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Exhibit 1
KENNAMETAL INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
--------------------
Rights Agreement
Effective as of November 2, 2000
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TABLE OF CONTENTS
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Section 1. Certain Definitions.............................................................................2
Section 2. Appointment of Rights Agent.....................................................................7
Section 3. Issue of Rights Certificates....................................................................8
Section 4. Form of Rights Certificates....................................................................11
Section 5. Execution, Countersignature and Registration...................................................12
Section 6. Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates..................................................14
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..................................15
Section 8. Cancellation and Destruction of Rights Certificates............................................19
Section 9. Reservation and Availability of Capital Stock..................................................19
Section 10. Preferred Stock Record Date....................................................................22
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights....................22
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....................................39
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................39
Section 14. Fractional Rights and Fractional Shares........................................................43
Section 15. Rights of Action...............................................................................45
Section 16. Agreement of Rights Holders....................................................................46
Section 17. Rights Certificate Holder Not Deemed a Shareholder.............................................47
Section 18. Concerning the Rights Agent....................................................................48
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................49
Section 20. Duties of Rights Agent.........................................................................50
Section 21. Change of Rights Agent.........................................................................53
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<TABLE>
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Section 22. Issuance of New Rights Certificates............................................................55
Section 23. Redemption and Termination.....................................................................56
Section 24. Notice of Certain Events.......................................................................58
Section 25. Notices........................................................................................59
Section 26. Supplements and Amendments.....................................................................60
Section 27. Successors.....................................................................................62
Section 28. Determinations and Actions by the Board of Directors, etc......................................62
Section 29. Benefits of this Agreement.....................................................................63
Section 30. Severability...................................................................................63
Section 31. Governing Law..................................................................................64
Section 32. Counterparts...................................................................................64
Section 33. Descriptive Headings...........................................................................64
Exhibit A Certificate of Designation, Preferences and Rights
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights to Purchase Preferred Stock
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, effective as of November 2, 2000 (the "Agreement"),
between Kennametal Inc., a Pennsylvania corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability company
(the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Company's previous rights agreement dated as of October 25,
1990 will expire upon the close of business on November 2, 2000; and
WHEREAS, desiring to renew the Company's rights plan, on July 24, 2000 (the
"Rights Declaration Date"), the Board of Directors of the Company authorized and
declared a distribution of one Right for each share of Capital Stock, par value
$1.25 per share, of the Company (the "Common Stock") outstanding at the close of
business on September 5, 2000 (the "Record Date"), and has authorized the
issuance on the close of business on November 2, 2000 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 or the Expiration Date, whichever shall occur first, each
Right initially representing the right to purchase one one-hundredth of a share
of Series One Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation, Preferences and
Rights attached hereto as Exhibit A (the "Certificate of Designation"), 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 and intending to be legally bound hereby, the parties hereby
agree as follows:
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Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of outstanding shares of Voting Stock representing 20% or more of the Voting
Power, but shall not include (i) the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, any
Person or entity organized, appointed or established by the Company or holding
Voting Stock for or pursuant to the terms of any such plan, or (ii) any Person,
together with Affiliates and Associates of such Person, who or which would be an
Acquiring Person solely by reason of (A) being the Beneficial Owner of Common
Stock of the Company, the beneficial ownership of which was acquired by such
Person (and the Affiliates and Associates of such Person) pursuant to any action
or transaction, or series of related actions or transactions, approved by the
Board of Directors of the Company, upon the affirmative vote of a majority of
the Disinterested Directors, prior to the Distribution Date or (B) a reduction
in the number of issued and outstanding shares of Common Stock of the Company
pursuant to a transaction or series of related transactions approved by the
Board of Directors of the Company, upon the affirmative vote of a majority of
the Disinterested Directors; provided, however, that in the event that such
Person described in this clause (ii) does not become an Acquiring Person by
reason of clause (A) or (B) of this clause (ii), such Person nonetheless shall
become an Acquiring Person in the event that such Person, together with all
Affiliates and Associates of such Person, thereafter acquires beneficial
ownership of any additional shares of Common Stock of the Company (unless the
acquisition of such beneficial ownership would not result in such Person
becoming an Acquiring Person by reason of clause (A) or (B) of this clause (ii)
without regard to
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this proviso) and thereafter such Person, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 20% or more of the
Voting Power.
(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 and in effect on the date of
this Agreement (the "Exchange Act").
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, 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 Rights issuable under this Agreement),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," (A) 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 thereunder, or (B) securities issuable upon exercise of
the Rights at any time prior to the occurrence of a Triggering Event,
or (C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof
(the "Original Rights") or
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pursuant to Section 11(i) in connection with an adjustment made with
respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
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 (ii) 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
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (ii) of
this paragraph (c)) or disposing of any voting securities of the
Company.
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Notwithstanding the foregoing, nothing contained in this paragraph (c) shall
cause a Person ordinarily engaged in business as an underwriter of securities to
be the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in a bona fide firm commitment underwriting
pursuant to an underwriting agreement with the Company for such period of time
as shall be determined by the Board of Directors 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 and/or Commonwealth
of Pennsylvania 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 Capital Stock, par value $1.25 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 aggregate voting power, or the equity securities or other
equity interest having power to control or direct the management, of such
Person.
(g) "Controlling Person" shall have the meaning assigned to such term
from time to time by Section 2543 of the Pennsylvania Business Corporation Law
of 1988, as it may hereafter be amended.
(h) "Disinterested 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 officer or employee of the Company or any of its Subsidiaries and who is not
an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
nominee or a representative of an Acquiring
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Person or of any such Affiliate or Associate, and was a member of the Board
prior to the time that the Acquiring Person became an Acquiring Person, or (ii)
any Person who subsequently becomes a member of the Board to fill a vacancy
created by an increase in the size of the Board, while such Person is a member
of the Board, who is not an officer or employee of the Company or any of its
Subsidiaries and who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a nominee or representative of an Acquiring Person or of
any such Affiliate or Associate, if such Person's nomination for election by the
shareholders or election to the Board is recommended or approved by a majority
of the Disinterested Directors or (iii) any successor of a Disinterested
Director who is not an officer or employee of the Company or any of its
Subsidiaries and who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a nominee or representative of an Acquiring Person or of
any such Affiliate or Associate, if such Person's nomination for election by the
shareholders or election to the Board is recommended or approved by a majority
of the Disinterested Directors then on the Board.
(i) "Person" shall mean any individual, firm, corporation,
partnership, joint venture, limited liability company, association, trust,
unincorporated association or other entity and shall include any successor (by
merger or otherwise) to such entity.
(j) "Preferred Stock" shall mean shares of Series One Preferred Stock,
no par value, of the Company. Any reference in this Agreement to Preferred Stock
shall be deemed to include any authorized fraction of a share of Preferred
Stock, unless the context otherwise requires.
(k) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A) or (B) hereof.
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(l) "Section 13 Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a) hereof.
(m) "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 an
Acquiring Person.
(n) "Subsidiary" shall mean, with reference to any Person, a Person, a
majority of the total outstanding Voting Power of which is beneficially owned,
directly or indirectly by such other Person or by one or more Subsidiaries of
such other Person, or otherwise controlled by such other Person.
(o) "Triggering Event" shall mean any Section 11(a)(ii) Event or
Section 13 Event.
(p) "Voting Power" shall mean, at any particular point in time, the
total number of votes that all holders of the then outstanding shares of capital
stock of the Person would be entitled to cast in an annual election of the
directors of such Person, voting together as a single class (if such Person is a
corporation) or to participate in the management and control of such Person (if
such Person is not a corporation).
(q) "Voting Stock" shall mean Common Stock of the Company and all
other equity securities of the Company that would entitle the holders thereof to
cast votes in an election of directors of the Company.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to
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time appoint one or more co-Rights Agents as it may deem necessary or desirable
(the term "Rights Agent" being used herein to refer, collectively, to the Rights
Agent together with any such co-Rights Agents). The Rights Agent shall have no
duty to supervise, and in no event shall be liable for, the acts or ommissions
of any such co-Rights Agents. In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agent shall be as the Company shall determine.
Section 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the Close of Business on the tenth day
after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of Business on the
Record Date), (ii) the Close of Business on the tenth Business Day 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 or holding Voting Stock for or pursuant to the terms
of any such plan) is first published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of shares of
Voting Stock representing 20% or more of the Voting Power, (iii) the Close of
Business on the date on which any Triggering Event occurs, or (iv) the Close of
Business on the tenth day after any Person becomes a Controlling Person (the
earliest of (i), (ii), (iii) or (iv) being herein referred to as the
"Distribution 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
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certificates, and (y) the Rights, including the right to receive rights
certificates as herein provided, will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company). The Company shall give prompt notice of the Distribution Date to
the Rights Agent and shall take such necessary action to provide the Rights
Agent with a shareholder list. 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 rights certificates, in substantially the form of Exhibit B
hereto (the "Rights 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 Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
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 Rights 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 associated with the Common
Stock represented by such certificates will be evidenced by such certificates
for the
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Common Stock and the registered holders of the Common Stock shall also 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 surrender for 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 issued for shares of
Common Stock after the Record Date (including, without limitation, upon transfer
or exchange of outstanding shares of Common Stock), but prior to the earlier of
the Distribution Date or the Expiration Date, shall also be deemed to be
certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Kennametal
Inc. (the "Company") and Chase Mellon Shareholder Services, L.L.C.
(the "Rights Agent") effective as of November 2, 2000 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of
the Company. 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. The Company will mail
or cause to be mailed 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. Rights
will expire on November 2, 2010 unless earlier redeemed or otherwise
extended as described in the Rights Agreement.
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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 surrender
for 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 Rights Certificates.
(a) The Rights 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 (which do not affect the
duties or responsibilities of the Rights Agent) 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 hereof, the Rights 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 one one-hundredths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one one-hundredth of a share being hereinafter called 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.
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(b) Notwithstanding any other provision of this Agreement, any Rights
Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents
Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming 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 such Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of Section 7(e)
hereof, and, provided the Company shall have notified the Rights Agent that this
subsection applies, any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
The failure of any Rights Certificate to be legended as set forth in
this Section 4(b) shall not be deemed to waive the voiding of any Rights
pursuant to Section 7(e).
Section 5. Execution, Countersignature and Registration.
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(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President, any Vice President or its
Treasurer, 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 of the Company, either manually or by
facsimile signature. The Rights 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 Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights Agent of
notice of such date, the Rights Agent will keep or cause to be kept, at its
office designated in Section 25 hereof (the "Designated Office") or other
offices designated as the appropriate place for surrender of Rights Certificates
upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates, and the Certificate
Number and the date of each of the Rights Certificates.
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Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 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
Rights Certificate or Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of a share of
Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or 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 Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the Designated Office or other 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 Rights Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b),
Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights 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
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with any transfer, split up, combination or exchange of Rights Certificates. The
Rights Agent shall have no duty or obligations under this subsection unless and
until it is satisfied that all such taxes and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a valid Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security 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 Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof and except as otherwise provided in
this Agreement, the registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c),
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 Rights Certificate, with the
form of election to purchase and the certificate on the reverse side thereof
duly and properly executed, to the Rights Agent at the Designated Office or
other offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price (except as provided in Section 11(q)
hereof) with respect to the total number of one one-hundredths of a share of
Preferred Stock (or other securities, cash or other assets, as the case may be)
as to which such surrendered Rights are then exercisable, at or prior to the
earlier of (i) the
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Close of Business on November 2, 2010 unless otherwise extended (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 one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $120, and
shall be subject to adjustment from time to time as provided in Sections 11 and
13(a) hereof and shall be payable in accordance with paragraph (c) below (the
"Purchase Price").
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly and
properly executed, accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one one-hundredth of a share of Preferred
Stock (or other shares, securities, cash or other assets, as the case may be) to
be purchased as set forth below and an amount equal to any applicable tax or
charge, the Rights Agent shall, subject to Section 20(k) hereof, thereupon as
soon as practicable (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 total number of one one-hundredths of a
share of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a depositary agent
under a depositary agreement, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a share of Preferred
Stock as are to be purchased (in which case certificates for the 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,
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(ii) when appropriate, 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) as soon as practicable after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt thereof,
deliver such cash, if any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) may be made (x) in cash or by
certified bank check or money order, in lawful money of the United States of
America, payable to the order of the Company, or (y) by delivery of Rights if
and to the extent authorized by Section 11(q) hereof. 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 other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, 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
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Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming 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 Board of Directors of the Company has 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 no holder of such Rights (including any subsequent holder) shall have
any rights whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise. The Company shall use all reasonable efforts to
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 Rights 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 of any Rights Certificate upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) properly completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side of
the Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company or the
Rights Agent shall reasonably request.
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Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 9. 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 occurrence of a Triggering Event, 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), free from preemptive rights or any
right of first refusal, the number of shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
that, as provided in this Agreement including 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
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the
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Company covenants and agrees to 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 first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined 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, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect with prompt
notice thereof to the Rights Agent. Notwithstanding any provision of this
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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 one one-hundredths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, 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 duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all taxes and charges which may be payable in respect of the
issuance or delivery of the Rights Certificates and of any certificates for a
number of one one-hundredths of a share 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 tax or charge which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a number of one one-hundredths
of a share 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 Rights Certificates evidencing Rights surrendered for exercise or to issue
or deliver any certificates for a number of one one-hundredths of a share 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 or charge shall have been paid (any such tax or charge being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax or
charge is due.
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Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for a number of one one-hundredths of a share 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 such fractional 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 Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable taxes or charges) 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 (fractional or otherwise) 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
Rights Certificate shall not be entitled to any rights of a shareholder 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.
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<PAGE> 26
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend, or make a distribution, on the
outstanding Preferred Stock payable in shares of Preferred Stock, (B)
subdivide (by stock split or otherwise) or split the outstanding Preferred
Stock into a larger number of shares, (C) combine (by a reverse stock split
or otherwise) the outstanding Preferred Stock into a smaller number of
shares, or (D) issue any shares of its capital stock in a reclassification
or change of the outstanding Preferred Stock (including any such
reclassification or change in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), then, in
each such event, 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 distribution 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, upon payment
of the Purchase Price then in effect, 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 or distribution, subdivision, combination or
reclassification. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in
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<PAGE> 27
this Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii) hereof.
(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, 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 and the Common
Stock of the Company shall remain outstanding and unchanged, or
(B) 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), alone or together with its Affiliates and Associates, shall, at
any time after the Rights Declaration Date, become the Beneficial
Owner of shares of Voting Stock representing 20% or more of the Voting
Power, other than (i) pursuant to any transaction set forth in Section
13(a) hereof or (ii) solely by reason of (x) being the Beneficial
Owner of Common Stock of the Company, the beneficial ownership of
which was acquired by such Person (and the Affiliates and Associates
of such Person) pursuant to any action or transaction, or series of
related actions or transactions, approved by the Board of Directors of
the Company, upon the affirmative vote of a majority of the
Disinterested Directors, or (y) a
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reduction in the number of issued and outstanding shares of Common
Stock of the Company pursuant to a transaction or series of related
transactions approved by the Board of Directors of the Company, upon
the affirmative vote of a majority of the Disinterested Directors;
provided, however, that in the event that a Person, together with its
Affiliates and Associates, shall not be deemed to have become the
Beneficial Owner of shares of Voting Stock representing 20% or more of
the Voting Power for the purposes of this Section 11(a)(ii)(B) by
reason of clause (x) or (y) of this Section 11(a)(ii)(B)(ii) such
Person nonetheless shall be deemed to have become the Beneficial Owner
of shares of Voting Stock representing 20% or more of the Voting Power
in the event that such Person, together with all Affiliates and
Associates of such Person, thereafter acquires Beneficial Ownership of
any additional shares of Common Stock of the Company (unless the
acquisition of such Beneficial Ownership would not result in such
Person becoming the Beneficial Owner of such 20% or more of the Voting
Power by reason of clause (x) or (y) of this Section 11(a)(ii)(B)(ii)
without regard to this proviso) and thereafter such Person, together
with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of shares of Voting Stock representing 20% or more of
the Voting Power,
then, promptly following five (5) days after the date of the occurrence of an
event described in Section 11(a)(ii)(B) hereof and promptly following the
occurrence of an event described in Section 11(a)(ii)(A) hereof, proper
provision shall be made so that each holder of a Right (except
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as provided below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of a number of one one-hundredths of a
share of Preferred Stock, such number of shares of Common Stock of the Company
as shall equal the result obtained by (x) multiplying the then current Purchase
Price by the then number of one one-hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as the "Purchase Price" for
each Right and for all purposes of this Agreement) by 50% of the current market
price (determined pursuant to Section 11(d) hereof) per share of Common Stock on
the date of such first occurrence (such number of shares hereinafter referred to
as the "Adjustment Shares").
(iii) In the event that the number of shares of Common Stock which are
authorized by the Company's articles of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with respect to
each Right, make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares, or units
of shares, of preferred stock which the Board of Directors of the Company
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has deemed to have the same value as shares of Common Stock (such shares of
preferred stock, "common stock equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the later
of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to
the Spread. If the Board of Directors of the Company shall determine in
good faith that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval for
the authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second
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sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence. 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, as
well as a public announcement at such time as the suspension is no longer
in effect in each case, with prompt notice thereof to the Rights Agent. For
purposes of this Section 11(a)(iii), the value of the Common Stock shall be
the current market price (as determined pursuant to Section 11(d) hereof)
per share of the Common Stock on the Section 11(a)(ii) Trigger Date and the
value of any "common stock equivalent" shall be deemed to have the same
value as the Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants (other than the Rights) 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 (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
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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 may 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 and the holders of the Rights.
Shares of Preferred Stock or equivalent 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 or equivalent preferred stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend),
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<PAGE> 33
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) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the 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 Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date 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 but not including 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
the ten (10) consecutive Trading Days immediately
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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 such
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 but not including 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 Trading 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
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<PAGE> 35
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.
(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 or 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
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<PAGE> 36
conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations 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 of
the Preferred Stock 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. For all purposes of this Agreement, the
"current market price" of one one-hundredth of a share of Preferred Stock
shall be equal to the "current market price" of one share of Preferred
Stock divided by 100.
(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 one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment, or
(ii) the Expiration Date.
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(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
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), (e), (g), (h), (i), (j), (k), (m) and (q), 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 one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths 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.
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(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-hundredths of a share 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 one one-hundredths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made with prompt notice thereof to the Rights
Agent. This record date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Rights Certificates have been issued, shall
be at least ten (10) days later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights Certificates
on such record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
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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 Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of one one-hundredth of a share which were expressed in the
initial Rights 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 number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable such number of one one-hundredths of a share
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 (with prompt notice thereof to
the Rights Agent) until the occurrence of such event the issuance to the holder
of any Right exercised after such record date the number of one one-hundredths
of a share of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of one
one-hundredths of a share 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
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other appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) 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 shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
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 other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) 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
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or otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale, the shareholders of the Person who constitutes the "Principal Party" for
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(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 if at the time such action is
taken it is reasonably foreseeable that such action 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 Declaration Date and
prior to the Distribution Date (i) declare a dividend on the outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding shares of
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.
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(q) In the event that the Rights become exercisable following a
Section 11(a)(ii) Event, the Company, by action of a majority of the Board of
Directors, may authorize that the Rights, subject to Section 7(e) hereof, either
(i) will only be, or (ii) may, at the option of the holder entitled to exercise
the Rights be, exercisable for, in either case 50% of the number of share of
Common Stock (or cash or other securities or assets to be substituted for the
Adjustment Shares pursuant to Section 11(a)(iii)), that would otherwise be
purchasable under Section 11(a), in consideration of the surrender to the
Company of the Rights so exercised and without other payment of the Purchase
Price. Rights exercised under this Section 11(q) shall be deemed to have been
exercised in full and shall be cancelled.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts and computations 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 Rights 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 and shall have no duty with respect to and shall
not be deemed to have knowledge of any such adjustment unless and until it shall
have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
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(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 in a transaction which
complies with Section 11(o) hereof), 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 in a transaction which complies with Section
11(o) hereof) 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 one 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 in one or more transactions each of which complies with Section
11(o) hereof), then, and in each such case, proper provision shall be made so
that: (i) each holder of a valid Right, except as 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 such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one one-hundredths
of a share of Preferred Stock for which a Right is exercisable immediately prior
to the first
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occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such one one-hundredths of a share for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price
in effect immediately prior to such first occurrence), and (2) dividing that
product (which, following the first occurrence of a Section 13 Event, shall be
referred to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the current market price (determined pursuant to Section
11(d)(i) hereof) per share of the Common Stock of such Principal Party on the
date of consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
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 be of no effect following the first occurrence
of any 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
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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.
(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
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(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 on 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 a Section 13 Event
shall occur at any time after the occurrence of a Section 11 (a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) In the event that the Rights become exercisable under Section
13(a), the Company, by action of a majority of the Board of Directors, may
authorize that the Rights either (i) will only be , or (ii) may, at the option
of the Principal Party be, exercisable for, in either case 50% of the number of
shares of Common Stock of the Principal Party that would otherwise be
purchasable under Section 13(a), in consideration of the surrender to the
Principal Party, as the successor to the Company under Section 13(a)(ii), of the
Rights so exercised and without other payment of the Purchase Price. Rights
exercised under this Section 13(d) shall be deemed to have been exercised in
full and shall be cancelled.
Section 14. Fractional Rights and Fractional Shares.
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(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 Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For 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 Rights 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.
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(b) The Company may, but shall not be required to, issue fractions of
shares of Preferred Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock. In lieu of
fractional shares of Preferred Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one one-hundredth of a share of Preferred Stock. For purposes of this
Section 14(b), the current market value of one one-hundredth of a share of
Preferred Stock shall be one one-hundredth 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 occurrence of a Triggering Event, 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 Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one (1) share of Common Stock. For purposes of this
Section 14(c), the current market value of one share of Common Stock shall be
the closing price of one 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.
(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 provided 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 Rights
Certificates (and, prior to the
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Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights 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 Rights 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 Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and 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 earlier of the Distribution Date and the Expiration
Date, the Rights will be transferable only in connection with the transfer of
Common Stock; provided, however, that no transfer of Common Stock to a
Controlling Person pursuant to the Pennsylvania Business Corporation Law of 1988
Sections 2541 et seq. shall effect a transfer of the Rights;
(b) after the Distribution Date, the Rights Certificates are
transferable, subject to Section 7(e) hereof, only on the registry books of the
Rights Agent if surrendered at the Designated Office or other offices of the
Rights Agent designated for such purposes, duly
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endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, 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
Rights 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, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of one one-hundredths of a
share of Preferred Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights
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represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Company, including, without
limitation, any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 24 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
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
preparation, delivery, amendment 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, damage, judgment, fine, penalty, claim, demand, settlement, cost, or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including without limitation the costs and expenses of defending
against any claim of liability arising therefrom, directly or indirectly. The
indemnity provided herein shall survive the termination of this Agreement and
the termination and the expiration of the Rights. The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the
Company. Anything to the contrary notwithstanding, in no
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event shall the Rights Agent be liable for special, punitive, indirect or
consequential damage (including but not limited to lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or damage. Any
liability of the Rights Agent under this Rights Agreement will be limited to the
amount of fees paid by the Company to the Rights Agent.
(b) The Rights Agent shall be authorized and 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 Rights
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, or
otherwise upon advise of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services 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 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 Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent
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may adopt the countersignature of a predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only the
duties and obligations expressly imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken, suffered or omitted by it in good faith and in accordance with
such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without
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limitation, the identity of any Acquiring Person and the determination of
"current market price") be proved or established by the Company prior to taking,
suffering or omitting any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman
of the Board, the President, any Vice President, the Treasurer, or the Secretary
of the Company and delivered to the Rights Agent; and such certificate shall be
full authorization and protection to the Rights Agent and the Rights Agent shall
incur no liability for or in respect of any action taken, suffered or omitted in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
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 Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights 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 liability or
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 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
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to the exercise of Rights evidenced by Rights 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 Rights 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 Chief Executive Officer the President, any Vice
President, the Secretary, or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken, suffered or omitted by it in good faith in
accordance with instructions of any such officer. The Rights Agent may
conclusively rely on the most recent instructions given by any such officer.
(h) The Rights Agent and any shareholder, director, affiliate, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other Person.
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(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, absent gross
negligence, bad faith or willful 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.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
it reasonably believes 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 Rights 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 of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 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 to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
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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 to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 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
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (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 conduct a stock transfer or corporate trust business in the State of New
York), in good standing, having a principal office in the State of New York,
which is authorized to provide shareholder services and to do business otherwise
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 $50,000,000 or (b) an Affiliate controlled by a corporation
described in clause (a). 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
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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 Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of shares of Common Stock following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (a) shall, with respect
to shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such Rights
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Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the Close of Business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth day
following the Record Date), or (ii) the Final Expiration Date, order the
redemption of all but not fewer 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 distribution or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price") and the Company, at its
option, may pay the Redemption Price either in cash or Common Stock or other
securities of the Company deemed by the Board of Directors, in the exercise of
its sole discretion, to be at least equivalent in value to the Redemption Price;
provided, however, if the Board of Directors of the Company authorizes
redemption of the Rights in either of the circumstances set forth in clauses (i)
and (ii) below, then there must be Disinterested Directors then in office and
such authorization shall require the concurrence of a majority of such
Disinterested Directors: (i) such authorization occurs on or after the time a
Person becomes an Acquiring Person, or (ii) such authorization occurs on or
after the date of a change (resulting from a proxy or consent solicitation) in a
majority of the directors in office at the commencement of such solicitation if
any Person who is a participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board of Directors of the
Company has determined in good faith) that such Person (or any of its Affiliates
or Associates) intends to take,
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or may consider taking, any action which would result in such Person becoming an
Acquiring Person or which would cause the occurrence of a Triggering Event
unless, concurrent with such solicitation, such Person (or one or more of its
Affiliates or Associates) is making a cash tender offer pursuant to a Schedule
TO (or any successor form) filed with the Securities and Exchange Commission for
all outstanding shares of Common Stock not beneficially owned by such Person (or
by its Affiliates or Associates); provided further, however, that if, following
the occurrence of a Stock Acquisition Date and following the expiration of the
right of redemption hereunder but prior to any Triggering Event, (i) a Person
who is an Acquiring Person shall have transferred or otherwise disposed of a
number of shares of Common Stock in one transaction, or series of transactions,
not directly or indirectly involving the Company or any of its Subsidiaries,
which did not result in the occurrence of a Triggering Event such that such
Person is not thereafter a Beneficial Owner of shares of Voting Stock
representing more than 10% of the Voting Power, and (ii) there are no other
Persons, immediately following the occurrence of the event described in clause
(i), who are Acquiring Persons, then the right of redemption shall be reinstated
and thereafter be subject to the provisions of this Section 23. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section 11(a)(ii) Event until such
time as the Company's 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 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
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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 Stock. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Any notice which is mailed in the
manner herein provided shall be conclusively deemed to have been given, whether
or not the holder receives the notice. In any case, failure to give such notice
by mail, or any defect in the notice, to any particular holder of Rights shall
not affect the sufficiency of the notice to other holders of Rights.
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 periodic cash dividend), 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 any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), 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 transaction or a
series of related 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
Persons (other than the Company and/or any of its Subsidiaries in one or
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more transactions each of which complies with Section 11(o) hereof), 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 Rights Certificate and the
Rights Agent, 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 Section 11(a)(ii) Event shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights 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 Rights Certificate to
or on the
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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:
Kennametal Inc.
World Headquarters
1600 Technology Way
P.O. Box 231
Latrobe, Pennsylvania 15650-0231
Attention: David T. Cofer, Vice President, Secretary and General Counsel
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 Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
One Mellon Bank Center
500 Grant Street, Suite 2122
Pittsburgh, Pennsylvania 15258-0001
Attention: Lawrence J. Schweiger
Assistant Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (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 and
subject to the penultimate sentence of this Section 26, the Company may, and the
Rights Agent shall if the Company so directs, supplement or amend any provision
of this Agreement (including, without limitation, the date on which the
Distribution Date shall occur, the time during which the Rights may be redeemed
or any provision of the Certificate of Designation with
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respect to the Preferred Stock) without the approval of any holders of
certificates representing shares of Common Stock. From and after the
Distribution Date, and subject to the penultimate sentence of this Section 26,
the Company may, and the Rights Agent shall if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates 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 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 Rights Certificates (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person),
(iv) to suspend the effectiveness of Section 7(e) hereof (which suspension,
following the first occurrence of an event set forth in clauses (i) and (ii) of
the first proviso to Section 23(a) hereof, shall be effective only if there are
Disinterested Directors and shall require the concurrence of a majority of such
Disinterested Directors), or (v) to shorten or lengthen any time period
hereunder (which lengthening or shortening, following the first occurrence of an
event set forth in clauses (i) and (ii) of the first proviso to Section 23(a)
hereof, shall be effective only if there are Disinterested Directors and shall
require the concurrence of a majority of such Disinterested Directors);
provided, this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (v) of this sentence, (A) a time period relating to when the
Rights may be redeemed at such time as the Rights are not then redeemable or (B)
any other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights. 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, and such supplement or amendment does not
increase the Rights
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Agent's duties, liabilities or obligations the Rights Agent shall execute such
supplement or amendment. Notwithstanding anything contained in this Agreement to
the contrary, no supplement or amendment shall be made which (i) changes the
Redemption Price, the Purchase Price or the number of one one-hundredths of a
share of Preferred Stock for which a Right is exercisable or (ii) shortens the
Final Expiration Date. 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 and inure to
the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock or of any other class of capital stock outstanding at any
particular time, including for purposes of determining the particular percentage
of outstanding shares of Common Stock or of Voting Power of which any Person is
the Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The
Board of Directors of the Company (with, where specifically provided for herein,
the concurrence of the Disinterested Directors) shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board (with, where specifically provided for herein,
the concurrence of the Disinterested Directors) or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the
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administration of this Agreement (including a determination to redeem or not
redeem the Rights or to supplement or amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board (with, where specifically provided for herein, by the
concurrence of the Disinterested Directors) in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board or the Disinterested
Directors to any liability to the holders of the Rights.
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 Rights Certificates (and, prior to the Distribution
Date, the 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 Rights 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 Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the
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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 day following the date of such determination by the Board
of Directors.
Section 31. Governing Law. This Agreement, each Right and each Rights
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 for
Sections 18, 19, 20 and 21 hereof, to the extent pertaining to the rights,
duties and obligations of the Rights Agent, shall be governed by and construed
in accordance with the laws of the State of New York.
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.
[remainder of this page intentionally left blank]
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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: KENNAMETAL INC.
By: /s/ Kevin G. Nowe By: /s/ David T. Cofer
-------------------------------- --------------------------------
Name: Kevin G. Nowe Name: David T. Cofer
Title: Assistant Secretary and Title: Vice President, Secretary
Assistant General Counsel and General Counsel
Attest: CHASEMELLON
SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
By: /s/ J.D. Curtin By: /s/ Lawrence J. Schweiger
-------------------------------- --------------------------------
Name: J.D. Curtin Name: Lawrence J. Schweiger
Title: Assistant Vice President Title: Assistant Vice President
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EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
[attached]
<PAGE> 70
Microfilm Number Filed with the Department of State on
------------ ------------
Entity Number
--------------- -------------------------------------------------
Secretary of the Commonwealth
AMENDED AND RESTATED
STATEMENT WITH RESPECT TO
SERIES ONE PREFERRED STOCK
OF
KENNAMETAL INC.
Pursuant to Section 1522 of the Business Corporation Law
of the Commonwealth of Pennsylvania
In compliance with the requirements of Section 1522(b) of the Business
Corporation Law of the Commonwealth of Pennsylvania (relating to statement with
respect to shares), the undersigned corporation, desiring to amend and restate
the designation and voting rights, preferences, limitations, and special rights,
if any, of a class or series of its shares, hereby states that:
1. The name of the corporation is Kennametal Inc. (the "Company").
2. Pursuant to the authority conferred upon the Board of Directors of
the Company by the Company's Articles of Incorporation, as amended, the Board of
Directors on October 26, 1990 created a series of Two Hundred Thousand shares of
Class A Preferred Stock designated as "Series One Preferred Stock," of which no
shares have been issued.
3. Pursuant to the authority conferred upon the Board of Directors by
the Company's Amended and Restated Articles of Incorporation, as amended, and
the Business Corporation Law, the Board of Directors on July 24, 2000 adopted
the following resolutions amending the Series One Preferred Stock:
RESOLVED that pursuant to the authority conferred upon the
Board of Directors by the Company's Amended and Restated Articles of
Incorporation, as amended, the designated amount of the Series One
Preferred Stock created by the Board of Directors on October 23, 1990,
and the relative rights and preferences of such series, are hereby
amended effective upon the close of business on November 2, 2000, to
read in their entirety as follows:
Section 1. Designation. The shares of such series shall be
designated as "Series One Preferred Stock" and the number of shares
constituting such series shall initially be Five Hundred Thousand
(500,000). Shares of this series shall be issued pursuant to the
exercise of rights to purchase Series One Preferred Stock distributed
to the holders of Capital Stock, par value $1.25 per share, of the
Corporation (the "Capital Stock").
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Section 2. Dividends and Distributions. Subject to the rights
and preferences of the holders of any shares of any series of Class A
Preferred Stock ranking senior as to dividends to this Series One
Preferred Stock, the holders of shares of Series One Preferred Stock,
in preference to the holders of Capital Stock and shares of stock
ranking junior as to dividends to the Series One Preferred Stock, shall
be entitled to receive, when and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends
payable in cash on the 15th day of September, December, March and June
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 One Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $25.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends plus 100 times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Capital
Stock, or a subdivision of the outstanding shares of Capital Stock (by
reclassification or otherwise), paid on the Capital Stock at any time
during the quarter year immediately preceding the quarter year ending
on the day immediately preceding such Quarterly Dividend Payment Date.
In the event the Corporation shall at any time after July 24, 2000 (the
"Rights Declaration Date") during any quarter year immediately
preceding the quarter year ending on the day immediately preceding a
Quarterly Dividend Payment Date (i) declare any dividend on Capital
Stock payable in shares of Capital Stock, or (ii) subdivide the
outstanding Capital Stock or combine the outstanding Capital Stock into
a greater or lesser number of shares of Capital Stock, then in each
such case the amounts to which holders of shares of Series One
Preferred Stock were entitled immediately prior to such event under
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 Capital Stock outstanding immediately after such event and
the denominator of which is the number of shares of Capital Stock that
were outstanding immediately prior to such event.
Dividends shall begin to accrue and be cumulative on
outstanding shares of Series One Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Series One Preferred Stock, 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 One 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 One 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 One
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than
30 days prior to the date fixed for the payment thereof.
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Section 3. Voting Rights.
(A) Each share of Series One Preferred Stock shall entitle the
holder thereof to 100 votes (and each one one-hundredth of a share of
Series One Preferred Stock shall entitle the holder thereof to one
vote) on all matters submitted to a vote of the stockholders of the
Corporation. In the event that the Corporation shall at any time
declare or pay any dividend on Capital Stock payable in shares of
Capital Stock or effect a subdivision or combination or consolidation
of the outstanding shares of Capital Stock (by reclassification or
otherwise than by payment of a dividend in shares of Capital Stock)
into a greater or lesser number of shares of Capital Stock, then and in
each such event, the number of votes per share to which holders of
shares of Series One Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Capital Stock
outstanding immediately after such event, and the denominator of which
is the number of shares of Capital Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by applicable law,
the holders of shares of Series One Preferred Stock and the holders of
shares of Capital Stock shall vote together as one class for the
election of directors of the Corporation and on all other matters
submitted to a vote of stockholders of the Corporation.
(C) Except as provided herein, or by applicable law, holders
of Series One Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Capital Stock as set forth herein) for
authorizing or taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series One Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series One Preferred Stock outstanding shall have been paid in full,
the Corporation 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 as to assets) to the Series One 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 as to assets) with the Series One
Preferred Stock, except dividends paid ratably on the Series
One 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;
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(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or as to assets) to the Series One Preferred Stock,
provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or as to assets) to the Series
One Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series One 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 One
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 Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
Paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series One
Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Class A Preferred Stock and
may be reissued as part of a new series of Class A 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 6. Liquidation, Dissolution or Winding Up. Subject to
the rights and preferences of the holders of any shares of any series
of Class A Preferred Stock ranking senior as to assets to this Series
One Preferred Stock, (A) upon any involuntary or voluntary liquidation,
dissolution or winding up of the Corporation, no distribution shall be
made to the holders of shares of stock ranking junior (either as to
dividends or as to assets) to the Series One Preferred Stock unless,
prior thereto, the holders of shares of Series One Preferred Stock
shall have received an amount per share equal to the Per Share Series
One Liquidation Preference. The Per Share Series One Liquidation
Preference shall be equal to the sum of (x) $100.00 plus an amount
equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, plus (y) the
Participation Preference. The "Participation Preference" is an amount
per each share of Series One Preferred Stock outstanding, equal to the
product of (A) the Excess Distribution Amount, as hereinafter defined
times (B) a fraction whose numerator is 100 and whose denominator is
the sum of (i) the product of 100 times the number of outstanding
shares of Series One Preferred Stock, plus (ii) the product of 100
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times a fraction whose numerator is the number of outstanding shares of
Capital Stock and whose denominator is the Adjustment Number; provided,
however, if the foregoing computation results in a negative number,
then the Participation Preference shall be 0. Following the payment of
the full amount of the Series One Liquidation Preference, holders of
shares of Capital Stock shall receive the remaining assets to be
distributed.
The "Excess Distribution Amount" is an amount equal to the
amount available for distribution to stockholders of the Corporation
after payment of all debts and liabilities less the sum of (i) the
liquidation preferences in respect of all shares of preferred stock of
the Corporation other than the Series One Preferred Stock, (ii) the
product of 100 times the number of outstanding shares of Series One
Preferred Stock, and (iii) the product of the number of outstanding
shares of Capital Stock times a fraction whose numerator is 100 and
whose denominator is the Adjustment Number.
(B) The Adjustment Number shall initially be 100 and shall be
subject to adjustment as provided in this subsection (B). In the event
the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Capital Stock payable in shares of Capital
Stock, (ii) subdivide the outstanding Capital Stock, or (iii) combine
the outstanding Capital 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 Capital
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Capital Stock that were outstanding
immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Capital 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 One 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 100 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 Capital Stock is changed or exchanged. In the event
the Corporation shall at any time (i) declare any dividend on Capital
Stock payable in shares of Capital Stock, or (ii) subdivide the
outstanding Capital Stock or combine the outstanding Capital Stock into
a greater or lesser number of shares of Capital 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 One Preferred Stock shall
be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Capital Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Capital Stock that were outstanding immediately prior to such event.
Section 8. Redemption. The outstanding shares of Series One
Preferred Stock may be redeemed at the option of the Board of Directors
as a whole, but not in part, at any time, or from time to time, at a
cash price per share equal to (i) the product of the Adjustment Number
times the Average Market Value, as such term is hereinafter defined,
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of the Capital Stock, plus (ii) all dividends which on the redemption
date have accrued on the shares to be redeemed and have not been paid
or declared and a sum sufficient for the payment thereof set apart,
without interest; provided, however, that if and whenever any
quarter-yearly dividend shall have accrued on the Series One Preferred
Stock which has not been paid or declared and a sum sufficient for the
payment thereof set apart, the Corporation may not purchase or
otherwise acquire any shares of Series One Preferred Stock unless all
shares of such stock at the time outstanding are so purchased or
otherwise acquired. The "Average Market Value" is the average of the
closing sale prices of the Capital Stock during the 30 day period
immediately preceding the date before the redemption date on the
Composite Tape for New York Stock Exchange-Listed Stocks, or, if such
stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on the
principal United States securities exchange registered under the
Securities Exchange Act of 1934, as amended, on which such stock is
listed, or, if such stock is not listed on any such exchange, the
average of the closing bid quotations with respect to a share of
Capital Stock during such 30-day period on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then
in use, or if no such quotations are available, the fair market value
of the Capital Stock as determined by the Board of Directors in good
faith.
Section 9. Fractional Shares. Series One Preferred Stock may
be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting
rights, if applicable, receive dividends, participate in distributions
and to have the benefit of all other rights of holders of Series One
Preferred Stock.
4. Said resolutions were adopted at a meeting of the Board of Directors
of the Company duly called and held on July 24, 2000, at which meeting a quorum
was present and acting throughout.
5. Said resolution shall be effective on the close of business on
November 2, 2000.
IN TESTIMONY WHEREOF, the undersigned corporation has caused this
statement to be signed by a duly authorized officer thereof this ___ day of
_______________, 2000.
KENNAMETAL INC.
By:
--------------------------------
Title:
-----------------------------
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<PAGE> 76
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
[attached]
<PAGE> 77
[Form of Rights Certificate]
Certificate No. Rights
------------ ----------------
NOT EXERCISABLE AFTER NOVEMBER 2, 2010 (UNLESS OTHERWISE EXTENDED) OR EARLIER IF
REDEEMED BY THE CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE CORPORATION, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. IF THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A PERSON
WHO IS AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON
OR A TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT.
RIGHTS CERTIFICATE
KENNAMETAL 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 effective November 2, 2000
("Rights Agreement") between Kennametal Inc., a Pennsylvania corporation (the
"Corporation"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey
limited liability company (the "Rights Agent"), to purchase from the Corporation
at any time after the Distribution Date (as that term is defined in the Rights
Agreement) and prior to the close of business on November 2, 2010 (unless
otherwise extended) (the "Final Expiration Date") at the principal office of the
Rights Agent, or its successors as Rights Agent, in Pittsburgh, Pennsylvania,
one one-hundredth (1/100) of a fully paid and nonassessable share of Series One
of Class A Preferred Stock, no par value per share ("Series One Preferred
Stock"), of the Corporation at a purchase price of $120 per one one-hundredth of
a share, as the same may from time to time be adjusted in accordance with the
Rights Agreement (the "Purchase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase duly executed.
As provided in the Rights Agreement, the Purchase Price and the number
of one one-hundredths of a share of Series One Preferred Stock which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events
and, upon the happening of certain events, securities other than shares of
Series One Preferred Stock, or other property, may be acquired upon exercise of
the Rights evidenced by this Rights Certificate, as provided by the Rights
Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof, and reference to the
Rights Agreement is made for a full description of the rights, limitations of
rights, obligations, duties and immunities of the Rights Agent, the corporation
and the holders of record of Rights Certificates. Copies of the Rights
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<PAGE> 78
Agreement are on file at the principal executive office of the Corporation.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the shareholder services office of the Rights Agent designated
for that purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase the same aggregate number of shares of Series One Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered entitled that holder to purchase. If this Rights Certificate is
exercised in part, the holder shall be entitled to receive, upon surrender
hereof, another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Corporation by action of the Board of
Directors at its option at a redemption price of $0.01 per Right at any time
prior to the earlier of the close of business on (i) the tenth day following the
Stock Acquisition Date (as that term is defined in the Rights Agreement) and
(ii) the Final Expiration Date.
No fractional shares of Series One Preferred Stock or other securities
of the Corporation are required to be issued upon the exercise of any Right or
Rights evidenced hereby, and in lieu thereof, as provided in the Rights
Agreement, a cash payment may be made.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Series One
Preferred Stock or of any other securities of the Corporation which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Corporation or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to receive notice of meetings or other actions affecting
shareholders or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal. Dated as of _______________ _____, 2000.
ATTEST: KENNAMETAL INC.
By:
----------------------------------- --------------------------------
Title:
-----------------------------
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Rights Agent
By:
--------------------------------
Authorized Signature
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<PAGE> 79
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if that holder desires
to transfer the Rights represented by the Rights Certificate)
FOR VALUE RECEIVED, _____________________________ hereby sells, assigns
and transfers unto _____________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
Rights evidenced by this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
___________________________ as Attorney to transfer this Rights Certificate on
the books of Kennametal Inc., with full power of substitution.
Date: .
-----------------------------------
--------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as those terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate
from a Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or any transferee of such Persons.
Date: .
-----------------------------------
--------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of this Rights Certificate in every particular, without
alteration, enlargement or any other change.
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<PAGE> 80
[Form of]
ELECTION TO PURCHASE
(To be executed by the registered holder if that holder desires
to exercise the Rights represented by the Rights Certificate)
To: Kennametal Inc.
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Rights Certificate to purchase the shares of Series
One Preferred Stock issuable upon the exercise of those Rights and requests that
certificates for those share(s) be issued in the name:
----------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------
----------------------------------------------------------------
(Please insert Social Security or other identifying number)
If the number of Rights exercised does not constitute all of the Rights
evidenced by this Rights Certificate, a new Rights Certificate for the balance
of Rights remaining shall be registered in the name of and delivered to:
----------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------
----------------------------------------------------------------
(Please insert Social Security or other identifying number)
Dated: .
----------------------------------- --------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Rights Certificate)
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as those
terms are defined pursuant to the Rights Agreement);
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<PAGE> 81
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or any transferee of such
Persons.
Dated: .
----------------------------------- --------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Rights Certificate)
Signature Guaranteed:
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<PAGE> 82
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
[attached]
<PAGE> 83
KENNAMETAL INC.
SUMMARY OF PREFERRED STOCK
PURCHASE RIGHTS
On July 24, 2000, the Board of Directors of Kennametal Inc. (the
"Corporation") declared a distribution of one Preferred Stock Purchase Right
(the "Rights") for each outstanding share of Capital Stock, $1.25 par value (the
"Capital Stock"), of the Corporation. The distribution is payable to the
shareowners of record at the close of business on September 5, 2000 (the "Record
Date") and the Rights are effective as of the close of business on November 2,
2000. Except as set forth below, each Right, when exercisable, entitles the
registered holder to purchase from the Corporation one one-hundredth of a share
of Class A Preferred Stock designated as Series One Preferred Stock, without par
value (the "Preferred Stock"), at a price of $120 per one one-hundredth of a
share (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Corporation and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (the "Rights Agent").
Initially, the Rights will be attached to all Capital Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Until the earlier of (i) ten days following
(a) a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to acquire,
20% or more of the outstanding shares of Capital Stock of the Corporation (the
"Stock Acquisition Date") or (b) the Record Date if the tenth day after the
Stock Acquisition Date occurs before the Record Date, (ii) ten business days
following the commencement or announcement of an intention to make a tender
offer or exchange offer which would result in ownership of 20% or more of the
outstanding shares of the Capital Stock, (iii) the close of business on the date
on which a Triggering Event (as hereinafter defined) occurs, or (iv) the close
of business on the tenth day after any person becomes a Controlling Person as
that term is defined in Section 2543 of the Pennsylvania Business Corporation
Law of 1988 (the earliest of the dates in clause (i), (ii), (iii) or (iv) above
being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Corporation's Capital Stock certificates outstanding as of
and after the Record Date, by such Capital Stock certificates. The Rights
Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Corporation's Capital Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Capital Stock certificates issued after the Record Date, upon transfer, new
issuance or issuances from the Corporation's treasury of the Corporation's
Capital 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 of the Corporation's Capital
Stock certificates outstanding as of and after the Record Date will also
constitute the transfer of the Rights associated with the Capital Stock
represented by such certificate except for the transfer of Capital Stock
certificates (i) from an Acquiring Person (ii) from a person who subsequently
becomes an Acquiring Person if such transfer is 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 Rights; or
(iii) in any transaction which the Board deems to have as a primary purpose or
effect the transactions prohibited by clauses (i) and (ii) of this sentence. As
soon as practicable following the Distribution Date, separate certificates
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evidencing the Rights (the "Rights Certificates") will be mailed to holders of
record of the Corporation's Capital Stock as of the close of business on the
Distribution Date and such separate certificates alone will then evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on November 2, 2010 (the "Final Expiration Date"), unless earlier
redeemed by the Corporation (as described below) or otherwise extended.
The Purchase Price payable, and the number of shares 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 distribution to holders of Preferred Stock of the
rights or warrants to subscribe for shares of Preferred Stock or securities
convertible into Preferred Stock at less than the then current market price of
the Preferred Stock, or (iii) upon the distribution to holders of Preferred
Stock of evidences of indebtedness, cash (excluding regular periodic cash
dividends), assets or subscription rights or warrants (other than those referred
to above).
In the event that, following the Distribution Date, the Corporation is
acquired in a merger or other business combination transaction in which the
Corporation is not the surviving corporation or in which the Capital Stock is
exchanged or changed or 50% or more of the Corporation's assets or earning power
is sold (in one transaction or a series of transactions), proper provision shall
be made so that each holder of a Right shall thereafter have the right to
receive, upon the exercise of the Right and payment of the Purchase Price, that
number of shares of common stock of the surviving or purchasing company (or, in
certain cases, one of its affiliates) which at the time of such transaction
would have a market value of two times the Purchase Price.
In the event that any person shall acquire shares representing 20% of
the voting power of all outstanding shares of the Corporation, proper provision
shall be made so that each holder of a Right will thereafter have the right to
receive upon exercise that number of shares (or fractional shares) of Capital
Stock having a market value of two times the exercise price of the Right,
subject to the availability of a sufficient number of treasury shares or
authorized but unissued shares. This event, together with the event described in
the immediately preceding paragraph, are referred to as the "Triggering Events."
Any Rights that are beneficially owned by an Acquiring Person or an
affiliate or an associate of an Acquiring Person will become null and void upon
the occurrence of a Triggering Event and any holder of such Rights will have no
right to exercise such Rights from and after the occurrence of such an event.
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares are required to be issued. In lieu of
fractional shares, an adjustment in cash may be made based on the market price
of the Capital Stock.
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<PAGE> 85
At any time prior to the earlier of (i) the tenth day following the
Stock Acquisition Date (or the Record Date if the tenth day after the Stock
Acquisition Date occurs before the Record Date) or (ii) the Final Expiration
Date, the Corporation may elect to redeem the Rights in whole, but not in part,
at a price of $0.01 per Right. Under certain circumstances set forth in the
Rights Agreement, the decision to redeem shall require the concurrence of a
majority of the Disinterested Directors, as that term is defined in the Rights
Agreement. Immediately upon the action of the Board of Directors electing to
redeem the Rights, with, where required, the concurrence of the Disinterested
Directors, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the redemption price.
The Preferred Stock purchasable upon exercise of the Rights will have a
preferential quarterly dividend in an amount equal to the greater of $25.00 or
100 times any dividend declared on each share of Capital Stock. In the event of
liquidation, the holders of Preferred Stock will receive a preferred liquidation
payment per share of $100 plus the sum of (a) all accrued and unpaid dividends
and distribution plus (b) the Participation Preference, as that term is defined
in the Rights Agreement. Each Preferred Share will have 100 votes, voting
together with the Capital Stock. In the event of any merger, consolidation or
other transaction in which shares of Capital Stock are exchanged, each share of
Preferred Stock will be entitled to receive 100 times the amount and type of
consideration received per share of Capital Stock. No fractional shares of
Preferred Stock are required to be issued. In lieu of fractional shares, an
adjustment in cash may be made based on the market price of the Preferred Stock.
In general, the terms of the Rights may be amended by the Board of
Directors of the Corporation without the consent of the holders of the Rights,
except that from and after the Distribution Date, the Rights Agreement permits
only limited amendments (in certain circumstances, with the concurrence of the
Disinterested Directors) and no such amendment may adversely affect the
interests of the holders of the Rights (other than the Acquiring Person and its
Affiliates and Associates).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareowner of the Corporation, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A under
the Securities Exchange Act of 1934, as amended. A copy of the Rights Agreement
is available to shareowners of the Corporation free of charge from the
Corporation. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement.
C-3
