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FORM 8 A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) or (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PEERLESS MFG. CO.
(Exact name of registrant as specified in its charter)
TEXAS 75-0724417
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(State of incorporation or organization) I.R.S. Employer Identification No.
2819 WALNUT HILL LANE, DALLAS TEXAS 75229
P.O. BOX 540667, DALLAS TEXAS 75354
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(Address of principal executive offices) (Zip Code)
If this form relates to the If this form relates to the
registration of a class of registration of a class of debt
debt securities and is effective securities and is to become
upon filing pursuant to General effective simultaneously with the
Instruction A(c)(1) please check effectiveness of a concurrent
the following box. [ ] registration statement under the
Securities Act of 1933 pursuant to
General Instruction A(c)(2) please
check the following box. [ ]
SECURITIES TO be REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
Name of each exchange on
Title of each class which each class is to
to be so registered be registered
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<S> <C>
NONE
</TABLE>
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK PURCHASE RIGHTS
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(Title of Class)
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Item 1. Description of Registrant's Securities
to be Registered
On May 21, 1997, the Board of Directors of Peerless Mfg. Co. (the
"Company") declared a dividend of one common share purchase right (a "Right")
for each outstanding share of common stock, $1.00 par value (the "Common
Shares"), of the Company. The dividend will be made to the shareholders of
record at the close of business on June 2, 1997 (the "Record Date"). Each
Right entitles the registered holder to purchase from the Company one Common
Share at a price of $30.00 (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated
as of May 22, 1997 (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C. as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten Business Days following a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 20% or more
of the outstanding Common Shares (an "Acquiring Person") or (ii) ten Business
Days following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of such outstanding
Common Shares (the earlier of such dates being the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached to the certificate.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding even without such notation or a copy of this Summary
of Rights being attached to such Certificate, will also constitute the transfer
of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 22, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company, in each case, as described below.
The Purchase Price payable and the number of Common Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination, or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights
or warrants to subscribe for or purchase Common Shares at a price or securities
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convertible into Common Shares with a conversion price less than the then
current market price of the Common Shares; or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness, cash (other than
regular cash dividends out of the Company's earnings or retained earnings), or
assets.
In the event that any person or entity becomes an Acquiring Person (the
beneficial owner of 20% or more of the Common Shares), provision will be made
so that each Right, other than Rights beneficially owned by the Acquiring
Person (which will then be void), will entitle the holder to purchase that
number of Common Shares having a market value of two times the then current
Purchase Price of the Right.
The Rights Agreement excludes from the definition of Acquiring Person,
Persons who certify to the Company that they inadvertently acquired in excess
of 19.9% of the outstanding Common Shares and thereafter divest such excess
Common Shares or who acquire 20% or more of the Common Shares in a Permitted
Transaction. A "Permitted Transaction" is a stock acquisition or tender or
exchange offer pursuant to a definitive agreement which would result in a
person beneficially owning 20% or more of the Common Shares and which has been
approved by the Board of Directors (including a majority of the Directors not
in association with an Acquiring Person) prior to the execution of the
agreement or the public announcement of the offer.
In the event that the Company is acquired in a merger or other business
combination transaction, or 50% or more of its consolidated assets or earning
power are sold, proper provisions will be made so that each Right will entitle
the holder to purchase that number of shares of common stock of the acquiring
company that at the time of such transaction will have a market value of two
times the then current Purchase Price of the Right.
No adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in the Purchase Price. With
certain exceptions, no fractional Common Shares will be issued and, in lieu of
such fractional shares, an adjustment in cash will be made based on the market
price of the Common Shares on the last trading day prior to the date of
exercise.
After a person becomes an Acquiring Person, the Company's Board of
Directors may exchange the Rights, other than those Rights owned by the
Acquiring Person, in whole or in part, at an exchange ratio of one Common Share
per Right, subject to adjustment. However, the Board of Directors cannot
conduct an exchange at any time after any Person, together with its Affiliates
and Associates, becomes the Beneficial Owner of 50% or more of the outstanding
Common Stock.
At any time within ten Business Days following the date that any Person
becomes an Acquiring Person, a Requisite Majority may redeem the Rights in
whole, but not in part, at a price of $0.01 per Right (the "Redemption Price").
In addition, the Board of Directors may extend or reduce the period during
which the Rights are redeemable, so long as the Rights are redeemable at the
time of such extension or reduction. Immediately upon any redemption of the
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Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an
amendment to extend the Final Expiration Date, except that from and after the
date any Person becomes an Acquiring Person, no such amendment may adversely
affect the economic interests of the holders of the Rights.
Until a Right is exercised, the holder of the Right, as such, will have
no rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
Item 2. Exhibits
1. Shareholder Rights Agreement dated May 22, 1997 among the
Company and ChaseMellon Shareholder Services, L.L.C., as
rights agent.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
PEERLESS MFG. CO.
By: /s/ Sherrill Stone
-----------------------------------
Sherrill Stone, President and Chief
Executive Officer
Dated: May 22, 1997
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INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
1 - Rights Agreement
</TABLE>
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EXHIBIT 1
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RIGHTS AGREEMENT
between
PEERLESS MFG. CO.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
dated
May 22, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
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<S> <C> <C>
1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . 5
3. Issuance of Rights Certificates . . . . . . . . . . . . . . . . . . . 5
4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . 7
5. Countersignature and Registration . . . . . . . . . . . . . . . . . . 7
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 . . . . . . . . . . . . . . . . . . . . . . 8
8. Cancellation and Destruction of Rights Certificates . . . . . . . . . 10
9. Reservation and Availability of
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10. Common Stock Record Date . . . . . . . . . . . . . . . . . . . . . . 12
11. Adjustment of Purchase Price, Number, and Kind of Shares or
Number of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12. Certificate of Adjusted Purchase Price or Number of Shares . . . . . 19
13. Consolidation, Merger, or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . 22
15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . 23
16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . 23
17. Rights Certificate Holder Not Deemed a Stockholder . . . . . . . . . 24
18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
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<TABLE>
<S> <C> <C>
19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . 25
20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 25
21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 27
22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . 28
23. Redemption and Termination . . . . . . . . . . . . . . . . . . . . . 29
24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . 30
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . 32
28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
29. Determinations and Actions by the Board of Directors, Etc. . . . . . 32
30. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . 33
31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
34. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 22, 1997 (the "Agreement"), between
Peerless Mfg. Co., a Texas corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., (the "Rights Agent").
BACKGROUND
On May 21, 1997 (the "Rights Dividend Declaration Date"), the board of
directors of the Company (the "Board of Directors") authorized and declared a
dividend distribution of one Right for each share of Common Stock outstanding
at the Close of Business on June 2, 1997 (the "Record Date"), and has
authorized the issuance of one Right (as such number may be adjusted pursuant
to the provisions of SECTION 11(P)) for each share of Common Stock of the
Company issued between the Record Date (whether originally issued or delivered
from the Company's treasury) and the Distribution Date, each Right initially
representing the right to purchase one share of Common Stock of the Company
upon the terms and subject to the conditions set forth below (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Acquiring Person" means any Person that, together with
all Affiliates and Associates of such Person, is the Beneficial Owner of
20% or more of the shares of Common Stock then outstanding, but does not
include (i) the Company; (ii) any Subsidiary of the Company; (iii) any
employee benefit plan of the Company or of any Subsidiary of the
Company; (iv) any Person organized, appointed, or established by the
Company for or pursuant to the terms of any such plan; (v) any person
that becomes an Acquiring Person pursuant to a Permitted Transaction;
(vi) any Person that has become an Acquiring Person inadvertently and,
within five Business Days of being requested by the Company to advise it
regarding the same, certifies to the Company that such Person acquired
beneficial ownership of shares of Common Stock in excess of 19.9%
inadvertently or without knowledge of the terms of the Rights and such
certification is accepted as true by a Requisite Majority acting in good
faith, and such Person divests as promptly as practicable a sufficient
amount of Common Stock so that such Person no longer holds in excess of
19.9% of the Common Stock then outstanding; and (vii) any Person that
becomes an Acquiring Person solely as a result of a reduction in the
number of outstanding shares of Common Stock in a transaction that is
approved by a Requisite
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Majority, provided that such Person will immediately be an Acquiring
Person in the event such Person thereafter acquires any additional
shares of Common Stock (other than as a result of a stock split or stock
dividend) while the Beneficial Owner of 20% or more of the shares of
Common Stock then outstanding.
(c) An "Affiliate" of, or a person "affiliated" with, a
specified Person, is 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.
(d) The term "Associate" used to indicate a relationship with
any person, means: (1) any Person (other than the registrant or a
majority-owned subsidiary of the registrant) of which such Person is an
officer or partner or is, directly or indirectly, the Beneficial Owner
of 10 percent or more of any class of equity securities, (2) any trust
or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar
fiduciary capacity, and (3) any relative or spouse of such Person, or
any relative of such spouse, who has the same home as such Person or who
is a director or officer of such Person or any of its parents or
subsidiaries.
(e) A Person will be deemed the "Beneficial Owner" of, and
will be deemed to "beneficially own," any securities that:
(i) 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 or upon the occurrence of certain events)
pursuant to any agreement, arrangement, or understanding (whether
or not in writing) or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person will 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 Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange,
(B) securities issuable upon exercise of Rights at any time prior
to the occurrence of a Distribution Date, or (C) securities
issuable upon exercise of Rights, which 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
(the "Original Rights") or pursuant to SECTION 11(I) in
connection with an adjustment made with respect to any Original
Rights;
(ii) such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), including pursuant to any agreement,
arrangement, or understanding, whether or not in writing;
provided, however, that a Person will not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security
under this SECTION 1(e)(ii) as a result of an agreement,
arrangement, or
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understanding to vote such security if such agreement,
arrangement, or understanding: (1) 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 (2) is not also then reportable by such Person
on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate of such Person)
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 in SECTION 1(E)(II)), or disposing of
any voting securities of the Company;
provided, however, that nothing in this SECTION 1(E) will 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 bona fide firm
commitment underwriting until the expiration of forty days after the
date of such acquisition.
(f) "Business Day" means any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Texas are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date will mean 5:00 p.m.,
Dallas, Texas time, on such date; provided, however, that if such date
is not a Business Day it will mean 5:00 p.m., Dallas, Texas time, on the
next succeeding Business Day.
(h) "Common Stock" means the common stock, par value $1.00 per
share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company will mean the capital
stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct
the management, of such Person.
(i) "Continuing Director" means (i) any member of the Board of
Directors of the Company who (i) is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person and (ii) was either a
member of the Board of Directors of the Company on the date of this
Agreement or who subsequently became a director of the Company and whose
initial election or initial nomination for election was approved by a
majority of the Continuing Directors then on the Board of Directors of
the Company.
(j) "Distribution Date" means the Close of Business on the
tenth Business Day after the earlier to occur of (i) the Stock
Acquisition Date or (ii) the date any Person commences or publicly
announces an intention to commence a tender offer or exchange offer for
the Common Stock that would result in, upon the consummation of such
offer, the Person making such offer (together with all of its Affiliates
and Associates) being the
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Beneficial Owner of 20% or more of the Common Stock then outstanding
(including any such date that is after the date of this Agreement and
prior to the issuance of the Rights); provided, however, that if the
tender offer or exchange offer that gave rise to the Distribution Date
is cancelled, terminated or otherwise withdrawn within ten Business Days
of its announcement, such offer shall be deemed never to have been made
and no Distribution Date shall occur with respect thereto.
(k) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(l) "Permitted Transaction" means a stock acquisition or a
tender or exchange offer pursuant to a definitive agreement by which a
Person (who is not at the time an Acquiring Person) would become an
Acquiring Person and which has been approved by a Requisite Majority
prior to the execution of the definitive agreement providing for the
acquisition or the public announcement of the offer, as the case may be.
(m) "NASDAQ" means the National Association of Securities
Dealers, Inc. Automated Quotation System.
(n) "Person" means any individual, firm, corporation, trust,
partnership, limited liability company or other public or private
entity.
(o) "Redemption Price" with respect to each Right means $.01,
as such amount may from time to time be adjusted in accordance with
SECTION 11. All references herein to the Redemption Price means the
Redemption Price as in effect at the time in question.
(p) "Requisite Majority" means, at any time, the affirmative
vote of a majority of the Continuing Directors then in office.
(q) "Rights Shares" means the shares of Common Stock (and/or
other securities) issuable or issued upon the exercise of the Rights.
(r) "Section 11(a)(ii) Event" means any event described in
SECTION 11(A)(II).
(s) "Section 13 Event" means any event described in SECTION
13(A)(I), (II), OR (III).
(t) "Stock Acquisition Date" means the first date of public
announcement (which, for purposes of this definition, will include,
without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become an Acquiring Person.
(u) "Subsidiary" means, with reference to any Person, any
entity of which an amount of voting securities sufficient to elect at
least a majority of the directors or similar
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Persons of such entity is beneficially owned, directly or indirectly, by
such Person, or otherwise controlled by such Person.
(v) "Trading Day" means a day on which the principal national
securities exchange or quotation system on which the shares of Common
Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange or quotation system, a
Business Day.
(w) "Triggering Event" means any Section 11(a)(ii) Event or
any Section 13 Event.
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 of this Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Prior to the Distribution Date, (i) the Rights will be
evidenced (subject to the provisions of this SECTION 3(b)) by the
certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock will be deemed
also to be certificates for Rights) and not by separate certificates,
and (ii) the Rights will be transferable only in connection with the
transfer of the underlying shares of Common Stock (including a transfer
to the Company). As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured, postage prepaid
mail, to each record holder of the Common Stock as of the 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 A
(the "Rights Certificates"), evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided in this
Agreement. In the event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to SECTION 11(p), at the
time of distribution of the Rights Certificates, the Company will make
the necessary and appropriate rounding adjustments (in accordance with
SECTION 14(a)) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Rights Certificates.
(b) As soon as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the
form of EXHIBIT B, by first-class, postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company.
With respect to certificates for the Common Stock outstanding as of the
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Record Date, until the Distribution Date, the Rights will be evidenced
by such certificates for the Common Stock and the registered holders of
the Common Stock will also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration
Date (as defined in SECTION 7), the transfer of any certificates
representing shares of Common Stock in respect of which Rights have been
issued will also constitute the transfer of the Rights associated with
such shares of Common Stock.
(c) Rights will be issued in respect of all shares of Common
Stock that are issued (whether originally issued or 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 shares of Common Stock will also be deemed to be certificates for
Rights, and will bear the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER TO
CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN
PEERLESS MFG. CO. (THE "COMPANY") AND CHASEMELLON SHAREHOLDER
SERVICES, L.L.C. (THE "RIGHTS AGENT") DATED AS OF MAY 22, 1997
(AS AMENDED FROM TIME TO TIME, THE "RIGHTS AGREEMENT"), THE TERMS
OF WHICH ARE HEREBY INCORPORATED IN THIS CERTIFICATE BY REFERENCE
AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE
COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES
AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE
COMPANY WILL MAIL 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. UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS, OR BECOMES AN
ACQUIRING PERSON AND ANY AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSONS OR BY ANY
SUBSEQUENT HOLDERS, MAY BECOME NULL AND VOID.
With respect to the shares of Common Stock issued after the
Record Date, until the earlier of (i) the Distribution Date or (ii) the
Expiration Date, the Rights associated with the Common Stock represented
by such certificates will be evidenced by such certificates alone and
registered holders of Common Stock will also be the registered holders
of the associated Rights, and the transfer of any of such certificates
will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates.
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Section 4. Form of Rights Certificates.
The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse of the rights
certificates) will each be substantially in the form set forth in
EXHIBIT A and may have such marks of identification or designation and
such legends, summaries, or endorsements as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange or quotation system on which the Rights
may from time to time be listed, or to conform to usage. Subject to
the provisions of SECTION 11 and SECTION 22, the Rights Certificates,
whenever distributed, will be dated as of the Record Date and on their
face will entitle the holders of such Rights Certificates to purchase
such number of shares of Common Stock as is set forth in such Rights
Certificates at the price set forth in such Rights Certificates (such
exercise price per share, the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise of each Right and the
Purchase Price will be subject to adjustment as provided in this
Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates will be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
Chief Operating Officer, its President, or any Vice President, either
manually or by facsimile signature, will have affixed thereto the
Company's seal or a facsimile thereof, and will be attested by the
Secretary or an Assistant Secretary of the Company, either manually or
by facsimile signature. The Rights Certificates will be countersigned
by the Rights Agent, either manually or by facsimile signature and will
not be valid for any purpose unless so countersigned. In case any
officer of the Company who has signed any of the Rights Certificates
ceases to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as
though the Person who signed such Rights Certificates had not ceased to
be such officer of the Company, and any Rights Certificate may be signed
on behalf of the Company by any Person who, at the actual date of the
execution of such Rights Certificate, is a proper officer of the Company
to sign such Rights Certificate, although at the date of the execution
of this Rights Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated
as the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued under this Agreement. Such books will show the
names and addresses of the respective holders of the Rights
Certificates, the number of Rights
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evidenced on the face of the Rights Certificates, and the date of each
of the Rights Certificates.
Section 6. Transfer, Split Up, Combination, and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost, or Stolen Rights Certificates.
(a) Subject to the provisions of SECTION 7(E) and SECTION 14,
at any time after the Distribution Date, and at or prior to the
Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined, or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of Rights Shares (or, following a Triggering
Event, 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 Rights Certificates will make such request in
writing delivered to the Rights Agent, and will surrender the Rights
Certificate or Rights Certificates to be transferred, split up,
combined, or exchanged at the principal office or offices of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the
Company will be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Rights Certificate until the
registered holder has completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights Certificate
and has provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company requests in good faith. Thereupon,
the Rights Agent will, subject to SECTION 4, SECTION 7(E) and SECTION
14, countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split up, combination, or exchange of any Rights Certificate.
(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.
(a) Subject to SECTION 7(e), the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided in this Agreement including, without limitation, the
restrictions on exercisability set forth in SECTION 9(c), SECTION
11(a)(iii), SECTION 23(a) and SECTION 24) in whole or in part at any
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<PAGE> 12
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 of the Rights Certificate duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate
Purchase Price for each share of Common Stock (or other securities, cash
or other assets, as the case may be) as to which such surrendered Rights
are then exercisable, at or prior to the earlier of (i) the Close of
Business on May 22, 2007, (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in SECTION 23 or (iii) the
time at which such rights are exchanged as provided in SECTION 24 (the
earlier of such times, the "Expiration Date")).
(b) The Purchase Price (the "Purchase Price") for each share
of Common Stock pursuant to the exercise of a Right will initially be
$30.00, subject to adjustment from time to time as provided in SECTION
11, and SECTION 13(a). The Purchase Price will be payable in accordance
with SECTION 7(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 of the Purchase Price
for the shares of Common Stock (or other securities, cash or other
assets, as the case may be) to be purchased and an amount equal to any
applicable transfer tax, the Rights Agent will, subject to SECTION
20(k), promptly (i) (A) requisition from any transfer agent of the
shares of Common Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number of
shares of Common Stock to be purchased (the Company hereby irrevocably
authorizing its transfer agent to comply with all such requests) or (B)
if the Company has elected to deposit the shares of Common Stock with a
depository agent, requisition from the depository agent depository
receipts representing such number of shares of Common Stock as are to be
purchased (in which case certificates for the shares of Common Stock
represented by such receipts will be deposited by the transfer agent
with the depository agent) and the Company will direct the depository
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; (iii) after receipt of such certificates or
depository receipts, cause such certificates or depository receipts to
be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder; and (iv) after receipt thereof, deliver such
cash, if any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount
may be reduced pursuant to SECTION 11(a)(III)) will be made in cash or
by certified bank check or bank draft payable to the order of the
Company. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash, or
distribute other property pursuant to SECTION 11(a), the Company will
make all arrangements necessary so that such other securities, cash, or
other property are available for distribution by the Rights Agent, if
and when appropriate. The Company reserves the right to require prior
to the occurrence of a Triggering Event that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of
Common Stock would be issued.
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<PAGE> 13
(d) If the registered holder of any Rights Certificate
exercises less than all the Rights evidenced by such certificate, a new
Rights Certificate evidencing the unexercised Rights will be issued by
the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as
may be designated by such holder, subject to the provisions of SECTION
14.
(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 any Person referred to in
clauses (i) through (iii) below will become null and void without any
further action and no holder of such Rights will have any rights
whatsoever with respect to such Rights, under any provision of this
Agreement or otherwise: (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee from an Acquiring
Person (or from any Associate or Affiliate of an Acquiring Person) that
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee from an Acquiring Person (or from any such Associate or
Affiliate of an Acquiring Person) that becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring Person
has any continuing agreement, arrangement, or understanding regarding
the transferred Rights or (B) a transfer that the Board of Directors of
the Company has determined is part of an agreement, plan, arrangement,
or understanding that has as a substantial purpose or effect the
avoidance of this SECTION 7(e). The Company will use reasonable efforts
to insure that the provisions of this SECTION 7(e) are complied with,
but will have no liability under this Agreement to any holder of Rights
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person, or any of its
Affiliates, Associates, or transferees.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company will be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this SECTION 7
unless such registered holder has (i) 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 requests in good faith.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange will, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, will be cancelled by it, and no Rights
Certificates will be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company will deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent will so
cancel and retire, any other Rights Certificate
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<PAGE> 14
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent will deliver all cancelled Rights Certificates to the Company,
or will, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case will deliver a certificate of destruction to the
Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company will use its best efforts to reserve and keep
available out of its authorized and unissued shares of Common Stock
(and/or or other securities) or its authorized and issued shares of
Common Stock (and/or or other securities) held in its treasury, the
number of shares of Common Stock (and/or other securities) that will be
sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Common Stock (and, following the
occurrence of a Triggering Event, other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any
national securities exchange or automated quotation system, the Company
will use its reasonable efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for such issuance to
be listed on such exchange or automated quotation system upon official
notice of issuance upon such exercise.
(c) The Company will use its best efforts to (i) file, as soon
as practicable following 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), a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights or issued in an
exchange pursuant to SECTION 24 on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the Expiration Date.
The Company will also take such action as may be appropriate under, or
to ensure compliance with, the applicable state securities laws in
connection with the exercisability of the Rights. The Company may
temporarily suspend, for up to 90 days after the date described in
CLAUSE (i) of this SECTION 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company will 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 no longer remains in effect. In addition, if the
Company determines that a registration statement is required following
the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration statement
has been declared effective. Notwithstanding any provision of this
Agreement to the contrary, the Rights will not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction has not
been obtained, the exercise of such Rights is not permitted under
applicable law, or a registration statement has not been declared
effective.
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(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Common
Stock (and/or other securities) delivered upon exercise of Rights will,
at the time of delivery of the certificates for such shares upon payment
of the Purchase Price, be duly and validly authorized and issued and
fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges that may be payable in respect of the issuance or delivery of
the Rights Certificates and any Common Stock or other certificates
issued upon the exercise of Rights. The Company will 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 Common Stock (or other securities, as the
case may be) in respect of a name other than that of the registered
holder of the Rights Certificates or to issue or deliver any Common
Stock or other certificates in a name other than that of the registered
holder until such tax has 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.
Section 10. Common Stock Record Date. Each Person in whose name any
Rights Share certificate is issued will, for all purposes, be deemed to have
become the record holder of such Rights Shares represented thereby, and such
certificate will be dated, on the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Stock (other
securities, as the case may be) transfer books of the Company are closed, such
Person will be deemed to have become the record holder of the Rights Shares on,
and such certificate will be dated, the next succeeding Business Day on which
the Common Stock (or other securities, as the case may be) transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby,
the Rights Certificate holders will not be entitled to any stockholder rights
with respect to Rights Shares, including, without limitation, the right to
vote, to receive dividends or other distributions, or to exercise any
preemptive rights, and will not be entitled to receive any notice of any
proceedings of the Company, except as provided in this Agreement.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares,
or Number of Rights. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this SECTION 11.
(a) (i) In the event the Company at any time after the date
of this Agreement (A) declares a dividend on the Common Stock
payable in shares of Common Stock, (B) subdivides the outstanding
Common Stock, (C) combines the outstanding Common Stock into a
smaller number of shares, or (D) issues any shares of its capital
stock in a reclassification of the Common Stock (including,
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<PAGE> 16
without limitation, 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), the Purchase Price in effect at
the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and
the number and kind of shares of Common Stock or capital stock,
as the case may be, issuable on such date, will be
proportionately adjusted so that the holder of any Right
exercised after such time will be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate
number and kind of shares of Common Stock 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 Common
Stock transfer books of the Company were open, such holder would
have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination, or
reclassification. If an event occurs that would require an
adjustment under both this SECTION 11(a)(i) and SECTION
11(a)(ii), the adjustment provided for in this SECTION 11(a)(i)
will be in addition to, and will be made prior to, any adjustment
required pursuant to SECTION 11(a)(ii).
(ii) In the event that any Person, alone or together
with its Affiliates and Associates, at any time after the Rights
Dividend Declaration Date, becomes an Acquiring Person, then,
proper provision will be made so that each Right holder (except
as provided in SECTION 7(e)) will thereafter have the right to
receive, upon exercise of such Right at the then current Purchase
Price determined in accordance with the terms of this Agreement,
such number of Rights Shares equal to the result obtained by (x)
multiplying the then current Purchase Price by the then number of
Rights Shares for which a Right is then exercisable and (y)
dividing that product by 50% of the Current Market Price (defined
in SECTION 11(d)) per share of Common Stock on the date such
Person became an Acquiring Person (such number of Rights Shares,
the "Adjustment Shares").
(iii) In the event that the number of shares of Common
Stock that are authorized by the Company's articles of
incorporation but not issued, or issued but not outstanding, are
not sufficient to permit the exercise in full of the Rights in
accordance with SECTION 11(a)(II), the Company will, upon the
exercise of a Right and payment of the applicable Purchase Price,
(A) determine the value of the Adjustment Shares issuable upon
the exercise of a Right (the "Current Value"), and (B) with
respect to each Right (subject to SECTION 7(e)), make adequate
provision to substitute for the Adjustment Shares (1) cash, (2) a
reduction in the Purchase Price, (3) other equity securities of
the Company (including, without limitation, shares, or units of
shares, of preferred stock), that a Requisite Majority has deemed
to have essentially the same rights, privileges and preferences
as shares of Common Stock ("Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to
the Current Value, where such aggregate value has been
conclusively determined by a Requisite Majority based upon the
advice of a
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<PAGE> 17
nationally recognized investment banking firm selected by a
Requisite Majority; provided, however, that if the Company has
not made adequate provision to deliver value pursuant to CLAUSE
(B) above within 30 days following the first occurrence of a
Section 11(a)(ii) Event, then the Company will be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which
shares or cash have an aggregate value equal to the Spread. The
term "Spread" means the excess of (i) the Current Value over (ii)
the Purchase Price. If the Board of Directors determines in good
faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in
full of the Rights, the 30-day period set forth above may be
extended to the extent necessary, but not more than 90 days after
the Section 11(a)(ii) Event, in order that the Company may seek
shareholder approval for the authorization of such additional
shares (such 30-day period, as it may be extended, being the
"Substitution Period"). To the extent that action is to be taken
pursuant to this SECTION 11(a)(iii), the Company (1) will
provide, subject to SECTION 7(e), that such action will apply
uniformly to all outstanding Rights, and (2) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any required shareholder
approval or to decide the appropriate form of distribution to be
made and the value thereof. In the event of any such suspension,
the Company will 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 no
longer remains in effect. For purposes of this SECTION
11(a)(iii), the Current Value of each Adjustment Share will be
the Current Market Price per share of the Common Stock on the
effective date of the Section 11(a)(ii) Event and the per share
or per unit value of any Common Stock Equivalent will be deemed
to equal the Current Market Price per share of the Common Stock
on such date.
(b) In case the Company fixes a record date for the issuance
of rights, options or warrants to all holders of Common Stock entitling
them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Common Stock (and/or Common Stock
Equivalents or securities convertible into Common Stock) at a price per
share of Common Stock (or having a conversion price per share, if a
security convertible into Common Stock) less than the Current Market
Price per share of Common Stock on such record date, the Purchase Price
to be in effect after such record date will be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, (i) the numerator of which is the number of shares of Common
Stock outstanding on such record date, plus the number of shares of
Common Stock that the aggregate offering price of the total number of
shares of Common Stock (and/or Common Stock Equivalents) so to be
offered (or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market
Price, and (ii) the denominator of which is the number of shares of
Common Stock outstanding on such record date, plus the number of
additional shares of Common Stock (and/or Common Stock Equivalents) to
be offered for subscription or purchase (or into which the
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<PAGE> 18
convertible securities so to be offered are initially convertible). In
the event that the number of shares of Common Stock issuable under the
terms of a convertible security, or the conversion or exercise price of
such convertible security, changes after the initial issuance of such
convertible security, an adjustment will be made to the Purchase Price
that conforms with the adjustment set forth in this SECTION 11(b). 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 will be as conclusively determined in good faith by the
Board of Directors of the Company, whose determination will be described
in a statement filed with the Rights Agent and will be binding on the
Rights Agent and the holders of the Rights. Shares of Common Stock
owned by or held for the account of the Company will be deemed not to be
outstanding for the purpose of any such computation. Such adjustment
will 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 will 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 fixes a record date for a distribution
to all holders of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Common Stock,
but including any dividend payable in stock other than Common Stock) or
subscription rights or warrants (excluding those referred to in SECTION
11(b)), the Purchase Price to be in effect after such record date will
be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, (i) the numerator of which is
the Current Market Price per share of Common Stock on such record date,
less the fair market value (as conclusively determined in good faith by
the Board of Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent) of the portion of
the cash, assets, or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to a share of Common
Stock and (ii) the denominator of which is such Current Market Price per
share of Common Stock. Such adjustments will be made successively
whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price will be adjusted to be
the Purchase Price that would have been in effect if such record date
had not been fixed.
(d) The "Current Market Price" per share of Common Stock on
any date will be deemed to be the average of the daily closing prices
per share of such Common Stock for the 30 consecutive Trading Days
immediately prior to such date; provided, however, that in the event
that the Current Market Price per share of the Common Stock is
determined during a period following the announcement by the issuer of
such Common Stock of (i) a dividend or distribution on such Common Stock
payable in shares of such Common Stock or securities convertible into
shares of such Common Stock (other than the Rights), or (ii) any
subdivision, combination, or reclassification of such Common Stock, and
the ex-dividend date for such dividend or distribution, or the record
date for
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<PAGE> 19
such subdivision, combination, or reclassification has not occurred
prior to the commencement of the requisite 30 Trading Day period, as set
forth above, then, and in each such case, the Current Market Price will
be properly adjusted to take into account ex-dividend trading. The
closing price for each day will be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange
or, if the shares of Common Stock are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if
on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors. If on any such date no market
maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board of
Directors will be used. If the Common Stock is not publicly held or not
so listed or traded, Current Market Price per share will mean the fair
value per share as determined in good faith by the Board of Directors,
the determination of which will be described in a statement filed with
the Rights Agent and will be conclusive for all purposes.
(e) Anything in this Agreement to the contrary
notwithstanding, no adjustment in the Purchase Price will be required
unless such adjustment would require an increase or decrease of at least
one percent (1%) in the Purchase Price; provided, however, that any
adjustments that by reason of this SECTION 11(e) are not required to be
made will be carried forward and taken into account in any subsequent
adjustment. All calculations under this SECTION 11 will be made to the
nearest cent or to the nearest one-hundredth of a share of Common Stock.
Notwithstanding the first sentence of this SECTION 11(e), any adjustment
required by this SECTION 11 will be made no later than the earlier of
(i) three years from the date of the transaction that mandates such
adjustment or (ii) the Final Expiration Date.
(f) If, as a result of an adjustment made pursuant to SECTION
11(a)(ii) or SECTION 13(a), the holder of any Right thereafter exercised
becomes entitled to receive any shares of capital stock other than
Common Stock, then the number of such other shares so receivable upon
exercise of any Right and the Purchase Price will be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common
Stock 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
with respect to the Common Stock will apply on like terms to any such
other shares.
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<PAGE> 20
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price under this Agreement will
evidence the right to purchase, at the adjusted Purchase Price, the
number of Rights Shares purchasable from time to time under this
Agreement, all subject to further adjustment as provided in this
Agreement.
(h) Unless the Company has exercised its election as provided
in SECTION 11(i), upon each adjustment of the Purchase Price as a result
of the calculations made in SECTIONS 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment will
thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of Rights Shares (calculated to the nearest one-
hundredth) obtained by (i) multiplying (x) the number of Rights Shares
covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu
of any adjustment in the number of Rights Shares purchasable upon the
exercise of a Right. Each of the Rights outstanding after such an
adjustment in the number of Rights will be exercisable for the number of
Rights Shares for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of
the number of Rights will become that number of Rights (calculated to
the nearest one-hundredth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company will make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, will be at least ten Business 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 will, 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, the additional Rights to
which such holders are entitled as a result of such adjustment, or, at
the option of the Company, will 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 are entitled after such adjustment.
Rights Certificates so to be distributed will be issued, executed, and
countersigned in the manner provided for in this Agreement (and may
bear, at the option of the Company, the adjusted Purchase Price) and
will 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 Rights Shares, the Rights Certificates theretofore and
thereafter issued may continue to
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express the Purchase Price per Rights Shares and the number of Rights
Shares that were expressed in the initial Rights Certificates issued
under this Agreement.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of the
number of Rights Shares, the Company will 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 Rights Shares at such adjusted Purchase Price.
(l) In any case in which this SECTION 11 requires that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of Rights Shares and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Rights Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company will 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.
(m) Anything in this SECTION 11 to the contrary
notwithstanding, the Company will 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 its good faith
judgment, the Board of Directors of the Company determines it to be
advisable in order that any (i) consolidation or subdivision of the
Common Stock, (ii) issuance wholly for cash of any shares of Common
Stock at less than the then current market price, (iii) issuance wholly
for cash of shares of Common Stock or securities that by their terms are
convertible into or exchangeable for shares of Common Stock, (iv) stock
dividends, or (v) issuance of rights, options, or warrants referred to
in this SECTION 11, hereafter made by the Company to holders of its
Common Stock will not be taxable to such stockholders.
(n) The Company covenants and agrees that it will not, at any
time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction that complies
with SECTION 11(o)), (ii) merge with, from, or into any other Person
(other than a Subsidiary of the Company in a transaction that complies
with SECTION 11(o)), 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 or any of
its Subsidiaries in one or more transactions each of which complies with
SECTION 11(o)), 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 could
reasonably be expected to substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
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<PAGE> 22
simultaneously with, or immediately after, such consolidation, merger,
or sale, the stockholders of the Person that constitutes, or would
constitute, the "Principal Party" for purposes of SECTION 13(a) has
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 27, 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) Notwithstanding anything in this Agreement to the
contrary, in the event that the Company at any time after the Rights
Dividend Declaration Date and prior to the Distribution Date (i)
declares a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivides the outstanding shares of Common
Stock, or (iii) combines the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, will be proportionately
adjusted so that the number of Rights thereafter associated with each
share of Common Stock following any such event will equal the result
obtained by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction the
numerator of which is the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which is the total number of shares of Common Stock
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 Requisite
Majority, may permit the Rights, subject to SECTION 7(e), to be
exercised for 50% of the shares of Common Stock (or other securities,
cash or other assets to be substituted for the Adjustment Shares
pursuant to SECTION 11(a)(III)) that would otherwise be purchasable
under SECTION 11(a) in consideration of the surrender to the Company of
the Rights so exercised and without other payment of the Purchase Price.
Rights exercised under this SECTION 11(q) will be deemed to have been
exercised in full and will be cancelled.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in SECTION 11 or SECTION
13, the Company will (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a brief summary thereof
to each holder of a Rights Certificate (or, if prior to the Distribution Date,
to each holder of a certificate representing shares of Common Stock) in
accordance with SECTION 25. The Rights Agent will be fully protected in
relying on any such certificate and on any adjustment contained in such
certificate.
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<PAGE> 23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (i) the Company consolidates with, or merges
with, or into, any other Person (other than a Subsidiary of the Company
in a transaction that complies with SECTION 11(o)), and the Company is
not the continuing or surviving Person of such consolidation or merger;
(ii) any Person (other than a Subsidiary of the Company in a transaction
that complies with SECTION 11(o)) consolidates with, or merges with, or
into, the Company, and the Company is the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common
Stock is changed into or exchanged for stock or other securities of any
other Person or cash or any other property; or (iii) the Company sells
or otherwise transfers (or one or more of its Subsidiaries sells or
otherwise transfers), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions each of which
complies with SECTION 11(o)), then, and in each such case (except as
contemplated by SECTION 13(d)), proper provision will be made so that
(a) each holder of a Right, except as provided in SECTION 7(e) or
SECTION 13(e), will thereafter have the right to receive, upon the
exercise of such Right at the then current Purchase Price in accordance
with the terms of this Agreement, such number of validly authorized and
issued, fully paid, nonassessable, and freely tradable shares of Common
Stock of the Principal Party (as defined below), not subject to any
liens, encumbrances, preemptive rights, rights of first refusal, or
other adverse claims, as are equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of Rights
Shares 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 Rights 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, will be referred to as the
"Purchase Price" for each Right and for all purposes of this Agreement)
by 50% of the Current Market Price per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event;
(B) such Principal Party will thereafter be liable for, and will assume,
by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (C) the term "Company" will
thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of SECTION 11 will apply only
to such Principal Party following the first occurrence of a Section 13
Event; (D) such Principal Party will take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its
Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions of this
Agreement will thereafter be applicable, as nearly as may be, in
relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (E) the
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<PAGE> 24
provisions of SECTION 11(a)(ii) will be of no effect following the first
occurrence of any Section 13 Event.
(b) "Principal Party" means
(i) in the case of any transaction described in CLAUSE
(I) or (II) of the first sentence of SECTION 13(a), the Person
that is the issuer of any securities into which shares of Common
Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in CLAUSE
(III) of the first sentence of SECTION 13(a), the Person that is
the party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock
of such Person is not at such time and has not been continuously
over the preceding 12-month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has
been so registered, "Principal Party" will refer to such other
Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, with Common Stock that is
and has been so registered, "Principal Party" will refer to
whichever of such Persons is the issuer of the Common Stock
having the greatest aggregate market value.
(c) The Company will not consummate any such consolidation,
merger, sale, or transfer unless the Principal Party has a sufficient
number of authorized shares of its Common Stock 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 have executed and delivered to the
Rights Agent a supplemental agreement providing for the Principal Party
to assume and perform the terms set forth in SECTIONS 13(a) and (b) and
further providing that, as soon as practicable after the date of any
consolidation, merger, or transfer mentioned in SECTION 13(a), the
Principal Party will
(i) prepare and file a registration statement under the
Act, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use
its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Final Expiration Date; and
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<PAGE> 25
(ii) will 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.
(d) In the event that the Rights become exercisable under
SECTION 13(a), the Company, by action of a Requisite Majority, may agree
with the Principal Party that the Principal Party may permit the Rights
to be exercised for 50% of the Common Stock of the Principal Party that
would otherwise be purchasable under SECTION 13(a), in consideration of
the surrender to the Principal Party, as the successor to the Company
under SECTION 13(a)(ii), of the Rights so exercised and without other
payment of the Purchase Price. Rights exercised under this SECTION
13(e) will be deemed to have been exercised in full and cancelled.
(e) The provisions of this SECTION 13 will similarly apply to
successive mergers, consolidations, and sales or other transfers. In
the event that a Section 13 Event occurs at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights that have not
theretofore been exercised will thereafter become exercisable in the
manner described in SECTION 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company will not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in SECTION
11(p), or to distribute Rights Certificates that evidence fractional
Rights. In lieu of such fractional Rights, there will be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole Right. For
purposes of this SECTION 14(a), the current market value of a whole
Right will 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
will 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
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<PAGE> 26
as conclusively determined in good faith by the Board of Directors of
the Company will be used.
(b) The Company will not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute
certificates that evidence fractional shares of Common Stock. In lieu
of fractional shares of Common Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as provided in this Agreement an amount in cash equal to the
same fraction of the Current Market Price of one share of Common Stock
as of the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Rights,
expressly waives the right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this
SECTION 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), may, on its own behalf and for its
own benefit, enforce, and may institute and maintain any suit, action, or
proceeding against the Company to enforce, or otherwise act in respect of, its
right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under this Agreement and injunctive relief
against actual or threatened violations of the obligations under this Agreement
of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the Rights consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer, and with the appropriate forms and certificates
fully executed;
(c) subject to SECTION 6(a) and SECTION 7(f), the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the
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<PAGE> 27
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, will 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 will have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree, or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory, or administrative agency or commission, or any
statute, rule, regulation, or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company will
use its reasonable best efforts to have any such order, decree, or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate will be entitled to vote or receive
dividends or be deemed for any purpose the holder of the number of shares of
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor will anything
contained in this Agreement 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, 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 25), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate have been exercised in accordance with the
provisions of this Agreement.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Agreement and,
from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements
incurred in the administration and execution of this Agreement and the
exercise and performance of its duties under this Agreement. The
Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith, or willful misconduct on the part of the
Rights Agent, for anything done or omitted to be done by the Rights
Agent in connection with the acceptance and administration of this
Agreement, including, without limitation, the costs and expenses of
defending against any claim of liability. In no case shall the Rights
Agent be liable for special, indirect, incidental or consequential loss
or damage, even if the Rights Agent has been advised of the likelihood
of such loss or damage.
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<PAGE> 28
(b) The Rights Agent will be protected and will incur no
liability for or in respect of any action taken, suffered, or omitted by
it in connection with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed, and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into or with 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 is a party, or
any corporation succeeding to the corporate trust or shareholder
services business of the Rights Agent or any successor Rights Agent,
will 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 to this Agreement; provided, however, that such
corporation would be eligible for appointment as a successor Rights
Agent under the provisions of SECTION 21. In case at the time such
successor Rights Agent succeeds to the agency created by this Agreement,
any of the Rights Certificates 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 have not 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 will have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Rights Certificates 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
have not 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 will have the full force
provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance of such Rights Certificates, will be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel will
be full and complete
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<PAGE> 29
authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any fact
or matter (including, without limitation, the identity of any Acquiring
Person and the determination of "Current Market Price") be proved or
established by the Company prior to taking or suffering any action under
this Agreement, such fact or matter (unless other evidence in respect of
such fact or matter is specifically prescribed in this Agreement) may be
deemed to be conclusively proved and established by a certificate signed
by the Chairman of the Board, the Chief Executive Officer, the Chief
Operating Officer, 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 will be
full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent will be liable under this Agreement only
for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will 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 will be deemed to have been made by the
Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
of this Agreement (except the due execution of this Agreement by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature); nor will it be responsible
for any breach by the Company of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor will it be responsible
for any adjustment required under the provisions of SECTION 11 or
SECTION 13, or responsible for the manner, method, or amount of any such
adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after actual notice of any such
adjustment); nor will it by any act under this Agreement be deemed to
make any representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of
Common Stock will, when so issued, be validly authorized or issued,
fully paid, or 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.
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(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties under
this Agreement from the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice President,
the Secretary, any Assistant Secretary, the Treasurer, or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it will not be liable
for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer,
or employee of the Rights Agent may buy, sell, or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
contract with or lend money to the Company, or otherwise act as fully
and freely as though it were not Rights Agent under this Agreement.
Nothing in this Agreement will preclude the Rights Agent from acting in
any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers vested by this Agreement in it or perform any duty
under this Agreement either itself or by or through its attorneys or
agents, and the Rights Agent will not be answerable or accountable for
any act, default, neglect, or misconduct of any such attorneys or agents
or for any loss to the Company resulting from any such act, default,
neglect, or misconduct; provided, however, that reasonable care was
exercised in the selection and continued employment of such Person.
(j) No provision of this Agreement will 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 under this Agreement
or in the exercise of its rights if there are reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may
be, has either not been completed or indicates an affirmative response
to clause 1 or 2 of such certificate, the Rights Agent will not take any
further action with respect to such requested exercise of transfer
without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company, and to each transfer
agent of the Common Stock, by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Stock, by registered or certified mail,
and to the holders of the Rights
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<PAGE> 31
Certificates by first-class mail. If the Rights Agent resigns or is removed or
otherwise becomes incapable of acting, the Company will appoint a successor to
the Rights Agent. If the Company fails to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who will,
with such notice, submit such holder's 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,
will be a corporation organized and doing business under the laws of the United
States or a State of the United States, in good standing, that is authorized
under such laws to exercise corporate trust 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 $25,000,000. After appointment, the successor Rights Agent will 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, except that
the predecessor Rights Agent will deliver and transfer to the successor Rights
Agent any property at the time held by it under this Agreement 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 will file notice of such appointment in writing with the predecessor
Rights Agent and each transfer agent of the Common Stock and the Common Stock,
and mail a notice of such appointment in writing to the registered holders of
the Rights Certificates. Failure to give any notice provided for in this
SECTION 21, however, or any defect in such notice, will 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, in its discretion, 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, kind or class of
shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the Expiration Date, the Company
(a) will, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement,
granted or awarded as of the Distribution Date, or upon the exercise,
conversion, or exchange of securities 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 (y) no
such Rights Certificate will be issued if, and to the extent that, the Company
is 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 (z) no such Rights Certificate will be
issued if, and to the extent that, appropriate adjustment has otherwise been
made in lieu of the issuance of such Rights Certificate.
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<PAGE> 32
Section 23. Redemption and Termination.
(a) The Company may, at its option, by action of a Requisite
Majority, at any time prior to the Close of Business on the earlier of
(i) the tenth Business Day following a Stock Acquisition Date, or (ii)
the Final Expiration Date, redeem all but not fewer than all the then
outstanding Rights at the Redemption Price (the date of such redemption,
the "Redemption Date"), and the Company, at its option, may pay the
Redemption Price either in cash or Common Stock or other securities of
the Company, deemed by the Board of Directors, in the exercise of its
sole discretion, to be at least equivalent in value to the Redemption
Price.
(b) Immediately upon the action of a Requisite Majority
ordering the redemption of the Rights, evidence of which has been filed
with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights will be to receive the
Redemption Price. Promptly after the action of a Requisite Majority
ordering the redemption of the Rights, the Company will give notice of
such redemption to the Rights Agent and to the holders of the then
outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books
of the transfer agent for the Common Stock. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made. Any notice that is mailed in the manner in this
Agreement provided will be deemed given, whether or not the holder
receives such notice. In any case, failure to give such notice by mail,
or any defect in the notice, to any particular holder of Rights shall
not affect the sufficiency of the notice to other holders of Rights.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option,
at any time after a Triggering Event, exchange all or part of the then
outstanding and exercisable Rights (which will not include Rights that
have become void pursuant to the provisions of SECTION 7(e) hereof) for
shares of Common Stock, each Right being exchangeable for one share of
Common Stock, appropriately adjusted to reflect any transaction
specified in SECTION 11(a)(i) occurring after the Record Date (such
number of shares of Common Stock issuable in exchange for one Right
being referred to herein as the "Exchange Shares"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
any of its Subsidiaries or any Person or entity 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 Stock then
outstanding.
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<PAGE> 33
(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 a holder of such Rights shall be to receive the
Exchange Shares. 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 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 that 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 Stock 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
Stock issued but not outstanding, or authorized but unissued, to permit
any exchange of Rights as contemplated in accordance with this SECTION
24, the Company shall take all such action as may be necessary to
authorize additional Common Stock for issuance upon exchange of the
Rights or shall take such other action specified in SECTION 11(a)(iii)
hereof.
(d) The Company shall not be required to issue fractions of
shares of Common Stock to distribute certificates that evidence
fractional Common Stock. In lieu of such fractional shares, the Company
shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares would otherwise be issuable an
amount in cash equal to the same fraction of the Current Market Price of
a whole share of Common Stock. For the purposes of this SUBSECTION (d),
the Current Market Price of a whole share of Common Stock shall be
determined as of the Trading Day immediately prior to the date of
exchange pursuant to this SECTION 24.
Section 25. Notice of Certain Events.
(a) In case the Company proposes, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class
to the holders of Common Stock or to make any other distribution to the
holders of Common Stock (other than a regular quarterly cash dividend
out of earnings or retained earnings of the Company), or (ii) to offer
to the holders of Common Stock rights or warrants to subscribe for or to
purchase any additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Common Stock (other than a reclassification
involving only the subdivision of outstanding shares of Common Stock),
or (iv) to effect any consolidation or merger into, or with any other
Person (other than a Subsidiary of the Company in a transaction that
complies with SECTION 11(o)), 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
30
<PAGE> 34
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 or any of its Subsidiaries in one or
more transactions each of which complies with SECTION 11(o)), or (v) to
effect the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company will give to each holder of a Rights
Certificate, to the extent feasible and in accordance with SECTION 26, a
notice of such proposed action, which will specify the record date for
the purposes of such, distribution, stock dividend, distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the
holders of the shares of Common Stock, if any such date is to be fixed,
and such notice will be so given in the case of any action covered by
CLAUSE (i) or (ii) above at least 20 days prior to the record date for
determining holders of the shares of Common Stock for purposes of such
action, and in the case of any such other action, at least 20 days prior
to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common Stock,
whichever is the earlier.
(b) In case of a Triggering Event, then (i) the Company will
as soon as practicable give to each holder of a Rights Certificate, to
the extent feasible and in accordance with SECTION 26, a notice of the
occurrence of such event, which will specify the event and the
consequences of the event to holders of Rights under this Agreement, and
(ii) all references in SECTION 25(a) to common stock will be deemed
thereafter to refer to other securities, if appropriate.
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 will 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:
Peerless Mfg. Co.
2819 Walnut Hill Lane
Dallas, Texas 75229
Attention: Chief Executive Officer
with a copy to:
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attention: R. Clayton Mulford
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
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<PAGE> 35
on the Rights Agent will be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing
with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, N.J. 07660
Attention: Mona Vohrees
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) will 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. Supplement and Amendments. The Company, by action of its
Board of Directors, and the Rights Agent may from time to time supplement or
amend this Agreement without the approval of any holders of Rights in order to
cure any ambiguity, to correct or supplement any provision contained in this
Agreement that may be defective or inconsistent with any other provisions in
this Agreement, or to make any other provisions in regard to matters or
questions arising under this Agreement that the Company and Rights Agent may
deem necessary or desirable and that will be consistent with, and for the
purpose of fulfilling, the objectives of the Board of Directors in adopting
this Agreement; provided, however, that following the Distribution Date, this
Agreement may only be amended to shorten or lengthen any time period or in a
manner that would not adversely affect the basic economic terms of the Rights;
provided further, that, once the Rights are no longer redeemable in accordance
with SECTION 23 of this Agreement, no amendment to this Agreement may have the
effect of making the Rights redeemable.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent will bind
and inure to the benefit of their respective successors and assigns under this
Agreement.
Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock of which any Person is the Beneficial Owner, will be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act as in effect on the date of this Agreement.
The Board of Directors of the Company (with, where specifically provided for in
this Agreement, the concurrence of the Continuing Directors) will have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors (with, where
specifically provided for in this Agreement, the concurrence of the Continuing
Directors) or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (a)
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<PAGE> 36
interpret the provisions of this Agreement, and (b) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of CLAUSE (Y)
below, all omissions with respect to the foregoing) that are done or made by
the Board of Directors (with, where specifically provided for in this
Agreement, the concurrence of the Continuing Directors) in good faith, will (x)
be final, conclusive, and binding on the Company, the Rights Agent, the holders
of the Rights, and all other parties, and (y) not subject the Board of
Directors or the Continuing Directors to any liability to the holders of the
Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement
will 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 Stock) any legal or
equitable right, remedy, or claim under this Agreement; and this Agreement will
be for the sole and exclusive benefit of the Company, the Rights Agent, and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, or unenforceable, the remainder of the
terms, provisions, covenants, and restrictions of this Agreement will remain in
full force and effect and will 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 will
be reinstated and will not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board of
Directors. Without limiting the foregoing, if any provision requiring action
by a Requisite Majority is held by any court of competent jurisdiction or other
authority to be invalid, void, or unenforceable, such determination will then
be made by the Board of Directors of the Company in accordance with applicable
law and the Company's articles of incorporation and by-laws.
SECTION 32. GOVERNING LAW. THIS AGREEMENT, EACH RIGHT, AND EACH
RIGHTS CERTIFICATE ISSUED UNDER THIS AGREEMENT WILL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF TEXAS AND FOR ALL PURPOSES WILL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts will for all purposes be
deemed to be an original, and all such counterparts will together constitute
but one and the same instrument.
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<PAGE> 37
Section 34. Interpretation. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions of this
Agreement. References in this Agreement to Sections and Exhibits are
references to the Sections of and Exhibits to this Agreement unless the context
requires otherwise. In this Agreement, the word "or" is not exclusive.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: PEERLESS MFG. CO.
By:
--------------------------------
Sherrill Stone,
Chief Executive Officer
Attest: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
34
<PAGE> 38
Exhibit A
to Rights Agreement
Certificate No. R-
FORM OF RIGHTS CERTIFICATE
________ Rights
NOT EXERCISABLE AFTER MAY 22, 2007 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID.
Rights Certificate
PEERLESS MFG. CO.
This certifies that _____________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions, and conditions of
the Rights Agreement, dated as of May 22, 1997 (as amended from time to time,
the "Rights Agreement"), between Peerless Mfg. Co., a Texas corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"),
to purchase from the Company at any time prior to 5:00 p.m. (Dallas, Texas
time) on May 22, 2007 at the office or offices of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one fully paid,
nonassessable share of Common Stock (the "Common Stock") of the Company, at a
purchase price of $30.00 per share (the "Purchase Price"), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of shares that may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of June 2, 1997 based on the Common
Stock as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number and kind of shares of Common Stock or other
securities, that may be purchased upon the exercise of the Rights evidenced by
this Rights Certificate are subject to modification and adjustment upon the
happening of certain events.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
incorporated herein by reference and made a part of this certificate 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 certain circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at
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<PAGE> 39
the office of the Rights Agent and are also available upon written request to
the Rights Agent. All capitalized terms not otherwise defined have the meaning
set forth in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person, (ii) a
transferee of any such Acquiring Person, Associate, or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of
a Person who, after such transfer, became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person, such Rights will become null and void and
no holder of this certificate will have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices 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 shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered have
entitled such holder to purchase. If this Rights Certificate is exercised in
part, the holder will be entitled to receive upon surrender of this certificate
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 $0.01 per Right. In addition, in certain circumstances the
Rights may be exchanged, in whole or in part, for shares of the Common Stock.
Immediately upon the action of the Board of Directors of the Company
authorizing any such exchange, and without any further action or any notice,
the Rights (other than Rights that are not subject to such exchange) will
terminate and the Rights will only enable holders to receive the shares
issuable upon such exchange. Under certain circumstances set forth in the
Rights Agreement, the decision to redeem the Rights will require the
concurrence of a majority of the Continuing Directors.
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Rights Certificate will be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock or
of any other securities of the Company that may at any time be issuable on the
exercise hereof, nor will anything contained in the Rights Agreement or herein
be construed to confer upon the holder of this 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 the
Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Rights Certificate have
been exercised as provided in the Rights Agreement.
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<PAGE> 40
This Rights Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ____________________
ATTEST: PEERLESS MFG. CO.
By:
- ---------------------------- ---------------------------------
Title:
Countersigned: ------------------------------
- ----------------------------
By
--------------------------
Authorized Signature
3
<PAGE> 41
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 transfer 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:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned, or
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:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
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<PAGE> 42
FORM OF ELECTION TO PURCHASE
The signature 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.
To: PEERLESS MFG. CO.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of the Rights (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 are not all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights will 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:
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<PAGE> 43
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:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
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<PAGE> 44
Exhibit B
to Rights Agreement
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF PEERLESS MFG. CO. COMMON STOCK
On May 21, 1997, the Board of Directors of Peerless Mfg. Co. (the
"Company") declared a dividend of one common share purchase right (a "Right")
for each outstanding share of common stock, $1.00 par value (the "Common
Shares"), of the Company. The dividend was made to the shareholders of record
at the close of business on June 2, 1997 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company one Common Share at
a price of $30.00 (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated
as of May 22, 1997 (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C. as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten Business Days following a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 20% or more
of the outstanding Common Shares (an "Acquiring Person") or (ii) ten Business
Days following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of such outstanding
Common Shares (the earlier of such dates being the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached to the certificate.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding even without such notation or a copy of this Summary
of Rights being attached to such Certificate, will also constitute the transfer
of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 22, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company, in each case, as described below.
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<PAGE> 45
The Purchase Price payable and the number of Common Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination, or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights
or warrants to subscribe for or purchase Common Shares at a price or securities
convertible into Common Shares with a conversion price less than the then
current market price of the Common Shares; or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness, cash (other than
regular cash dividends out of the Company's earnings or retained earnings), or
assets.
In the event that any person or entity becomes an Acquiring Person (the
beneficial owner of 20% or more of the Common Shares), provision will be made
so that each Right, other than Rights beneficially owned by the Acquiring
Person (which will then be void), will entitle the holder to purchase that
number of Common Shares having a market value of two times the then current
Purchase Price of the Right.
The Rights Agreement excludes from the definition of Acquiring Person,
Persons who certify to the Company that they inadvertently acquired in excess
of 19.9% of the outstanding Common Shares and thereafter divest such excess
Common Shares or who acquire 20% or more of the Common Shares in a Permitted
Transaction. A "Permitted Transaction" is a stock acquisition or tender or
exchange offer pursuant to a definitive agreement which would result in a
person beneficially owning 20% or more of the Common Shares and which has been
approved by the Board of Directors (including a majority of the Directors not
in association with an Acquiring Person) prior to the execution of the
agreement or the public announcement of the offer.
In the event that the Company is acquired in a merger or other business
combination transaction, or 50% or more of its consolidated assets or earning
power are sold, proper provisions will be made so that each Right will entitle
the holder to purchase that number of shares of common stock of the acquiring
company that at the time of such transaction will have a market value of two
times the then current Purchase Price of the Right.
No adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in the Purchase Price. With
certain exceptions, no fractional Common Shares will be issued and, in lieu of
such fractional shares, an adjustment in cash will be made based on the market
price of the Common Shares on the last trading day prior to the date of
exercise.
After a person becomes an Acquiring Person, the Company's Board of
Directors may exchange the Rights, other than those Rights owned by the
Acquiring Person, in whole or in part, at an exchange ratio of one Common Share
per Right, subject to adjustment. However, the Board of Directors cannot
conduct an exchange at any time after any Person, together with its Affiliates
and Associates, becomes the Beneficial Owner of 50% or more of the outstanding
Common Stock.
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<PAGE> 46
At any time within ten Business Days following the date that any Person
becomes an Acquiring Person, a Requisite Majority may redeem the Rights in
whole, but not in part, at a price of $0.01 per Right (the "Redemption Price").
In addition, the Board of Directors may extend or reduce the period during
which the Rights are redeemable, so long as the Rights are redeemable at the
time of such extension or reduction. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an
amendment to extend the Final Expiration Date, except that from and after the
date any Person becomes an Acquiring Person, no such amendment may adversely
affect the economic interests of the holders of the Rights.
Until a Right is exercised, the holder of the Right, as such, will have
no rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
B-3
