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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): December 15, 1998
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Scott Technologies, Inc.
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(Exact name of registrant specified in Charter)
Delaware 1-8591 52-1297376
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(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
5875 Landerbrook Drive, Suite 250, Mayfield Heights, Ohio 44124
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(Address of principal executive offices) Zip Code
REGISTRANT'S TELEPHONE, INCLUDING AREA CODE: (440) 446-1333
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(Former name and former address, if changed since last report)
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Item 5. OTHER EVENTS.
ADOPTION OF AMENDMENTS TO THE COMPANY'S CHARTER, BYLAWS AND EMPLOYEE STOCK
OPTION PLAN.
On September 23, 1998, the Board of Directors of Scott Technologies,
Inc. (the "Company") unanimously approved and recommended approval by the
Company's stockholders (except that N. Colin Lind recused himself from action
on the "substantial stockholder" proposal because he served on the Board of
Directors as the designee of Richard C. Blum & Associates, L.P., a substantial
stockholder of the Company) of the following five proposals: (1) adoption of a
restructuring plan under which Article Fourth of the Company's Amended
and Restated Certificate of Incorporation (the "Charter") would be amended
to eliminate the Company's dual class capital structure and to provide,
instead, for a single, new class of common stock designated as "Common Stock,"
par value $.10 per share (the "Common Stock"), consisting of 36,000,000 shares
of Common Stock authorized for issuance, with each share entitled to one vote,
thereby effecting the reclassification and conversion of each share of Class A
Common Stock and each share of Class B Common Stock as and into one share of
Common Stock; (2) amendment of Article Sixth of the Charter, along with other
conforming amendments to the Charter, to eliminate the voting limitations
imposed generally upon any stockholder who beneficially owns more than 20% of
the outstanding voting shares of any class of stock; (3) amendment of Article
Fourth of the Charter to eliminate certain unnecessary provisions regarding
previously outstanding shares of preference stock and the terms of convertible
and redeemable stock; (4) amendment of Section 2 of Article 2 of the Company's
bylaws to lengthen the notice period before a stockholders' meeting for the
nomination of directors by stockholders; and (5) amendment of the Key
Employees' Stock Option Plan (the "Option Plan") to increase the number of
shares authorized for issuance under the Option Plan from 1,500,000 shares to
3,000,000 shares and to revise certain other provisions of the Option Plan.
At a special meeting held on December 15, 1998, the stockholders of the
Company approved the five proposals and approved the filing of a restated
Charter to reflect the Charter amendments. An amended and restated Charter was
filed with the Secretary of State of the State of Delaware and became effective
as of December 15, 1998.
DESCRIPTION OF CAPITAL STOCK.
This description of capital stock amends, updates, combines and
supersedes the description of "common stock" (Class B) contained in the Form 8-B
filed on October 19, 1983 and the description of "special common stock" (Class
A) contained in the Form 8-A filed on November 27, 1985. The Charter and
Certificate of Designations, Preferences, Related Rights, Qualifications,
Limitations and Restrictions of Series A Junior Participating Preferred Shares
are being filed with the Securities and Exchange Commission as Exhibits to this
Form 8-K.
The Company's authorized capital stock consists of 36,000,000 shares of
Common Stock and 3,217,495 shares of preference stock, par value
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$1.00 per share (the "Preference Stock"). No stockholder has any preemptive
right to subscribe for additional shares of capital stock.
Common Stock
The holders of Common Stock are entitled to one vote for each share
held by them for the election of directors and for all other purposes. They are
entitled to receive such dividends as may be legally declared by the Board of
Directors. In any event of liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share in the assets
available for distribution after the rights of the holders of Preference Stock,
if any, and creditors have been satisfied.
The Company's Common Stock trades on the Nasdaq National Market under
the symbol "SCTT." National City Bank is the transfer agent and registrar for
the Common Stock.
Preference Stock
The Company's Charter authorizes the Board of Directors (without
stockholder approval) to issue shares of Preference Stock from time to time in
one or more series, each series to have such designations, preferences, related
rights, qualifications, limitations or restrictions as may be determined by the
Board of Directors. The ability of the Board of Directors to issue shares of
Preference Stock, while providing flexibility in connection with acquisitions
and other corporate purposes, could have the effect of making it more difficult
for a third party to acquire, or discourage a third party from acquiring, a
majority of the outstanding share of voting stock of the Company.
On December 15, 1998, the Company established a series of Preference
Stock, Series A Junior Participating Preferred Shares (the "Preferred Shares"),
consisting of 500,000 shares. The Preferred Shares may be issued to holders of
Common Stock upon the exercise of purchase rights that, on December 15, 1998,
were declared as a dividend to holders of Common Stock as of December 28, 1998
upon the Board's adoption of a Stockholder Rights Plan. (See below). The
Preferred Shares will be senior to the Common Stock with respect to payment of
dividends and the distribution of assets, but will rank junior to any other
series of Preference Stock unless the terms of such other series of Preference
Stock provides otherwise.
The holders of Preferred Shares will be entitled to 100 votes per share
on all matters submitted to a vote of the stockholders of the Company. In the
event that dividends upon the Preferred Shares are in arrears in an amount equal
to six full quarterly dividends, the holders of the Preferred Shares will become
entitled to vote, separately as a class, for the election of two directors. Such
special voting rights will continue until all accumulated and unpaid dividends
have been paid or sufficient funds for such payment have been set aside.
Cumulative preferential dividends will be payable quarterly, at a
quarterly rate equal to the greater of (a) $15.00 or (b) 100 times the aggregate
per share amount of all cash dividends, and 100
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times the aggregate per share amount of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock, declared
on the Common Stock since the immediately preceding quarterly dividend payment
date, or, with respect to the first such payment date, since the first issuance
of any share or fraction of a share of the Preferred Shares.
The liquidation preference of the Preferred Shares will be the greater
of (a) $40.00 per share, plus accrued dividends to the date of distribution,
whether or not earned or declared, or (b) an amount per share, subject to
adjustment, equal to 100 times the aggregate amount to be distributed per share
to holders of Common Stock. In case the Company enters into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, the Preferred Shares will at the same time be similarly exchanged or
changed in an amount per share equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property into which or for which each share of
Common Stock is changed or exchanged.
The Preferred Shares will not be redeemable. The holders of Preferred
Shares will have anti-dilution protection against stock splits, stock dividends,
and the combination of the outstanding shares of Common Stock into a smaller
number of shares.
Stockholder Rights Plan.
On September 23, 1998, the Board of Directors of the Company approved,
contingent upon stockholder approval of amendments to the Charter eliminating
the Company's dual class common stock structure and the substantial stockholder
provision, a stockholder rights plan in the form of a rights agreement dated as
of the date of the effectiveness of the Charter amendments (the "Rights
Agreement"). On December 15, 1998, the Board of Directors approved the Rights
Agreement and, in connection therewith, declared a dividend distribution of one
Right for each outstanding share of the Company's Common Stock, par value $.10
per share (each, a "Common Share"), to stockholders of record at the close of
business on December 28, 1998 (the "Record Date"). Each Right will entitle the
registered holder to purchase from the Company one one-hundredth (1/100) of a
share (a "Preferred Share Fraction") of the Series A Junior Participating
Preferred Shares, par value $1.00 per share (the "Preferred Shares"), or a
combination of securities and assets of equivalent value, at a per unit,
adjustable Purchase Price of $35. The description and terms of the Rights are
set forth in the Rights Agreement.
Initially, ownership of the Rights will be evidenced by the Common
Share certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Shares on the "Distribution Date," the earlier of (i) ten (10) business days
following a determination by the Board of Directors that a person or group of
affiliated or asso-
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ciated persons (an "Acquiring Person"1/) has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding Common Shares
(the "Stock Acquisition Date"), or (ii) ten (10) business days following the
commencement of a tender offer or exchange offer that will result in a person or
group beneficially owning 15% or more of the outstanding Common Shares. Until
the Distribution Date, (i) the Rights will be evidenced by the Common Share
certificates, (ii) new Common Share certificates issued after the Record Date
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Shares
outstanding will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate.
The Rights will not be exercisable until the Distribution Date and will
expire at the close of business on December 28, 2003 (or, subject to Section 27
of the Rights Agreement, such later date that would be no more than five years
thereafter UNLESS, prior to such date, (A) a majority of the members of the
Board of Directors has voted to amend the Rights Agreement to extend the
effectiveness of the Rights Agreement for an additional five-year period and to
provide for a new Purchase Price, AND (B) such extension has been submitted to a
vote of the stockholders of the Company and such extension has not been rejected
by a negative vote of a majority of a quorum of the votes of stockholders who
are then eligible to vote on such a matter) or unless earlier redeemed by the
Company as described below or unless a transaction under Section 13(d) of the
Rights Agreement has occurred.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Shares as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only Common Shares issued after the Record Date and
prior to the Distribution Date will be issued with Rights.
Except in the circumstances described below, after the Distribution
Date each Right will be exercisable for a Preferred Share Fraction. Each
Preferred Share Fraction will carry voting and dividend rights that are
intended to produce the equivalent of one Common Share. The voting and dividend
rights of the Preferred Shares will be subject to adjustment in the event of
dividends, subdivisions and combinations with respect to the Common Shares of
the Company. In lieu of issuing certificates for Preferred Share Fractions that
are less than an integral multiple of one Preferred Share (i.e., 100 Preferred
Share Fractions), the Company will pay cash representing the current market
value of the Preferred Share Fractions.
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1/ Common Shares continuously owned by holders of more than 5% of the
Company's outstanding shares of Class A Common Stock or Class B Common
Stock since September 23, 1998 will be excluded from future calculations of
their share ownership for the purposes of determining whether any such
person has become an Acquiring Person provided that, prior to December 15,
1998, each such person entered into an agreement with the Company in which
such person certified to the Company such person's stock ownership as of
September 23, 1998 and agreed, among other things, not to enter into a
proxy contest with the Company or seek to acquire the Company in a hostile
takeover.
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In the event that, at any time following the Stock Acquisition Date, a
Person becomes an Acquiring Person other than pursuant to a tender offer or
exchange offer that provides fair value to all stockholders and therefore has
been deemed to be a "Qualifying Offer," each holder of a Right will thereafter
have the right to receive, upon exercise, Common Shares (or, in certain
circumstances, cash, property or other securities of the Company) having a value
equal to two times the exercise price of the Right. In lieu of requiring payment
of the Purchase Price upon exercise of the Rights following any such event, the
Company may permit the holders simply to surrender the Rights, in which event
they will be entitled to receive Common Shares (and other property, as the case
may be) with a value of 50% of what could be purchased by payment of the full
Purchase Price. Notwithstanding any of the foregoing, following the occurrence
of an event described in the first sentence of this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) have
been, beneficially owned by any Acquiring Person who was involved in the
transaction giving rise to any such event, will be null and void. However,
Rights will not be exercisable following the occurrence of any of the events
set forth above until such time as the Rights are no longer redeemable by the
Company as set forth below.
For example, at a Purchase Price of $35 per Right, each Right not
otherwise voided following an event set forth in the preceding paragraph will
entitle its holder to purchase $70 worth of Common Shares (or other
consideration, as noted above) for $35. Assuming that the Common Shares have a
per share value of $10 at such time, the holder of each valid Right will be
entitled to purchase seven Common Shares for $35. Alternatively, the Company may
permit the holder to surrender each Right in exchange for three and a half
Common Shares (with a value of $35) without the payment of any consideration
other than the surrender of the Right.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation (other than a
merger that is described in or that follows a Qualifying Offer), or (ii) 50% or
more of the Company's assets or earning power are sold or transferred, each
holder of a Right (except Rights that previously have been voided as set forth
above) will thereafter have the right to receive, upon exercise, common shares
of the acquiring company having a value equal to two times the exercise price of
the Right. Again, provision may be made to permit surrender of the Rights in
exchange for one-half of the value otherwise purchasable. The events set forth
in this paragraph and in the second preceding paragraph are referred to as the
"Triggering Events."
The Purchase Price payable, and the number of Preferred Share Fractions
or other securities or property issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) if holders of the Preferred Shares are granted certain rights or
warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly dividends) or of subscription rights or
warrants (other than those referred to above).
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With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No Preferred Share Fractions will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of the exercise.
At any time until ten (10) days following the Stock Acquisition Date,
the Company can redeem the Rights in whole, but not in part, at a price of $.001
per Right. That ten (10) day redemption period can be extended by the Board of
Directors so long as the Rights are still redeemable. Immediately upon the
action of the Board of Directors ordering redemption of the Rights, the Rights
will terminate and the only right of the holders of Rights will be to receive
the $.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Preferred Shares (or Common Shares or other consideration) of
the Company or for common shares of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement can be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement can be amended by the
Board of Directors in order to cure any ambiguity, to make changes that do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; PROVIDED, however, that no amendment to adjust the time period
governing redemption can be made at such time as the Rights are not redeemable.
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to this Form 8-K. A copy of the Rights
Agreement also is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is incorporated herein
by reference.
Anti-Takeover Provisions of the Charter and the Bylaws.
1. Supermajority Vote for Transactions with Related Parties --
Section(b)(1) of Article Sixth of the Charter. This provision requires the
affirmative vote of 80% of the votes that are entitled to be cast (the
"eligible votes"), to approve a merger with, a transfer of all or
substantially all of the assets to and certain other transactions with any
related company or affiliate or associated person thereof (collectively, the
"Related Person"), provided a stockholder vote on the transaction would be
required under Ohio law. Ohio law
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requires stockholder approval of a merger with, or a transfer of all or
substantially all of the assets to, any person. In addition, Ohio law requires
stockholder approval of business combinations and certain transactions with
holders of 10% or more of the voting power of a company's shares, except under
certain circumstances. Section (b)(1) of Article Sixth of the Charter was
designed to ensure that a Related Person cannot determine the result of a
stockholder vote on a merger or other corporate transaction without offering to
the minority stockholders terms sufficient to induce 80% of the eligible votes
to approve the transactions. An amendment of this provision would require
approval of 80% of the eligible votes.
2. Minimum Price and Prohibited Transactions -- Section (b)(2) of
Article Sixth of the Charter. The minimum price provision requires a Related
Person which receives the requisite approval to complete a transaction with the
Company to pay a stockholder who does not affirmatively vote for the transaction
a price per share equal to not less than the highest price per share paid by the
Related Person (or, if the Related Person did not buy shares of the same class
held by the stockholder, the highest market price of the shares of the class
held by the stockholder on any day on which the Related Person did purchase
shares), plus the excess of such price over the lower of the market price per
share immediately prior to the purchases of such stock by the Related Person or
the lowest price per share paid by the Related Person (or, if the Related Person
did not buy shares of the same class held by the stockholder, the lowest market
price on any day on which the Related Person did purchase shares). The
prohibited transaction provision prohibits a merger with, transfer of assets to
and certain other transactions with a Related Person which, after becoming a
Related Person: acquired shares from the Company, except upon conversion or
pursuant to a dividend or stock split; received loans or other financial
assistance from the Company; was responsible for any material change in the
Company's business, equity capital structure or dividend practices; or was
responsible for any change in the Charter or Bylaws or membership of the Board
or committees thereof.
These provisions were designed to ensure that any takeover offer will
be presented first to the Board so that it may negotiate the best possible terms
in the interests of the Company and all of its stockholders. The prohibited
transaction provision is intended to prohibit a Related Person from engaging in
activities with, or relating to, the Company which could adversely affect the
fairness of the price paid to the stockholders in a transaction between the
Related Person and the Company. These provisions do not apply to a transaction
that a majority of the whole Board (the number of directors if there were no
vacancy) approves by a two-thirds vote, provided a majority of the directors
acting on such matter consists of continuing directors. An amendment of these
provisions would require the affirmative vote of 95% of the eligible votes.
3. Board Evaluation of a Proposed Transaction -- Section (b) of Article
Sixth of the Charter. This provision permits the Board to take into account the
following factors when evaluating whether a merger, a sale of substantially all
of the assets and certain other transactions are in the best interests of the
Company: the best interests of all stockholders, taking into account the
consideration being offered not only in relation to the current market price but
also in relation to the Board's estimate of the future value of the Company as
an independent entity; and such other factors
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as it determines to be relevant, including the social, legal, and economic
effects of the transaction on the employees, suppliers, customers and business
of the Company.
This provision is intended to provide the Board the flexibility to
consider any appropriate factors in evaluating a transaction. An amendment of
this provision would require the affirmative vote of 80% of the eligible votes,
unless two-thirds of the whole Board approve the amendment and a majority of the
directors acting on the amendment consists of continuing directors.
4. Appraisal Rights -- Section (d) of Article Sixth of the Charter.
This provision provides appraisal rights for holders of the Company's voting
shares in connection with stockholder votes on any amendments to the Charter,
mergers, consolidations and sales of all or substantially all of the assets of
the Company, unless two-thirds of the whole Board approve the amendment or the
transaction and a majority of the directors acting on the matter consists of
continuing directors. This provision is designed to ensure fair treatment of
minority stockholders in a second-stage merger or other transaction. An
amendment of this provision would require the affirmative vote of 80% of the
eligible votes, unless two-thirds of the whole Board approve the amendment and a
majority of the directors acting on the amendment consists of continuing
directors.
5. Limitation on Action by Written Consent -- Article Fifth of the
Charter. Article Fifth provides that stockholders may act by written consent
only if such consent is unanimous, unless the action has been recommended to the
stockholders by two-thirds of the whole Board and a majority of the directors
making the recommendation consists of continuing directors. This provision is
intended to preclude a person other than the Board from avoiding the delay
related to the holding of a meeting of stockholders by obtaining the consent of
a majority of the votes of the stockholders. An amendment of this provision
would require the affirmative vote of 80% of the eligible votes, unless
two-thirds of the whole Board approve the amendment and a majority of the
directors acting on the amendment consists of continuing directors.
6. Limitation on Right to Call Special Meeting -- Section 1(b) of
Article I of the Bylaws. Section 1(b) of Article I of the Bylaws prohibits a
stockholder from calling a special meeting. The DGCL does not provide
stockholders with the right to call a special meeting unless such right is
otherwise provided by the company. An amendment of this provision would require
the affirmative vote of 80% of the eligible votes, unless two-thirds of the
whole Board approve the amendment and a majority of the directors acting on the
amendment consists of continuing directors.
7. Board Structure -- Sections 2(a) and (b) and Section 3 of Article II
of the Bylaws. Sections 2(a) and (b) and Section 3 of Article II of the Bylaws
provide for a classified Board consisting of not less than five nor more than
11 directors divided into three classes, each of which must be as nearly equal
to one-third of the total number of directors as possible and one of which is
elected each year to a three-year term. Section 3 of Article II of the Bylaws
also provides that directors may only be removed for cause, and describes
procedures for and the effects of resignations from the Board and the effects of
vacancies on the Board. These provisions make it more difficult for a raider to
seize control of the Company immediately, because only one of the three classes
of
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directors stands for election in any one year and directors may only be removed
for cause. An amendment of this provision would require the affirmative vote of
80% of the eligible votes, unless two-thirds of the whole Board approve the
amendment and a majority of the directors acting on the amendment consists of
continuing directors.
8. Stockholder Nomination of Directors -- Section 2(c) of Article II of
the Bylaws. Section 2(c) of Article II of the Bylaws requires a stockholder to
notify the Company at least 45 days prior to the anniversary of the mailing date
of the Company's proxy statement for its prior annual meeting of the
stockholder's intent to nominate an individual for addition to the Board. This
provision is designed to provide the Board with enough time to formulate its
views with respect to a stockholder's nominee prior to the stockholder's meeting
at which the nominee was to be nominated. The provision may impede an attempt to
take control of the board of directors and inhibit stockholders from
participating in the nomination process even if they have no intention of
controlling the Company.
9. Provisions Requiring A Supermajority Vote for Amendment -- Article
Eighth of the Charter. Article Eighth of the Charter provides that 80% of the
eligible votes of the Company must approve any amendment to the provisions of
the Charter described above in items 3, 4 and 5, Article Eighth itself and the
provisions of the Bylaws described above in items 6, 7, and 8. This provision
makes more difficult the repeal or amendment of the Company's anti-takeover
provisions. The supermajority vote is not required, however, if two-thirds of
the whole Board approve the amendment and a majority of the directors acting on
the amendment consists of continuing directors.
Statutory Business Continuation Provision.
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Section 203 provides, with certain
exceptions, that a Delaware corporation may not engage in any of a broad range
of business combinations with a person or an affiliate, or associate of such
person, who is an "interested stockholder" for a period of three years from the
date that such person became an interested stockholder unless: (i) the
transaction resulting in a person becoming an interested stockholder, or the
business combination, is approved by the board of directors of the corporation
before the person becomes an interested stockholder, (ii) the interested
stockholder acquired 85% or more of the outstanding voting stock of the
corporation in the same transaction that makes such person an interested
stockholder (excluding shares owned by persons who are both officers and
directors of the corporation, and shares held by certain employee stock
ownership plans); or (iii) on or after the date the person becomes an interested
stockholder, the business combination is approved by the corporation's board of
directors and by the holders of at least 66 2/3% of the corporation's
outstanding voting stock at an annual or special meeting, excluding shares owned
by the interested stockholder. Under Section 203, an "interested stockholder" is
defined as any person, who is: (i) the owner of 15% or more of the outstanding
voting stock of the corporation; or (ii) an affiliate or associate of the
corporation if such affiliate or associate was the owner of 15% or more of the
outstanding voting stock of the corporation at any
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time within the three-year period immediately prior to the date on which it is
sought to be determined whether such person is an interested stockholder.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits.
Exhibit No. Exhibit
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3.1 Amended and Restated Certificate of Incorporation.
3.1.1 Certificate of Designations, Preferences, Related Rights,
Qualifications, Limitations and Restrictions of Series A
Junior Participating Preferred Shares.
3.2 Amended and Restated Bylaws.
4 Rights Agreement, dated as of December 15, 1998, between Scott
Technologies, Inc. and National City Bank, as Rights Agent.
10 Amended and Restated Scott Technologies, Inc. Key Employees'
Stock Option Plan.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SCOTT TECHNOLOGIES, INC.
By: /s/ Glen W. Lindemann
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Name: Glen W. Lindemann
Title: President and Chief Executive Officer
Dated: December 22, 1998
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Index of Exhibits
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Exhibit No. Exhibit
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3.1 Amended and Restated Certificate of Incorporation.
3.1.1 Certificate of Designations, Preferences, Related Rights,
Qualifications, Limitations and Restrictions of Series A
Junior Participating Preferred Shares.
3.2 Amended and Restated Bylaws.
4 Rights Agreement, dated as of December 15, 1998, between Scott
Technologies, Inc. and National City Bank, as Rights Agent.
10 Amended and Restated Scott Technologies, Inc. Key Employees'
Stock Option Plan.
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Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SCOTT TECHNOLOGIES, INC.
Pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware
SCOTT TECHNOLOGIES, INC., a corporation organized and existing under
the General Corporation Law of the State of Delaware, does hereby certify:
1. The name of the corporation is Scott Technologies, Inc. (the
"Corporation"). The Corporation was originally incorporated under the name
Figgie International Holdings Inc. on May 11, 1983.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Restated Certificate of Incorporation was duly
adopted and hereby restates and integrates and further amends the provisions of
the Amended and Restated Certificate of Incorporation of this Corporation as
follows:
ARTICLE FIRST: The name of the Corporation is Scott Technologies, Inc.
(hereinafter the "Corporation").
ARTICLE SECOND: The registered office of the Corporation is to be
located at the Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, in the County of New Castle, in the State of Delaware. The name of
its registered agent at that address is The Corporation Trust Company.
ARTICLE THIRD: The purpose or purposes for which the Corporation is
formed are:
(a) to manufacture, purchase or otherwise acquire, hold, own,
use, mortgage, sell, lease, pledge, assign, exchange or otherwise
dispose of merchandise and property of any and every class or
description;
(b) to acquire all or any part of the good will, rights,
property and business of any corporation, association, partnership,
firm, trustee, syndicate, combination, organization, person or entity,
domestic or foreign, heretofore or hereafter engaged in any business
and to pay for the same in cash or in shares or obligations of the
Corporation or otherwise, and to hold, utilize, enjoy, and in any
manner dispose of the whole or any part of the rights and property so
acquired in the State of Delaware or any other state, territory or
country, provided such business is not prohibited by the laws of the
State of Delaware;
<PAGE> 2
(c) to guarantee the obligations of and to aid in any manner
any corporation, association, firm or individual, in which, or in the
welfare of which, the Corporation shall have any interest, direct or
indirect, and to aid or participate in the reorganization,
consolidation or merger of any corporation, association or firm in
which, or in the welfare of which, the Corporation shall have any
interest; and
(d) to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of
Delaware.
Each purpose specified in any clause or paragraph of this Article is an
independent purpose and shall not be limited by reference to or inference from
the terms of any other clause or paragraph of this Certificate of Incorporation.
ARTICLE FOURTH: The number of shares which the Corporation is
authorized to issue is thirty-nine million two hundred seventeen thousand four
hundred and ninety-five (39,217,495), of which shares
(a) three million two hundred seventeen thousand four hundred
and ninety-five (3,217,495) shall be preferred stock designated as
Preference Stock with a par value of one dollar ($1.00) per share
(hereinafter called the "Preference Stock"); and
(b) thirty-six million (36,000,000) shall be common stock
designated as Common Stock with a par value of ten cents ($.10) per
share (hereinafter called the "Common Stock").
The terms of each class of stock are set forth in the following
Divisions.
DIVISION I
The terms of the Preference Stock are as follows:
(A) Authority of Board of Directors to Create Series. The Board of
Directors of the Corporation is hereby expressly granted authority, to the full
extent now or hereafter permitted herein and by the laws of the State of
Delaware, at any time or from time to time, by resolution or resolutions, to
create one or more series of the Preference Stock, to fix the authorized number
of shares of any series (which number of shares may vary as between series and
be changed from time to time by like action), and to fix the terms of such
series, including but not limited to, the following:
(1) the designation of such series, which may be by
distinguishing number, letter, or title;
<PAGE> 3
(2) the rate or rates at which shares of such series shall be
entitled to receive dividends, the periods in respect of which
dividends are payable, the conditions upon, and times of payment of,
such dividends, the relationship and preference, if any, of such
dividends to dividends payable on any other class or classes or any
other series of stock, whether such dividends shall be cumulative and,
if cumulative, the date or dates from which such dividends shall
accumulate, and the other terms and conditions applicable to dividends
upon shares of such series;
(3) the rights of the holders of the shares of such series in
case the Corporation be liquidated, dissolved, or wound up (which may
vary depending upon the time, manner, or voluntary or involuntary
nature or other circumstances of such liquidation, dissolution, or
winding up) and the relationship and preference, if any, of such rights
to rights of holders of shares of stock of any other class or classes
or any other series of stock;
(4) the right, if any, to redeem shares of such series at the
option of the Corporation, including any limitation of such right, and
the amount or amounts to be payable in respect of the shares of such
series in case of such redemption, and the manner, effect, and other
terms and conditions of any such redemption thereof;
(5) the obligation, if any, of the Corporation to purchase,
redeem, or retire shares of such series and/or to maintain a fund for
such purpose, and the amount or amounts to be payable from time to time
for such purpose or into such fund, or the number of shares to be
purchased, redeemed or retired, the per share purchase price or prices,
and the other terms and conditions of any such obligation or
obligations;
(6) the voting rights, if any, full, special, or limited, to
be given the shares of such series, including without limiting the
generality of the foregoing, the right, if any, as a series or in
conjunction with other series or classes, to elect one or more members
of the Board of Directors either generally or at certain times or under
certain circumstances, and restrictions, if any, on particular
corporate acts without a specified vote or consent of holders of such
shares (such as, among others, restrictions on modifying the terms of
such series or of the Preference Stock, restricting the permissible
terms of other series or the permissible variations between series of
the Preference Stock, authorizing or issuing additional shares of the
Preference Stock, creating debt, or creating any class of stock ranking
prior to or on a parity with the Preference Stock or any series thereof
as to dividends, or assets remaining for distribution to the
stockholders in the event of the liquidation, dissolution, or winding
up of the Corporation);
(7) the right, if any, to exchange or convert the shares of
such series into shares of any other series of the Preference Stock or
into shares of any other class of stock of the Corporation, and the
rate or basis, time, manner, terms, and conditions of exchange or
conversion or the method by which the same shall be determined; and
<PAGE> 4
(8) the other special rights, if any, and the qualifications,
limitations, or restrictions thereof, of the shares of such series.
The Board of Directors shall fix the terms of each such series by
resolution or resolutions adopted at any time prior to the issuance of the
shares thereof, and the terms of each such series may, subject only to
restrictions, if any, imposed by this Certificate of Incorporation or by
applicable law, vary from the terms of other series to the extent determined by
the Board of Directors from time to time and provided in the resolution or
resolutions fixing the terms of the respective series of the Preference Stock.
Shares of any series of the Preference Stock, whether provided for
herein or by resolution or resolutions of the Board of Directors, which have
been redeemed (whether through the operation of a sinking fund or otherwise) or
which, if convertible or exchangeable, have been converted into or exchanged for
shares of stock of any other class or classes, or which have been purchased or
otherwise acquired by the Corporation, shall have the status of authorized and
unissued shares of the Preference Stock of the same series and may be reissued
as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of the Preference Stock to be
created by resolution or resolutions of the Board of Directors or as part of any
other series of the Preference Stock, all subject to the conditions or
restrictions on issuance set forth herein or in the resolution or resolutions
adopted by the Board of Directors providing for the issue of any series of the
Preference Stock.
DIVISION II
The terms of the Common Stock are as follows:
(A) Dividend Rights. After unpaid cumulative dividends on all the
outstanding shares of Preference Stock for all prior fiscal years and also the
full dividend on such shares for the current quarter year dividend period shall
have been declared and paid or set aside in accordance with the terms thereof,
cash dividends may be paid upon the Common Stock out of any funds lawfully
available for dividends under the laws of the State of Delaware, if, when, and
as declared by the Board of Directors of the Corporation in its discretion.
(B) Voting Rights. The holders of the Common Stock shall, subject to
the provisions of the Bylaws of the Corporation and of the statutes of the State
of Delaware relating to the fixing of a record date and other matters, be
entitled to one (1) vote for each share of Common Stock held by them,
respectively, for the election of directors and for all other purposes.
(C) Liquidation. In the event of the liquidation, dissolution, or
winding up of the Corporation, whether voluntary or involuntary, after there
shall have been paid or set apart for the holders of shares of the Preference
Stock the full preferential amounts to which they are entitled, the holders
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<PAGE> 5
of the Common Stock shall be entitled to receive pro rata, to the exclusion of
the holders of shares of the Preference Stock, the assets of the Corporation
remaining for distribution to its stockholders.
The consolidation or merger of the Corporation into or with any other
corporation or corporations shall not be deemed a liquidation, dissolution, or
winding up within the meaning of the preceding paragraph.
* * *
Effective at the time of the filing with the Secretary of State of the
State of Delaware of this Restated Certificate of Incorporation of the
Corporation, (I) each share of the Corporation's Class A Common Stock, par value
$.10 per share ("Class A Common Stock"), issued and outstanding or held in
treasury immediately prior to such time shall, without any action on the part of
the respective holders thereof, be reclassified as and converted into one share
of Common Stock and each stock certificate that, immediately prior to the time
of such filing, represented shares of the Corporation's Class A Common Stock
shall, from and after such time and without the necessity of presenting the same
for exchange, represent the number of shares of Common Stock into which the
shares of Class A Common Stock represented by such stock certificate were
reclassified pursuant hereto, and (ii) each share of the Corporation's Class B
Common Stock, par value $.10 per share ("Class B Common Stock"), issued and
outstanding or held in treasury immediately prior to such time shall, without
any action on the part of the respective holders thereof, be reclassified as and
converted into one share of Common Stock, and each stock certificate that,
immediately prior to the time of such filing, represented shares of the
Corporation's Class B Common Stock shall, from and after such time and without
the necessity of presenting the same for exchange, represent the number of
shares of Common Stock into which the shares of Class B Common Stock represented
by such stock certificate were reclassified pursuant hereto.
ARTICLE FIFTH: No action required or permitted to be taken at any
annual or special meeting of the stockholders of the Corporation may be taken
without a meeting except by the unanimous written consent of the stockholders
entitled to vote thereon; provided, however, that such action may be taken by
less than the unanimous written consent of the stockholders if it has been
recommended to them for their approval by the affirmative vote of two-thirds
(2/3) of the whole board, but only if a majority of the members of the Board of
Directors acting upon such matter shall be continuing directors, as these terms
are defined in section (a) of Article Sixth.
ARTICLE SIXTH: (a) Except as otherwise specifically provided in section
(b) of this Article Sixth, the following definitions shall apply to this Article
Sixth and to this Certificate of Incorporation generally:
(1) An "affiliate" of a specified person shall mean a person
that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
person specified.
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<PAGE> 6
(2) "Beneficial ownership" shall be determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934 (or any successor rule or statutory provision),
or, if said Rule 13d-3 shall be rescinded and there shall be no
successor rule or statutory provision thereto, pursuant to said Rule
13d-3 as in effect at July 18, 1983; provided, however, that a person
shall, in any event, also be deemed the "beneficial owner" of any
voting shares:
(A) which such person or any of its affiliates
beneficially owns, directly or indirectly; or
(B) which such person or any of its affiliates has
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to
any agreement, arrangement or understanding (but shall not be
deemed to be the beneficial owner of any voting shares solely
by reason of an agreement, arrangement, or understanding with
this Corporation to effect any transaction which is described
in any one or more of clauses (i) through (iv) of section
(b)(1)(A) of this Article Sixth) or upon the exercise of
conversion rights, exchange rights, warrants, or options or
otherwise, or (ii) sole or shared voting or investment power
with respect thereto pursuant to any agreement, arrangement,
understanding, relationship or otherwise (but shall not be
deemed to be the beneficial owner of any voting shares solely
by reason of a revocable proxy granted for a particular
meeting of stockholders, pursuant to a public solicitation of
proxies for such meeting, with respect to shares of which
neither such person nor any such affiliate is otherwise deemed
the beneficial owner); or
(C) which are beneficially owned, directly or
indirectly, by any person with which such first mentioned
person or any of its affiliates acts as a partnership, limited
partnership, syndicate or other group pursuant to any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of
capital stock of this Corporation;
and provided further, however, that (1) no director or officer of this
Corporation (or any affiliate of such director or officer) shall,
solely by reason of any or all of such directors or officers acting in
their capacities as such, be deemed, for any purposes hereof, to
beneficially own any voting shares beneficially owned by any other such
director or officer (or any affiliate thereof), and (2) neither any
employee stock ownership or similar plan of this Corporation or any
subsidiary nor any trustee with respect thereto (or any affiliate of
such trustee) shall, solely by reason of such capacity of such trustee,
be deemed, for any purposes hereof, to beneficially own any voting
shares held under any such plan. The outstanding voting shares shall
include only voting shares then outstanding and shall not include any
voting shares which may be issuable by this Corporation pursuant to any
agreement, or upon the exercise of conversion rights, warrants or
options, or otherwise.
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<PAGE> 7
(3) "Continuing director" shall mean a person who was a member
of the Board of Directors at December 15, 1998 or who was designated
(before his initial election or appointment as a director) as a
continuing director by a majority of the whole board, but only if a
majority of the whole board shall then consist of continuing directors,
or, if a majority of the whole board shall not then consist of
continuing directors, by a majority of the then continuing directors.
(4) A "person" shall mean any individual, firm, corporation,
or other entity.
(5) "Subsidiary" shall mean any corporation of which 50% or
more of each class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect at July 18, 1983) is owned, directly or indirectly,
by this Corporation.
(6) "Voting shares" shall mean shares of capital stock of this
Corporation entitled to vote generally in the election of directors.
(7) "Whole board" shall mean the total number of directors
which this Corporation would have if there were no vacancies.
(b) Except as otherwise provided in this section (b), the provisions
and requirements of this section shall be in addition to any requirements of law
and the other provisions of this Certificate of Incorporation. However, the
provisions and requirements of this section, except for those set forth in
subsection (1), shall not apply to any transaction which has received the
affirmative vote of two-thirds (2/3) of the whole board, but only if a majority
of the members of the Board of Directors acting upon such matter shall be
continuing directors. It is hereby declared to be a proper corporate purpose,
reasonably calculated to benefit stockholders, for the Board of Directors to
base the response of the Corporation to any transaction within the scope of this
section (b), generally including certain majority share acquisitions or
combinations, mergers or consolidations, or dispositions of assets, on the Board
of Directors' evaluation of what is in the best interests of the Corporation,
and for the Board of Directors, in evaluating what is in the best interests of
the Corporation, to consider (i) the best interests of all the stockholders,
taking into account, among other factors, not only the consideration being
offered in any such transaction in relation to the then current market price,
but also in relation to the then-current value of the Corporation in a freely
negotiated transaction and in relation to the Board of Directors' estimate of
the future value of the corporation as an independent entity; and (ii) such
other factors as the Board of Directors determines to be relevant, including,
among other factors, the social, legal, and economic effects of any such
transaction upon employees, suppliers, customers, and business of the
Corporation.
(1) If a stockholder vote would be required by the Ohio
General Corporation Law if this Corporation were incorporated under the
laws of the State of Ohio, then the stockholders of the Corporation
shall be entitled to such vote, and the affirmative vote of the
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<PAGE> 8
holders of shares entitling them to exercise 80% of the voting power of
the Corporation, given in person or by proxy at a meeting called for
the purpose, shall be necessary:
(A) to approve (i) the lease, sale, exchange,
transfer or other disposition by the Corporation of all, or
substantially all, of its assets or business to a related
company or an affiliate of a related company, or (ii) the
consolidation of the Corporation with or its merger into a
related company or an affiliate of a related company, or (iii)
the merger into the Corporation or a subsidiary of the
Corporation of a related company or an affiliate of a related
company, or (iv) a combination or majority share acquisition
in which the Corporation is the acquiring corporation and its
voting shares are issued or transferred to a related company
or an affiliate of a related company or to stockholders of a
related company or an affiliate of a related company or an
associated person; or
(B) to approve any agreement, contract, or other
arrangement with a related company or an affiliate of a
related company or an associated person providing for any of
the transactions described in paragraph (A) above; or
(C) to effect any amendment of this Certificate of
Incorporation which changes the provisions of this subsection
(1).
For the purpose of this subsection (1), (i) a "related
company" in respect of a given transaction shall be any person,
partnership, corporation or firm which, together with its affiliates
and associated persons, owns of record or beneficially, directly or
indirectly, in excess of 5% of the shares of any outstanding class of
shares of the Corporation entitled to vote upon such transaction, as of
the record date used to determine the shareholders of the Corporation
entitled to vote upon such transaction; (ii) an "affiliate" of a
related company shall be any individual, joint venture, trust,
partnership or corporation which, directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under
common control with, the related company; (iii) an "associated person"
of a related company shall be any officer or director or any beneficial
owner, directly or indirectly, of 10% or more of any class of equity
security of such related company or any of its affiliates; and (iv) the
terms "combination," "majority share acquisition," and "acquiring
corporation" shall have the same meaning as that contained in section
1701.01 of the Ohio General Corporation Law or any similar provision
hereafter enacted.
The determination of the Board of Directors of the
Corporation, based on information known to the Board of Directors and
made in good faith, shall be conclusive as to whether any person,
partnership, corporation or firm is a related company or affiliate or
associated person as defined in this subsection (1).
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<PAGE> 9
(2) The terms "related company," "affiliate," "combination,"
"majority share acquisition," "acquiring corporation," and "associated
person" shall have the same meanings in this subsection (2) as are
ascribed to such terms in subsection (1).
(A) In the event that the requisite corporate action
has been taken in accordance with the other provisions of this
Certificate of Incorporation and in accordance with the laws
of the State of Delaware to approve the adoption of or to
authorize:
(i) the lease, sale, exchange, transfer or other
disposition by the Corporation of all or
substantially all of its assets or business to a
related company or an affiliate of a related company
or an associated person of a related company; or
(ii) any combination or a majority share
acquisition or other transaction in which the
Corporation is the acquiring corporation and its
voting shares are issued or transferred to a related
company or an affiliate of a related company or to
stockholders of a related company or of an affiliate
of a related company or to an associated person of a
related company; or
(iii) any transaction proposed by or receiving the
favorable vote of any related company, affiliate of a
related company or an associated person of a related
company, the effect of which would be to cause the
involuntary surrender of the covered stock (as
defined in paragraph (B)) of the Corporation held by
any stockholder of the Corporation who is not a
related company or an affiliate of a related company
or an associated person of a related company; or
(iv) any agreement, contract, or other arrangement
with a related company or an affiliate of a related
company or an associated person of a related company
providing for any of the transactions described in
(i) through (iii) above;
then in such event the provisions of paragraph (B) below shall
be satisfied prior to the consummation of any transaction
described in clauses (i) through (iv) above.
(B) Any cash or the fair market value of any property to be
received per share of any class or series of covered stock held by each
covered stockholder of the Corporation who does not affirmatively vote
to approve such transaction described in clauses (i) through (iv) of
paragraph (A) above shall not be less than:
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<PAGE> 10
(i) the highest price per share (including
brokerage commissions, soliciting dealers' fees,
dealer management compensation, cost of newspaper
advertisements, printing expenses, and attorneys'
fees and other expenses) paid by such related company
or an affiliate of such related company or an
associated person of such related company in
acquiring such class or series of shares of covered
stock of the Corporation, or, if no shares of that
class or series of covered stock were acquired by
such person, the highest market price per share of
such class or series for any day on which such person
acquired any of the covered stock of the Corporation,
plus;
(ii) an amount which exceeds such price per share
by the same amount by which such price per share
exceeds the lower of:
(a) the market price per share of such class
or series of covered stock of the Corporation
immediately prior to the commencement of the
acquisition of any of such class or series of
covered stock of the Corporation by such
related company, affiliate of such related
company or an associated person of such related
company; or
(b) the lowest price per share paid for any
share of such class or series of covered stock
of the Corporation by such related company,
affiliate of such related company or an
associated person of such related company, or,
if no shares of that class or series of covered
stock were acquired by such person, the lowest
market price per share of such class or series
for any day on which such person acquired any
of the covered stock of the Corporation.
In the event that the terms of any transaction covered by the
provisions of paragraph (A) above do not provide for any cash or
property to be received by the holders of the issued and outstanding
covered stock of the Corporation, then any covered stockholder of the
Corporation who, by reason of such transaction is entitled to exercise
his statutory appraisal rights under Delaware law, as expanded in
section (d) of this Article Sixth, shall, upon the proper exercise of
appraisal rights, receive cash per share of covered stock which shall
not be less than the amount derived by application of the formula set
forth in this paragraph (B). In the event that the requisite corporate
action to be taken to approve the adoption of or to authorize any
transaction covered by the provisions of paragraph (A) above requires a
vote of any of the stockholders of the Corporation, the phrase "covered
stockholder of the Corporation" as used in this paragraph (B) shall
mean such holder of shares of Common Stock or such other stock as is
designated in this Certificate of Incorporation or by the Board of
Directors in the resolution or resolutions fixing the terms of such
stock (the "covered stock") as is registered
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<PAGE> 11
as such on the books of the Corporation as of the record date set to
determine those stockholders who are entitled to vote upon such
transaction. In the event that such requisite corporate action does not
require a vote of any of the stockholders of the Corporation, such
phrase shall mean such holder of shares of covered stock as is
registered as such on the books of the Corporation as of the date on
which such requisite corporate action is taken. In either of such
events, the provisions of this paragraph (B) shall apply only with
respect to shares of covered stock owned by such covered stockholder on
such record date or date on which such requisite corporate action is
taken, whichever is applicable.
(C) The Corporation shall not enter into any of the
transactions covered by the provisions of paragraph (A) above if such
related company or an affiliate of such related company or an
associated person of such related company from and after the date on
which it first became such shall have:
(i) acquired any newly issued or treasury shares
of the Corporation's capital stock directly or
indirectly from the Corporation (except upon
conversion of convertible securities or as a result
of a pro rata stock dividend or stock split);
(ii) received the benefit directly or indirectly
(except proportionately as a stockholder) of any
loans, advances, guarantees, pledges or other
financial assistance or tax credits provided by the
Corporation;
(iii) made any material change in the Corporation's
business, equity capital structure or dividend
practices;
(iv) made, caused, or brought about directly or
indirectly, any change in the Corporation's
Certificate of Incorporation or Bylaws; or
(v) made, caused, or brought about, directly or
indirectly, any change in the membership of the
Corporation's Board of Directors or Committees
thereof.
(D) The determination of a majority of the whole board, but
only if a majority of the whole board shall then consist of continuing
directors, or, if a majority of the whole board shall not then consist
of continuing directors, a majority of the then continuing directors,
based on information known to it and made in good faith shall be
conclusive as to (i) whether any transaction is included within the
provisions of this subsection (2), and (ii) the fair market value of
any property to be received by each covered stockholder pursuant to the
provisions of paragraph (B) of this subsection (2).
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(E) No amendment of this Certificate of Incorporation shall
amend, alter, repeal, or change the effect of any of the provisions of
this subsection (2) unless such amendment shall receive the affirmative
vote of (i) the holders of then outstanding voting shares entitling the
holders thereof to cast at least 95% of the votes entitled to be cast
by the holders of all of the then outstanding voting shares entitled to
vote thereon and (ii) the holders of voting shares entitled to cast at
least 55% of the votes entitled to be cast thereon by the stockholders
who are not as of the record date fixed for such vote a related
company, affiliate of a related company or an associated person of a
related company.
(c)(1) A majority of the whole board, but only if a majority of the
whole board shall then consist of continuing directors, or, if a majority of the
whole board shall not then consist of continuing directors, a majority of the
then continuing directors, shall have the power to construe and apply the
provisions of this section and to make all determinations necessary or desirable
to implement such provisions, including but not limited to matters with respect
to (A) the number of voting shares beneficially owned by any person, (B) whether
a person is an affiliate of another, (C) whether a person has an agreement,
arrangement, or understanding with another as to the matters referred to in the
definition of beneficial ownership, (D) the application of any other definition
or operative provision of the section to the given facts, or (E) any other
matter relating to the applicability or effect of this section.
(2) Any constructions, applications, or determinations made by the
Board of Directors or by the continuing directors, as the case may be, pursuant
to this section in good faith and on the basis of such information and
assistance as was then reasonably available for such purpose shall be conclusive
and binding upon the Corporation and its stockholders.
(d) To the maximum extent permissible under section 262(c) of the
Delaware General Corporation Law or any successor section or sections, the
holders of voting shares of the Corporation shall be entitled to the statutory
appraisal rights permitted therein as to an amendment to this Certificate of
Incorporation, any merger or consolidation in which the Corporation is a
constituent corporation, or the sale of all or substantially all of the assets
of the Corporation, but only if such amendment or transaction requires the
approval of the stockholders; provided, however, that this section of this
Article Sixth shall not apply to any transaction which has received the
affirmative vote of two-thirds (2/3) of the whole board, but only if a majority
of the members of the Board of Directors acting upon such matter shall be
continuing directors.
ARTICLE SEVENTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation law, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is hereafter
amended to permit a corporation to further eliminate or limit the liability of a
director of a corporation, then the liability of a director of the Corporation,
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in addition to the circumstances in which a director is not personally liable as
set forth in the preceding sentence, shall be further eliminated or limited to
the fullest extent permitted by the Delaware General Corporation Law as so
amended. Any amendment, repeal, or modification of this Article Seventh shall
not adversely affect any right or protection of a director of the Corporation
for any act or omission occurring prior to the date when such amendment, repeal,
or modification became effective.
ARTICLE EIGHTH: The Corporation reserves the right to amend, alter,
change, or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute or by this Certificate of
Incorporation, and all rights conferred on stockholders herein are granted
subject to this reservation. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is authorized to adopt, amend, and
repeal the Bylaws of the Corporation. Notwithstanding the foregoing, any
amendment, alteration, change, or repeal of the provisions set forth in Article
Fifth and Sixth of this Certificate of Incorporation, except for sections (b)(1)
and (b)(2) of Article Sixth, which must be amended as provided therein; sections
1(b), 1(e), and 1(g) of Article I, sections 2 and 3 of Article II, and Article
IX of the Bylaws; and this Article Eighth shall, in addition to any other vote
or approval required by law or by this Certificate of Incorporation, require the
affirmative vote of the holders of then outstanding voting shares entitling the
holders thereof to cast at least 80% of the votes entitled to be cast by the
holders of all of the then outstanding voting shares; provided, however, that
this sentence shall not apply to, and such 80% vote shall not be required for,
any amendment, alteration, change, or repeal declared advisable by the Board of
Directors by the affirmative vote of two-thirds (2/3) of the whole board and
submitted to the stockholders for their consideration, but only if a majority of
the members of the Board of Directors acting upon such matter shall be
continuing directors, as these terms are defined in section (a) of Article
Sixth.
ARTICLE NINTH: In the event any provision (or portion thereof) of this
Certificate of Incorporation shall be found to be invalid, prohibited, or
unenforceable for any reason, the remaining provisions (or portions thereof) of
this Certificate shall be deemed to remain in full force and effect, and shall
be construed as if such invalid, prohibited, or unenforceable provision had been
stricken herefrom or otherwise rendered inapplicable, it being the intent of the
Corporation and its stockholders that each such remaining provision (or portion
thereof) of this Certificate remain, to the fullest extent permitted by law,
applicable and enforceable as to all stockholders, notwithstanding any such
finding.
-13-
<PAGE> 14
IN WITNESS WHEREOF, Scott Technologies, Inc. has caused this Restated
Certificate of Incorporation to be signed by Glen W. Lindemann, its President,
and attested by Debra L. Kackley, its Secretary, this ____ day of
_______________, 1998.
SCOTT TECHNOLOGIES, INC.
By:________________________________
Glen W. Lindemann
ATTEST:
- --------------------------
Debra L. Kackley
-14-
<PAGE> 1
Exhibit 3.1.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES,
RELATED RIGHTS, QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED SHARES
OF
SCOTT TECHNOLOGIES, INC.
-----------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-----------
Scott Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Division I of Article
Fourth of the Amended and Restated Certificate of Incorporation of the
Corporation, and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors of the
Corporation at a meeting duly called and held on December 15, 1998 adopted the
following resolution which resolution remains in full force and effect on the
date hereof:
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors of Scott Technologies, Inc. (the "Corporation") by Division I of
Article Fourth of the Amended and Restated Certificate of Incorporation of the
Corporation, the Board of Directors hereby fixes and determines the voting
rights, designations, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights and other special or relative rights of
the first series of the Preference Stock, par value $1.00 per share, which shall
consist of 500,000 shares and shall be designated as Series A Junior
Participating Preferred Shares (the "Series A Preferred Shares").
SPECIAL TERMS OF THE SERIES A PREFERRED SHARES
SECTION 1. DIVIDENDS AND DISTRIBUTIONS.
(a) The rate of dividends payable per share of Series A
Preferred Shares on the first day of January, April, July and October in each
year or such other quarterly payment date as shall be specified by the Board of
Directors (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 the Series A Preferred
Shares, shall be (rounded to the nearest cent) equal to the greater of (i)
$15.00 or (ii) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in cash, based upon the fair market
value at the time the non-cash dividend or other distribution is declared or
paid as determined in good faith by the Board of Directors) of all non-cash
dividends or other distributions other than a
1
<PAGE> 2
dividend payable in shares of common stock of the Corporation, par value $.10
per share (the "Common Stock"), or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of the Series A Preferred Shares. Dividends
on the Series A Preferred Shares shall be paid out of funds legally available
for such purpose. In the event the Corporation shall at any time after December
15, 1998 (the "Rights Declaration Date") (i) declare any dividend on 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, then in each such case the amounts to which holders of
Series A Preferred Shares were entitled immediately prior to such event under
clause (ii) of the preceding sentence shall be adjusted by multiplying each such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(b) Dividends shall begin to accrue and be cumulative on
outstanding Series A Preferred Shares from the Quarterly Dividend Payment Date
next preceding the date of issue of such Series A Preferred Shares, unless the
date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of Series A Preferred Shares 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 Series A Preferred Shares 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.
SECTION 2. VOTING RIGHTS. In addition to any other voting
rights required by law, the holders of Series A Preferred Shares shall have the
following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Shares shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on 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,
then in each such case the number of votes per share to which holders of Series
A Preferred Shares 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 Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
2
<PAGE> 3
(b) In the event that dividends upon the Series A Preferred
Shares shall be in arrears to an amount equal to six full quarterly dividends
thereon, the holders of such Series A Preferred Shares shall become entitled to
the extent hereinafter provided to vote noncumulatively at all elections of
directors of the Corporation, and to receive notice of all stockholders'
meetings to be held for such purpose. At such meetings, to the extent that
directors are being elected, the holders of such Series A Preferred Shares
voting as a class shall be entitled solely to elect two members of the Board of
Directors of the Corporation; and all other directors of the Corporation shall
be elected by the other stockholders of the Corporation entitled to vote in the
election of directors. Such voting rights of the holders of such Series A
Preferred Shares shall continue until all accumulated and unpaid dividends
thereon shall have been paid or funds sufficient therefor set aside, whereupon
all such voting rights of the holders of shares of such series shall cease,
subject to being again revived from time to time upon the reoccurrence of the
conditions described above as giving rise thereto.
At any time when such right to elect directors separately as a
class shall have so vested, the Corporation may, and upon the written request of
the holders of record of not less than 15% of the then outstanding total number
of shares of all the Series A Preferred Shares having the right to elect
directors in such circumstances shall, call a special meeting of holders of such
Series A Preferred Shares for the election of directors. In the case of such a
written request, such special meeting shall be held within ninety (90) days
after the delivery of such request, and, in either case, at the place and upon
the notice provided by law and in the By-laws of the Corporation; provided, that
the Corporation shall not be required to call such a special meeting if such
request is received less than one hundred twenty (120) days before the date
fixed for the next ensuing annual or special meeting of stockholders of the
Corporation. Upon the mailing of the notice of such special meeting to the
holders of such Series A Preferred Shares, or, if no such meeting be held, then
upon the mailing of the notice of the next annual or special meeting of
stockholders for the election of directors, the number of directors of the
Corporation shall be increased to the extent, but only to the extent, necessary
to provide sufficient vacancies to enable the holders of such Series A Preferred
Shares to elect the two directors hereinabove provided for, and all such
vacancies shall be filled only by vote of the holders of such Series A Preferred
Shares as hereinabove provided. Whenever the number of directors of the
Corporation shall have been increased, the number as so increased may thereafter
be further increased or decreased in such manner as may be permitted by the
By-laws and without the vote of the holders of Series A Preferred Shares,
provided that no such action shall impair the right of the holders of Series A
Preferred Shares to elect and to be represented by two directors as herein
provided.
So long as the holders of Series A Preferred Shares are
entitled hereunder to voting rights, any vacancy in the Board of Directors
caused by the death or resignation of any director elected by the holders of
Series A Preferred Shares, shall, until the next meeting of stockholders for the
election of directors, in each case be filled by the remaining director elected
by the holders of Series A Preferred Shares having the right to elect directors
in such circumstances.
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<PAGE> 4
Upon termination of the voting rights of the holders of Series
A Preferred Shares, the terms of office of all persons who shall have been
elected directors of the Corporation by vote of the holders of Series A
Preferred Shares or by a director elected by such holders shall forthwith
terminate.
(c) Except as otherwise provided herein, in the Amended and
Restated Certificate of Incorporation of the Corporation, or by law, the holders
of Series A Preferred Shares and the holders of Common Stock (and the holders of
shares of any other series or class entitled to vote thereon) shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
SECTION 3. REACQUIRED SHARES. Any Series A Preferred Shares
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued Preference
Stock and may be reissued as part of a new series of Preference Stock to be
created by resolution or resolutions of the Board of Directors.
SECTION 4. LIQUIDATION, DISSOLUTION OR WINDING UP. In the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, the holders of Series A Preferred Shares shall be entitled to
receive the greater of (a) $40.00 per share, plus accrued dividends to the date
of distribution, whether or not earned or declared, or (b) an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on 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,
then in each such case the amount to which holders of Series A Preferred Shares
were entitled immediately prior to such event pursuant to clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
SECTION 5. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the Series
A Preferred Shares 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 Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding
4
<PAGE> 5
shares of Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Shares shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
SECTION 6. NO REDEMPTION. The Series A Preferred Shares
shall not be redeemable.
SECTION 7. RANKING. The Series A Preferred Shares shall rank
junior to all other series of the Corporation's Preference Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
SECTION 8. FRACTIONAL SHARES. Series A Preferred Shares 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, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of Series A Preferred Shares.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Glen W. Lindemann, its President and Chief Executive Officer, and
attested by Debra L. Kackley, its Secretary, this ___ day of December, 1998.
SCOTT TECHNOLOGIES, INC.
By:
----------------------------------
Glenn W. Lindemann
President and Chief Executive Officer
ATTEST:
By:
------------------------------
Debra L. Kackley
Secretary
5
<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
SCOTT TECHNOLOGIES, INC.
ARTICLE I
STOCKHOLDERS
SECTION 1. Meetings of Stockholders.
(a) Annual Meeting. The annual meeting of the stockholders of the
Corporation shall be held at such date and time as shall be determined by the
Board of Directors. Upon due notice, there may also be considered and acted upon
at an annual meeting any matter which could properly be considered and acted
upon at a special meeting.
(b) Special Meetings. Special meetings of the stockholders of the
Corporation maybe held on any business day when called at any time by the Board
of Directors or by acommittee of the Board of Directors which has been duly
designated by the Board of Directors and whose powers and authority, as provided
in a resolution of the Board of Directors, include the power to call such
meetings, but special meetings may not be called by any other person or persons.
(c) Place of Meetings. Any meetings of the stockholders may be held at
such place within or without the State of Delaware as may be designated in the
notice of said meeting.
(d) Notice of Meeting and Waiver of Notice.
(1) Notice. Written notice of the place, date and hour of
every meeting of the stockholders, whether annual or special, shall be given to
each stockholder of record entitled to vote at the meeting not less than 10 nor
more than 60 days before the date of the meeting. Every notice of a special
meeting shall state the purpose or purposes thereof. Such notice shall be given
by mail to each stockholder entitled thereto, and shall be directed to the
stockholder at his address as it appears on the records of the Corporation.
Notice shall be deemed to have been given on the day on which it was deposited
in the mail.
(2) Record Holder of Shares. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
ownerof shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claims to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
(3) Waiver. Whenever any written notice is required to be
given under the provisions of the Certificate of Incorporation, these Bylaws, or
by statute, a waiver thereof in
<PAGE> 2
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice. Neither the business to be transacted at nor the purpose of any
meeting of the stockholders need be specified in any written waiver of notice of
such meeting.
Attendance of a person, either in person or by
proxy, at any meeting, shall constitute a waiver of notice of such meeting,
except where a person attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting was not lawfully called or
convened.
(e) Quorum, Manner of Acting and Adjournment. The holders of record of
shares entitled to cast a majority of the votes entitled to be cast by the
holders of all shares of the capital stock issued and outstanding (not including
treasury stock) and entitled to vote, thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute, by the
Certificate of Incorporation, or by these Bylaws. Whether or not a quorum is
present, the holders of shares entitled to cast a majority of the votes entitled
to be cast by the holders present in person or represented by proxy at the
meeting shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At any such adjourned meeting, at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. If the adjournment is for more
than 30 days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting. When a quorum is present
at any meeting, the vote of a majority of the votes entitled to be cast by the
holders of all issued and outstanding shares present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the applicable statute or the
Certificate of Incorporation or these Bylaws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question. Except upon those questions governed by the aforesaid express
provisions, the stockholders present in person or by proxy at a duly organized
meeting can continue to do business until adjournment, notwithstanding
withdrawal of enough stockholders to leave less than a quorum.
(f) Organization of Meetings.
(1) Presiding Officer. Any "executive officer" of the
Corporation, as that term is defined in section 3(g) of Article III of these
Bylaws, may call all meetings of the stockholders to order and shall act as
Chairman thereof.
(2) Minutes. The Secretary of the Corporation, or, in his
absence or by his designation, an Assistant Secretary, or, in the absence of
both, a person appointed by the Chairman of the meeting, shall act as Secretary
of the meeting and shall make and keep a record of the proceedings thereat.
2
<PAGE> 3
(3) Stockholders' List. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least 10 days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting. The list shall be arranged in alphabetical order showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 10 days prior to the meeting either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
(g) Voting. Except as otherwise provided by statute or the Certificate
of Incorporation, every stockholder entitled to vote shall be entitled to cast
the vote per share to which stock share is entitled, in person or by proxy, on
each proposal submitted to the meeting for each share held of record by him on
the record date for the determination of the stockholders entitled to vote at
the meeting. At any meeting at which a quorum is present, all questions and
business which may come before the meeting shall be determined by a majority of
votes cast, except when a greater proportion is required by law, the Certificate
of Incorporation, or these Bylaws.
(h) Proxies. A person who is entitled to attend a stockholders'
meeting, to vote thereat, and execute consents, waivers and releases, may be
represented at such meeting or vote thereat, and execute consents, waivers and
releases, and exercise any of his rights by proxy or proxies appointed by a
writing signed by such person, or by his duly authorized attorney, as provided
by the laws of the State of Delaware.
SECTION 2. Consent of Stockholders in Lieu of Meeting.
Any action required to be taken at any annual or special meeting of
stockholdersof the Corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by all the holders of outstanding stock
entitled to vote thereon, except as the Certificate of Incorporation may
otherwise provide.
SECTION 3. Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than 60 or less than 10 days before the date of such meeting, or
more than 60 days prior to any other action.
3
<PAGE> 4
If no record date is fixed:
(1) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(2) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed.
(3) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
ARTICLE II
DIRECTORS
SECTION 1. General Powers.
The business, power, and authority of this Corporation shall be
exercised, conducted, and controlled by the Board of Directors, except where the
law, the Certificate of Incorporation, or these Bylaws require action to be
authorized or taken by the stockholders.
SECTION 2. Number, Classification, and Election of Directors.
(a) Number. The Board of Directors shall consist of not less than 5 nor
more than 11 members. At any annual meeting, the stockholders by a vote of a
majority of the votes entitled to be cast by the holders of all issued and
outstanding shares, may increase or decrease the number of the members of the
Board of Directors within the above limitation of 5 to 11 members, and may
increase or decrease the number of directors of the class whose term shall
expire in that year, provided that such class shall continue to consist of, as
nearly as may be, one-third (1/3) of the whole number of the Board of
Directors. If the Board of Directors determines prior to any annual meeting that
an increase in the number of directors of the class whose term shall expire in
that year would cause such class not to consist of, as nearly as may be,
one-third (1/3) of the whole number of the Board of Directors, then the
stockholders, by the vote specified in this Section 2(a), may increase by one
(1) the number of directors of one (1) of the other classes, provided that such
class shall continue to consist of, as nearly as may be, one-third (1/3) of the
whole number of the Board of
4
<PAGE> 5
Directors. In addition, the Board of Directors may increase or decrease the
number of the members of the Board of Directors within the above limitation of 5
to 11 members, and may increase or decrease the number of directors of any
class, provided that such class shall continue to consist of, as nearly as may
be, one-third (1/3) of the whole number of the Board of Directors. No reduction
in the number of directors shall itself have the effect of shortening the term
of any incumbent director.
(b) Classification. The directors shall be classified in respect of the
time for which they shall hold office by dividing them into three classes, each
class consisting, as nearly as may be, of one-third (1/3) of the whole number of
the Board of Directors.
(c) Election. The directors of the appropriate class shall be elected
at the annual meeting of stockholders, or if not so elected, at a special
meeting of stockholders called for that purpose. At any meeting of stockholders
at which directors are to be elected, only persons nominated as candidates shall
be eligible for election, and the candidates receiving the greatest number of
votes entitled to be cast by the holders of all issued and outstanding shares
shall be elected.
Directors of the Corporation need not be residents of Delaware or
stockholders. No person shall be appointed or elected a director of the
Corporation unless:
(1) such person is elected to fill a vacancy in the Board of
Directors pursuant to section 3(d) of this Article II;
(2) such person is nominated for election as a director of the
Corporation by the Board of Directors or a committee thereof; or
(3) in the case of a nomination to be made by a stockholder of
the Corporation at an annual or special meeting of the stockholders, except in
the case of a nomination for which proxies are being solicited under applicable
regulations of the Securities and Exchange Commission, or a nomination permitted
by the affirmative vote of two-thirds (2/3) of the "whole board," but only if a
majority of the members of the Board of Directors acting upon the matter are
"continuing directors" (as these terms are defined in section (a) of Article
Sixth of the Certificate of Incorporation), written notice of a stockholder's
intent to make a nomination at a meeting of stockholders is filed with the
Secretary of the Corporation at least 45 days prior to the anniversary of the
mailing date of the Corporation's proxy statement for the previous annual
meeting. Such notice of intent to nominate must contain or be accompanied by the
following information, which shall be accurate and current as of the date of
such notice:
(A) the name and residence of the stockholder of the
Corporation who intends to make the nomination;
(B) a representation that the stockholder is a holder
of record of the voting shares of the Corporation and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice;
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<PAGE> 6
(C) such information regarding each nominee as would
have been required to be included in a proxy statement filed pursuant to the
Securities and Exchange Commission's proxy rules had the Board of Directors of
the Corporation nominated or intended to nominate each nominee;
(D) a description of all arrangements or
understandings among the nominating stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; and
(E) the consent of each nominee to serve as a
director of the Corporation if so elected.
SECTION 3. Term of Office of Directors.
(a) Term. The term of office of each class of directors shall be three
years (so that the term of one class of directors shall expire each year), and
the directors shall hold office for the respective terms to which elected until
their respective successors are elected and qualified, subject only to prior
resignation, death or removal by the directors as provided by law, and subject
to the provisions of the Certificate of Incorporation.
(b) Removal. Other than as herein stated, no director may be removed
from office except for cause. With prior notice thereof, all the directors, or
all the directors of a particular class, or any individual director may be
removed for cause by a vote of a majority of the votes entitled to be cast by
the holders of all issued and outstanding shares at any meeting of stockholders
properly called for that purpose.
(c) Resignation. Any director of the Corporation may resign at any time
by giving written notice to the Chairman of the Board of Directors or to the
President or the Secretary of the Corporation. A resignation from the Board of
Directors shall be deemed to take effect immediately or at such other time as
the director may specify.
(d) Vacancy. If there shall be any vacancy in the Board of Directors
for any reason, including but not limited to death, resignation, or as provided
by law, the Certificate of Incorporation, or these Bylaws (including any
increase in the authorized number of directors), the remaining directors shall
constitute the Board of Directors until such vacancy is filled. The remaining
directors may fill any vacancy in the Board for the unexpired term.
SECTION 4. Meetings of Directors.
(a) Meetings. Meetings of the Board of Directors may be held at any
time upon call by the Chairman of the Board, or by the President, or by any Vice
President, or by any two directors. Unless otherwise indicated in the notice
thereof, any business may be transacted at any such meeting.
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<PAGE> 7
(b) Place of Meeting. Any meeting of directors may be held at such
place within or without the State of Delaware as may be designated in the notice
of said meetings.
(c) Notice of Meeting and Waiver of Notice. Notice of the time and
place of any meeting of the Board of Directors and the waiver thereof shall be
governed by such rules as the Board of Directors may prescribe.
SECTION 5. Quorum and Voting.
At any meeting of directors, not less than one-half (1/2) of the
directors then in office (or, in the event that the directors than in office are
an uneven number, the nearest full number of directors less than one-half (1/2)
of such number) is necessary to constitute a quorum for such meeting, except
that any meeting duly called, whether a quorum is present or otherwise, may, by
vote of a majority of the directors present, be adjourned from time to time. At
any meeting at which a quorum is present, all acts, questions and business which
may come before the meeting shall be determined by a majority of votes cast by
the directors present at such meeting, unless the vote of a greater number is
required by the Certificate of Incorporation or Bylaws.
SECTION 6. Action of Board of Directors Without a Meeting.
Any action which may be authorized or taken at a meeting of the Board
of Directors may be authorized or taken without a meeting if approved and
authorized by a writing or writings, signed by all the directors, which are
filed with the minutes of proceedings of the Board.
SECTION 7. Compensation.
The Board of Directors is authorized to fix a reasonable salary for
directors or a reasonable fee for attendance at any meeting of the Board, the
Executive and Finance Committee, or other committees appointed by the Board of
Directors, or any combination of salary and attendance fee. In addition,
directors may be reimbursed for any expenses incurred by them in traveling to
and from such meetings.
SECTION 8. Committees.
(a) Appointment. The Board of Directors may from time to time, by
resolution adopted by a majority of the whole Board, appoint one or more of its
members to act as a committee or committees. Each such committee and each member
thereof shall serve at the pleasure of the Board. Vacancies occurring in any
such committee may be filed by the Board of Directors.
(b) Executive and Finance Committee. In particular, the Board of
Directors may create from its membership an Executive and Finance Committee, the
members of which shall hold office during the pleasure of the Board of Directors
and may be removed at any time, with or without cause, by action thereof. During
the intervals between meetings of the Board of Directors, the
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<PAGE> 8
Executive and Finance Committee shall possess and may exercise all of the powers
of the Board of Directors in the management and control of the business of the
Corporation to the extent permitted by law. All action taken by the Executive
and Finance Committee shall be reported to the Board of Directors.
(c) Committee Action. Unless otherwise provided by the Board of
Directors, a majority of the members of any committee appointed by the Board of
Directors pursuant to this section shall constitute a quorum at any meeting
thereof and the act of a majority of the members present at a meeting at which a
quorum is present shall be the act of such committee. Action may also be taken
by any such committee without a meeting by a writing or writings, signed by all
its members, which is filed with the minutes of proceedings of the committee.
Any such committee shall appoint one of its own number as Chairman who shall
preside at all meetings and may appoint a Secretary (who need not be a member of
the committee) who shall hold office during the pleasure of such committee.
Meetings of any such committee may be held without notice of the time, place or
purpose thereof and may be held at such times and places within or without the
State of Delaware, as the committee may from time to time determine, at the call
of the Chairman or any two members thereof. Any such committee may prescribe
such other rules as it shall determine for calling and holding meetings and its
method of procedure, subject to any rules prescribed by the Board of Directors.
SECTION 9. Conference Telephone Meetings.
One or more directors may participate in a meeting of the Board, or of
a committee of the Board, by means of conference telephone or similar
communications equipment enabling all persons participating in the meeting to
hear each other. Participants in a meeting pursuant to this section shall
constitute presence in person at such meeting.
ARTICLE III
OFFICERS
SECTION 1. General Provisions.
The Board of Directors at such time as it determines may elect such
executive officers, as defined in section 3(g), as the Board deems necessary.
The Chairman of the Board shall be, but the other executive officers may, but
need not, be chosen from the members of the Board. Any two or more executive
offices may be held by the same person. Other officers may be appointed in the
manner provided for in these Bylaws. The election or appointment of an officer
for a given term, or a general provision in the Certificate of Incorporation or
in the Bylaws with respect to term of office, shall not be deemed to create any
contract rights.
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<PAGE> 9
SECTION 2. Term of Office, Removal, and Vacancies.
(a) Term. Each executive officer of the Corporation shall hold office
during the pleasure of the Board of Directors and until his successor is elected
and qualified, unless he sooner dies or resigns or is removed by the Board of
Directors or the Chairman.
(b) Removal. The Board of Directors by a majority vote of the members
present at a meeting at which a quorum is present or the Chairman acting alone
may remove any executive officer at any time, with or without cause.
(c) Vacancies. Any vacancy in any executive office may be filled by the
Board of Directors or by the Chairman.
SECTION 3. Powers and Duties.
(a) In general. All officers, as between themselves and the
Corporation, shall respectively have such authority and perform such duties as
are customarily incident to their respective offices, and as may be specified
from time to time by the Board of Directors, regardless of whether such
authority and duties are customarily incident to such office. In the absence of
any officer of the Corporation, or for any other reason the Board of Directors
may deem sufficient, the Board of Directors may delegate from time to time the
powers or duties of such officer, or any of them, to any other officer or to any
Director.
(b) Chairman of the Board. The Chairman of the Board shall, subject to
the provisions of these Bylaws, preside at all meetings of the stockholders and
of the Board of Directors. The Chairman of the Board shall have general
supervision over the Corporation's property, business, and affairs, and perform
all the duties usually incident to such office, subject to the direction of the
Board of Directors. He may execute all authorized deeds, mortgages, bonds,
contracts, and other obligations in the name of the Corporation and shall have
such other powers and duties as may be prescribed by the Board of Directors.
(c) President. In the absence of the Chairman of the Board, and subject
to the provisions of these Bylaws, the President shall preside at all meetings
of the stockholders. The President shall be the chief operating officer of the
Corporation and perform all the duties usually incident to such office, subject
to the direction of the Board of Directors. In case of the absence or disability
of the Chairman of the Board, or when circumstances prevent the Chairman of the
Board from acting, the President shall perform the duties of the Chairman of the
Board, and in such case, may execute all authorized deeds, mortgages, bonds,
contracts and other obligations, in the name of the Corporation.
(d) Vice Presidents. The Vice Presidents shall have such powers, duties
and titles as may be prescribed by the Board of Directors or as may be delegated
by the Chairman of the Board of by the President.
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<PAGE> 10
(e) Secretary. The Secretary shall keep the minutes of all meetings of
the stockholders and the Board of Directors. He shall keep such books as may be
required by the Board of Directors, shall have charge of the scal, if any, of
the Corporation and shall be permitted, subject to the provisions of these
Bylaws, to give notices of stockholders' and directors' meetings required by law
or by these Bylaws, or otherwise, and have such other powers and duties as may
be prescribed by the Board of Directors or the Chairman of the Board.
(f) Treasurer. The Treasurer shall receive and have charge of all
money, bills, notes, bonds, stock in other corporations and similar property
belonging to the Corporation, and shall do with the same as shall be ordered by
the Board of Directors. He shall keep accurate financial accounts, and hold the
same open for inspection and examination by the directors. On the expiration of
his term of office, he shall turn over to his successors, or to the Board of
Directors, all property, books, papers, and money of the Corporation in his
hands, and shall possess such other powers and duties as may be prescribed by
the Board of Directors or the Chairman of the Board.
(g) Executive Officers. The officers referred to in subparagraphs (b),
(c), (d),(e), and (f) of this section and such other officers as the Board of
Directors may be resolution identify shall be executive officers of the
Corporation and may be referred to as such.
(h) Other Officers. The Assistant Secretaries, Assistant Treasurers, if
any, and any other subordinated officers shall be appointed and removed by the
executive officer at whose pleasure each shall serve and shall have such powers
and duties as such executive officer may prescribe.
SECTION 4. Compensation.
The Board of Directors is authorized to determine or to provide the
method of determining the compensation of all officers.
ARTICLE IV
SECURITIES HELD BY CORPORATION
SECTION 1. Transfer of Securities Owned by the Corporation.
All endorsements, assignments, transfers, share powers, or other
instruments of transfer of securities standing in the name of the Corporation
shall be executed for an in the name of the Corporation by the Chairman of the
Board, or by the President, or by any Vice President, or by the Secretary or
Treasurer or by any additional person or persons as may be thereunto authorized
by the Board of Directors.
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<PAGE> 11
SECTION 2. Voting Securities Held by the Corporation.
The Chairman of the Board, or the President, or any Vice President, or
the Secretary or Treasurer, in person or by another person thereunto authorized
by the Board of Directors, in person or by proxy or proxies appointed by him,
shall have full power and authority on behalf of the Corporation to vote, act
and execute consents, waivers and releases with respect to any securities issued
by other corporations which the Corporation may own.
ARTICLE V
SHARE CERTIFICATES
SECTION 1. Transfer and Registration of Certificates.
The Board of Directors shall have authority to make such rules and
regulations, not inconsistent with law, the Certificate or these Bylaws, as it
deems expedient concerning the issuance, transfer and registration of
certificates for shares and the shares represented thereby.
SECTION 2. Certificates for Shares.
Each holder of shares is entitled to one or more certificates for
shares of the Corporation in such form not inconsistent with law and the
Certificate of Incorporation as shall be approved by the Board of Directors.
Each such certificate shall be signed by the Chairman of the Board or the
President or any Vice President, and by the Secretary, an Assistant Secretary,
the Treasurer, or an Assistant Treasurer of the Corporation, which certificate
shall certify the number and class of shares held by each stockholder in the
Corporation, but no certificates for shares shall be executed or delivered until
such shares are fully paid. Any of or all the signatures upon such certificate
may be a facsimile, engraved or printed. In case any officer, transfer agent or
registrar who has signed, or whose facsimile signature has been placed upon, any
share certificate shall have ceased to be such officer, transfer agent or
registrar, before the certificate is issued, it may be issued with the same
effect as if he were such officer, transfer agent or registrar at the date of
its issue.
SECTION 3. Transfer Agents, Registrars and Dividend Disbursing Agents.
The Board of Directors may from time to time by resolution appoint one
or more incorporated transfer agents and registrars (which may or may not be the
same corporation) for the shares of the Corporation, and the Board of Directors
from time to time by resolutions may appoint a dividend disbursing agent to
disburse any and all dividends authorized by the Board of Directors payable upon
the shares of the Corporation.
11
<PAGE> 12
SECTION 4. Transfers.
Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
No transfer shall be made which would be inconsistent with the provisions of
Article 8, Title 6 of the Delaware Uniform Commercial Code--Investment
Securities.
SECTION 5. Lost, Stolen or Destroyed Certificates.
The Corporation may issue a new certificate for shares in place of any
certificate or certificates heretofore issued by the Corporation alleged to have
been lost, stolen or destroyed and upon the making of an affidavit of that fact
by the person claiming the certificate of stock to have been lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion, and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representatives, to attest the same in
such manner as it shall require and to give the Corporation a bond in such sum
and containing such terms as the Board may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost, stolen, or destroyed.
SECTION 6. Protection of Corporation.
The Corporation may treat a fiduciary as having capacity and authority
to exercise all rights of ownership in respect to shares of record in the name
of the decedent holder, person, firm or corporation in conservation,
receivership or bankruptcy, minor, incompetent person, or person under
disability, as the case may be, for whom he is acting, or a fiduciary acting as
such, and the Corporation, its transfer agent and registrar, upon presentation
of evidence of appointment of such fiduciary shall be under no duty to inquire
as to the powers of such fiduciary and shall not be liable to any firm, person,
or corporation for loss caused by any act done or omitted to be done by the
Corporation or its transfer agent or registrar is reliance thereon.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS,
AND OTHER AUTHORIZED REPRESENTATIVES
SECTION 1. Indemnification of Authorized Representative in Third Party
Proceedings.
The Corporation shall indemnify any person who was or is an "authorized
representative" of the Corporation (which shall mean for purposes of this
Article a director or officer of the Corporation, or a person serving at the
request of the Corporation as a director, officer, or trustee,
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<PAGE> 13
of another corporation, partnership, joint venture, trust or other enterprise)
and who was or is a "party" (which shall include for purposes of this Article
the giving of testimony or similar involvement) or is threatened to be made a
party to any "third party proceeding" (which shall mean for purposes of this
Article the giving of testimony or similar involvement) or is threatened to be
made a party to any "third party proceeding" (which shall mean for purposes of
this Article any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or investigative, other than an action
by or in the right of the Corporation) by reason of the fact that such person
was or is an authorized representative of the Corporation, against expenses
(which shall include for purposes of this Article attorneys' fees), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such third party proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in, or
not opposed to , the best interests of the Corporation and, with respect to any
criminal third party proceedings (which could or does lead to a criminal third
party proceeding) had no reasonable cause to believe such conduct was unlawful.
The termination of any third party proceeding by judgment, order, settlement,
indictment, conviction, or upon a plea of nolo contendere or its equivalent,
shall not of itself create a presumption that the authorized representative did
not act in good faith and in a manner which such person reasonably believed to
be in, or not opposed to, the best interests of the Corporation, and, with
respect to any criminal third party proceeding, had reasonable cause to believe
that such conduct was unlawful.
SECTION 2. Indemnification of Authorized Representatives in Corporate
Proceedings.
The Corporation shall indemnify any person who was or is an authorized
representative of the Corporation and who was or is a party or is threatened to
be made a party to any "corporate proceeding" (which shall mean for purposes of
this Article any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor or investigative
proceeding by the Corporation) by reason of the fact that such person was or is
an authorized representative of the Corporation, against expenses actually and
reasonably incurred by such person in connection with the defense or settlement
of such corporate action if such person acted in good faith and in a manner
reasonably believed to be in, or not opposed to , the best interests of the
Corporation, except that no indemnification shall be made in respect to any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such corporate proceeding was pending shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such authorized representative is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
SECTION 3. Mandatory Indemnification of Authorized Representatives.
To the extent that an authorized representative of the Corporation has
been successful on the merits or otherwise in defense of any third party or
corporate proceedings or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses actually and reasonably incurred by
such person in connection therewith.
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<PAGE> 14
SECTION 4. Determination of Entitlement to Indemnification.
Any indemnification under section 1, 2, or 3 of this Article (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the authorized
representative is proper in the circumstances because such person has either met
the applicable standard of conduct set forth in section 1 or 2 or has been
successful on the merits or otherwise act forth in section 3 and that the amount
requested has been actually and reasonably incurred. Such determination shall be
made:
(1) by the Board of Directors by a majority of a quorum
consisting of directors who were not parties to such third party or corporate
proceedings; or
(2) If such a quorum is not obtainable, or, even if obtainable
a majority vote of such a quorum so directs, by independent legal counsel in a
written opinion; or
(3) by the stockholders.
SECTION 5. Advancing Expenses.
Expenses actually and reasonably incurred in defending a third party or
corporate proceeding shall be paid on behalf of an authorized representative by
the Corporation in advance of the final disposition of such third party or
corporate proceedings upon receipt of an undertaking by or on behalf of the
authorized representative to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the Corporation
as authorized in this Article.
SECTION 6. Employee Benefit Plans.
For purposes of this Article, the Corporation shall be deemed to have
requested an authorized representative to serve an employee benefit plan where
the performance by such person of duties to the Corporation also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; excise taxes assessed on an authorized
representative with respect to an employee benefit plan pursuant to applicable
law shall be deemed "fines"; and action taken or omitted by such person with
respect to an employee benefit plan in the performance of duties for a purpose
reasonably believed to be in the interest of the participant and beneficiaries
of the plan shall be deemed to be for a purpose which is not opposed to the best
interest of the Corporation.
SECTION 7. Scope of Article.
The indemnification of and advancement of expenses to authorized
representatives, as authorized by this Article, shall (1) not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, agreement, vote of
stockholders or disinterested directors or otherwise both as to action in an
official capacity
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and as to action in other capacities, (2) continued as to a person who has
ceased to be an authorized representative, and (3) inure to the benefit of the
heirs, executors, and administrators of such person.
SECTION 8. Reliance on Provisions.
Each person who shall act as an authorized representative of the
Corporation shall be deemed to be doing so in reliance upon rights of
indemnification provided by this Article.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors and shall remain as fixed until changed by resolution of the
Board from time to time.
ARTICLE VIII
CONSISTENCY WITH CERTIFICATE OF INCORPORATION
If any provision of these Bylaws shall be inconsistent with the
Corporation's Certificate of Incorporation (and as they may be amended from time
to time), the Certificate of Incorporation (as so amended at the time) shall
govern.
ARTICLE IX
AMENDMENTS
Except as otherwise provided in the Certificate of Incorporation, these
Bylaws may be altered, amended, or repealed or new bylaws may be adopted by the
stockholders or by the Board of Directors at any regular meeting of the
stockholders or of the Board of Directors or at any special meeting of the
stockholders or of the Board of Directors if notice of such alteration,
amendment, repeal or adoption of new bylaws be contained in the notice of such
special meeting.
15
<PAGE> 1
Exhibit 4
- --------------------------------------------------------------------------------
SCOTT TECHNOLOGIES, INC.
and
NATIONAL CITY BANK,
as Rights Agent
RIGHTS AGREEMENT
Dated as of December 15, 1998
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
1. Certain Definitions......................................................................................2
2. Appointment of Rights Agent..............................................................................5
3. Issue of Rights Certificates.............................................................................5
4. Form of Rights Certificates..............................................................................7
5. Countersignature and Registration........................................................................8
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates............................................................8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights............................................9
8. Cancellation and Destruction of Rights Certificates.....................................................11
9. Reservation and Availability of Capital Stock; Registration of Securities...............................12
10. Capital Stock Record Date...............................................................................13
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.............................14
12. Certificate of Adjusted Purchase Price or Number of Shares..............................................21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power....................................22
14. Fractional Rights and Fractional Shares.................................................................25
15. Rights of Action........................................................................................26
16. Agreement of Rights Holders.............................................................................26
17. Rights Certificate Holder Not Deemed a Stockholder......................................................27
18. Concerning the Rights Agent.............................................................................27
19. Merger or Consolidation or Change of Name of Rights Agent...............................................28
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
20. Duties of Rights Agent..................................................................................28
21. Change of Rights Agent..................................................................................30
22. Issuance of New Rights Certificates.....................................................................31
23. Redemption and Termination..............................................................................32
24. Exchange................................................................................................33
25. Notice of Certain Events................................................................................34
26. Notices.................................................................................................34
27. Supplements and Amendments..............................................................................35
28. Successors..............................................................................................36
29. Determinations and Actions by the Board of Directors, etc...............................................36
30. Benefits of this Agreement..............................................................................37
31. Severability............................................................................................37
32. Governing Law...........................................................................................37
33. Counterparts............................................................................................37
34. Descriptive Headings....................................................................................38
Exhibit A Resolution of the Board of Directors with respect to
Series A Junior Participating Preferred Shares................................................A-1
Exhibit B Form of Rights Certificate....................................................................B-1
Exhibit C Summary of Rights.............................................................................C-1
</TABLE>
<PAGE> 4
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 15, 1998 (the
"Agreement"), between SCOTT TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), and NATIONAL CITY BANK, an Ohio corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on December 15, 1998 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company authorized and
declared a dividend distribution of one Right for each Common Share (as
hereinafter defined) of the Company outstanding at the close of business on
December 28, 1998 (the "Record Date") (which for these purposes shall include
all Common Shares presently entitled to receive dividends) and has authorized
the issuance of one Right (as such number may hereafter be adjusted pursuant to
the provisions of Section 11(i) hereof) for each Common Share of the Company
issued between the Record Date (whether originally issued or delivered from the
Company's treasury) and the earlier of the Distribution Date or the Expiration
Date (as such terms are hereinafter defined), each Right initially representing
the right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined) of the Company having the rights, powers and preferences set forth in
the form of the Resolution of the Board of Directors attached hereto as Exhibit
A (the "Rights"); and
WHEREAS, the Board of Directors of the Company has considered
whether approval of this Agreement and the distribution of the Rights is in the
best interests of the Company and all other pertinent factors; and
WHEREAS, the Board of Directors of the Company has concluded
that approval of this Agreement and the distribution of the Rights is in the
best interests of the Company because the existence of the Rights will help (i)
reduce the risk of coercive two-tiered, front-end loaded or partial offers that
may not offer fair value to all stockholders, (ii) mitigate against market
accumulators who through open market and/or private purchases may achieve a
position of substantial influence or control without paying to selling or
remaining stockholders a fair control premium, (iii) deter market accumulators
who are simply interested in putting the Company into "play," (iv) restrict
self-dealing by a substantial stockholder, and (v) preserve the Board of
Directors' bargaining power and flexibility to deal with third-party acquirors,
to pursue the business strategies of the Company and to otherwise seek to
maximize value for all of the stockholders.
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:
<PAGE> 5
SECTION 1. CERTAIN DEFINITIONS. For purposes of this
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding, but shall
not include 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. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of Common Shares by the
Company which, by reducing the number of Common Shares outstanding, increases
the proportionate number of Common Shares beneficially owned by such Person to
15% or more of the Common Shares then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the then outstanding
Common Shares by reason of Common Shares purchased by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any
additional Common Shares, then such Person shall be deemed to be an "Acquiring
Person." Notwithstanding the foregoing, if a majority of the Board of Directors
determines in good faith that a Person who would otherwise be an "Acquiring
Person", as defined pursuant to the foregoing provisions of this paragraph, has
become such inadvertently, and such Person divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an
Acquiring Person, as defined pursuant to the foregoing provisions of this
paragraph, then such Person shall not be deemed to be an "Acquiring Person" for
purposes of this Agreement. However, notwithstanding any of the foregoing, for
the purposes of determining an "Acquiring Person," any person who, prior to the
date hereof, signed an agreement with the Company pursuant to which such person,
among other things, agrees not to engage in a proxy contest with the Company or
seek to acquire control of the Company or be a member of a group intending to do
one of those things.
"Act" shall mean the Securities Act of 1933, as amended.
"Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) of this Agreement.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities:
(i) that 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
-2-
<PAGE> 6
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or
any of such Per son's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange, or (B)
securities issuable upon exercise of 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 pursuant
to Section 11(i) hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) that 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 without limitation 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 sub paragraph (ii) as
a result of an oral or written agreement, arrangement or understanding
to vote such security if such agreement, arrangement or under standing:
(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) that 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) above) or disposing of any voting securities of the
Company,
PROVIDED, however, that nothing in this definition shall cause a person 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 good faith in a firm commitment underwriting until the
expiration of forty (40) days after the date of such acquisition.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of Ohio are
authorized or obligated by law or executive order to close.
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<PAGE> 7
"Close of Business" on any given date shall mean 5:00 P.M.,
Ohio time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., Ohio time, on the next succeeding Business Day.
"Common Share" shall mean, when used with reference to the
Company, a share of common stock, par value $.10 per share, of the Company and,
to the extent that there are not a sufficient number of Common Shares
authorized to permit the full exercise of the Rights, shares of any other class
or series of the Company designated for such purpose containing terms
substantially similar to the terms of the Common Shares, except that "Common
Share" when used with reference to any Person other than the Company shall mean
the shares of common stock of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or direct the
management, of such Person.
"Distribution Date" shall have the meaning set forth in
Section 3 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
"Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity.
"Preferred Share" shall mean a share of Series A Junior
Participating Preferred Shares, par value $1.00 per share, of the Company and,
to the extent that there are not a sufficient number of shares of Series A
Junior Participating Preferred Shares authorized to permit the full exercise of
the Rights, shares of any other series of Series Preferred Stock of the Company
designated for such purpose containing terms substantially similar to the terms
of the Series A Junior Participating Preferred Shares.
"Preferred Share Fraction" shall mean one one-hundredth of a
Preferred Share.
"Qualifying Offer" shall have the meaning set forth in Section
11(a)(ii) hereof.
"Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
"Section 13 Event" shall mean any event described in clauses
(x), (y) or (z) of Section 13(a) hereof.
"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) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
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<PAGE> 8
"Subsidiary" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
"Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
Unless otherwise specified, where reference is made in this
Agreement to sections of, and the General Rules and Regulations under, the
Exchange Act, such reference shall mean such sections and rules as amended from
time to time and any successor provisions thereto.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
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<PAGE> 9
(a) Until the earlier of (i) the Close of Business on the
tenth Business Day after a Stock Acquisition Date involving an Acquiring Person
that has become such in a transaction as to which the Board of Directors has not
made the determination referred to in Section 11(a)(ii) hereof, or (ii) the
Close of Business on the tenth Business Day (or such later date as may be
determined by action of the Board of Directors prior to such time any Person
becomes an Acquiring Person) after the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan) is first commenced 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 15% or more
of the Common Shares then outstanding (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) beneficial interests in the Rights
will be evidenced (subject to the provisions of paragraph (b) of this Section 3)
by the certificates for the Common Shares registered in the names of the holders
of the Common Shares (which certificates for Common Shares shall be deemed also
to be certificates for beneficial interests in the Rights) and not by separate
certificates, and (y) the Rights and beneficial interests therein will be
transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Company). The Company must promptly notify
the Rights Agent of such Distribution Date and request that its transfer agent
provide the Rights Agent with a list of the record holders of the Company's
Common Shares as of the close of business on the Distribution Date. As soon as
practicable after the Rights Agent receives such notice and list, the Rights
Agent will send to each record holder of the Common Shares as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more rights certificates, in substantially the
form of Exhibit B hereto (the "Rights Certificates"), evidencing one Right for
each Common Share so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per Common Share 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 in accordance with Section 14(a)
hereof. 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 to each record holder of the Common Shares as of
the close of business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for the Common Shares
outstanding as of the Record Date, until the Distribution Date, the registered
holders of the Common Shares shall also be the registered holders of the
beneficial interests in the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date (as such term is defined in Section 7
hereof), the transfer of any certificates representing Common Shares in respect
of which Rights have been issued shall also constitute the transfer of the
Rights associated with such Common Shares.
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<PAGE> 10
(c) Except as provided in Section 22 hereof, Rights shall be
issued in respect of all Common Shares that are issued (whether originally
issued or delivered from the Company's treasury) after the Record Date but prior
to the earlier of the Distribution Date or the Expiration Date. Certificates
representing such Common Shares and all certificates issued after the Record
Date upon the transfer of Common Shares outstanding on the Record Date shall
also be deemed to be certificates for beneficial interests in the associated
Rights, and shall bear the following legend:
"This certificate also evidences a beneficial interest in and
entitles the holder hereof to certain Rights as set forth in the Rights
Agreement between Scott Technologies, Inc., a Delaware corporation (the
"Company") and National City Bank, an Ohio corporation (the "Rights
Agent") dated as of December 15, 1998 (the "Rights Agreement"), and as
the same may be amended from time to time, 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 beneficial interests therein will no longer
be evidenced by this certificate. The Company will mail to the holder
of this certificate a copy of the Rights Agreement, as in effect on the
date of mailing, without charge promptly after receipt of a written
request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether currently held
by or on behalf of such Person or by any subsequent holder, may become
null and void."
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, beneficial
interests in the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone and registered
holders of Common Shares shall also be the registered holders of beneficial
interests in the associated Rights, and the transfer of any of such certificates
shall also constitute the transfer of beneficial interests in the Rights
associated with the Common Shares represented by such certificates.
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<PAGE> 11
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 or the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq") 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 entitle the holders thereof to purchase such number
of Preferred Share Fractions as shall be set forth therein at the price set
forth therein (such exercise price per Preferred Share Fraction, the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights that the Company knows are 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 oral or written plan, agreement, arrangement
or understanding regarding the transferred Rights or (B) a transfer that the
Board of Directors of the Company has determined is part of an oral or written
plan, agreement, arrangement or understanding that has as a primary purpose or
effect avoidance of Section 7(e) hereof, and provided that the Company shall
have notified the Rights Agent that this Section 4(b) applies, any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
7(e) of such Agreement."
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<PAGE> 12
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President, Chief Financial Officer or
General Counsel, 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 Agreement any such
Person was not such an officer.
(b) Following the Distribution Date and upon receipt by the
Rights Agent of the notice and list of record holders of the Rights referred to
in Section 3(a), the Rights Agent will keep or cause to be kept, at its office
or offices designated pursuant to Section 25 hereof, 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, the
Certificate number and the date of each of the Rights Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OF
STOLEN RIGHTS CERTIFICATES
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<PAGE> 13
(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 Preferred Share Fractions
(or, following a Triggering Event, Common Shares or 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 office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate or
Certificates 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 Rights Agent shall not be obligated to process the transaction until it has
received evidence that all taxes and charges arising from the transaction have
been paid. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security satisfactory to them, and 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.
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<PAGE> 14
(a) Subject to subsection (e), 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 executed, to the Rights Agent
at the office 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 Preferred Share Fractions (or Common
Shares, other securities, cash or other assets, as the case may be) as to which
such surrendered Rights are then exercisable (except as provided in Section
11(q) hereof), at or prior to the earliest of (i) the Close of Business on
December 28, 2003 (or, subject to Section 27 hereof, such later date no more
than five years there after or more than five years after the end of the most
recent five-year term as (A) may be fixed by the Board of Directors in its
discretion based upon its view as to the need for the Rights and after adjusting
the Purchase Price and any other terms to the extent appropriate and, after
submission to a stockholder vote (B) is not rejected by a negative vote of a
majority of the votes of the stockholders of the Company who are then eligible
to vote on such a matter) and are present in person or represented by proxy
(the "Final Expiration Date"), (ii) the consummation of a transaction
contemplated by Section 13(d) hereof, or (iii) the time at which the Rights are
redeemed or terminated as provided in Section 23 hereof (the earliest of (i),
(ii) and (iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each Preferred Share Fraction
pursuant to the exercise of a Right shall initially be $35, subject to
adjustment from time to time as provided in Sections 11 and 13(a) hereof, and
shall be payable in accordance with subsection (c).
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per Preferred Share Fraction (or Common Shares, other
securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable tax or governmental charge, the Rights Agent
shall, subject to Section 20(k) and Section 14(b) hereof, thereupon promptly
(i)(A) requisition from any transfer agent of the Preferred Shares (or make
available, if the Rights Agent is the transfer agent for the Common Shares)
certificates for the total number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all of
such requests, or (B) if the Company shall have elected to deposit some or all
of the total number of Preferred Shares issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of Preferred Share Fractions as are
to be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section 14 hereof,
(iii), after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Rights
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<PAGE> 15
Certificate, registered in such name or names as may be designated by such
holder, and (iv), after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. The payment of
the Purchase Price (as such amount may be adjusted pursuant to Section 11
hereof) may be made, at the election of the holder of the Rights Certificate,
(x) in cash or by certified bank check or money order 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 of the Company (including Common Shares), 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 necessary to
comply with this Agreement.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all of 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 6 and
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 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 oral or written plan,
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
an oral or written plan, agreement, 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 shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise; provided, however, that the Rights held by an
Acquiring Person, an Affiliate or Associate of an Acquiring Person or the
transferees of such persons referred to above shall not be voided unless the
Acquiring Person in question or an Affiliate or Associate of such Acquiring
Person shall be involved in the transaction giving rise to the Section 11(a)(ii)
Event. The Company shall notify the Rights Agent when this Section 7(e) applies
and shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but neither the Company
nor the Rights Agent shall have any liability to any holder of Rights
Certificates or other Person as a result of the Company's 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
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<PAGE> 16
holder upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) properly completed and
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall or the Rights Agent reasonably request.
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
canceled form, or, if surrendered to the Rights Agent, shall be canceled 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 canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK;
REGISTRATION OF SECURITIES.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available for issuance upon the exercise of outstanding Rights
as many of its authorized and unissued Preferred Shares (and, following the
occurrence of a Triggering Event, out of its authorized and unissued or
treasury Common Shares and/or other securities) or out of its authorized and
issued shares held in its treasury, which together, shall at all times after the
Distribution Date be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any stock
exchange, or quoted on Nasdaq, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares and other
securities 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 or statements
under the Act, with respect to the securities purchasable upon exercise of the
Rights on an appropriate form or forms, (ii) cause such
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<PAGE> 17
registration statement or statements to become effective as soon as practicable
after such filing, and (iii) cause such registration statement or statements 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 Expiration Date. 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 subsection (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. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may, by issuing a public announcement, temporarily suspend the exercisability of
the Rights until such time as a registration statement has been declared
effective. The Company shall notify the Rights Agent whenever it makes a public
announcement pursuant to this subsection (c) and give the Rights Agent a copy of
the announcement. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained, nor shall
the Rights be exercisable if the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared
effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares (and,
following a Triggering Event, Common Shares or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares or other securities (subject to payment of the Purchase Price), be duly
and validly authorized and issued and, with respect to Preferred Shares, Common
Shares or other shares of capital stock, fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and pay able any and all taxes and governmental charges that may be
payable in respect of the issuance or deli very of the Rights Certificates and
of any certificates for a number of Preferred Share Fractions (or Common Shares
or other securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax that 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 Preferred Share
Fractions (or Common Shares 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 Preferred Share Fractions (or Common Shares or
other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
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<PAGE> 18
SECTION 10. CAPITAL STOCK RECORD DATE. Each Person in whose
name any certificate for a number of Preferred Share Fractions (or Common
Shares 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 Preferred Share Fractions (or Common Shares 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 and
governmental charges) was made; provided, however, that if the date of such
surrender and payment is a date upon which the applicable transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or other wise) on, and such certificate shall be
dated, the next succeeding Business Day on which the applicable 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
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
SHARES OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares
and other securities covered by each Right and the number of Rights issued (or
to be issued) and outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on any security of the Company
payable in Preferred Shares, (B) sub divide the outstanding Preferred Shares,
(C) combine the outstanding Preferred Shares into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of Preferred Shares 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 adjusted Purchase Price, the aggregate number and kind of Preferred
Shares or capital stock, as the case may be, that, if such Right had been
exercised immediately prior to such date and at a time when the Preferred Share
transfer books were open, such holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
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<PAGE> 19
(ii) In the event that 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 Dividend Declaration Date, become an Acquiring Person, unless
the event causing such Person to become an Acquiring Person is a Section 13
Event, or is an acquisition of Common Shares pursuant to a tender offer or an
exchange offer for all outstanding Common Shares at a price or for consideration
and on terms determined by a majority of the Board of Directors, after receiving
advice from one or more nationally recognized investment banking firms, to be in
the best interests of the Company and its stockholders (a "Qualifying Offer"),
after taking into consideration all factors that the Board of Directors deems
relevant, including, without limitation, the long-term prospects and value of
the Company and the prices and terms that the Board of Directors believes, in
good faith, could reasonably be achieved if the Company or its assets were sold
on an orderly basis designed to realize maximum value, then, promptly following
the first occurrence of a Section 11(a)(ii) Event, proper provision shall be
made so that each holder of a Right (except 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 Preferred Share Fractions, such number of
Common Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of Preferred
Share Fractions 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 (as defined in and determined pursuant to Section
11(d) hereof) per Common Share on the date of such first occurrence (such number
of shares, the "Adjustment Shares").
(iii) In the event that the number of Common
Shares that are authorized by the Charter 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 fore going
subparagraph (ii) of this Section 11(a), the Company shall: (A) determine the
excess of the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over 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 Shares of the same or a
different class or other equity securities of the Company (including, without
limitation, preferred shares or units of preferred shares that a majority of the
Board of Directors in office at the time has deemed (based, among other things,
on the dividend and liquidation rights of such preferred shares) to have
substantially the same economic value as Common Shares (such preferred shares,
hereinafter referred to as "common share 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 a majority of the Board of Directors after considering the
advice of a nationally recognized investment banking firm selected by the Board
of Directors of the Company;
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<PAGE> 20
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, Common Shares (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 Common Shares 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 stockholder 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 sentences of this Section 11(a)(iii), the Company shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and 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 and to determine the value thereof. The
Company shall make a public announcement when the exercisability of the Rights
has been temporarily suspended, and again when such suspension is no longer in
effect. The Company shall notify the Rights Agent of the suspension of the
exercisability of the Rights, and provide the Rights Agent with a copy of such
public announcement. For purposes of this Section 11(a)(iii), the value of the
Common Shares shall be the current market price (as determined pursuant to
Section 11(d) hereof) per Common Share on the Section 11(a)(ii) Trigger Date and
the value of any "common share equivalent" shall be deemed to have the same
value as the Common Shares on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to holders of any security of the
Company entitling them to subscribe for or purchase (for a period expiring
within forty-five (45) calendar days after such record date) Preferred Shares
(or shares having the same rights, privileges and preferences as the Preferred
Shares ("equivalent prefer red shares")) or securities convertible into
Preferred Shares or equivalent preferred shares at a price per Preferred Share
or per equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the current market price (as determined pursuant to Section 11(d) hereof)
per Preferred Share on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Preferred Shares outstanding on such record date,
plus the number of Preferred Shares that the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares 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 Preferred Shares outstanding on
such record date, plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or
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<PAGE> 21
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 Company, the Rights
Agent and the holders of the Rights. Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price that 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 Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly dividend out of the earnings or retained earnings of the Company),
assets (other than a regular quarterly dividend referred to above or dividend
payable in Preferred Shares, but including any dividend payable in stock other
than Preferred Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as deter mined pursuant to Section 11(d)
hereof) per Preferred Share on such record date, less the then 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 and
shall be conclusive for all purposes) 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 Preferred Share and the denominator of which shall be
such current market price (as determined pursuant to Section 11(d) hereof) per
Preferred Share. 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 Common Share on any date shall be deemed to be the average of
the daily closing prices per Common Share for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to and not
including such date; and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per Common Share on any date shall
be deemed to be the average of the daily closing prices per Common Share for the
ten (10) consecutive Trading Days immediately following and not including such
date; provided, however, that in the event that the current market price per
Common Share is determined during a period following the announcement by the
issuer of such Common Share of (A) a dividend or distribution on such Common
Share payable in Common Shares or securities convertible into Common Shares
(other than the Rights), or (B) any subdivision, combination or reclassification
of such Common Shares, and prior to the expiration of
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<PAGE> 22
the requisite thirty (30) Trading Day or ten (10) Trading Day period, as set
forth above, after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the "current market price" shall be properly adjusted to take
into account 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 Common Shares are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Common Shares are listed or admitted
to trading or, if the Common Shares are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use, or, if on any such date the
Common Shares 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 Shares selected by the Board of Directors of the Company.
If on any such date no market maker is making a market in the Common Shares, 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 Common
Shares are listed or admitted to trading is open for the transaction of business
or, if the Common Shares are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Shares are 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 Preferred Share shall be determined in
the same manner as set forth above for the Common Shares in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the current market
price per Preferred Share cannot be determined in the manner provided above or
if the Preferred Shares are not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the "current market price" per
Preferred Share shall be conclusively deemed to be an amount equal to one
hundred (as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common Shares
occurring after the date of this Agreement) multiplied by the current market
price per Common Share. If neither the Common Shares nor the Preferred Shares
are publicly held or so listed or traded, "current market price" per Preferred
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.
For all purposes of this Agreement, the "current market price" of a Preferred
Share Fraction shall be equal to the "current market price" of one Preferred
Share divided by 100.
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<PAGE> 23
(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 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 Common Share or one
millionth of a Preferred Share, as the case may be. Notwithstanding the first
sentence of this subsection (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 that mandates such adjustment, or (ii) the Expiration Date.
(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 Shares, 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 Shares contained in
Sections 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
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Share
Fractions 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 sub sections (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
Preferred Share Fractions (calculated to the nearest one-one millionth of a
Preferred Share) obtained by (i) multiplying (x) the number of Preferred Share
Fractions covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Preferred Share Fractions 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 Preferred Share
Fractions 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-one
millionth of a Preferred Share) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately
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<PAGE> 24
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. The Company shall forward a copy of such public
announcement to the Rights Agent. The record date for the adjustment 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 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 Preferred Share Fractions issuable upon the exercise of
the Rights, the Rights Certificates thereto fore and thereafter issued may
continue to express the Purchase Price per Preferred Share Fraction and the
number of Preferred Share Fractions that 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 or par value, if any, of the
number of Preferred Share Fractions issuable upon exercise of the Rights, the
Company shall take any corporate action that may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue such number
of fully paid and nonassessable Preferred Share Fractions at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the number of Preferred Share Fractions and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the number of
Preferred Share Fractions and other capital stock or securities of the Company,
if any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment, and the Company
shall also deliver a copy of such bill or instrument to the Rights Agent.
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<PAGE> 25
(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 sub division of the Preferred Shares, (ii) issuance wholly for
cash of any Preferred Shares at less than the current market price, (iii)
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, (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 Shares shall not be
taxable to such stockholders.
(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 that would
substantially diminish 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 stockholders of the Person who
constitutes, or would constitute, 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 Dividend Declaration Date and prior to the Distribution Date (i) declare
a dividend on the outstanding Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares, or (iii) combine the outstanding Common
Shares into a smaller number of shares, the number of Rights associated with
each Common Share 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 Common Share following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each Common Share immediately prior to such event by a fraction the
numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and
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<PAGE> 26
the denominator of which shall be the total number of Common Shares outstanding
immediately following the occurrence of such event.
(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 Common Shares (or cash
or other securities or assets to be substituted for the Adjustment Shares
pursuant to subsection (a)(iii)) that would otherwise be purchasable under
subsection (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 subsection (q) shall be deemed to have been exercised in full and
shall be canceled.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES. Whenever an adjustment is made as provided in Section 11 or Section
13 hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief, reasonably detailed 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 Shares and the Common
Shares, 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 Common Shares) 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 a certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
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<PAGE> 27
(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 Common Shares 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, operating income, cash flow 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 and except as contemplated by subsection (d), proper provision
shall be made so that:
(i) each holder of a Right, except as provided in
Section 7(e) hereof or subsection (e), 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 Common Shares 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 Preferred Share Fractions for which a Right is
exercisable immediately prior to the first 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 shares
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 Common Share 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
of 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;
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(iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number
of its Common Shares) 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 Common Shares 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 subsection (a), the
Person that is the issuer of any securities into which Common
Shares of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of subsection (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 the case of either (i) or (ii) above, (1) if the
Common Shares of such Person are not at such time and have 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 Shares of which are and have 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 Shares
of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Shares having the
greatest aggregate market value.
(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 Shares that 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 Section 13 event, the Principal Party will
(i) prepare and file a registration statement
under the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such registration
statement to
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(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;
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the
Rights under blue sky laws of such jurisdiction, as may be
necessary or appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that 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 that have not theretofore been exercised shall thereafter become
exercisable solely in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 (other than this subsection (d)) shall not be applicable
to, and the term "Section 13 Event" shall not include, a transaction described
in subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person, or Persons who acquired Common Shares pursuant to a
Qualifying Offer pursuant to Section 11(a)(ii) (or a wholly owned Subsidiary of
any such Person or Persons), (ii) the price per Common Share offered in such
transaction is not less than the price per Common Share paid to all holders of
Common Shares whose shares were purchased pursuant to such tender offer or
exchange offer and (iii) the form of consideration being offered to the
remaining holders of Common Shares pursuant to such transaction is the same as
the form of consideration paid pursuant to such tender or exchange offer. Upon
consummation of any such transaction contemplated by this sub section (d), all
Rights hereunder shall expire.
(e) In the event that the Rights become exercisable under
subsection (a) (except as provided in subsection (d)), 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, 50% of the Common Shares of the Principal Party that would otherwise be
purchasable under subsection (a), in consideration of the surrender to the
Principal Party, as the successor to the Company under subsection (a)(ii), of
the Rights so exercised and without other payment of the Purchase Price. Rights
exercised under this subsection (e) shall be deemed to have been exercised in
full and shall be canceled.
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 that 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 subsection (a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price of the Rights for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares, except in each case for fractions which
are integral multiples of Preferred Shares. In lieu of fractional Prefer red
Shares that are not integral multiples of Preferred Shares, 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 a Preferred Share. For purposes of this subsection (b),
the current market value of one Preferred Share shall be the closing price of a
Preferred Share (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 Common Shares upon exercise
of the Rights or to distribute certificates that evidence fractional Common
Shares. In lieu of fractional Common Shares, 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 Common Share. For purposes of this subsection (c), the
current market value of one Common Share shall be the closing price of one
Common Share (as determined pursuant to Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
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(d) Whenever a payment for fractional Rights or fractional
shares is to be made by the Rights Agent, the Company shall (i) promptly prepare
and deliver to the Rights Agent a certificate setting forth in reasonable
detail the facts related to such payment and the process and/or formulas
utilized in calculating such payments, and (ii) provide sufficient monies to the
Rights Agent in the form of fully collected funds to make such payments. The
Rights Agent shall be fully protected in relying on such certificate and shall
have no duty with respect to and shall not be deemed to have knowledge of any
payment for fractional Rights or fractional shares under this Section 4 unless
and until it shall have received such a certificate and sufficient monies.
(e) The holder of a Right or a beneficial interest in a Right
by the acceptance thereof expressly waives his right to receive any fractional
Rights or any fractional Common Shares upon exercise of a Right, except as
permitted by this Section 14.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in 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 avail able to the holders of Rights or beneficial interests
therein, it is specifically acknowledged that the holders of Rights or
beneficial interests therein 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 or a beneficial interest in a Right, by accepting the same, consents and
agrees with the Company and the Rights Agent and with every other such holder
that:
(a) prior to the Distribution Date, beneficial interests in
the Rights will be transfer able only in connection with the transfer of Common
Shares;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purposes, duly 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
Share certificate) is registered as the absolute owner thereof and
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<PAGE> 32
of the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Share certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be required to be
affected by any notice to the contrary; 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 a beneficial interest in 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,
judgment or ruling (whether interlocutory or final) issued by a court of
competent jurisdiction or by a govern mental, 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, judgment or ruling lifted
or otherwise overturned as soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. 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
Preferred Share Fractions or any other securities of the Company (including the
Common Shares) that may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 24 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.
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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 preparation, execution,
delivery, amendment, administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent and its directors, officers, employees and agents,
for and to hold each of them 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 or any such indemnified party, for any action taken, suffered or
omitted by the Rights Agent in connection with the acceptance or administration
of this Agreement or the exercise of its duties here under, including without
limitation the costs and expenses of defending against any claim of liability in
the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with the acceptance and administration of this Agreement or in the
exercise of its duties hereunder in reliance upon any Rights Certificate or
certificate for Common Shares or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
stockholder 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 Person would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof.
(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.
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SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations, and only the duties and obligations,
expressly imposed by this Agreement (and no implied duties or obligations) upon
the following terms and conditions, by all of which the Company and the holders
of Rights Certificates or beneficial interests in the Rights, 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 written opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent, and the Rights Agent shall incur no liability for or in respect of, any
action taken, suffered or omitted by it in good faith and in accordance with
such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "current market price") be proved or established by the
Company prior to taking, 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, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization 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; provided, however that
the Rights Agent shall not be liable for special, indirect, incidental or
consequential loss or damage of any kind whatsoever, even if the Rights Agent
has been advised of the likelihood of such loss or damage.
(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 any provision 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 this Agreement or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights
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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 Common Shares to be
issued pursuant to this Agreement or any Rights Certificate or as to whether any
Common Shares or Preferred Shares 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
any one of the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and such instructions shall be full authorization
and protection for the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted to be taken
by it in good faith in accordance with instructions of any such officer. The
Rights Agent may conclusively rely on the most recent instructions provided to
it by any such officer.
(h) The Rights Agent and any stockholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Agreement and none of such actions shall constitute
a breach of trust. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other Person or legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company or any other Person
resulting from any such act, default, neglect or misconduct, absent gross
negligence, bad faith or willful misconduct in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if it believes that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
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(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 or 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' prior written notice mailed to the Company and
to each transfer agent of the Common Shares and Preferred Shares by registered
or certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' prior written notice mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares and Preferred Shares, by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 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 Person organized, doing business and
in good standing under the laws of the United States or of any state, having a
principal office in the State of Ohio, that is authorized by law to exercise
stockholder services and stock transfer powers and is subject to supervision or
examination by federal or state authority and that 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 of any such Person. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and Preferred Shares and mail a
notice thereof in writing to the registered holders of the Rights Certificates
or, prior to the Distribution Date, to the registered holders of the Common
Shares. In case at the time such successor Rights Agent shall succeed to the
agency and trust created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of 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. Failure to give any
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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, sale or delivery of Common Shares
following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to Common Shares so issued, sold or
delivered pursuant to the exercise of stock options, stock appreciation rights,
grants or awards outstanding on the Distribution Date under any benefit plan or
arrangement for employees or directors, or upon the exercise, conversion or
exchange of securities outstanding on the Record Date or 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 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.
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(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 a 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 Close of Business on the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at
a redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price") and the Company may, at its option, pay
the Redemption Price either in Common Shares (based on the "current market
price", as defined in Section 11(d)(i) hereof, of the Common Shares at the time
of redemption) or cash; 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) of this proviso, then such authorization shall
require the concurrence of a majority of the members of the Board of Directors
of the Company; and 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) an Acquiring Person
shall have transferred or otherwise disposed of a number of Common Shares 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 or the Company shall have issued additional equity securities,
in either instance such that such Person is thereafter a Beneficial Owner of 15%
or less of the outstanding Common Shares, and (ii) there is no other Acquiring
Person immediately following the occurrence of the event described in clause
(i), 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, without any notice, or
further action, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by, in the case of notice to holders, 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 Shares. Any notice that is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
SECTION 24. EXCHANGE.
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(a) The Board of Directors of the Company may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Not withstanding the
foregoing, the Company's Board of Directors shall not be empowered to effect
such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any Person organized, appointed or established by the Company for
or pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of the
holders of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall promptly notify the
Rights Agent of any such exchange. The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last addresses
as they appear upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the Common Shares for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares authorized and not outstanding to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this subsection (d), the current market value of a whole Common
Share shall be the closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
-36-
<PAGE> 40
SECTION 25. 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 Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular quarterly dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, or (iii) to effect any reclassification of its Preferred Shares
(other than a reclassification involving only the subdivision of outstanding
Preferred Shares), 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 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 the Rights Agent
and to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 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 Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of Preferred Shares 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 Preferred Shares, whichever shall be the
earlier.
(b) Upon the occurrence of a Section 11(a)(ii) Event, (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 26 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 Shares shall be
deemed thereafter to refer to Common Shares and/or, if appropriate, other
securities.
-37-
<PAGE> 41
SECTION 26. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Scott Technologies, Inc.
5875 Landerbrook Drive
Suite 250
Mayfield Heights, Ohio 44124
Attention: 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:
National City Bank
P.O. Box 92301
Location 5352
Cleveland, Ohio 44139
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 Common
Shares) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the
Distribution Date and subject to the penultimate sentence of this Section 27,
the Company may and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing Common Shares. From and after the
Distribution Date and subject to the penultimate sentence of this Section 27,
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 shorten or lengthen any time period hereunder,
or (iv) to change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable and that shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of any such Person); provided, this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) 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
-38-
<PAGE> 42
clarifying the rights of, and/or the benefits to, the holders of Rights (other
than an Acquiring Person or an Affiliate or Associate of any such Person). Upon
the delivery of a certificate from an appropriate officer of the Company that
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, and if requested by the Rights Agent, an opinion of counsel,
the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, (i) no supplement or
amendment shall be made that changes the Redemption Price, the Final Expiration
Date, the Purchase Price or the number of Preferred Share Fractions for which a
Right is exercisable unless any such change is made in connection with an
amendment to extend the term of this Agreement by an additional five years, (ii)
any supplement or amendment shall require the concurrence of a majority of the
Board of Directors if: (x) such supplement or amendment occurs on or after the
time a Person becomes an Acquiring Person, or (y) such supplement or amendment
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, or may consider
taking, any action that would result in such Person becoming an Acquiring Person
or that 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 14D-1 (or any successor
form) filed with the Securities and Exchange Commission for all outstanding
Common Shares not beneficially owned by such Person (or by its Affiliates or
Associates), and (iii) no supplement or amendment that changes or increases the
obligations and duties of the Rights Agent under this Agreement shall be
effective without the consent of the Rights Agent. Prior to the Distribution
Date, the interests of the beneficial owners of Rights shall be deemed
coincident with the interests of the holders of Common Shares.
SECTION 28. 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 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS, ETC. For all purposes of this Agreement, any calculation of the
number of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Shares 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 shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board 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 administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend or supplement the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y)
-39-
<PAGE> 43
below, all omissions with respect to the foregoing) that are done or made by the
Board in good faith, shall (x) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights and all other Persons, and (y) not
subject the Board of Directors to any liability to the holders of the Rights.
For purposes of this Agreement, the Rights Agent shall be allowed to assume that
all such actions, calculations, interpretations and determinations have been
done or made by the Board in good faith.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common Shares) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Shares).
SECTION 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable for any purpose or under
any set of circumstances or as applied to any Person, such invalid, void or
unenforceable term, provision, covenant or restriction shall continue in effect
to the maximum extent possible for all other purposes, under all other
circumstances and as applied to all other Persons; and 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 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.
Without limiting the foregoing, if any provisions requiring that a determination
be made by less than the entire Board (or at a time or with the concurrence of a
group of directors consisting of less than the entire Board) is held by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by the Board in accordance
with applicable law and the Company's certificate of incorporation and by-laws.
SECTION 32. 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 State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such jurisdiction applicable to
contracts made and to be performed entirely within such jurisdiction; except
that all provisions regarding the rights, duties and obligations of the Rights
Agent shall by governed by and construed in accordance with the laws of the
State of Ohio applicable to contracts made and to be performed entirely within
such jurisdiction.
-40-
<PAGE> 44
SECTION 33. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
-41-
<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
-------------------------------------
SCOTT TECHNOLOGIES, INC.
By:
Name:
Title:
NATIONAL CITY BANK
By:
Name: J. Dean Presson
Title: Vice President
-42-
<PAGE> 46
EXHIBIT A
---------
RESOLUTION OF THE BOARD OF DIRECTORS OF
SCOTT TECHNOLOGIES, INC.
ESTABLISHING AND DESIGNATING
SERIES A JUNIOR PARTICIPATING PREFERRED SHARES
AS A SERIES OF THE PREFERENCE STOCK
RESOLVED, that pursuant to the authority expressly vested in the Board
of Directors of Scott Technologies, Inc. (the "Corporation") by Division I of
Article Fourth of the Amended and Restated Certificate of Incorporation of the
Corporation, the Board of Directors hereby fixes and determines the voting
rights, designations, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights and other special or relative rights of
the first series of the Preference Stock, par value $1.00 per share, which shall
consist of 500,000 shares and shall be designated as Series A Junior
Participating Preferred Shares (the "Series A Preferred Shares").
Special Terms of the Series A Preferred Shares
- ----------------------------------------------
SECTION 1. DIVIDENDS AND DISTRIBUTIONS.
<PAGE> 47
(a) The rate of dividends payable per share of Series A Preferred
Shares on the first day of January, April, July and October in each year or such
other quarterly payment date as shall be specified by the Board of Directors
(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 the Series A Preferred Shares,
shall be (rounded to the nearest cent) equal to the greater of (i) $15.00 or
(ii) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in cash, based upon the fair market value at
the time the non-cash dividend or other distribution is declared or paid as
determined in good faith by the Board of Directors) of all non-cash dividends or
other distributions other than a dividend payable in shares of common stock of
the Corporation, par value $.10 per share (the "Common Stock"), or a subdivision
of the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of the Series A
Preferred Shares. Dividends on the Series A Preferred Shares shall be paid out
of funds legally available for such purpose. In the event the Corporation shall
at any time after December 15, 1998 (the "Rights Declaration Date") (i) declare
any dividend on 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, then in each such case the
amounts to which holders of Series A Preferred Shares were entitled immediately
prior to such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying each such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Dividends shall begin to accrue and be cumulative on outstanding
Series A Preferred Shares from the Quarterly Dividend Payment Date next
preceding the date of issue of such Series A Preferred Shares, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of Series A Preferred Shares 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 Series A Preferred Shares 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.
SECTION 2. VOTING RIGHTS. In addition to any other voting rights
required by law, the holders of Series A Preferred Shares shall have the
following voting rights:
A-3
<PAGE> 48
(a) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Shares shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on 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, then in each
such case the number of votes per share to which holders of Series A Preferred
Shares 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 Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) In the event that dividends upon the Series A Preferred Shares
shall be in arrears to an amount equal to six full quarterly dividends thereon,
the holders of such Series A Preferred Shares shall become entitled to the
extent hereinafter provided to vote noncumulatively at all elections of
directors of the Corporation, and to receive notice of all stockholders'
meetings to be held for such purpose. At such meetings, to the extent that
directors are being elected, the holders of such Series A Preferred Shares
voting as a class shall be entitled solely to elect two members of the Board of
Directors of the Corporation; and all other directors of the Corporation shall
be elected by the other stockholders of the Corporation entitled to vote in the
election of directors. Such voting rights of the holders of such Series A
Preferred Shares shall continue until all accumulated and unpaid dividends
thereon shall have been paid or funds sufficient therefor set aside, whereupon
all such voting rights of the holders of shares of such series shall cease,
subject to being again revived from time to time upon the reoccurrence of the
conditions described above as giving rise thereto.
At any time when such right to elect directors separately as a class
shall have so vested, the Corporation may, and upon the written request of the
holders of record of not less than 15% of the then outstanding total number of
shares of all the Series A Preferred Shares having the right to elect directors
in such circumstances shall, call a special meeting of holders of such Series A
Preferred Shares for the election of directors. In the case of such a written
request, such special meeting shall be held within ninety (90) days after the
delivery of such request, and, in either case, at the place and upon the notice
provided by law and in the By-laws of the Corporation; provided, that the
Corporation shall not be required to call such a special meeting if such request
is received less than one hundred twenty (120) days before the date fixed for
the next ensuing annual or special meeting of stockholders of the Corporation.
Upon the mailing of the notice of such special meeting to the holders of such
Series A Preferred Shares, or, if no such meeting be held, then upon the mailing
of the notice of the next annual or special meeting of stockholders for the
election of directors, the number of directors of the Corporation shall be
increased to the extent, but only to the extent, necessary to provide sufficient
vacancies to enable the holders of such Series A Preferred Shares to elect the
two directors hereinabove provided for, and all such vacancies shall be filled
only by vote of the holders of such Series A Preferred Shares as hereinabove
provided. Whenever the number of directors of the Corporation shall have been
increased, the number as so increased may thereafter be further increased or
decreased in such manner as may be permitted by the By-laws and without
A-4
<PAGE> 49
the vote of the holders of Series A Preferred Shares, provided that no such
action shall impair the right of the holders of Series A Preferred Shares to
elect and to be represented by two directors as herein provided.
So long as the holders of Series A Preferred Shares are entitled
hereunder to voting rights, any vacancy in the Board of Directors caused by the
death or resignation of any director elected by the holders of Series A
Preferred Shares, shall, until the next meeting of stockholders for the election
of directors, in each case be filled by the remaining director elected by the
holders of Series A Preferred Shares having the right to elect directors in such
circumstances.
Upon termination of the voting rights of the holders of Series A
Preferred Shares, the terms of office of all persons who shall have been elected
directors of the Corporation by vote of the holders of Series A Preferred Shares
or by a director elected by such holders shall forthwith terminate.
(c) Except as otherwise provided herein, in the Amended and Restated
Certificate of Incorporation of the Corporation, or by law, the holders of
Series A Preferred Shares and the holders of Common Stock (and the holders of
shares of any other series or class entitled to vote thereon) shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
SECTION 3. REACQUIRED SHARES. Any Series A Preferred Shares purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued Preference Stock
and may be reissued as part of a new series of Preference Stock to be created by
resolution or resolutions of the Board of Directors.
SECTION 4. LIQUIDATION, DISSOLUTION OR WINDING UP. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of Series A Preferred Shares shall be entitled to
receive the greater of (a) $40.00 per share, plus accrued dividends to the date
of distribution, whether or not earned or declared, or (b) an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the out standing shares of Common Stock into a smaller number of shares,
then in each such case the amount to which holders of Series A Preferred Shares
were entitled immediately prior to such event pursuant to clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
A-5
<PAGE> 50
SECTION 5. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the Series A
Preferred Shares 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 Common Stock is changed or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
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, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series A Preferred Shares shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
SECTION 6. NO REDEMPTION. The Series A Preferred Shares shall not be
redeemable.
SECTION 7. RANKING. The Series A Preferred Shares shall rank junior to
all other series of the Corporation's Preference Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
SECTION 8. FRACTIONAL SHARES. Series A Preferred Shares 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, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of Series A Preferred Shares.
EXHIBIT B
---------
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R- ___________ Rights
A-6
<PAGE> 51
NOT EXERCISABLE AFTER DECEMBER 28, 2003 (UNLESS EXTENDED PURSU ANT TO THE
TERMS OF THE RIGHTS AGREEMENT) OR AFTER EARLIER REDEMPTION BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [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 bracketed portion of the legend shall be inserted only if applicable
and shall replace the preceding sentence.
<PAGE> 52
SCOTT TECHNOLOGIES, INC.
RIGHTS CERTIFICATE
This certifies that ___________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of December 15, 1998 (the "Rights Agreement"), between Scott
Technologies, Inc., a Delaware corporation (the "Company"), and National City
Bank, an Ohio corporation (the "Rights Agent"), to purchase from the Company at
any time prior to 5:00 P.M. Ohio time on December 28, 2003 (or, subject to
Section 27 of the Rights Agreement, such later date no more than five years
thereafter or more than five years after the end of the most recent five year
term as (A) may be fixed by the Board of Directors in its discretion based upon
its view as to a need for the Rights and, after submission to a stockholder vote
(B) is not rejected by a negative vote of a majority of a quorum of the votes of
the stockholders of the Company who are then eligible to vote on such a matter)
at the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-hundredth of a fully paid, nonassessable
share of Series A Junior Participating Preferred Stock (the "Preferred Share")
of the Company, at a purchase price (the "Purchase Price") of $35.00 per one
one-hundredth of a Preferred Share (such fraction, a "Preferred Share
Fraction"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly executed. Except as
provided in Sections 11(q) and 13(e) of the Rights Agreement, the Purchase Price
shall be paid, at the option of the Company, in cash or Common Stock, of the
Company (the "Common Shares") having an equivalent value. The number of Rights
evidenced by this Rights Certificate (and the number of Preferred Share
Fractions that may be purchased upon exercise thereof) set forth above, and the
Purchase Price per Preferred Share Fraction set forth above, are the number and
Purchase Price as of December 28, 1998, based on the Preferred Shares as
constituted at such date.
Except as otherwise provided in the Rights Agreement, upon the
occurrence of any Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or Associate or Affiliate or Associate of any
Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any Acquiring Person (of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii), under
certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of any such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of Preferred Shares or other securities that may be purchased upon the
exercise of the Rights evidenced
B-3
<PAGE> 53
by this Rights Certificate are subject to modification and adjustment upon the
happening of certain events, including Triggering Events and a Section 11(a)(ii)
Event.
This Rights Certificate is subject to all of the terms, covenants and
restrictions of the Rights Agreement, which terms, covenants and restrictions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Share Fractions as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right at any time prior to the earlier of the Close of
Business (as such term is defined in the Rights Agreement) on (i) the tenth day
following the Stock Acquisition Date (as such time period may be extended
pursuant to the Rights Agreement), and (ii) the Final Expiration Date.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of a Preferred Share, which may, as the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Shares or
of any other securities of the Company (including Common Shares) that may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), 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.
B-4
<PAGE> 54
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Company and its
corporate seal.
- ------------------------------------------ ----------------------------------
Dated as of ____________, ____
ATTEST SCOTT TECHNOLOGIES, INC.
By:
Secretary Title:
-----------------------------------
Countersigned
NATIONAL CITY BANK
By:
Authorized Signature
B-5
<PAGE> 55
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _______________________________________ hereby sells, assigns
and transfers unto ______________________________________________________
(Please print name and address of transferee)
__________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________ Attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _________________, ____
-----------------------
Signature
Signature Guaranteed:
B-6
<PAGE> 56
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ________________, ____ ___________________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
B-7
<PAGE> 57
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: SCOTT TECHNOLOGIES, INC.:
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Rights Certificate to purchase the Preferred Shares issuable
upon the exercise of the Rights (or Common Shares or such other securities of
the Company or of any other person that may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: _____________, ____
-------------------------
Signature
Signature Guaranteed:
B-8
<PAGE> 58
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________, ____ _________________________
Signature
Signature Guaranteed:
NOTICE
------
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-8
<PAGE> 59
EXHIBIT C
---------
SUMMARY OF RIGHTS
On September 23, 1998 the Board of Directors of Scott Technologies,
Inc. (the "Company") approved, contingent upon approval by the Company's
stockholders of amendments to the Company's Amended and Restated Certificate of
Incorporation (the "Charter") eliminating the dual class common stock structure
and the substantial stockholder provision, a Rights Agreement dated as of the
date of the effectiveness of the Charter amendments (the "Rights Agreement"). On
December 15, 1998, the Board gave final approval to the Rights Agreement and in
connection therewith, declared a dividend distribution of one Right for each
outstanding share of the Company's Common Stock, par value $.10 per share (each,
a "Common Share"), to stockholders of record at the close of business on
December 28, 1998 (the "Record Date"). Each Right will entitle the registered
holder to purchase from the Company one one-hundredth (1/100) of a share (a
"Preferred Share Fraction") of the Series A Junior Participating Preferred
Shares, par value $1.00 per share (the "Preferred Shares"), or a combination of
securities and assets of equivalent value, at a per unit, adjustable Purchase
Price of $35. The description and terms of the Rights are set forth in the
Rights Agreement.
Initially, ownership of the Rights will be evidenced by the Common
Share certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Shares on the "Distribution Date," the earlier of (i) ten (10) business days
following a determination by the Board of Directors that a person or group of
affiliated or associated persons (an "Acquiring Person"1/) has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding Common Shares (the "Stock Acquisition Date"), or (ii) ten (10)
business days following the commencement of a tender offer or exchange offer
that will result in a person or group beneficially owning 15% or more of the
outstanding Common Shares.
- -----------------
1/ Common Shares continuously owned by holders of more than 5% of the
Company's outstanding shares of Class A Common Stock or Class B Common
Stock since September 23, 1998 will be excluded from future calculations of
their share ownership for the purposes of determining whether any such
person has become an Acquiring Person provided that, prior to final
adoption of the Rights Agreement, each such person entered into an
agreement with the Company in which such person certified to the Company
such person's stock ownership as of September 23, 1998 and agreed, among
other things, not to enter into a proxy contest with the Company or seek to
acquire the Company in a hostile takeover.
<PAGE> 60
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Share certificates, (ii) new Common Share certificates issued after the Record
Date will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Shares
outstanding will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate.
The Rights will not be exercisable until the Distribution Date and will
expire at the close of business on December 28, 2003 (or, subject to Section 27
of the Rights Agreement, such later date that would be no more than five years
thereafter UNLESS, prior to such date, (A) a majority of the members of the
Board of Directors has voted to amend the Rights Agreement to extend the
effectiveness of the Rights Agreement for an additional five year period and to
provide for a new Purchase Price, AND (B) such extension has been submitted to a
vote of the stockholders of the Company and such extension has not been rejected
by a negative vote of a majority of a quorum of the votes of stockholders who
are then eligible to vote on such a matter) or unless earlier redeemed by the
Company as described below or unless a transaction under Section 13(d) of the
Rights Agreement has occurred.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Shares as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only Common Shares issued after the Record Date and
prior to the Distribution Date will be issued with Rights.
Except in the circumstances described below, after the Distribution
Date each Right will be exercisable for a Preferred Share Fraction. Each
Preferred Share Fraction will carry voting and dividend rights that are intended
to produce the equivalent of one Common Share. The voting and dividend rights of
the Preferred Shares will be subject to adjustment in the event of dividends,
subdivisions and combinations with respect to the Common Shares of the Company.
In lieu of issuing certificates for Preferred Share Fractions that are less than
an integral multiple of one Preferred Share (i.e., 100 Preferred Share
Fractions), the Company will pay cash representing the current market value of
the Preferred Share Fractions.
In the event that, at any time following the Stock Acquisition Date, a
Person becomes an Acquiring Person other than pursuant to a tender offer or
exchange offer that provides fair value to all stockholders and therefore has
been deemed to be a "Qualifying Offer," each holder of a Right will thereafter
have the right to receive, upon exercise, Common Shares (or, in certain
circumstances, cash, property or other securities of the Company) having a value
equal to two times the exercise price of the Right. In lieu of requiring payment
of the Purchase Price upon exercise of the Rights following any such event, the
Company may permit the holders simply to surrender the Rights, in which event
they will be entitled to receive Common Shares (and other property, as the case
may be) with a value of 50% of what could be purchased by payment of the full
Purchase Price. Notwithstanding any of the foregoing, following the occurrence
of an event described in the first sentence of this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agree-
<PAGE> 61
ment) have been, beneficially owned by any Acquiring Person who was involved in
the transaction giving rise to any such event, will be null and void. However,
Rights will not be exercisable following the occurrence of any of the events set
forth above until such time as the Rights are no longer redeemable by the
Company as set forth below.
For example, at an exercise price of $35 per Right, each Right not
otherwise voided following an event set forth in the preceding paragraph will
entitle its holder to purchase $70 worth of Common Shares (or other
consideration, as noted above) for $35. Assuming that the Common Shares have a
per share value of $10 at such time, the holder of each valid Right will be
entitled to purchase seven Common Shares for $35. Alternatively, the Company may
permit the holder to surrender each Right in exchange for three and a half
Common Shares (with a value of $35) without the payment of any consideration
other than the surrender of the Right.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation (other than a
merger that is described in or that follows a Qualifying Offer), or (ii) 50% or
more of the Company's assets or earning power are sold or transferred, each
holder of a Right (except Rights that previously have been voided as set forth
above) will thereafter have the right to receive, upon exercise, common shares
of the acquiring company having a value equal to two times the exercise price of
the Right. Again, provision may be made to permit surrender of the Rights in
exchange for one-half of the value otherwise purchasable. The events set forth
in this paragraph and in the second preceding paragraph are referred to as the
"Triggering Events."
The Purchase Price payable, and the number of Preferred Share Fractions
or other securities or property issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) if holders of the Preferred Shares are granted certain rights or
warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No Preferred Share Fractions will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of the exercise.
At any time until ten (10) days following the Stock Acquisition Date,
the Company can redeem the Rights in whole, but not in part, at a price of $.001
per Right. That ten (10) day redemption period can be extended by the Board of
Directors so long as the Rights are still redeemable. Immediately upon the
action of the Board of Directors ordering redemption of the Rights, the Rights
C-3
<PAGE> 62
will terminate and the only right of the holders of Rights will be to receive
the $.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Preferred Shares (or Common Shares or other consideration) of
the Company or for common shares of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement can be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement can be amended by the
Board of Directors in order to cure any ambiguity, to make changes that do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; PROVIDED, however, that no amendment to adjust the time period
governing redemption can be made at such time as the Rights are not redeemable.
C-4
<PAGE> 1
Exhibit 10
AMENDED AND RESTATED
SCOTT TECHNOLOGIES, INC.
KEY EMPLOYEES' STOCK OPTION PLAN
Scott Technologies, Inc. hereby amends and restates its Key Employees'
Stock Option Plan as set forth below.
1. Definitions. The following terms shall have the meanings set forth
below whenever used in this instrument:
(a) The word "Board" shall mean the Board of Directors of the Company.
(b) The word "Code" shall mean the United States Internal Revenue Code
of 1986, as amended, or successor provisions of future United States
revenue laws (Title 26 of the United States Code).
(c) The word "Committee" shall mean the Stock Option Committee of the
Board.
(d) The words "Common Stock" shall mean the Common stock, $0.10 par
value, of the Company.
(e) The word "Company" shall mean Scott Technologies, Inc., a Delaware
corporation, and any successor thereto which shall maintain this Plan.
(f) The word "Disability" shall mean the Optionee's inability to engage
in substantial gainful activity for the Company by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months, as determined by the Committee pursuant
to written certification of such Disability from a physician acceptable to
the Committee.
(g) The words "Incentive Stock Option" shall mean any option which
qualifies as an Incentive Stock Option under the terms of Section 422 of
the Code.
(h) The words "Key Employee" shall mean any person who is determined by
the Committee to be a high-level executive officer or other valuable
managerial or technical employee of either the Company or any Subsidiary.
(i) The word "Optionee" shall mean any Employee to whom a stock option
has been granted pursuant to this Plan.
(j) The word "Plan" shall mean this instrument, the Scott Technologies,
Inc. Key Employees' Stock Option Plan, as originally executed, as amended
and restated herein and as it may be amended hereafter.
<PAGE> 2
(k) The word "Subsidiary" shall mean any corporation at least 50% of
the common stock of which is owned directly or indirectly by the Company.
(l) The words "Substantial Stockholder" shall mean any Employee who
owns directly and through attribution more than 10% of the total combined
voting power of all classes of stock of either the Company or any
Subsidiary. Ownership shall be determined in accordance with Section 424(d)
of the Code and lawful applicable regulations.
(m) The words "Transferee" shall mean any person to whom a stock option
which is not an Incentive Stock Option has been transferred pursuant to
Subsection 7(c).
2. Purpose of the Plan. The purpose of the Plan is to provide Key Employees
of the Company and its Subsidiaries with greater incentive to serve and promote
the interests of the Company and its stockholders. The premise of the Plan is
that, if such persons acquire a proprietary interest in the business of the
Company or increase such proprietary interest as they may already hold, then the
incentive of such persons to work toward the Company's continued success will be
commensurately increased. Accordingly, the Company will, from time to time
during the effective period of the Plan, grant to such Employees as may be
selected to participate in the Plan options to purchase Common Stock on the
terms and subject to the conditions set forth in the Plan. Options may be either
Incentive Stock Options or non-qualified stock options.
3. Effective Dates. The Plan originally became effective on October 20,
1994. This amendment and restatement of the Plan shall become effective on
December 15, 1998, subject to approval of a majority of the votes of the holders
of all classes of Common Stock present in person or represented by proxy at a
duly constituted meeting of stockholders of the Company voting together and not
as separate classes. In the event that the foregoing condition is not satisfied
within twelve (12) months after the date this amendment and restatement of the
Plan is adopted, this amendment and restatement of the Plan and any options
granted hereunder after December 15, 1998 shall be null and void. If, however,
this amendment and restatement of the Plan is approved, subject to the
provisions of Section 11, no further stockholder approval shall be required with
respect to the granting of any options pursuant to the Plan. This amendment and
restatement of the Plan shall not affect any options granted under the Plan
prior to December 15, 1998.
4. Administration of the Plan. The Plan shall be administered by the
Committee. The Committee shall consist of no fewer than two (2) members, who
shall be designated by and be members of the Board. Each member of the Committee
shall be a "disinterested person" within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 or any amendment of or successor to
such rule as may be in effect from time to time and shall be an "outside
director" as defined pursuant to Section 162(m) of the Code. A majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by all of the members, shall be acts of the Committee. Subject to the terms and
conditions of the Plan, the Committee shall have full and final authority in its
absolute discretion:
2
<PAGE> 3
(a) To select the Key Employees to whom options will be granted;
(b) To determine the number of shares of Common Stock subject to any
option;
(c) To determine the time or times when options will be granted;
(d) To determine the option price of shares of Common Stock subject to
an option;
(e) To determine the time or times when each option may be exercised
and the duration of the exercise period;
(f) To determine at the time of grant of an option whether and to what
extent such option is an Incentive Stock Option under Section 422 of the
Code and regulations thereunder as the same or any successor statute or
regulations may at the time be in effect;
(g) To determine whether stock appreciation rights shall be made part
of any option grant pursuant to Section 8 hereof, the method of valuing the
stock appreciation rights and whether the stock appreciation rights may be
exercised in lieu of or in addition to the related option;
(h) To prescribe the form of the option agreements governing the
options which are granted under the Plan and to set the provisions of such
option agreements as the Committee may deem necessary or desirable provided
such provisions are not contrary to the terms and conditions of either the
Plan or, where the option is an Incentive Stock Option, Section 422 of the
Code and regulations thereunder as the same or any successor statute or
regulations may at, the time be in effect;
(i) To adopt, amend and rescind such rules and regulations as, in the
Committee's opinion, may be advisable in the administration of the Plan;
(j) To construe and interpret the Plan, the rules and regulations and
the instruments evidencing options granted under the Plan and to make all
other determinations deemed necessary or advisable for the administration
of the Plan;
(k) To authorize the transfer to a Transferee of an option which is not
an Incentive Stock Option;
(l) To determine the time or times when an option may be exercised by a
Transferee and the duration of the exercise period; and
(m) To rescind option grants to the extent necessary to enable the
Company to be a party to a business combination which is to be accounted
for under the pooling-of-interests method of accounting.
3
<PAGE> 4
Any decision made or action taken by the Committee in connection with the
administration, interpretation, or implementation of the Plan and of its rules
and regulations, shall, to the extent permitted by law, be conclusive and
binding upon all Optionees under the Plan and upon any person claiming under or
through such an Optionee. Neither the Committee nor any of its members shall be
liable for any act taken by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.
5. Persons Eligible for Options. Subject to the restrictions herein
contained, options may be granted from time to time in the discretion of the
Committee only to such Key Employees, as designated by the Committee, whose
initiative and efforts contribute or may be expected to contribute to the
continued growth and future success of the Company and/or its subsidiaries.
Notwithstanding the preceding sentence, a Key Employee who renounces in writing
any right he may have to receive stock options under the Plan shall not be
eligible to receive any stock options under the Plan. No option shall be granted
to any Key Employee during any period of time when he is on leave of absence.
The Committee may grant more than one option, with or without stock appreciation
rights, to the same Key Employee.
6. Shares Subject to the Plan. Subject to the provisions of Section 8
concerning payment for stock appreciation rights in shares of Common Stock and
subject to the provisions of the next succeeding paragraph of this Section 6,
the aggregate number of shares of Common Stock for which options may be granted
under the Plan shall be 3,000,000 shares of Common Stock. Either treasury or
authorized and unissued shares of Common Stock, or both, in such amounts, within
the maximum limits of the Plan, as the Committee shall from time to time
determine, may be so issued. All shares of Common Stock which are the subject of
any lapsed, expired or terminated options may be made available for reoffering
under the Plan to any Key Employee. If an option granted under this Plan is
exercised pursuant to the terms and conditions determined by the Committee under
Subsection 7(d), any shares of Common Stock which are the subject thereof shall
not thereafter be available for reoffering under the Plan to any Employee. If a
stock appreciation right granted in conjunction with an option pursuant to
Section 8 can only be exercised in lieu of exercise of the related option, and
the stock appreciation right is thereafter exercised in whole or in part, then
the option or the portion thereof with respect to which the stock appreciation
right was exercised shall be deemed to have been exercised and the shares of
Common Stock which otherwise would have been issued upon exercise of such
option, to the extent not used in payment for the stock appreciation right, may
be made available for reoffering under the Plan to any Key Employee, except as
provided in Subsection 7(f).
In the event that subsequent to the date of adoption of the Plan by the
Board the outstanding shares of Common Stock are, as a result of a stock split,
stock dividend, combination or exchange of shares, exchange for other
securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization, spin-off, split-off, split-up or other such
change (including, without limitation, any transaction described in Section
424(a) of the Code) or a special dividend or other distribution to the Company's
stockholders, increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company,
then (i) there shall
4
<PAGE> 5
automatically be substituted for each share of Common Stock subject to an
unexercised option granted under the Plan and each share of Common Stock
available for additional grants of options under the Plan the number and kind of
shares of stock or other securities into which each outstanding share of Common
Stock shall be exchanged, (ii) the option price per share of Common Stock or
unit of securities shall be increased or decreased proportionately so that the
aggregate purchase price for the securities subject to the option shall remain
the same as immediately prior to such event, and (iii) the Committee shall make
such other adjustments to the securities subject to options, the provisions of
the Plan, and option agreements as may be appropriate or equitable, in order to
prevent dilution or enlargement of option rights and in compliance with the
provisions of Section 424(a) of the Code to the extent applicable and any such
adjustment shall be final, binding and conclusive as to each Optionee. Any such
adjustment may, in the discretion of the Committee, provide for the elimination
of fractional shares.
7. Option Provisions.
(a) Option Price. The option price per share of Common Stock which is
the subject of an Incentive Stock Option under the Plan shall be determined
by the Committee at the time of grant but shall not be less than one
hundred percent (100%) of the fair market value of a share of Common Stock
on the date the Incentive Stock Option is granted; provided, however, that
if an Employee to whom an Incentive Stock Option is granted is at the time
of the grant a Substantial Stockholder, the option price per share of
Common Stock shall be determined by the Committee but shall never be less
than one hundred ten percent (110%) of the fair market value of a share of
Common Stock on the date the option is granted. The option price per share
of Common Stock under each option granted pursuant to the Plan which is not
an Incentive Stock Option shall be determined by the Committee at the time
of grant, and may be above or below the fair market value of a share of
Common Stock on the date the option is granted. Such fair market value
shall be determined in accordance with procedures to be established by the
Committee. The date on which the Committee approves the granting of an
option shall be deemed for all purposes hereunder the date on which the
option is granted.
(b) Period of Option. The Committee shall determine when each option is
to expire but no option shall be exercisable after ten (10) years have
elapsed from the date upon which the option is granted; provided, however,
that no Incentive Stock Option granted to a person who is a Substantial
Stockholder at the time of the grant of such option shall be exercisable
after five (5) years have elapsed from the date upon which the option is
granted. Each option shall be subject to earlier termination as provided in
Subsection 7(e) hereunder.
(c) Limitation on Exercise and Transfer of Option. Except as otherwise
provided in the event of an Optionee's death or the transfer of the option
as set forth below, only the Optionee may exercise an option, provided that
a guardian or other legal representative who has been duly appointed for
such Optionee may exercise an option on behalf of the Optionee. Except as
otherwise provided below, no option granted hereunder shall be transferable
other than (i) by the Last Will and Testament of the Optionee or, if the
Optionee dies intestate, by the applicable laws
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of descent and distribution, or (ii), to the extent approved by the
Committee, pursuant to a qualified domestic relations order as defined by
the Code or the rules thereunder. An option granted hereunder which is not
an Incentive Stock Option may be transferred to a Transferee in the
discretion of the Committee for estate planning purposes. No option granted
hereunder may be pledged or hypothecated, nor shall any such option be
subject to execution, attachment or similar process.
(d) Conditions Governing Exercise of Option. The Committee may, in its
absolute discretion, either require that, prior to the exercise of any
option granted hereunder, the Optionee shall have been an employee for a
specified period of time after the date such option was granted, or make
any option granted hereunder immediately exercisable. Each option shall be
subject to such additional restrictions or conditions with respect to the
right to exercise and the time and method of exercise as shall be
prescribed by the Committee. Upon satisfaction of any such conditions, the
option may be exercised in whole or in part at any time during the option
period, but this right of exercise shall be limited to whole shares, unless
the Committee shall otherwise provide. Options shall be exercised by the
Optionee or any Transferee giving written notice to the Secretary of the
Company at its principal office, by certified mail, return receipt
requested, of the exercise of the option and the number of shares with
respect to which the option is being exercised, accompanied by full payment
of the purchase price either in cash or, with the consent of the Committee,
in whole or in part in shares of Common Stock having a fair market value on
the date the option is exercised equal to that portion of the purchase
price for which payment in cash is not made. Such notice shall be deemed
delivered when deposited in the mails. Notwithstanding anything in the
foregoing to the contrary, in the event that a person becomes the
"beneficial owner" (as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of shares
of Common Stock or any security convertible into Common Stock having
aggregate votes equal to fifty percent (50%) of the voting power of all
classes of common stock and of all classes of securities convertible into
such common stock calculated as provided in paragraph (d) of said Rule
13d-3 in a transaction with the Company accounted for under the
pooling-of-interests method of accounting, all outstanding options shall be
immediately exercisable. In addition, in the event of other transactions
considered to be a "change in control," the Committee shall have the
authority and power: (i) to cause all outstanding options to be immediately
exercisable notwithstanding any vesting limitation otherwise previously
imposed on such options; and (ii) to accelerate the termination date of all
such options. Thereafter, upon the exercise of the power in subparagraph
(i) above, an Optionee or any Transferee may exercise any and all
outstanding options (in whole or in part), whether or not such options are
by their terms fully exercisable at such time). The term "change in
control" shall include, but not be limited to: (i) the first purchase of
shares pursuant to a tender offer or exchange (other than a tender offer or
exchange by the Company) for shares of Common Stock or any security
convertible into Common Stock having aggregate votes equal to twenty
percent (20%) of the voting power of all of the Company's outstanding
shares of common stock or of all classes of securities convertible into
such common stock; (ii) the receipt by the Company of a Schedule 13D or
other advice indicating that a person is the "beneficial owner" (as that
term is defined in Rule 13d-3 under the Exchange Act) of shares of Common
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<PAGE> 7
Stock or any security convertible into Common Stock having aggregate votes
equal to twenty percent (20%) of the voting power of all classes of common
stock and of all classes of securities convertible into such common stock
calculated as provided in paragraph (d) of said Rule 13-d; (iii) the date
of approval by stockholders of the Company of an agreement providing for
any consolidation or merger of the Company in which the Company will not be
the continuing or surviving corporation or pursuant to which shares of
capital stock of any class or any securities convertible into such capital
stock, of the Company would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of common
stock of all classes of the Company immediately prior to the merger would
have the same proportion of ownership of common stock of the surviving
corporation immediately after the merger; (iv) the date of the approval by
stockholders of the Company of any sale, lease, exchange, or other transfer
(in one transaction or a series of related transactions) of all or
substantially all the assets of the Company; (v) the adoption of any plan
or proposal for the liquidation (but not a partial liquidation) or
dissolution of the Company; or (vi) such other event as the Committee
shall, in its sole and absolute discretion, deem to be a "change in
control." The manner of application and interpretation of the foregoing
provisions shall be determined by the Committee in its sole and absolute
discretion.
(e) Termination of Employment, Etc. If an Optionee ceases to be an
employee of the Company or any of its Subsidiaries, his or her option or
the option held by his or her transferee shall be exercisable as follows:
(i) such option shall be exercisable during the three (3) months
after the date the Optionee ceased to be an employee of the Company or
any of its Subsidiaries (but not beyond the original term of the
option) if the reason for the Optionee's cessation as an employee was
other than his death or his Disability;
(ii) such option shall be exercisable during the one (1) year after
the date the Optionee ceased to be an employee of the Company or any of
its Subsidiaries (but not beyond the original term of the option) if
the reason for the Optionee's cessation as an employee was the
Optionee's Disability; or
(iii) such option shall be exercisable during the one (1) year after
the date the Optionee ceased to be an employee of the Company or any of
its Subsidiaries (but not beyond the original term of the option) if
either (A) the reason for the Optionee's cessation as an employee was
his death or (B) the Optionee died within three (3) months after
ceasing to be an employee of the Company or any of its Subsidiaries.
Notwithstanding the foregoing to the contrary, the Committee may in its
discretion provide in the option for shorter or longer periods in which the
option can be exercised after the Optionee's cessation as an employee or provide
that the option shall not be exercisable at all after the Optionee's cessation
as an employee of the Company or any of its Subsidiaries. However, no period of
exercise with respect to an option may be extended beyond the original
expiration date of the option.
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<PAGE> 8
An Optionee's employment shall not be deemed to have terminated while he or
she is on a temporary military, sick or other bona fide leave of absence from
the Company or a Subsidiary approved in writing by the Company, such as a leave
of absence as is described in Section 1.421-7(h) of the Federal Income Tax
Regulations or any lawful successor regulations thereto; provided, however, that
the Committee may impose such terms and conditions with respect to such leaves
as it deems proper as are consistent with such regulations.
(f) Limitations on Grant of Stock Options. During the calendar year in
which any Incentive Stock Options granted by the Company or any Subsidiary
first become exercisable by any Optionee, the aggregate fair market value
of the shares of Common Stock which are subject to such Incentive Stock
Options (determined as of the date the Incentive Stock Options were
granted) shall not exceed the sum of One Hundred Thousand Dollars
($100,000.00). Options which are not designated as Incentive Stock Options
shall not be subject to the limitation described in the preceding sentence
but are subject to a separate limitation so that the number of shares with
respect to which options may be granted to an Optionee in any five-year
period will not exceed 750,000.
(g) Prohibition of Alternative Options. It is intended that Employees
may be granted, simultaneously or from time to time, Incentive Stock
Options or other stock options, but no Employees shall be granted
alternative rights in Incentive Stock Options and other stock options so as
to prevent options granted as Incentive Stock Options under the Plan from
qualifying as such within the meaning of Section 422 of the Code.
(h) Waiver by Committee of Conditions Governing Exercise of Option. The
Committee may, in its discretion, waive any restrictions or conditions set
forth in an option agreement concerning an Optionee's right to exercise any
option and/or the time and method of exercise.
8. Stock Appreciation Rights. The Committee may provide, at the time of the
grant of a stock option and upon such terms and conditions as it deems
appropriate, that an Optionee shall have the right with respect to all or a
portion of the options granted to him to elect to surrender such options in
exchange for the consideration set forth in this Section 8 in lieu of exercising
such options. Alternatively, the Committee may provide, at the time of the grant
of a stock option and upon such terms and conditions as it deems appropriate,
that an Optionee shall have the right with respect to all or a portion of the
options granted to him to receive the consideration set forth in this Section 8
upon exercising such options in addition to any Common Shares purchased upon
exercise thereof. Stock appreciation rights must be specifically granted by the
Committee; provided, however, the Committee shall have no authority to grant
stock appreciation rights except in connection with the grant of a stock option
pursuant to the Plan, and no Optionee shall be entitled to such rights solely as
a result of the grant of an option to him. Stock appreciation rights, if
granted, may be exercised either with respect to all or a portion of the option
to which they relate. Stock appreciation rights shall not be transferable
separate from the option with respect to which they were granted, shall be
subject to all of the restrictions on transfer applicable to the said options
and, if the stock option to which they relate are transferred pursuant to
Subsection 7(c) hereof, must be transferred
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<PAGE> 9
simultaneously to the Transferee of the related option. Stock appreciation
rights shall be exercisable only at such times and by such persons as are
specified in the option agreement governing the stock option with respect to
which the stock appreciation rights were granted. A stock appreciation right
shall provide that an Optionee or Transferee shall have the right to receive a
percentage, not greater than One Hundred Percent (100%), of the excess over the
option price, if any, of the fair market value of the shares of Common Stock
covered by the option, as determined by the Committee as of the date of exercise
of the stock appreciation right, in the manner provided for herein. Such amount
shall be payable in one or more of the following manners, as shall be determined
by the Committee;
(a) in cash;
(b) in shares of Common Stock having a fair market value equal to such
amount; or
(c) in a combination of cash and Common Stock.
If payment is made in whole or in part in shares of Common Stock, such payment
shall thereby reduce the number of shares available for the grant of options
under this Plan.
In no event may any Optionee or Transferee exercise any stock appreciation
rights granted hereunder unless such person is then permitted to exercise the
option or the portion thereof with respect to which such stock appreciation
rights relate. If the option agreement provides that exercise of the stock
appreciation right shall be in lieu of exercise of the option, then (i) upon the
exercise of any stock appreciation rights, the option or that portion thereof to
which the stock appreciation rights relate shall be cancelled, and (ii) upon the
exercise of the option or that portion thereof to which the stock appreciation
rights relate, the stock appreciation rights shall be cancelled, and the option
agreement governing such option shall be deemed amended as appropriate without
any further action by the Committee. If the option agreement provides that
exercise of the stock appreciation right shall be in addition to exercise of the
option, then (i) upon the exercise of any stock appreciation rights, the option
or that portion thereof to which the stock appreciation rights relate shall be
deemed exercised and (ii) upon the exercise of the option, the stock
appreciation rights corresponding thereto shall be deemed exercised to the
extent the option is exercised. The terms of any stock appreciation rights
granted hereunder shall be incorporated into the option agreement which governs
the option with respect to which the stock appreciation rights are granted, and
shall be such terms as the Committee shall prescribe which are not inconsistent
with this Plan. The granting of an option or stock appreciation right shall
impose no obligation upon the Optionee or Transferee to exercise such option or
right. The Company's obligation to satisfy stock appreciation rights shall not
be funded or secured in any manner.
9. Investment Representation, Approvals and Listing. The Committee may
condition its grant of any option hereunder upon receipt of an investment
representation from the person exercising the option which shall be
substantially similar to the following:
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<PAGE> 10
"The undersigned agrees that any shares of Common Stock of Scott
Technologies, Inc. which the undersigned may acquire by virtue of the
exercise of this option shall be acquired for investment purposes only
and not with a view to distribution or resale; provided, however, that
this restriction shall become inoperative in the event the shares of
Common Stock of Scott Technologies, Inc. which are subject to this
option shall be registered under the Securities Act of 1933, as
amended, or in the event Scott Technologies, Inc. is otherwise
satisfied that the offer or sale of the shares of Common Stock which
are subject to this option may lawfully be made without registration
under the Securities Act of 1933, as amended."
The Company shall not be required to issue any certificates for shares of Common
Stock upon the exercise of an option or a stock appreciation right granted under
the Plan prior to (i) obtaining any approval from any governmental agency which
the Committee shall, in its sole discretion, determine to be necessary or
advisable, (ii) the admission of such shares of Common Stock to listing on any
national securities exchange on which the shares of Common Stock may be listed,
(iii) completion of any registration or other qualification of the shares of
Common Stock under any state or federal law or ruling or regulations of any
governmental body which the Committee shall, in its sole discretion, determine
to be necessary or advisable, or the determination by the Committee, in its sole
discretion, that any registration or other qualification of the shares of Common
Stock is not necessary or advisable, and (iv) obtaining an investment
representation from the Optionee in the form set forth above or in such other
form as the Committee, in its sole discretion, shall determine to be adequate.
10. General Provisions.
(a) Option Agreements Need Not Be Identical. The form and substance of
option agreements and grants of stock appreciation rights, whether granted
at the same or different times, need not be identical.
(b) No Right To Be Employed, Etc. Nothing in the Plan or in any option
agreement shall confer upon any Optionee any right to continue in the
employ of the Company or a Subsidiary, or to serve as a member of the
Board, or to be entitled to receive any remuneration or benefits not set
forth in the Plan or such option agreement, or to interfere with or limit
either the right of the Company or a Subsidiary to terminate his or her
employment at any time or the right of the stockholders of the Company to
remove him or her as a member of the Board with or without cause.
(c) Optionee Does Not Have Rights Of Stockholder. Nothing contained in
the Plan or in any option agreement shall be construed as entitling any
Optionee or Transferee to any rights of a stockholder as a result of the
grant of an option until such time as shares of Common Stock are actually
issued to such person pursuant to the exercise of an option or stock
appreciation right.
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(d) Successors In Interest. The Plan shall be binding upon the
successors and assigns of the Company.
(e) No Liability Upon Distribution Of Shares. The liability of the
Company under the Plan and any distribution of Common Stock made hereunder
is limited to the obligations set forth herein with respect to such
distribution and no term or provision of the Plan shall be construed to
impose any liability on the Company or the Committee in favor of any person
with respect to any loss, cost or expense which the person may incur in
connection with or arising out of any transaction in connection with the
Plan, including, but not limited to, any liability to any Federal, state,
or local tax authority and/or any securities regulatory authority.
(f) Taxes. Appropriate provisions shall be made for all taxes required
to be withheld and/or paid in connection with the options or the exercise
thereof, and the transfer of shares of Common Stock pursuant thereto, under
the applicable laws or other regulations of any governmental authority,
whether Federal, state or local and whether domestic or foreign.
(g) Use Of Proceeds. The cash proceeds received by the Company from the
issuance of shares of Common Stock pursuant to the Plan will be used for
general corporate purposes, or in such other manner as the Board of
Directors deems appropriate.
(h) Expenses. The expenses of administering the Plan shall be home by
the Company.
(i) Captions. The captions and section numbers appearing in the Plan
are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of the Plan.
(j) Number. The use of the singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases as the
context may require.
(k) Gender. The use of the feminine, masculine or neuter pronoun shall
not be restrictive as to gender and shall be interpreted in all cases as
the context may require.
11. Amendments. The Committee is authorized to interpret the Plan and from
time to time adopt any rules and regulations for carrying out the Plan that it
may deem advisable. Subject to the approval of the Board, the Committee may at
any time amend, modify, suspend or terminate the Plan. In no event, however,
without the approval of the Company's stockholders, shall any action of the
Committee or the Board result in:
(a) Amending, modifying or altering the eligibility requirements
provided in Section 5 hereof-,
(b) Increasing or decreasing, except as provided in Section 6 hereof,
the maximum number of shares for which options may be granted;
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(c) Decreasing the minimum option price per share at which options may
be granted under the Plan, as provided in Section 7(a) hereof;
(d) Extending either the maximum period during which an option is
exercisable as provided in Section 7(b) hereof or the date on which the
Plan shall terminate as provided in Section 12 hereof;
(e) Changing the requirements relating to the Committee; or
(f) Making any other change which would cause any option granted under
the Plan as an Incentive Stock Option not to qualify as an Incentive Stock
Option within the meaning of Section 422 of the Code;
except as necessary to conform the Plan and the option agreements to changes in
the Code or other governing law. No option may be granted during any suspension
of this Plan or after this Plan has terminated and no amendment, suspension or
termination shall, without the Optionee's consent, alter or impair any of the
rights or obligations under an option theretofore granted to such Optionee under
this Plan except that the Committee may rescind an option granted after December
15, 1998 to an Optionee to the extent necessary for the Company to use the
pooling-of-interests method of accounting to account for a business combination.
No such rescission shall take effect unless the Optionee is provided a written
opinion from the Company's independent accountants to the effect that such
rescission is necessary to obtain pooling-of-interests accounting and specifying
the extent to which his option must be rescinded.
12. Termination of the Plan. The Plan shall terminate on October 19, 2004,
and thereafter no options shall be granted under the Plan. All options
outstanding at the time of termination of the Plan shall continue in full force
and effect according to the terms of the option agreements governing such
options and the terms and conditions of the Plan.
13. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware and any applicable federal
law.
14. Venue. The venue of any claim brought hereunder by an Employee shall be
Cleveland, Ohio.
15. Changes in Governing Rules and Regulations. All references herein to
the Code or sections thereof, or to rules and regulations of the Department of
Treasury or of the Securities and Exchange Commission, shall mean and include
the Code sections thereof and such rules and regulations as are now in effect or
as they may be subsequently amended, modified, substituted or superseded.
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