13 Event")
set forth in clauses (x), (y) and (z) of this Section 13(a) (or, if any event
set forth in Section 11(a)(ii) has occurred prior to the Section 13 Event,
multiplying the number of such fractional shares for which a Right was
exercisable immediately prior to the first occurrence of an event set forth in
Section 11(a)(ii) hereof by the Purchase Price immediately prior to such
first occurrence), and dividing that product (which, following the Section 13
Event, shall thereafter be referred to as the "Purchase Price" for all
purposes of this Agreement) by (2) 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per share of the Common Stock (or other
securities or property as provided for herein) of such Principal Party 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, it being
specifically intended that the provisions of Section 11 hereof shall apply
only to such Principal Party following the first occurrence of a Section 13
Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights, and (v) the provisions
of Section 11(a)(ii) hereof shall thereafter be of no effect following the
first occurrence of a Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a), the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z)
of the first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions; provided, however, that in any such case,
(1) if the Common Stock of such Person is not at such time and has not been
continuously over the preceding twelve (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 Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and (2) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks 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 Stock having the greatest aggregate market value.
-25-<PAGE>
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable
after the date of any consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, 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) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; and
(ii) will 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 of Form 10 under
the Exchange Act.
The Provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the
event that one of the transactions described in Section 13(a) hereof shall
occur at any time after the occurrence of a transaction described in Section
11(a)(ii) hereof, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary,
Sections 11(a)(ii) and 13 shall not be applicable to a transaction described
in subparagraphs (x) and (y) of Section 13(a) if all of the following
conditions are met: (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock (or a wholly owned
subsidiary of any such Person or Person), (ii) the price per share of Common
Stock offered in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such tender offer or exchange offer, and (iii) the form
of consideration being offered to the remaining holders of shares of Common
Stock pursuant to such transaction is the same as the form of consideration
paid pursuant to such tender offer or exchange offer. Upon consummation of
any such transaction contemplated by this Section 13(d), all Rights hereunder
shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered
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holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of
the current market value of a whole Right. For 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 of
the Rights for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by NASDAQ or such other system then in use or, if
on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is making a market
in the Rights the fair value of the Rights on such date as determined in good
faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples
of one quarter shares of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one-quarter of a share
of Preferred Stock). In lieu of fractional shares of Preferred Stock that are
not integral multiples of one-quarter of a share of Preferred Stock, the
Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one-quarter of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value
of one-quarter of a share of Preferred Stock shall be one-quarter of the
closing price of a share of Preferred Stock (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the Stock Acquisition Date, the Company shall not
be required to issue fractions of shares of Common Stock upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may
pay to the registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the same fraction
of the current market value of one (1) share of Common Stock. For purposes of
this Section 14(c), the current market value of one (1) share of Common Stock
shall be the closing price of one (1) share of Common Stock (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
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(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Stock), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and shall be entitled
to specific performance of the obligations hereunder and injunctive relief
against actual or threatened violations of the obligations hereunder 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 Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with appropriate forms and certificates fully executed; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
required to be affected by any notice to the contrary.
(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 other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority prohibiting or otherwise
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restraining performance of such obligation.
Section 17. Right Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the shares of
Preferred Stock or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to share holders 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 24 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(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
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, however, that
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such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in the Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of any Acquiring Person
and the determination of "current market price") be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement
in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates or be required to verify the same (except as to its
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countersignature on such Right Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions
of Sections 11 or 13 hereof or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock
or Preferred Stock to be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of Common Stock or Preferred Stock
will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become peculiarly interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct; provided, however, reasonable care
was exercised in the selection and continued employment thereof.
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(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to Clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agents or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company, and
to each transfer agent of the Common Stock and Preferred Stock, by registered
or certified mail, and, if after the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon thirty (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 Stock and Preferred Stock, by registered
or certified mail, and, if after the Distribution Date, to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his Right Certificate
for inspection by the Company), then any registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of the
State of New York (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the State
of New York), in good standing, having a principal office in the State of New
York, which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $250,000,000 or (b) an affiliate of a
corporation described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and the
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Preferred Stock, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price per share
and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, the Company may, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Right
Certificates in connection with the issuance or sale of shares of Common Stock
following the Distribution Date.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at
any time prior to 5:00 P.M., New York City time, on the earlier of (i) the
close of business on the tenth Business Day following the Stock Acquisition
Date, or (ii) the Final Expiration Date, redeem all but not less than all the
then outstanding Rights at a redemption price of $.01 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights by the Board of Directors may be made effective
at such time, on such basis and with such conditions as the Board of Directors
in its sole discretion may establish including conditions which the Board
(with the concurrence of a majority of those directors who are Continuing
Directors then in office) deems appropriate to defer the expiration of the
right of redemption set forth in this Section 23(a) so long as the deferral of
the distribution of the Rights and exercisability thereof is in effect under
the provisions of Section 11(a)(ii)(B) hereof. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be
exercisable pursuant to Section 11(a)(ii) prior to the expiration of the
Company's right of redemption hereunder.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price
for each Right so held. Promptly after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights
by mailing such notice to all such holders at each holder's last address as it
appears 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
-33-<PAGE>
Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
the holders of Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular quarterly cash dividend out
of earnings or retained earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or
any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock), or
(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 more than 50% 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 each
holder of a Right Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least twenty
(20) days prior to the record date for determining holders of the shares of
Preferred Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Preferred Stock whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) of
this Agreement shall occur, then, in any such case, (i) the Company shall as
soon as practicable thereafter give to each holder of a Right Certificate, to
the extent feasible and in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
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Zurn Industries, Inc.
One Zurn Place
Erie, PA 16505
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent 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:
Society National Bank
c/o KeyCorp Shareholder Services, Inc.
127 Public Square, 15th Floor
Cleveland, OH 44114
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) 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 26. Supplements and Amendments. Prior to the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of the Rights. From and after the Distribution Date,
and subject to the penultimate sentence of this Section 26, the Company and
the Rights Agent shall, if the Company shall so direct, supplement or amend
this Agreement without the approval of any holders of the Rights in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions
herein, (iii) to extend the period of redemption provided in Section 23
hereof, or (iv) to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of the Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, this Agreement may not be supplemented or amended in any way after
the period for redemption of the Rights pursuant to Section 26 hereof shall
have expired. 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 26, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything in this Agreement to
the contrary, no supplement or amendment shall be made on or after the
Distribution Date which would change the Redemption Price, Final Expiration
Date, Purchase Price, or number of fractional shares of Preferred Stock for
which a Right is then exercisable. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
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and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors,
etc.
(a) For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time and any
determination of the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner shall be made in
accordance with the provisions of Rule 13d-3d(1)(i) of the General Rules and
Regulations under the Exchange Act as in effect as of the date hereof.
Subject to the provisions of paragraph (b) of this Section 28, the Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and power specifically
granted to the Board, 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 a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purpose of clause (ii) below, all omissions
with respect to the foregoing) which are done or made by the Board in good
faith, shall (i) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Right Certificates and all other parties, and (ii)
not subject the Board of Directors to any liability to the holders of the
Right Certificates.
(b) Notwithstanding anything in this Agreement to the contrary,
any actions by the Board of Directors of the Company pursuant to Section
11(a)(iii)(B), Section 23(a) or Section 26(iii) shall require the concurrence
of a majority of the Continuing Directors then in office and may not be taken
if there are no Continuing Directors then in office. Determinations
concerning the occurrence of any Section 11(a)(ii) or Section 13 Event shall
be made by a majority of Continuing Directors, provided that if there are no
Continuing Directors then in office, any holder of Rights may sue the Company
to obtain a judicial determination of the relevant facts.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement, but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Right Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in this
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Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
enforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth Business Day following the
date of such determination by the Board of Directors.
Section 31. Governing Law. This Agreement, each Right and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed in accordance with the laws of such Commonwealth,
applicable to contracts made and to be performed entirely within such
Commonwealth, except that the rights and obligations of the Rights Agent shall
be governed by the laws of the State of Ohio.
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
ATTEST: ZURN INDUSTRIES, INC.
By /s/ John R. Mellett By /s/ Robert R. Womack
Name: John R. Mellett Name: Robert R. Womack
Title: Senior Vice President and Title: Chairman and Chief
Chief Financial Officer Executive Officer
ATTEST: SOCIETY NATIONAL BANK
By /s/ Kathryn M. Gallagher By /s/ B. William Bedy
Name: Kathryn M. Gallagher Name: B. William Bedy
Title: Asst. Secretary Title: Vice President
-37-<PAGE>
Exhibit A
STATEMENT WITH RESPECT TO SECOND SERIES
JUNIOR PARTICIPATING PREFERRED STOCK
of
ZURN INDUSTRIES, INC.
Pursuant to Section 1522 of the
Business Corporation Law of 1988
of the Commonwealth of Pennsylvania
In compliance with the requirements of Section 1522 of the Pennsylvania
Business Corporation Law of 1988, approved December 21, 1988 (P.L. 1444, No.
177), as amended, ZURN INDUSTRIES, INC. hereby certifies under its corporate
seal that:
1. The name of the corporation is Zurn Industries, Inc. (the
"Company").
2. The Board of Directors of the Company had previously established a
series of the Company's Preferred Stock, designating it as the Second Series
Junior Participating Preferred Stock (the "Series Two Preferred Stock") and
filed a statement with respect thereto with the Secretary of the Commonwealth
of Pennsylvania as an amendment to its Articles of Incorporation.
3. No shares of the Series Two Preferred Stock have been issued.
4. The Board of Directors, at a meeting duly called and held in
accordance with the By-laws of the Company, at which a quorum was present and
acting throughout, duly adopted a resolution effective as of May 28, 1996,
amending and restating the provisions relating to the Series Two Preferred
Stock, which resolution is as follows:
RESOLVED, that the Board of Directors of the Company, pursuant to
authority expressly vested in it by the provisions of the Articles, as
amended, of the Company, hereby amends and restates the provisions of its
Articles that had established a series of the Preferred Stock of the Company,
designating it as the Second Series Junior Participating Preferred Stock, as
follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Second Series Junior Participating Preferred Stock" (the
"Series Two Preferred Stock") and the number of shares constituting such
series shall be 3,500,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
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shares of any series of stock ranking prior and superior to the
shares of Series Two Preferred Stock with respect to dividends,
the holders of shares of Series Two Preferred Stock, in preference
to the holders of Common Stock, par value $.50 per share, of the
Company (the "Common Stock") and of any junior stock, shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of January,
April, July and October in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series Two
Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $.20 or (b) subject to the
provision for adjustment hereinafter set forth, four times the
aggregate per share amount of all cash dividends, and four times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend or
distribution payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of
any share or fraction of a share of Series Two Preferred Stock.
In the event the Company shall at any time after May 28, 1996 (I)
declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amounts to which holders of
shares of Series Two Preferred Stock were entitled immediately
prior to such event under clause (a) and clause (b) of the
preceding sentence shall be adjusted by multiplying each such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series Two Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend or distribution payable
in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $.20 per share on the Series Two Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend
Payment Date; and provided further that nothing contained in this
paragraph (B) shall be construed so as to conflict with any
provision relating to the declaration of dividends contained in
the Articles of the Company.
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(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series Two Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue
of such shares of Series Two Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the
determination of holders of shares of Series Two Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series Two
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares
at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series Two
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon.
Section 3. Voting Rights. The holders of Series Two Preferred Stock
shall have only such voting rights as are required by law or as are provided
in the Articles of the Company.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series Two Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distribution, whether or not
declared, on shares of Series Two Preferred Stock outstanding
shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series Two Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series Two Preferred Stock, except
dividends paid ratably on the Series Two Preferred Stock and
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
-40-<PAGE>
consideration shares of any stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series Two Preferred
Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock
of the Company ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to the
Series Two Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series Two Preferred Stock, or any shares of
stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series Two
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of
stock of the Company unless the Company could, under paragraph (A)
of this Section 4, purchase or otherwise acquire such shares at
such time and in such manner.
Section 5. Redemption. The Company may, at the option of the Board of
Directors and in accordance with the Articles of the Company, redeem the whole
or any part of the Series Two Preferred Stock at any time or from time to time
at a redemption price equal to the greater of (a) $360 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date set for payment, or (b) subject to the
provision for adjustment hereinafter set forth, four times the current market
price (as hereinafter defined) per share of Common Stock on the date notice of
redemption is first mailed to the holders of the Series Two Preferred Stock.
In the event the Company shall at any time after May 28, 1996 (I) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amounts to which holders
of shares of Series Two Preferred Stock were entitled immediately prior to
such event under clause (a) and clause (b) of the preceding sentence shall be
adjusted by multiplying each such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
For purposes of this Section, "current market price" per share of Common
Stock on any date shall be deemed to be the average of the daily closing
prices per share of the Common Stock for the 30 consecutive Trading Days (as
-41-<PAGE>
such term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market price of the
Common Stock is determined during a period following the announcement by the
Company of (I) a dividend or distribution in Common Stock payable in shares of
Common Stock or securities convertible into shares of Common Stock or (ii) any
subdivision, combination or reclassification of Common Stock, and prior to the
expiration of the 30 Trading Day period 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 market price"
shall be properly adjusted to take into account ex-dividend trading. 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
asking prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if on any
such date the shares of Common Stock are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be
used. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for the transaction of business or, if the shares of Common
stock are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current market price" per share shall mean the fair value
per share determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement mailed to the holders of
the Series Two Preferred Stock with the notice of redemption.
Section 6. Reacquired Shares. Any shares of Series Two Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof. Except as
otherwise required by the Articles of the Company, all such shares shall upon
their cancellation become authorized but unissued shares of preferred stock
and may be reissued as part of a new series of preferred stock to be created
by resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 7. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding up of the
-42-<PAGE>
Company, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series Two Preferred Stock
unless, prior thereto, the holders of shares of Series Two
Preferred Stock shall have received $2 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series
Two Liquidation Preference"). Following the payment of the full
amount of the Series Two Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series Two
Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (I) the
Series Two Liquidation Preference by (ii) four (as appropriately
adjusted as set forth in subparagraph C below to reflect such
events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii), the
"Adjustment Number"). Following the payment of the full amount of
the Series Two Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series Two Preferred Stock
and Common Stock, respectively, holders of Series Two Preferred
Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with
respect to such Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series Two Liquidation
Preference and the liquidation preferences of all other series of
preferred stock, if any, which rank on a parity with the Series
Two Preferred Stock, then all such available assets shall be
distributed ratably to the holders of the Series Two Preferred
Stock and the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that
there are not sufficient assets available to permit payment in
full of the Common Adjustment, then any such remaining assets
shall be distributed ratably to the holders of Common Stock.
(C) In the event the Company shall at any time after May 28,
1996 (I) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common stock into a smaller number
of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying
such Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
-43-<PAGE>
Section 8. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares
of Series Two Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to four times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Company shall at any time declare or pay any
dividend on Common stock payable in shares of Common stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of shares of
Series Two Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 9. Fractional Shares. The Company may issue fractions and
certificates representing fractions of a share of Series Two Preferred Stock
in integral multiples of one-fourth of a share of Series Two Preferred Stock,
or in lieu thereof, at the election of the Board of Directors of the Company
at the time of the first issue of any shares of Series Two Preferred Stock,
evidence such fractions by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts
shall have all the rights, privileges and preferences to which they would be
entitled as beneficial owners of shares of Series Two Preferred Stock. In the
event that fractional shares of Series Two Preferred Stock are issued, the
holders thereof shall have all the rights provided herein for holders of full
shares of Series Two Preferred Stock in the proportion which such fraction
bears to a full share.
Section 10. Ranking. The Series Two Preferred Stock shall rank junior
to all other series of the Company's preferred stock outstanding at any time
as to the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.
Section 11. Amendment. The Articles, as amended, of the Company shall
not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series Two Preferred Stock so as
to affect them adversely without the affirmative vote of the holders of two-
thirds of the outstanding shares of Series Two Preferred Stock, voting
together as a single class.
IN TESTIMONY WHEREOF, ZURN INDUSTRIES, INC. has caused this
Statement to be signed under its corporate seal by its duly authorized
-44-<PAGE>
officers this 14th day of May, 1996.
ATTEST: ZURN INDUSTRIES, INC.
/s/ Dennis Haines By /s/ Robert R. Womack
Secretary Chairman and Chief Executive
Officer
[CORPORATE SEAL]
Filed in the Department of State on the ______ day of______________, 1996.
________________________________________
Secretary of the Commonwealth
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Exhibit B
[Form of Right Certificate]
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER MAY 26, 2006 OR EARLIER IF REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM
IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS 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 RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(e) OF SUCH AGREEMENT.]
Right Certificate
ZURN INDUSTRIES, INC.
This certifies that ___________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of May 28, 1996, (the "Rights Agreement"),
between Zurn Industries, Inc., a Pennsylvania corporation (the "Company") and
Society National Bank (a national banking association) (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M. (New York City
time) on May 26, 2006 at the office or offices of the Rights Agent, c/o
KeyCorp Shareholder Services, Inc., 127 Public Square, 15th Floor, Cleveland,
Ohio 44114, one-fourth of a fully paid, non-assessable share of Second Series
Junior Participating Preferred Stock (the "Preferred Stock") of the Company,
at a purchase price of $90 per one-fourth of a share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase and related Certificate duly executed. The number of
Rights evidenced by this Right Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price
per share set forth above, are the number and Purchase Price as of May 28,
1996, based on the Preferred Stock as constituted at such date.
Upon the occurrence of an event described in Section 11 (a) (ii) of the
Rights Agreement, and pursuant to the provisions of Section 7(e) thereof, if
the Rights evidenced by this Right Certificate are beneficially owned by (i)
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
-46-<PAGE>
(as such terms are defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person, or an Affiliate of an
Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any right with respect to such rights from and after the occurrence
of any such event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain
events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability
of such Rights for not more than ninety (90) days at the election of the
Company and under certain circumstances specified in such Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of
the Rights Agent and are also available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Preferred Stock as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed at a redemption price of $.01 per Right at
any time prior to the close of business ten (10) Business Days after the Stock
Acquisition Date. The redemption may be made effective at such time, on such
basis and with such conditions as the Board of Directors of the Company, in
its sole discretion, may establish, including conditions which the Board (with
the concurrence of a majority of those directors who were directors before a
Person becomes an Acquiring Person) deems appropriate to defer the expiration
of the right of redemption so long as the deferral of the distribution of
Rights and exercisability thereof is in effect under the provisions of Section
11(a)(ii)(B) of the Rights Agreement. Immediately upon the action of the
Board of Directors of the Company ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights evidenced
hereby will be to receive the redemption price.
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No fractional shares of Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one-fourth of a share of Preferred Stock, which may, at
the election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of _____________, 19____
ATTEST: ZURN INDUSTRIES, INC.
______________________________By____________________________
Secretary Title
Countersigned SOCIETY NATIONAL BANK
By____________________________
Authorized Signature
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED____________________________________________________________
hereby sells, assigns and transfers unto_____________________________________
_____________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated: _____________________, 19__
______________________________
Signature
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Signature Guaranteed:
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 Acquiring 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 Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person
Dated: ____________, 19__ ______________________________
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the Right Certificate.)
To: Zurn Industries, Inc.
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Right Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon
the exercise of the Rights) and requests that certificates for such shares be
issued in the name of:
Please insert social security
or other identifying number__________________________
___________________________________________________________________________
(Please print name and address)
___________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number__________________________
___________________________________________________________________________
(Please print name and address)
___________________________________________________________________________
Dated: _________________, 19__
______________________________
Signature
-51-<PAGE>
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such
terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: _____________, 19__ ______________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
Effective May 28, 1996, the Board of Directors of Zurn Industries, Inc.
(the "Company") declared a dividend distribution of one Right for each
outstanding share of common stock, par value $.50 per share (the "Common
Stock"), of the Company to shareholders of record at the close of business on
May 28, 1996 (the "Record Date"). Except as set forth below, each Right
entitles the registered holder to purchase from the Company a unit consisting
of one one-fourth of a share (a "Unit") of Second Series Junior Participating
Preferred Stock, par value of $1.00 per share (the "Preferred Stock") at a
price, determined at the time of initial issuance of the Rights, of $90 per
Unit (the "Purchase Price"), subject to adjustment. The Purchase Price shall
be paid, at the option of the holder, in cash or shares of Common Stock having
a value at the time of exercise equal to the Purchase Price. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and Society National Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Right certificates will
be distributed. Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15 percent or more of the outstanding shares of Common Stock or
(ii) 10 days following the commencement of (or a public announcement of an
intention to make) a tender offer or exchange offer if, upon consummation
thereof, such person or group would be the beneficial owner of 15 percent or
more of such outstanding shares of Common Stock (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificate. The Rights Agreement provides that,
until the Distribution Date, the Rights will be transferred with and only with
the Common Stock certificates. From as soon as practicable after the Record
Date and until the Distribution Date (or earlier redemption or expiration of
the Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuance of the Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Stock outstanding as of the Record
Date will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and, thereafter, such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire on May 26, 2006, unless earlier redeemed by the Company as described
below.
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In the event that any person becomes an Acquiring Person, the Rights
Agreement provides that proper provision shall be made so that each holder of
a Right will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two (2) times the exercise price of the
Right. Notwithstanding any of the foregoing, following the occurrence of the
event set forth in this paragraph any Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person shall immediately become null and void. The Board of
Directors may in its sole discretion defer the distribution of Right
Certificates and the exercisability of Rights if it deems the interest of the
Acquiring Person not to be adverse to the Company and its shareholders. The
determination of whether an interest is "adverse" is based on the finding that
(x) the Acquiring Person is involved in any court or agency proceedings such
that the market for Common Stock could be subject to false or misleading
influences, (y) the interest of the Acquiring Person is intended to cause the
Company to repurchase the Common Stock held by the Acquiring Person or to
cause pressure on the Company to enter into a transaction intended to provide
the Acquiring Person with short-term financial gain or other advantage under
circumstances where the Board determines that the best long-term interests of
the Company and its shareholders would not be served by such a transaction or
(z) the interest of the Acquiring Person will cause a material adverse impact
(including an impairment of relationships with customers or the Company's
ability to compete) on the business of the Company. This discretion of the
Board, however, is not operative once an Acquiring Person holds beneficially
20% or more of the Common Stock of the Company.
In the event that, at any time following the Distribution Date, (i) the
Company engages in a merger or other business combination transaction in which
the Company is not the surviving corporation, (ii) the Company engages in a
merger or other business combination transaction with another person in which
the Company is the surviving corporation, but in which its Common Stock is
changed or exchanged, or (iii) 50% or more of the Company's assets or earning
power is sold or transferred, the Rights Agreement provides that proper
provision shall be made so that each holder of a Right shall thereafter have
the right to receive, upon the exercise thereof at the then current-exercise
price of the Right, common stock of the acquiring company having a value equal
to two (2) times the exercise price of the Right.
The two preceding paragraphs will not be applicable to a transaction
where all the outstanding shares of Common Stock are acquired at a uniform
price to be paid to all shareholders with the form of consideration being
uniform as to all shareholders.
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of,
the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock, or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
-54-<PAGE>
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
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 Units will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Preferred
Stock on the last trading date prior to the date of exercise.
At any time after the date of the Rights Agreement until 10 Business
Days (as defined in the Rights Agreement) following the date (the "Stock
Acquisition Date") of a public announcement that a person or group of
affiliated or associated persons has acquired beneficial ownership of 15
percent or more of the outstanding Common Stock, the Board of Directors, with
the concurrence of a majority of the Continuing Directors, may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption may be made effective at such time, on
such basis and with such conditions as the Board in its sole discretion may
establish. Immediately upon the action of the Board of Directors of the
Company ordering redemption of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The shares of the Preferred Stock upon distribution following exercise
of the Rights will be redeemable at the greater of $360 per share or four
times the current market price of the Common Stock at the time of redemption,
and will be junior to any other preferred stock hereafter issued. Each share
of the Preferred Stock will have a minimum preferential quarterly dividend of
$.20 per share, but will be entitled to an aggregate dividend of four times
the dividend declared on the Common Stock. In the event of liquidation, the
holders of the Preferred Stock will receive a preferred liquidation payment of
$2.00 per share but will be entitled to receive an aggregate liquidation
payment equal to four times the payment made per share of Common Stock. Each
share of Preferred Stock will have one vote, voting together with the shares
of Common Stock. In the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each holder of
Preferred Stock will be entitled to receive four times the amount received for
each share of Common Stock. Because of the nature of the Preferred Stock's
dividend, liquidation and voting rights, the value of one-fourth of a share of
Preferred Stock purchasable upon the exercise of a Right should approximate
the value of one share of Common Stock.
While the distribution of Rights will not be taxable to shareholders or
to the Company, shareholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common
Stock (or other consideration) of the Company or for common stock of the
Acquiring Person as set forth above.
The provisions of the Rights Agreement may be amended by the Company
-55-<PAGE>
without the approval of the holders of the Rights prior to the Distribution
Date. Thereafter, the provisions of the Rights Agreement, other than those
provisions relating to the principal economic terms of the Rights may be
amended by the Company without the approval of the holders of the Rights to
cure an ambiguity or inconsistency, to extend the period of redemption as
provided in the Rights Agreement or to make a change the Board deems necessary
or desirable which will not adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person), provided that no
amendment shall be made at such time as the Rights are no longer redeemable.
A copy of the Rights Agreement was filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A on
May 17, 1996. A copy of the Rights Agreement, as amended and restated, 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 incorporated herein by reference.
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