SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 20, 1999
ESPEY MFG & ELECTRONICS CORP.
(Exact name of registrant as specified in its charter)
New York 1-4383 14-1387171
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
233 Ballston Avenue, Saratoga Springs, New York 12866
(Address of principal executive offices) (Zip Code)
(518) 584-4100
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. Other Events
On December 20, 1999, Espey Mfg. & Electronics Corp. ("Espey") amended and
restated its existing Rights Agreement dated March 31, 1989, as amended February
12, 1999, between Espey and Registrar and Transfer Company (as amended and
restated, the "Rights Agreement"). The amended and restated Rights Agreement
will be effective December 31, 1999. The Rights Agreement provides, generally,
that upon certain events, including the acquisition by certain parties of a
specified percentage of the Company's stock, shareholders receive rights to
purchase additional stock at a price specified in the Rights Agreement. The
significant amendments to the Rights Agreement include (i) the extension of the
expiration date of the Rights Agreement until December 31, 2009 (ii) the
reduction of the purchase price at which shareholders can acquire such
additional shares to $50 (subject to adjustment as described in the Rights
Agreement). As amended, the Rights Agreement remains in full force and effect.
This summary description of the Rights Agreement does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference and is attached hereto as Exhibit 4.1.
ITEM 7. Financial Statement and Exhibits
(a) Financial Statements of Businesses Acquired: N/A
(b) Pro Forma Financial Information: N/A
(c) Exhibits:
4.1 Amended and Restated Rights Agreement, dated March 31, 1989, as
amended February 12, 1999 and December 31, 1999, between Espey
Mfg. & Electronics Corp. and Registrar and Transfer Company
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ESPEY MFG. & ELECTRONICS CORP.
/s/ David O'Neil
-----------------
David O'Neil, Assistant Treasurer
And Controller
Dated: December 21, 1999
<PAGE>
EXHIBIT INDEX
Exhibit No. Document
----------- --------
4.1 Amended and Restated Rights Agreement, dated March 31, 1989,
as amended February 12, 1999 and December 31, 1999, between
Espey Mfg. & Electronics Corp. and Registrar and Transfer
Company
ESPEY MFG. & ELECTRONICS CORP.
and
REGISTRAR AND TRANSFER CO.
as
Rights Agent
AMENDED AND RESTATED
RIGHTS AGREEMENT
Dated as of March 31, 1989
Amended as of February 12, 1999
and December 31, 1999
<PAGE>
INDEX
PAGE
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Section 1. Certain Definitions 2
Section 2. Appointment of Rights Agents 5
Section 3. Issue Of Right Certificates 5
Section 4. Form of Right Certificates 8
Section 5. Countersignature and Registration 8
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights 10
Section 8. Cancellation and Destruction of Right Certificates 12
Section 9. Reservation and Availability of Common Shares 13
Section 10. Common Shares Record Date 15
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights 15
Section 12. Certificate of Adjusted Purchase Price or Number of Shares 28
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power 28
Section 14. Fractional Rights and Fractional Shares 30
Section 15. Rights of Action 32
Section 16. Agreement of Right Holders 33
Section 17. Right Certificate Holder Not Deemed a Stockholder 33
Section 18. Concerning the Rights Agent 34
<PAGE>
PAGE
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Section 19. Merger or Consolidation or Change of Name of Rights Agent 35
Section 20. Duties of Rights Agent 36
Section 21. Change of Rights Agent 38
Section 22. Issuance of New Right Certificates 40
Section 23. Redemption 40
Section 24. Notice of Certain Events 42
Section 25. Notices 44
Section 26. Supplements and Amendments 45
Section 27. Successors 45
Section 28. Severability 45
Section 29. Governing Law 45
Section 30. Counterparts 45
Section 31. Descriptive Headings 46
ii
<PAGE>
AMENDED AND RESTATED
RIGHTS AGREEMENT
AGREEMENT, dated as of March 31, 1989, amended as of February 12, 1999
and December 31, 1999, between ESPEY MFG. & ELECTRONICS CORP., a New York
corporation (the "Company"), and REGISTRAR AND TRANSFER CO., as Rights Agent
(the "Rights Agent").
WHEREAS, the Board of Directors of the Company adopted a Rights
Agreement dated as of March 31, 1989;
WHEREAS, the Board of Directors of the Company amended the Rights
Agreement as of February 12,
1999;
WHEREAS, the Board of Directors of the Company amended and restated the
Rights Agreement dated as of December 31, 1999;
WHEREAS, the Amended and Restated Rights Agreement dated as of December
31, 1999 supercedes and replaces the Rights Agreement dated as of March 31, 1989
and amended as of February 12, 1999; and
WHEREAS, the Board of Directors of the Company finds it in the best
long-term and short-term interests of the Company and its stockholders to amend
the Rights Agreement dated as of March 31, 1989 and amended as of February 12,
1999;
The Board of Directors of the Company has authorized and declared a
dividend of one Right for each share of Common Stock, $.33 1/3 par value per
share, of the Company ("Common Share") outstanding as of the Close of Business
on April 14, 1989 ( the "Record Date"), and has authorized the issuance of one
Right with respect to each Common Share that shall become outstanding (other
than Common Shares that are issued in connection with the exercise of these
Rights) after the Record Date and on or before the earlier of the Distribution
Date and the Expiration Date (as such terms are defined in Sections 3 and 7),
each Right representing the right to purchase one-half of a Common Share
(subject to adjustment as herein provided).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined ) of 15% or more of the Common Shares
then outstanding, but shall not include any Exempt Person (as such term is
hereinafter defined).
(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 (the "Exchange Act"), as
in effect on the date hereof.
(c) A Person shall be deemed to be the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
<PAGE>
(i) except as expressly excluded by the provisions of
Sections 1(c)(ii) and (iii), which such Person or any of
such Person=s Affiliates or Associates has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act, as in
effect on the date of such determination), directly or
indirectly;
(ii) which such Person or any of such Person=s Affiliates or
Associates has, directly or indirectly, (A) the right to
acquire or dispose or direct the disposition of (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 or on behalf of such Person or any of such Person=s
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement
or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules
and regulations of the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with whom 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 as
described in the proviso to clause (B) of subparagraph (ii)
of this Section 1(c)) or disposing of any securities of the
Company;
provided, however, that notwithstanding the provisions of clauses (i), (ii) or
(iii) of this Section 1(c), no Person shall be deemed to be the Beneficial Owner
of, and no Person shall be deemed to beneficially own, any Common Shares held by
any trust created under the will of Nathan Pinsley (the "Trust Common Shares").
Notwithstanding the foregoing, all Trust Common Shares shall be deemed
outstanding for purposes hereof.
(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.
<PAGE>
(f) "Common Shares" shall mean: (i) when used without specific
reference to any issuing entity, the shares of Common Stock, $.33 1/3 par value
per share, of the Company or any securities which such Common Stock is converted
into or exchanged for pursuant to any reclassification of such Common Stock or
(ii) when used with reference to any Person (other than the Company) the equity
security which has the greatest voting power of such Person or if such Person is
a subsidiary of another Person, the Person (other than an individual) which
ultimately controls such first mentioned Person.
(g) "Exempt Person" shall mean the Company, any subsidiary of the
Company, any employee benefit plan or employee stock plan of the Company or of
any subsidiary of the Company, or any person or entity organized, appointed,
established or holding Common Shares for or pursuant to the terms of any such
plan.
(h) "Person" shall mean any individual, firm, corporation or
other entity.
(i) "Shares Acquisition Date" shall mean the first date of public
announcement (including, without limitation, a report filed pursuant to Section
13(d) or
(g) of the Exchange Act) by the Company or an Acquiring Person
that an Acquiring Person has become such.
(j) "Term" shall mean December 31, 1999 to December 31, 2009.
Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights
Agent to act in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue Of Right Certificates.
(a) Until the Distribution Date (as hereinafter defined) (x) each
Right will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificate for the Common Share registered in the name of the
holder thereof in respect of which such Right has been issued and not by a
separate Right Certificate, and (y) each Right will be transferable only in
connection with the transfer of such Common Share. The term "Distribution Date"
shall mean such date which is the earlier of (i) the fifteenth day (or
twenty-fifth day if the Board of Directors of the Company shall within such
15-day period act by resolution to extend such period by 10 days) after the
Shares Acquisition Date and (ii) the fifteenth day (or twenty-fifth day if the
Board of Directors of the Company shall within such 15-day period act by
resolution to extend such period by 10 days) after the commencement by any
Person (other than an Exempt Person) of a tender or exchange offer which, if
consummated for the maximum amount of securities to which the offer relates,
would result in such Person, together with all Affiliates and Associates of such
Person, being the Beneficial Owner of 15% of more of the outstanding Common
Shares of the Company (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights). As soon as practicable after
the Distribution Date, the Rights Agent will send, by first-class, insured
postage prepaid mail, or, if requested by or on behalf of a holder, shall
otherwise deliver, to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the form of
Exhibit A hereto, evidencing one Right for each Common Share so held, subject to
adjustment as provided herein. On and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
<PAGE>
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Common Shares, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first-class postage prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company. Until the Distribution Date (or, if earlier, the
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the automatic transfer of the
Rights associated with the Common Shares represented thereby.
(c) Rights shall be issued in respect of all Common Shares that
become outstanding after the Record Date but on or before the earlier of the
Distribution Date and the Expiration Date. Certificates for Common Shares issued
after the Record Date, but on or before the earlier of the Distribution Date and
the Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a
Rights Agreement between Espey Mfg. & Electronics
Corp. and Registrar and Transfer Co., as Rights
Agent, dated as of March 31, 1989, and amended as of
February 12, 1999, and December 31, 1999 (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which
is on file at the principal executive offices of
Espey Mfg. & Electronics Corp. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. Espey Mfg. & Electronics Corp. will mail
to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a
written request therefor. Under certain
circumstances, Rights issued to or beneficially owned
by Acquiring Persons or Affiliates or Associates
thereof (as defined in the Rights Agreement) or
certain transferees thereof may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or, if earlier, the Expiration Date), the Rights associated
with the Common Shares represented by such certificates shall be evidenced by
such certificates alone. Until the Distribution Date (or, if earlier, the
Expiration Date), the surrender for transfer of any such certificate shall also
constitute the automatic transfer of the Rights associated with the Common
Shares represented thereby.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase shares and of assignment to be printed on
the reverse thereof) shall be substantially in the form of Exhibit A hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this agreement, or as may be required to
comply with any applicable law or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the Right Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall set forth the number of Rights evidenced thereby, the number of Common
Shares which may be purchased upon exercise thereof and the purchase price per
share provided for therein (the "Purchase Price"), provided, however, that the
number of Rights, the number of such shares and the Purchase Price shall be
subject to adjustment as provided herein.
<PAGE>
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its President or any
Vice president, either manually or by facsimile signature, and have affixed
thereto the Company=s seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature and delivery by the Rights Agent, such Right Certificates,
nevertheless, may be countersigned and delivered by the Rights Agent, with the
same force and effect as though the person who signed such Right Certificate had
not ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at one of its offices in the United States, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Sections 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 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
Common Shares as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. After the Distribution Date and on or prior to
the Expiration Date, any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate 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 with the
form of assignment on the reverse thereof duly executed, to the Rights Agent at
its principal office. Thereupon, the Company will make and deliver to the Rights
Agent and the Rights Agent shall countersign and deliver to the person entitled
thereto, a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company=s request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
<PAGE>
Section 7. Exercise of Rights; Purchase price; Expiration Date
of Rights. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent
in New York, New York, together with payment of the Purchase Price for each
Common Share as to which the Rights are exercised, at or prior to the earlier of
(i) the Close of Business on December 31, 2009 and (ii) the time at which the
Rights are redeemed as provided in Section 23 (such earlier time being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each Common share pursuant to the
exercise of Rights shall initially be $50, shall be subject to adjustment from
time to time as provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with paragraph (c)
below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax in cash, or by certified check or bank draft
payable to the order of the Company, the Rights Agent shall thereupon promptly
(i) requisition from the Company or any transfer agent of the Common Shares (or
make available, if the Rights Agent is the transfer agent) certificates for the
number of Common Shares to be purchased and the Company will comply and hereby
authorizes its transfer agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to be pad in lieu
of issuance of factional shares in accordance with Section 14, (iii) after
receipt of such certificates, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when appropriate,
after receipt of such cash, cause the same to be delivered to or upon the order
of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, the Company will make and
deliver to the Rights Agent a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised, which Right Certificate shall be
countersigned 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,
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 or any transfer, split-up, combination
or exchange as set forth in Section 6 hereof unless such registered holder shall
have (i) completed and signed the certificate set forth on the reverse side of
the Right Certificate surrendered for such exercise, transfer, split-up,
combination or exchange, and (ii) provided such additional evidence of the
identify of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
<PAGE>
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares. The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized but unissued Common Shares or any Common Shares
held in its treasury, the number of Common Shares that will be sufficient to
permit the exercise in full of all outstanding Rights. In the event that there
shall at any time not be sufficient authorized but unissued Common Shares or
treasury shares to permit the exercise in full of all outstanding Rights, the
Company shall take all such action as may be necessary to authorized additional
Common Shares for issuance upon exercise of all outstanding Rights.
So long as the Common Shares purchasable upon the exercise of
Rights may be listed on any national securities exchange or quoted on the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all such shares to be listed on such
exchange or quoted on NASDAQ, as the case may be, upon such exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Common Shares 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 duly and validly
authorized and issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Common Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax or governmental charge which may be
payable in respect of any transfer or delivery of Right Certificates to a person
other than the registered holder thereof or the issuance or delivery of
certificates for the Common Shares in a name other than that of the registered
holder of the Right Certificate evidencing Rights surrendered for exercise, or
to issue or deliver any certificates for Common Shares upon the exercise of any
Rights until any such tax shall have been paid (any such tax and charge 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 or
charge is due.
<PAGE>
The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of an event described in Section 11(a)(ii)
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 1993 (the
"Act") on an appropriate form with respect to the Common Shares purchasable upon
exercise of the Rights, (ii) cause such registration statement to become
effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date. The Company will
also take such action with respect to such Common Shares as may be appropriate
under the securities or "blue sky" laws of the various states. The Company may
temporarily suspend the exercisability of the Rights in order to prepare and
file such registration statement and cause it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained.
Section 10. Common Shares Record Date. Each person in whose
name any certificate for Common Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Common Shares represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price and any applicable transfer taxes)
was made; provided, however, that if the date of such surrender and payment is a
date upon which the Common Shares transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
Common Shares transfer books of the Company are open.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number 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 Common Shares payable in Common
Shares, (B) subdivide the then outstanding Common Shares, (C) combine the
outstanding Common Shares into a smaller number of Common Shares or (D) except
in a transaction or transactions covered by Section 11(a)(ii) or Section 13,
issue any shares of its capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a merger in which the
Company is the continuing or surviving corporation), the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable upon exercise of a Right on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of an amount equal to (x) the
Purchase Price in effect immediately prior to the record date for such dividend
or the effective date of such subdivision, combination or reclassification
multiplied by (y) the number of Common Shares for which a Right was exercisable
immediately prior to such date, the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Common Shares transfer books of the Company were
open, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification.
<PAGE>
(ii) In the event
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after
the date of this Agreement, directly or indirectly,
except in a transaction or transactions covered by
Section 13, (1) shall merge into the Company or
otherwise combine with the Company and the Company
shall be the continuing or surviving corporation of
such merger or combination, (2) shall, in one or more
transactions, transfer any assets to the Company or
any of its subsidiaries in exchange (in whole or in
part) for Common Shares or for securities exercisable
for or convertible into Common Shares or otherwise
obtain from the Company, with or without
consideration, any additional Common Shares or
securities exercisable for or convertible into Common
Shares (other than as part of a pro rata distribution
to all holders of Common Shares), (3) shall alone or
together with its Affiliates and Associates, become
the Beneficial Owner of 15% or more of the Common
Shares, (4) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise dispose of
(in one or more transactions), to, from or with, as
the case may be, the Company or any of its
subsidiaries, assets (including securities) on terms
and conditions less favorable to the Company than the
Company would be able to obtain in arm=s-length
negotiation with an unaffiliated third party, (5)
shall receive any compensation from the Company or
any of the Company=s subsidiaries other than
compensation for full-time employment as a regular
employee at rates in accordance with the Company=s
(or its subsidiaries=) past practices, or (6) shall
receive the benefit, directly or indirectly (except
proportionately as a stockholder) of any loans,
advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage
provided by the Company or any of its subsidiaries,
or
(B) during such time as there is an
Acquiring Person, there shall be, except in a
transaction or transactions covered by Section 13,
any reclassification of securities (including any
reverse stock split), or recapitalization of the
Company, or any merger or consolidation of the
Company with any of its subsidiaries or any other
transaction or series of transactions (whether or not
with or into or otherwise involving an Acquiring
Person) which has the effect, directly or indirectly,
or increasing by more than 1% the proportionate share
of the outstanding shares of any class of capital
stock or of securities exercisable for or convertible
into any class of capital stock of the Company or any
of its subsidiaries which is directly or indirectly
owned by any Acquiring Person or any Associate or
Affiliate of any Acquiring Person
<PAGE>
then, subject to the last sentence of Section 23(a) hereof, each holder of a
Right, except as provided below, shall thereafter have the right to receive,
upon the exercise thereof in accordance with the terms of this Agreement and
payment of an amount equal to (w) the Purchase Price in effect immediately prior
to the occurrence of an event listed above in this subparagraph (ii) multiplied
by (x) the number of Common Shares for which a Right was exercisable immediately
prior to such occurrence, such number of Common Shares as shall equal the result
obtained by (y) multiplying the then current Purchase Price by the number of
Common Shares for which a Right was exercisable immediately prior to such event
listed above in this subparagraph (ii) and (z) dividing that product by 50% of
the current per share market price of the Common Shares (determined pursuant to
Section 11(d)) on the date of the occurrence of such event listed above in this
subparagraph; generally, the holder of Rights may purchase ((x/2) *2w)/(current
per share market price) shares for $w/share (ii); provided that the number of
Common Shares adjusted pursuant to the above calculation shall be further
appropriately adjusted to reflect any events described in Sections 11(a)(i), (b)
or (c) hereof occurring after the date of the occurrence of such event.
Notwithstanding the foregoing, from and after the occurrence of any of the
events listed above in this subparagraph (ii), any Rights beneficially owned by
(1) such Acquiring Person or an Associate or Affiliate of such Acquiring Person,
(2) a transferee of such Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(3) a transferee of such Acquiring Person (or of any 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 (x) a transfer
(whether or not for consideration) from such Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (y) a transfer which the Board of Directors
of the Company determines is part of a plan, arrangement or understanding which
has as a primary purpose of effect the avoidance of all or any portion of this
section 11(a)(ii), and subsequent transferees of any such transferees, 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 provisions of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 11(a)(ii) are
complied with, but shall have no liability to any holder of Right Certificates
or any other Person as a result of its making or failure to make any
determination with respect to any Acquiring Person or its Affiliates, Associates
or transferees hereunder. Any Right Certificate issued pursuant to Section 3 or
Section 22 hereof that represents Rights beneficially owned by any Acquiring
Person or any Associate or Affiliate of any Acquiring Person, and any Right
Certificate issued pursuant to Section 6 hereof or this Section 11 upon
transfer, split up, combination, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall (to the extent
feasible) contain the following legend:
<PAGE>
The Rights represented by this Right Certificate were issued
to a Person who was an Acquiring Person or an Affiliate or
an Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement, dated as of March 31, 1989,
and amended as of February 12, 1999 and December 31, 1999
between Espey Mfg. & Electronics Corp. and Registrar and
Transfer Co., as Rights Agent (the "Rights Agreement")).
This Right Certificate and the Rights represented hereby
will become void in the circumstances specified in the
Rights Agreement.
(iii) In the event that there shall not be sufficient
treasury shares
or authorized but unissued Common Shares to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exercise of the Rights.
(b) In case the Company shall fix a record date for the issuance
of rights or warrants to all holders of Common Shares entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Common Shares (or securities exercisable for or convertible into
Common Shares) at a price per Common Share (or having an exercise or conversion
price per Common Share, if a security exercisable for or convertible into Common
Shares) less than the current per share market price of the Common Shares (as
defined in Section 11(d)) on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Common Shares outstanding on such
record date plus the number of Common Shares which the aggregate offering price
of the total number of Common Shares so to be offered (and/or the aggregate
initial exercise of conversion price of the exercisable or convertible
securities so to be offered) would purchase at such current market price and the
denominator of which shall be the number of Common Shares outstanding on such
record date plus the number of additional Common Shares so to be offered for
subscription or purchase (or into which the exercisable or convertible
securities so to be offered are initially exercisable or convertible). In case
such subscription price may be paid in a consideration, part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Common Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustments
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
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Common Shares of evidences of indebtedness
or assets (other than a regular periodic cash dividend at a rate not in excess
of 125% of the last regular periodic cash dividend theretofore paid) 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 per share market
<PAGE>
price of the Common Shares (as defined in Section 11(d)) on such record date
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Common Share and the denominator of which shall be such
current per share market price of the Common Shares. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) For the purpose of any computation hereunder, the "current
per share market price" of Common Shares on any date shall be the average of the
daily closing prices per share of such Common Shares for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market
price of Common Shares is determined during a period following the announcement
by the issuer of such Common Shares of (i) a dividend or distribution on such
Common Shares payable in such Common Shares or securities exercisable for or
convertible into such Common Shares or (ii) any subdivision, combination or
reclassification of such Common Shares, and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the daily closing prices per share of such Common Shares
prior to such ex-dividend date or record date, as the case may be, shall be
appropriately adjusted to reflect such dividend, distribution, subdivision,
combination or reclassification, as the case may be. 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 such Common Shares 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 such Common Shares are listed or admitted
to trading or, if such Common Shares 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
such Common Shares are not quoted or reported by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such Common Shares selected by the Board of
Directors of the Company. If on any such date during such 30-consecutive Trade
Day period such Common Shares are not quoted or reported by any such
organization and no such market maker is making a market in such Common Shares,
the closing price of such shares on such date shall be as determined in good
faith by the Board of Directors of the Company. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which such
Common Shares are listed or admitted to trading is open for the transaction of
business or, if such Common Shares are not listed or admitted to trading on any
national securities exchange, a Monday, Tuesday, Wednesday, Thursday or Friday
on which banking institutions in the State of New York are not authorized or
obligated by law or executive order to close.
<PAGE>
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share,
as the case may be.
(f) If as a result of an adjustment made pursuant to Section
11(a), the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Common Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the Common
Shares contained in Section 11(a) through (e), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Common Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), 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 thereafter evidence the
right to purchase that number of Common Shares (calculated to the nearest
ten-thousandth) obtained by (i) multiplying (x) the number of shares covered by
a Right immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price as a result of the calculations made in Section 11(b) and
(c) to adjust the number of Rights, in substitution for any adjustment pursuant
to Section 11(h) in the number of Common Shares purchasable upon the exercise of
a Right. In the event the Company makes such election, each Right outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of Common Shares for which a Right was exercisable immediately prior to
such adjustment, and each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price by the Purchase Price in effect
immediately after such adjustment of the Purchase Price. The Company shall make
a public announcement of its election, if any, 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 Right Certificates
shall theretofore have been issued, shall be at least 10 days later than the
date of the public announcement. If Right Certificates shall theretofore have
been issued, upon each adjustment of the number of Rights pursuant to this
<PAGE>
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Common Shares purchasable 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 talking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the Common
Shares purchasable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Common Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of the record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Common Shares and other capital stock or securities of the Company, if any,
purchasable upon such exercise over and above the Common Shares and other
capital stock or securities of the Company, if any, purchasable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder=s right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to be contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustment expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Common Shares, (ii)
issuance wholly for cash of Common Shares or securities which by their terms are
convertible into or exchangeable for Common Shares or (iii) stock dividends or
issuance or rights, options or warrants referred to herein above in this Section
11, hereafter made by the Company to holders of its Common Shares shall not be
taxable to such stockholders.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Shares a
copy of such certificate and (c) mail a brief summary thereof to each holder of
a Right Certificate in accordance with Section 25.
<PAGE>
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power. In the event, directly or indirectly, at any time on or after
the Shares Acquisition Date (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall merge with and into the
Company, and the Company shall be the continuing or surviving corporation of
such merger and, in connection with such merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other equity securities
of any other Person, or (c) the Company shall sell or otherwise transfer (or one
or more of its subsidiaries shall sell or otherwise transfer) to any other
Person, 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) (in the event of more than one transaction, measured as of
the date of the first such transaction), then proper provision shall be made so
that (i) each holder of a Right shall thereafter have the right to receive, upon
the exercise thereof in accordance with the terms of this Agreement and payment
of an amount equal to (w) the Purchase Price in effect immediately prior to the
occurrence of such consolidation, merger, sale or transfer multiplied by (x) the
number of Common Shares for which a Right was exercisable immediately prior to
such occurrence, such number of validly issued, fully paid and nonassessable and
freely tradeable Common Shares of the other Person, free and clear of any liens,
encumbrances, rights of first refusal or other adverse claims, as shall equal
the result obtained by (y) multiplying the then current Purchase Price, by the
number of Common Shares for which a Right was exercisable immediately prior to
such consolidation, merger, sale or transfer, and (z) dividing that product by
50% of the current per share market price (determined pursuant to Section 11(d))
of the Common Shares of such other Person (as defined in Section 1(f) hereof) on
the date of consummation of such consolidation, merger, sale or transfer;
generally, the holder of Rights may purchase ((x/2) * 2w)/(current per share
market price) shares for $w/share; (ii) the issuer of such Common Shares shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such issuer; and (iv) such issuer shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights. The Company shall not consummate
any such consolidation, merger, sale or transfer unless prior thereto the
Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The provisions of this Section 13 shall
similarly apply to successive mergers or consolidations or sales or other
transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 14(a), the "current market value" of a whole
Right on any date shall be, subject to the second following sentence, the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
<PAGE>
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 or reported 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 the Rights are not quoted or reported by any such
organization and no such market maker is making a market in the Rights, the
"current market value" of the Rights on such date shall be as determined in good
faith by the Board of Directors of the Company.
(b) The Company shall not be required to issue fractions of
shares upon exercise of the Rights or to distribute certificates which evidence
fractional shares. In lieu of fractional shares, the Company shall pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one Common Share. For purposes of this Section 14(b), the
"current market value" of a Common Share shall be the closing price of a Common
Share (as determined pursuant to the second sentence of Section 11(d)) for the
Trading Day immediately prior to the date of such exercise. If on such date the
closing price of a Common Share cannot be determined pursuant to the second
sentence of Section 11(d), the "current market value" of a Common Share on such
date shall be as determined in good faith by the Board of Directors of the
Company.
(c) Every holder of a Right by the acceptance of the same
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
Section 15. Rights of Action. All rights of action with
respect to this Agreement are vested in the respective holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of any other Common Shares), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate (or, prior to
the Distribution Date, the Common Shares) in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of the Rights, it is specifically acknowledged
that the holders of the Rights would not have an adequate remedy at law for any
reach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
<PAGE>
Section 16. Agreement of Right Holders. Every holder of a Right
by the acceptance of the same expressly 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, a Right will be transferable
only in connection with the transfer of the Common Share in respect of which it
has been issued;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent and if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations or
ownership or writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or any other securities of the Company which may at any time be purchasable on
the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and reasonable counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability or expense, incurred
without negligence, bad faith or willful misconduct on the part of this 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 (including reasonable counsel fees) of defending against any claim of
liability in the premises.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document reasonably believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper person or
persons.
<PAGE>
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver such Right Certificates so countersigned; and
in case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the President, a Vice
President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
<PAGE>
(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 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 evidence 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 Common Shares to be purchased pursuant to
this Agreement or any Right Certificate or as to whether any Common Shares will,
when so purchased, be validly authorized and issued, fully paid and
nonassessable, nor will it be liable for any federal or state transfer taxes or
charges that may be due upon the issuance or transfer of any Common Share or
Right Certificate.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the President, a Vice President, the Treasurer or the Secretary of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract 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.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon not less than 30 days= notice in writing mailed to the Company
and to each transfer agent of the Common Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days= notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit his
<PAGE>
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to a court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or any state therein, in good
standing, having a principal office in a state in the United States, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assistance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price per share and the number
or kind or class of shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors of the
Company may, at its option, at any time prior to the Close of Business on the
earlier of the Distribution Date and December 31, 2009, redeem all but not less
than all the then outstanding Rights at a redemption price of $.01 per Right
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). Notwithstanding anything
contained in this Rights Agreement to the contrary, the Rights shall not be
exercisable after an occurrence of any of the events referred to in Section
11(a)(ii) hereof until such time as the right of redemption hereunder has
expired.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of the Rights shall be to receive the
Redemption Price. Within 10 days after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent or transfer agents for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
<PAGE>
(c) If,
(i) following the occurrence of a Shares Acquisition
Date and following the expiration of the right of redemption
hereunder but prior to the occurrence of any event described
in Section 11(a)(ii) or Section 13, (A) a Person who is an
Acquiring Person and/or such Acquiring Person=s Affiliates and
Associates transfers or otherwise disposes of a number of
Common Shares in one transaction or a series of transactions,
to a Person other than the Company or any of its subsidiaries
and not otherwise directly or indirectly involving the Company
or any of its subsidiaries, which transfer or other
disposition does not result in the occurrence of an event
described in Section 11 (a)(ii) or Section 13 but does result
in such Person, together with such Person=s Affiliates and
Associates, thereafter being the Beneficial Owner of 10% or
less of the Common Shares, (B) at the time of and immediately
following such transfer or other disposition, the directors
who were in office prior to such Person becoming an Acquiring
Person and any director appointed or nominated to the Board of
Directors of the Company by such directors, constitute a
majority of the Board of Directors of the Company, and (C) no
Person, immediately following such transfer or other
disposition, is an Acquiring Person or is making a tender or
exchange offer which meets the requirements of Section
3(a)(ii), or
(ii) following the commencement of a tender or
exchange offer which meets the requirements of Section
3(a)(ii) and following the expiration of the right of
redemption hereunder but prior to the occurrence of any event
described in Section 11(a)(ii) or Section 13, (A) the offeror
has not consummated such tender or exchange offer and has
terminated or withdrawn such tender or exchange offer, (B) at
the time of and immediately following such termination or
withdrawal, the directors who were in office prior to the
commencement of such offer and any director appointed or
nominated to the Board of Directors of the Company by such
directors, constitute a majority of the Board of Directors of
the Company, and (C) no Person, immediately following such
termination or withdrawal, is an Acquiring Person or is making
a tender or exchange offer which meets the requirements of
Section 3(a)(ii),
then, and in each such case, the right of redemption shall be reinstated and
thereafter be subject to the provisions of this Section 23 until the earlier of
the occurrence of another Distribution Date and December 31, 2009.
Section 24. Notice of Certain Events. In case the Company
shall propose (a) to pay any dividend payable in stock of any class to the
holders of Common Shares or to make any other distribution to the holders of
Common Shares (other than a regular periodic cash dividend at a rate not in
excess of 125% of the last regular periodic cash dividend theretofore paid), or
(b) to offer to the holders of Common Shares rights or warrants to subscribe for
or to purchase any additional Common Shares or shares of stock of any other
class or any other securities, rights or options, or (c) to effect any
reclassification of its Common Shares (other than a reclassification involving
only the subdivision of outstanding Common Shares), or (d) to effect any
<PAGE>
consolidation or merger, or (e) to effect any sale or other transfer (or so
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 (f) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 25, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution or
offer or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Common Shares, if any such date
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (a) or (b) above prior to the record date for determining
holders of the Common Shares for purposes of such action, and in the case of any
such other action, prior to the date of the taking of such proposed action or
the date of participation therein by the holders of the Common Shares, whichever
shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) of
this Agreement shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to each holder of a Right Certificate, in accordance
with Section 25, 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).
Section 25. Notices. Subject to the provisions of Section 21,
any notice or demand 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:
Espey Mfg. & Electronics Corp.
P.O. Box 422
Saratoga Springs, New York 12866
Attention: President
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:
Registrar and Transfer Co.
10 Commerce Drive
Cranford, New Jersey 07016
Attention: Vice President
Any notice or demand authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
<PAGE>
Section 26. Supplements and Amendments. The Company and the
Rights Agent may from time to time supplement or amend this Agreement without
the approval of any holders of Right Certificates for purposes including curing
any ambiguity, correcting or supplementing any provision contained herein which
may be defective or inconsistent with any other provision herein, or making any
other provisions in regard to matters or questions arising hereunder which the
Company and the Rights Agent may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights.
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 and inure to the benefit of their respective successors and assigns
hereunder.
Section 28. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 29. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 30. 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 31. 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: ESPEY MFG. & ELECTRONICS CORP.
By: /s/Peggy Murphy By: /s/Howard Pinsley
--------------- -----------------
Peggy Murphy Howard Pinsley
Attest: REGISTRAR AND TRANSFER CO.
By: /s/Mary Rose Cascaes By: /s/William P. Tatler
-------------------- --------------------
Mary Rose Cascaes William P. Tatler
