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EXHIBIT 99.1
RIGHTS AGREEMENT
between
CHASE INDUSTRIES INC.
and
MELLON INVESTOR SERVICES LLC
as Rights Agent
Dated as of December 28, 2000
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Section 1. Certain Definitions.....................................................-1-
Section 2. Appointment of Rights Agent.............................................-8-
Section 3. Issue of Right Certificates.............................................-8-
Section 4. Form of Right Certificates.............................................-10-
Section 5. Execution, Authentication and Delivery.................................-11-
Section 6. Registration, Registration of Transfer and Exchange....................-12-
Section 7. Mutilated, Destroyed, Lost and Stolen Right Certificates...............-13-
Section 8. Exercise of Rights; Purchase Price; Expiration Date of Rights..........-14-
Section 9. Cancellation and Destruction of Right Certificates.....................-15-
Section 10. Reservation and Availability of Shares.................................-16-
Section 11. Record Date............................................................-16-
Section 12. Adjustment of Purchase Price, Number of Shares or Number of Rights.....-17-
Section 13. Certificate of Adjusted Purchase Price or Number of Shares.............-23-
Section 14. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...-23-
Section 15. Fractional Rights and Fractional Shares................................-24-
Section 16. Rights of Action.......................................................-25-
Section 17. Agreement of Right Holders.............................................-26-
Section 18. Right Certificate Holder Not Deemed a Stockholder......................-27-
Section 19. Concerning the Rights Agent............................................-27-
Section 20. Duties of Rights Agent.................................................-28-
Section 21. Merger or Consolidation or Change of Name of Rights Agent..............-30-
Section 22. Change of Rights Agent.................................................-30-
Section 23. Issuance of New Right Certificates.....................................-31-
Section 24. Redemption.............................................................-31-
Section 25. Mandatory Redemption and Exchange......................................-32-
Section 26. Notice of Certain Events...............................................-33-
Section 27. Securities Laws Registrations..........................................-34-
Section 28. Notices................................................................-35-
Section 29. Supplements and Amendments.............................................-35-
Section 30. Successors.............................................................-36-
Section 31. Benefits of this Agreement.............................................-36-
Section 32. Severability...........................................................-36-
Section 33. Governing Law..........................................................-36-
Section 34. Counterparts...........................................................-36-
Section 35. Descriptive Headings...................................................-36-
Section 36. Board of Directors.....................................................-36-
Section 37. Rights Issued with respect to Nonvoting Shares.........................-37-
</TABLE>
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Exhibits
Exhibit A - Certificate of Designation of Preferred Shares Series A
Junior Participating Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights To Purchase Preferred Stock
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RIGHTS AGREEMENT
This Rights Agreement, dated as of December 28, 2000, is between Chase
Industries Inc., a Delaware corporation (the "Company"), and Mellon Investor
Services LLC (formerly known as ChaseMellon Shareholder Services, L.L.C.), a New
Jersey limited liability Company, as Rights Agent.
WHEREAS, the Board of Directors of the Company (the "Board of
Directors"), having determined its actions to be in the interests of the
Company, has authorized the creation of Rights, has authorized and directed the
issuance to the Holders of record of Common Shares of the Company outstanding on
January 5, 2001 (the "Record Date"), of one Right with respect to each Common
Share of the Company outstanding on the Record Date, and has further authorized
and directed the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earlier of the
Distribution Date, the Redemption Date and the Final Expiration Date; and
WHEREAS, the Board of Directors of the Company has authorized and
directed that the terms and conditions under which the Rights are to be
distributed, including without limitation those affecting the exercise thereof,
the securities or other property to be acquired thereby and the purchase price
to be paid therefor, shall be set forth in a written agreement between the
Company and a rights agent.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 20% or more of the Voting Shares then
outstanding, but shall not include the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the Company or any trustee of or fiduciary with respect to any such
plan when acting in such capacity. Notwithstanding the foregoing,
(i) no member of the CVC Group shall be considered an
Acquiring Person unless the CVC Group, collectively, shall
become the Beneficial Owner of a number of Voting Shares
exceeding the Trigger Amount of the Voting Shares then
outstanding,
(ii) no Person, including any member of the CVC
Group, who Beneficially Owns 20% or more (or, in the case of
the CVC Group, in excess of the Trigger Amount) of the Voting
Shares outstanding on the Adoption Date shall be considered an
Acquiring Person unless such Person shall become the
Beneficial Owner of one Voting Share in excess of
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the greater of (A) the lesser of (1) the percentage of Voting
Shares Beneficially Owned by such Person on the Adoption Date
or (2) the lowest percentage of outstanding Voting Shares of
the Company Beneficially Owned by such Person after the
Adoption Date (as set forth in or derived from any Schedule
13D or 13G filed by such Person after the Adoption Date) or
(B) 20% of the Voting Shares then outstanding, and
(iii) no CVC Affiliate Assignee shall be considered
an Acquiring Person unless such CVC Affiliate Assignee shall
become the Beneficial Owner of the greater of (A) 20% or more
of the Voting Shares then outstanding or (B) the lesser of
(1) one Voting Share in excess of the number of Voting Shares
that such CVC Affiliate Assignee acquired from the CVC Group
or (2) the Trigger Amount; provided, however, that any CVC
Affiliate Assignee that decreases its Beneficially Ownership
of Voting Shares after the date it first acquires Voting
Shares from any member of the CVC Group after the Adoption
Date and thereafter increases its Beneficial Ownership of
Voting Shares (other than as a result of acquiring additional
Voting Shares from the CVC Group) to the greater of (A) 20% of
the then outstanding Voting Shares or (B) one Voting Share in
excess of such percentage of the outstanding Voting Shares
Beneficially Owned by such CVC Affiliate Assignee immediately
after such decrease in Beneficial Ownership shall be deemed an
Acquiring Person.
Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" solely as the result of an acquisition of Voting
Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially
owned by such Person to the amount of Voting Shares necessary for such
Person to become an Acquiring Person; provided, however, that, if a
Person shall become the Beneficial Owner of the amount of Voting Shares
necessary for such Person to become an Acquiring Person by reason of
share purchases by the Company and shall, after such share purchases by
the Company and at a time when such Person is the Beneficial Owner of
the amount of Voting Shares necessary for such Person to become an
Acquiring Person become the Beneficial Owner of any additional Voting
Shares, then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of
this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable, but in any event within the time
period directed by the Board of Directors of the Company, a sufficient
number of Common Shares so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of
this paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement. Nothing in this
Section 1(a) shall affect the effect or application of Section 8(e).
(b) "Adoption Date" shall mean December 26, 2000, as the date
the Board of Directors of the Company adopted this Rights Agreement.
(c) "Agreement" shall mean this Rights Agreement as hereafter
amended from time to time.
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(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this
Agreement.
(e) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "own beneficially" any securities which (without
duplication):
(1) such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time,
compliance with regulatory requirements, the fulfillment of a
condition or otherwise) pursuant to any oral or written
agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group
members (A) with respect to a bona fide public offering of
securities or (B) in connection with a placement of securities
pursuant to Rule 144A under the Securities Act), or upon the
exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise; or the
right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, (i)
securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (ii) securities issuable
upon exercise of Rights at any time prior to any Person
becoming an Acquiring Person;
(2) 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 Exchange Act) or has a
"pecuniary interest" or an "indirect pecuniary interest" in
(as determined pursuant to Rule 16a-1(a)(2) of the Exchange
Act), in either case including pursuant to any agreement,
arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to "beneficially own," any security
under this subparagraph (2) as a result of an agreement,
arrangement or understanding to vote such security (A) which
arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules
and regulations of the Exchange Act and (B) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(3) are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such
Person's Affiliates or Associates has any oral or written
agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group
members (A) with respect to a bona fide public offering of
securities or (B) in connection with a placement of securities
pursuant to Rule 144A under the Securities Act) for the
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purpose of acquiring, holding, voting (other than voting
pursuant to a revocable proxy as contemplated by the proviso
to subparagraph (2) of this paragraph) or disposing of any
securities of the Company.
Notwithstanding anything in this definition to the contrary,
(i) the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company (or to the
number of such securities "beneficially owned"), shall mean the number
of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder and (ii) the
record holder and each Person who is deemed to beneficially own any
shares of the Company's outstanding Nonvoting Shares shall be deemed to
be the Beneficial Owner of the number of Voting Shares into which such
Shares of Nonvoting Shares are convertible (without regard to any
limitation on conversion as may be contained in the Company's Restated
Certificate of Incorporation, as amended) and the Voting Shares into
which such Nonvoting Shares are convertible shall be deemed outstanding
for purposes of calculating the percentage of outstanding Voting Shares
held by such record holder and each such Person who is deemed to
beneficially own such Nonvoting Shares but shall not be deemed to be
outstanding for purposes of calculating the percentage of outstanding
Voting Shares held by any other Person.
(f) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00
P.M., New York, New York time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York, New
York time, on the next succeeding Business Day.
(h) "Closing Price", with respect to any security, shall mean
the last sale price, regular way, on a specific Trading Day or, in case
no such sale takes place on such Trading Day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if such security is not then listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which such
security is listed or admitted to trading or, if such security is not
then listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations
System or such other system then in use, or, if on any such Trading Day
such security is 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 such security selected by the Board of
Directors of the Company. If such security is not publicly held or so
listed or traded, "Closing Price" shall mean the fair value per unit of
such security as determined in good faith by the Board of Directors of
the Company, whose determination shall be described and the Closing
Price set forth in a statement filed with the Rights Agent.
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(i) "Common Shares" when used with reference to the Company
shall mean shares of capital stock of the Company which have no
preference over any other class of stock with respect to dividends or
assets, which are not redeemable at the option of the Company and with
respect to which no sinking, purchase or similar fund is provided and
shall initially mean the shares of Common Stock, par value $.01, of the
Company; provided, that, when used with reference to the Company
expressly or pursuant to the last sentence of this Section 1(i), the
term "Common Shares" shall not include the Nonvoting Shares unless
expressly specified as including such Nonvoting Shares. "Common Shares"
when used with reference to any Person other than the Company shall, if
used with reference to a corporation, mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person and, if
used with reference to any other Person, mean the equity interest in
such Person (or, if the net worth determined in accordance with
generally accepted accounting principles of another Person (other than
an individual) which controls such first-mentioned Person is greater
than such first-mentioned Person, then such other Person) with the
greatest voting power or managerial power with respect to the business
and affairs of such Person. Common Shares used without reference to the
Company or any other Person shall be deemed to refer to Common Shares
of the Company unless the context otherwise requires.
(j) "Company" shall mean Chase Industries Inc., a Delaware
corporation, and its successors.
(k) "Company Order" means a written request or order signed in
the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Rights Agent.
(l) "CVC Group" shall mean Chase Acquisition Corporation, a
Delaware Corporation; Court Square Capital Limited, a Delaware
Corporation; Citicorp Venture Capital, Ltd., a New York corporation,
Citigroup Inc., a Delaware corporation; Citigroup Holdings Company, a
Delaware corporation; Citicorp, a Delaware corporation; and Citibank,
N.A., a national banking association.
(m) "CVC Affiliate Assignee" shall mean any Person (i) who is
an Affiliate of any member of the CVC Group, (ii) which any member of
the CVC Group controls or otherwise has Beneficial Ownership of a
majority of the outstanding equity securities, (iii) whose ownership of
Common Shares is aggregated with one or more members of the CVC Group
for purposes of determining Beneficial Ownership of Voting Shares of
the CVC Group and (iv) who acquires Beneficial Ownership of Voting
Shares from CVC, either directly or indirectly, other than through
"brokers' transactions," as defined in Rule 144 promulgated under the
Securities Act.
(n) "Distribution Date" shall mean the Close of Business on
the earlier of (1) the tenth Business Day after the Shares Acquisition
Date or (2) the tenth Business Day (or such later date as may be
determined by action of the Board of Directors of the Company
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prior to such time as any Person becomes an Acquiring Person) after the
date of commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any trustee of or fiduciary with
respect to any such plan when acting in such capacity) of, or after the
date of the first public announcement of the intent of any Person
(other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any
trustee of or fiduciary with respect to any such plan when acting in
such capacity) to commence, a tender or exchange offer the consummation
of which would result in any Person becoming the Beneficial Owner of
the amount of Voting Shares necessary for such Person to become an
Acquiring Person; provided, however, that for purposes of clause (2)
above, any public announcement made by any Person prior to the Adoption
Date shall not cause the occurrence of the Distribution Date as
described in clause(2) above, but any commencement of such tender offer
by such Person on or after the Adoption Date shall cause the occurrence
of the Distribution Date as provided in clause (2) above (subject to
action by the Board of Directors to defer such Distribution Date as
contemplated by Section 1(a)).
(o) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and any successor statute thereto.
(p) "Nonvoting Shares" shall mean the shares of Nonvoting
Common Stock, par value $.01 per share, of the Company.
(q) "Final Expiration Date" shall mean the Close of Business
on December 26, 2010.
(r) "Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability company, joint
venture, association, trust, unincorporated organization, group or
other entity, and shall include any successor (by merger or otherwise)
of such entity.
(s) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company
having the rights and preferences set forth in the form of Certificate
of Designation of Series A Junior Participating Preferred Stock
attached hereto as Exhibit A, and, to the extent there is not a
sufficient number of shares of Series A Junior Participating Preferred
Shares outstanding to permit the full exercise of the Rights, any other
authorized shares of preferred stock, par value $.01 per share, of the
Company having rights and preferences substantially identical to such
Series A Preferred Shares.
(t) "Purchase Price" shall mean the initial price at which the
holder of a Right may, subject to the terms and conditions of this
Agreement, purchase one one-thousandth (1/1000) of a Preferred Share
(which initial price is set forth in Section 8(b) hereof), as such
price shall be adjusted pursuant to the terms of this Agreement.
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(u) "Redemption Date" shall mean the time at which the Rights
are redeemed pursuant to Section 24 herein or the time at which all of
the Rights are mandatorily redeemed and exchanged pursuant to Section
25 hereof.
(v) "Redemption Price" shall have the meaning specified in
Section 24(b) herein.
(w) "Right" shall mean one preferred share purchase right
which initially represents the right of the registered holder thereof
to purchase one one-thousandth (1/1000) of a Preferred Share upon the
terms and subject to the conditions herein set forth.
(x) "Right Certificate" shall mean a certificate, in
substantially the form of Exhibit B attached to this Rights Agreement,
evidencing the Rights registered in the name of the holder thereof.
(y) "Rights Agent" shall mean Mellon Investor Services LLC, a
New Jersey limited liability company and any successor thereto
appointed in accordance with the terms hereof.
(z) "Rights Register" and "Rights Registrar" shall have the
meanings specified in Section 6.
(aa) "Securities Act" shall mean the Securities Act of 1933,
as amended, and any successor statute thereto.
(bb) "Shares Acquisition Date" shall mean the first date of
public announcement (which for purposes of this definition shall
include without limitation a report filed pursuant to Section 13(d) or
Section 16(a) of the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such.
(cc) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the outstanding capital stock or
other equity interests having ordinary voting power in the election of
directors or similar officials is owned, directly or indirectly, by
such Person.
(dd) "Summary of Rights" shall mean a Summary of Rights to
Purchase Preferred Shares in substantially the form attached as Exhibit
C to this Agreement.
(ee) "Trigger Amount" shall mean, at any given date, the
greater of (A) the lesser of (i) 7,292,945 Voting Shares of the Company
or (ii) the lowest number of Voting Shares of the Company Beneficially
Owned by the CVC Group after the Adoption Date (as set forth in or
derived from any Schedule 13D or 13G filed after the Adoption Date) or
(B) a number of Voting Shares of the Company constituting 20% or more
of the outstanding Voting Shares.
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(ff) "Trading Day" shall mean a day on which the principal
national securities exchange on which any of the Voting Shares are
listed or admitted to trading is open for the transaction of business
or, if none of the Voting Shares is listed or admitted to trading on
any national stock exchange, a Business Day.
(gg) "Voting Shares" shall mean (1) the Common Shares of the
Company and (2) any other shares of capital stock of the Company
entitled to vote generally in the election of directors or entitled to
vote together with the Common Shares in respect of any merger or
consolidation of the Company, any sale of all or substantially all of
the Company's assets or any liquidation, dissolution or winding up of
the Company. Whenever any provision of this Agreement requires a
determination of whether a number of Voting Shares comprising a
specified percentage of such Voting Shares is, was or will be
beneficially owned or has been voted, tendered, acquired, sold or
otherwise disposed of or a determination of whether a Person has
offered or proposed to acquire a number of Voting Shares comprising
such specified percentage, the number of Voting Shares comprising such
specified percentage of Voting Shares shall in every such case be
deemed to be the number of Voting Shares comprising the specified
percentage of all the Company's then outstanding Voting Shares.
(hh) "Wholly-Owned Subsidiary" of a Person shall mean any
corporation or other entity all the outstanding capital stock or other
equity interests of which having ordinary voting power in the election
of directors or similar officials (other than directors' qualifying
shares or similar interests) are owned, directly or indirectly, by such
Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and in
no event shall be liable for, the acts or omissions of any such co-rights Agent.
Section 3. Issue of Right Certificates. (a) Until the Distribution
Date, (1) outstanding Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) (A) with respect to Common Shares that are held
in certificated form, by the certificates for outstanding Common Shares of the
Company and not by separate Right Certificates and (B) with respect to Common
Shares that are held in book-entry form, by a notation in the records of the
Rights Agent (and the records of the Company's transfer agent if different from
the Rights Agent), and (2) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares of the
Company. As soon as practicable after the Distribution Date, the Company shall
promptly notify in writing the Rights Agent thereof and provide the Rights Agent
with the names and addresses of all record holders of Common Shares (together
with all other necessary information), and the Company will prepare and execute,
and the Rights Agent will countersign and send, by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares of the Company as
of the Close of Business on the Distribution Date, at the address of such holder
shown on the stock transfer records of the Company, a Right Certificate
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evidencing one Right for each Common Share so held, subject to adjustments as
provided herein. From and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon thereafter as practicable,
the Company will send a copy of a Summary of Rights, by first-class,
postage-prepaid mail, to each record holder of Common Shares of the Company as
of the Close of Business on the Record Date, at the address of such holder shown
on the stock transfer records of the Company. With respect to Common Shares
outstanding on the Record Date, the certificates evidencing such Common Shares
shall thereafter also evidence the outstanding Rights (as such Rights may be
amended or supplemented) distributed with respect thereto until the Distribution
Date and the registered holders of the Common Shares shall also be the
registered holders of the associated Rights. Until the Distribution Date (or, if
earlier, the Redemption Date or Final Expiration Date), the surrender for
registration of transfer or exchange of any certificate for Common Shares
outstanding as of the Close of Business on the Record Date, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
surrender for registration of transfer or exchange of the outstanding Rights
associated with the Common Shares represented thereby.
(c) The Company agrees that, at any time after the Record Date
and prior to the Distribution Date (or, if earlier, the Redemption Date or Final
Expiration Date) at which it issues any of its Common Shares upon original issue
or out of treasury, it will concurrently distribute to the holder of such Common
Shares one Right for each such Common Share, which Right shall be subject to the
terms and provisions of this Agreement and will evidence the right to purchase
the same number of one one-thousandth (1/1000) of a Preferred Share at the same
Purchase Price as the Rights then outstanding.
(d) Certificates for Common Shares issued after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date, whether upon registration of transfer or exchange of
Common Shares outstanding on the Record Date or upon original issue or out of
treasury thereafter, shall also be deemed to be certificates for the Rights and
shall have impressed on, printed on, written on or otherwise affixed to them the
following legend or such similar legend as the Company may deem appropriate and
as is not inconsistent with the provisions of this Agreement:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between Chase
Industries Inc. and Mellon Investor Services LLC, dated as of December
28, 2000, as it may be amended (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of Chase Industries Inc.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. Chase Industries Inc. will mail to the
holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. As described in the
Rights Agreement, Rights issued to or acquired by any Acquiring Person
or any Affiliate or Associate thereof
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(each as defined in the Rights Agreement), whether currently held by or
on behalf of such Person or by any subsequent holder, shall, under
certain circumstances, become null and void.
With respect to certificates containing the foregoing legend, until the earlier
of the Distribution Date or the Final Expiration Date, outstanding Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender of any such certificate
for registration of transfer or exchange of the Common Shares evidenced thereby
shall also constitute surrender for registration of transfer or exchange of the
outstanding Rights (as such Rights may be amended or supplemented) associated
with the Common Shares represented thereby. The failure to print the foregoing
legend on any certificate or any other defect therein shall not affect in any
manner whatsoever the application or interpretation of the provisions of Section
8(e) hereof.
(e) If the Company purchases or acquires any of its Common
Shares after the Record Date, but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights associated with the
Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. (a) The form of Right
Certificates (and the forms of election to purchase Preferred Shares (or other
securities) and of assignment to be printed on the reverse thereof) shall in
form and substance be substantially the same as Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, as may be required to comply
with any applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Rights may from
time to time be listed or as may be necessary to conform to usage, provided that
such marks, legends, summaries and endorsements do not effect the rights, duties
or responsibilities of the Rights Agent. Subject to the provisions of Section 23
hereof, the Right Certificates, whenever issued, shall be dated as of the date
of authentication thereof, but, regardless of any adjustments of the Purchase
Price or the number of Preferred Shares (or other securities) as to which a
Right is exercisable (whether pursuant to this Agreement or any future
amendments or supplements to this Agreement), or both, occurring after the
Record Date and prior to the date of such authentication, such Right
Certificates may, on their face, without invalidating or otherwise affecting any
such adjustment, expressly entitle the holders thereof to purchase such number
of Preferred Shares at the Purchase Price per one one-thousandth (1/1000) of a
Preferred Share as to which a Right would be exercisable if the Distribution
Date were the Record Date; no adjustment of the Purchase Price or the number of
Preferred Shares (or other securities) as to which a Right is exercisable, or
both, effected subsequent to the date of authentication of any Right Certificate
shall be invalidated or otherwise affected by the fact that such adjustment is
not expressly reflected on the face or in the provisions of such Right
Certificate.
(b) Pending the preparation of definitive Right Certificates,
the Company may execute, and upon Company Order the Rights Agent shall
authenticate and send, by first-class, insured, postage-prepaid mail, to each
record holder of Common Shares of the Company as of the Close of Business on the
Distribution Date, temporary Right Certificates which are printed,
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<PAGE> 14
lithographed, typewritten, mimeographed or otherwise produced substantially of
the tenor of the definitive Right Certificates in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Right Certificates may determine, as
evidenced by their execution of such Right Certificates.
(c) If temporary Right Certificates are issued, the Company
will cause definitive Right Certificates to be prepared without unreasonable
delay. After the preparation of definitive Right Certificates, the temporary
Right Certificates shall be exchangeable for definitive Right Certificates, upon
surrender of the temporary Right Certificates at the office of the Rights Agent
designated for such purpose, without charge to the holder. Upon surrender for
cancellation of any one or more temporary Right Certificates, the Company shall
execute and the Rights Agent shall authenticate and deliver in exchange therefor
one or more definitive Right Certificates, evidencing a like number of Rights.
Until so exchanged, the temporary Right Certificates shall in all respects be
entitled to the same benefits under this Agreement as definitive Right
Certificates.
(d) Any Right Certificate issued pursuant to Section 3(a) or
Section 23 hereof that represents Rights beneficially owned by (1) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (2) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (3) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
avoidance of Section 8(e) hereof, and any Right Certificate issued pursuant to
Section 6 or Section 7 hereof upon transfer, exchange, replacement or adjustment
of any other Right Certificate referred to in this sentence, shall contain (to
the extent the Rights Agent has notice thereof and to the extent feasible) the
following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
8(e) of such Rights Agreement.
Section 5. Execution, Authentication and Delivery. (a) The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Right Certificates
may be manual or facsimile.
(b) Right Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding
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<PAGE> 15
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Right Certificates or did not hold such
offices at the date of authentication of such Right Certificates. At any time
and from time to time after the execution and delivery of this Agreement and
prior to the Distribution Date, the Company may deliver Right Certificates
executed by the Company to the Rights Agent for authentication, together with a
Company Order for the authentication and delivery of such Right Certificates;
and the Rights Agent in accordance with such Company Order shall authenticate
and deliver such Right Certificates as in this Agreement provided and not
otherwise.
(c) No Right Certificate shall be entitled to any benefit
under this Agreement or be valid or obligatory for any purpose unless there
appears on such Right Certificate a certificate of authentication substantially
in the form provided for herein executed by the Rights Agent by manual
signature, and such certificate upon any Right Certificate shall be conclusive
evidence, and the only evidence, that such Right Certificate has been duly
authenticated and delivered hereunder.
Section 6. Registration, Registration of Transfer and Exchange. From
and after the Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date, the Company shall cause to be kept at the office
of the Rights Agent designated for such purpose a Rights Register (a "Rights
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Right Certificates and of
transfers of Rights. The Rights Agent is hereby appointed the registrar and
transfer agent (the "Rights Registrar") for the purpose of registering Right
Certificates and transfers of Rights as herein provided and the Rights Agent
agrees to maintain such Rights Register in accordance with such regulations so
long as it continues to be designated as Rights Registrar hereunder.
Upon surrender to the Rights Agent for registration of transfer of any
Right Certificate, the Company shall execute, and the Rights Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Right Certificates evidencing a like number of
Rights.
At the option of the holder, Right Certificates may be exchanged for
other Right Certificates upon surrender of the Right Certificates to be
exchanged to the Rights Agent. Whenever any Right Certificates are so
surrendered for exchange, the Company shall execute, and the Rights Agent shall
authenticate and deliver, the Right Certificates which the holder making the
exchange is entitled to receive.
All Right Certificates issued upon any registration of transfer or
exchange of Right Certificates shall be the valid obligations of the Company,
evidencing the same Rights, and entitled to the same benefits under this
Agreement, as the Right Certificates surrendered upon such registration of
transfer or exchange.
Every Right Certificate presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Rights Agent)
be duly endorsed, or accompanied by
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<PAGE> 16
a written instrument of transfer in form satisfactory to the Company and the
Rights Registrar duly executed, by the holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Right Certificates, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Right Certificates,
other than exchanges not involving any transfer. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have properly completed and signed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate. The Rights Agent
shall have no duty or obligation under this Section 6 or any other similar
provision of this Agreement unless and until it is satisfied that all such taxes
and/or governmental charges have been paid in full.
The provisions of this Section 6 shall be subject to the provisions of
Section 4(d), Section 8(e) and Section 15.
Section 7. Mutilated, Destroyed, Lost and Stolen Right Certificates.
(a) If any mutilated Right Certificate is surrendered to the Rights Agent, the
Company shall execute and the Rights Agent shall authenticate and deliver in
exchange therefor a new Right Certificate of like tenor, for a like number of
Rights and bearing a registration number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and the Rights
Agent (1) evidence to their satisfaction of the destruction, loss or theft of a
Right Certificate and (2) such security or indemnity, if any, as may be required
by them to save each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Rights Agent that such Right
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and upon its prior written request the Rights Agent shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Right Certificate, a
new Right Certificate of like tenor, for a like number of Rights and bearing a
registration number not contemporaneously outstanding.
(c) Upon the issuance of any new Right Certificate under this
Section, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Rights Agent) connected
therewith. The Rights Agent shall have no duty or obligation under this Section
7 or any other similar provision of this Agreement unless and until it is
satisfied that all such taxes and/or governmental charges have been paid in
full.
(d) Every new Right Certificate issued pursuant to this
Section in lieu of any destroyed, lost or stolen Right Certificate shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Right Certificate shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Right Certificates duly issued
hereunder.
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<PAGE> 17
(e) The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Right
Certificates.
Section 8. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Subject to the provisions of Section 8(e) hereof, the registered
holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at its office designated for such purpose, together with payment of the
Purchase Price for each one one-thousandth (1/1000) of a Preferred Share (or
other securities) as to which the Rights are exercised, at or prior to the
earliest of (1) the Close of Business on the Final Expiration Date, (2) the time
of redemption on the Redemption Date or (3) the time at which such Rights are
mandatorily redeemed and exchanged as provided in Section 25 hereof.
(b) The Purchase Price for each one one-thousandth (1/1000) of
a Preferred Share pursuant to the exercise of a Right shall initially be $30,
shall be subject to adjustment from time to time as provided in Sections 12 and
14 hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the securities to be purchased
and an amount equal to any applicable tax or charge required to be paid by the
holder of such Right Certificate in accordance with Section 10 in cash, or by
certified check or cashier's check payable to the order of the Company, the
Rights Agent shall thereupon promptly (1) (A) requisition from any transfer
agent of the Preferred Shares (or other securities) certificates for such number
of one one-thousandths of a Preferred Share (or other securities) as are to be
purchased and registered in such name or names as may be designated by the
registered holder of such Right Certificate or, if appropriate, in the name of a
depositary agent or its nominee, and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the Company shall
have elected to deposit the total number of Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from such
depositary agent appointed by the Company, depositary receipts representing such
number of one one-thousandths of a Preferred Share as are to be purchased and
registered in such name or names as may be designated by such holder (in which
case certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with such depositary agent), and the Company
hereby directs such depositary agent to comply with all such requests, (2) when
necessary to comply with this Agreement, requisition from the Company the amount
of cash to be paid in lieu of issuance of fractional shares in accordance with
Section 15 hereof, (3) promptly after receipt of such certif icates or
depositary receipts registered in such name or names as may be designated by
such holder, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate and (4) when necessary to comply
with this Agreement, after receipt, promptly deliver such cash to or upon the
order of such holder. In the event that the Company is obligated to issue other
securities (including Common Shares) of the Company, pay cash and/or distribute
other property pursuant to Section 12(a) hereof, the Company will make
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<PAGE> 18
all arrangements necessary so that other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when necessary to
comply with this Agreement.
(d) If the registered holder of the Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equal to the Rights remaining unexercised shall be issued by
the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 15 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, if any Person shall become an Acquiring Person, thereafter any Rights
beneficially owned by (1) such Acquiring Person or an Associate or Affiliate of
such Acquiring Person, (2) a transferee of such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (3) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
has determined is part of a plan or an agreement, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 8(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 8(e) and
Section 4(d) hereof are complied with, but neither the Company nor the Rights
Agent shall have any liability to any holder of Right Certificates or other
Person as a result of the Company's failure to make any determinations with
respect to any Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action whatsoever with respect to a registered holder of Rights
upon the occurrence of any purported exercise as set forth in this Section 8
unless the certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such exercise
shall have been duly completed and signed by the registered holder thereof and
the Company shall have been provided with such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent shall request.
Section 9. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up
or exchange shall, if surrendered to the Company or to any of its other agents,
be delivered to the Rights Agent for such purpose and for cancellation or, if
surrendered to the Rights Agent for such purpose, shall be canceled by it. No
Right Certificates shall be authenticated in lieu of or in exchange for any
Right Certificates canceled as provided in this Section except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired by
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<PAGE> 19
the Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, pursuant to a
Company Order, destroy such canceled Right Certificates and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 10. Reservation and Availability of Shares. (a) The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) The Company further covenants and agrees that it will,
from and after the Distribution Date, cause to be reserved and kept available
out of its authorized and unissued Common Shares or any Common Shares held in
its treasury, the number of Common Shares of the Company that will be sufficient
to permit the exercise in full of all outstanding Rights if adjusted pursuant to
Section 12(a)(2).
(c) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares or Common
Shares of the Company issued upon exercise of Rights shall (subject to payment
of the Purchase Price) at the time of delivery of the certificates representing
any such Preferred Shares or Common Shares be duly authorized, validly issued,
fully paid and nonassessable. The Company further covenants and agrees that it
will pay when due and payable any and all taxes and charges which may be payable
in respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares (or depositary receipts therefor) or Common Shares of the
Company upon the exercise of Rights. The Company shall not, however, be required
to pay any tax or charge which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or in respect of the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares or Common Shares of the Company upon exercise of Rights evidenced by
Right Certificates in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for transfer or exercise or to
issue or deliver any certificates or depositary receipts for Preferred Shares or
Common Shares of the Company upon the exercise of any Rights until any such tax
or charge shall have been paid (any such tax or charge being payable by the
holder of such Right Certificate at the time of surrender thereof) or until it
has been established to the Company's satisfaction that no such tax or charge is
due.
(d) So long as the Common Shares issuable and deliverable upon
the exercise of the Rights may be listed on any national securities exchange,
the Company shall use its best efforts to promptly cause, from and after such
time as the Rights become exercisable, all Common Shares and other securities
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
Section 11. Record Date. Each Person in whose name any certificate for
Preferred Shares or Common Shares of the Company is issued upon the exercise of,
or upon mandatory redemption and exchange of, Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares or Common
Shares represented thereby on, and such certificate
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<PAGE> 20
shall be dated, (a) in the case of the exercise of Rights, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable taxes or charges) was made, or (b) in the
case of the mandatory redemption and exchange of Rights, the date of such
mandatory redemption and exchange; provided, however, that, if the date of such
surrender and payment or mandatory redemption and exchange is a date upon which
the transfer books of the Company for its Preferred Shares or Common Shares, as
the case may be, are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which such transfer books of the Company are open.
Prior to the exercise of (or the mandatory redemption and exchange of) the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares (or Common Shares of the
Company) for which the Rights shall be exercisable, including without limitation
the rights to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 12. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kind of shares of capital stock of
the Company covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 12.
(a) (1) If the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 12(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised thereafter shall be entitled to
receive, upon payment of the Purchase Price for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such date, the aggregate number and kind of shares of
capital stock which, if such Right had been duly exercised immediately prior to
such date (at a time when the Preferred Shares transfer books of the Company
were open), such holder would have acquired upon such exercise and been entitled
to receive upon payment or effectuation of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. If an event occurs which would require an adjustment
under both Section 12(a)(1) and Section 12(a)(2), the adjustment provided for in
this Section 12(a)(1) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 12(a)(2).
(2) Subject to action of the Board of Directors of the Company
pursuant to Section 25 of this Agreement, if any Person shall become an
Acquiring Person, each holder of a Right shall thereafter have a right to
receive, upon exercise thereof at a price equal to the then
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<PAGE> 21
current Purchase Price multiplied by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of Common
Shares of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one one-thousandths of a Preferred
Share for which a Right is then exercisable and dividing that product by (y) 50%
of the then current per share market price of the Company's Common Shares
(determined pursuant to Section 12(d)) on the date such Person became an
Acquiring Person. If any Person shall become an Acquiring Person and the Rights
shall then be outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the Rights.
(3) In the event that the number of Common Shares that are
authorized by the Company's certificate of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (2) of this Section 12(a), the Company shall: (A)
determine the excess of (1) the value of the Common Shares issuable upon the
exercise of a Right (the "Current Value"), over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right, make adequate
provision to substitute for such Common Shares, upon exercise of the Rights and
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Shares or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock
which the Board of Directors of the Company has deemed to have the same value as
shares of Common Shares (such shares of preferred stock, "Common Share
Equivalents")), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board of Directors
of the Company based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company; provided,
however, that if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the first
occurrence of a Shares Acquisition Date, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, Common Shares (to the extent available) and then,
if necessary, cash, which shares and/or cash have an aggregate value equal to
the Spread. If the Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights, the thirty (30) day
period set forth above may be extended to the extent necessary, but not more
than ninety (90) days after the Shares Acquisition Date, in order that the
Company may seek shareholder approval for the authorization of such additional
shares (such period, as it may be extended, the "Substitution Period"). To the
extent that the Company determines that some action need be taken pursuant to
the first and/or second sentences of this Section 12(a)(3), the Company (x)
shall provide, subject to Section 8(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall promptly
notify the Rights Agent in writing of such suspension and shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect
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<PAGE> 22
(with prompt written notice to the Rights Agent that such suspension is no
longer in effect). For purposes of this Section 12(a)(3), the value of the
Common Shares shall be the current market price (as determined pursuant to
Section 12(d) hereof) per share of the Common Shares on the Shares Acquisition
Date and the value of any Common Stock Equivalent shall be deemed to have the
same value as the Common Shares on such date.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into or exchangeable for Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (together with any additional consideration required upon
conversion or exchange in the case of a security convertible into or
exchangeable for Preferred Shares or equivalent preferred shares), less than the
current per share market price of the Preferred Shares (determined pursuant to
Section 12(d) on such record date), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(together with the aggregate of any additional consideration required upon
conversion or exchange in the case of any convertible or exchangeable securities
so to be offered) would purchase at such current market price and the
denominator of which shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or into or for
which the convertible or exchangeable securities so to be offered are initially
convertible or exchangeable); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case all or part of such subscription or purchase
price may be paid in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a reasonably detailed statement filed
with the Rights Agent. Preferred Shares owned by or held for the account of the
Company or any of its Subsidiaries shall not be deemed outstanding for the
purpose of any computation described in this Section 12(b). The adjustment
described in this Section 12(b) shall be made successively whenever such a
record date is fixed; and, if none of such rights, options or warrants are so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 12(b)), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the
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<PAGE> 23
numerator of which shall be the then current per share market price of the
Preferred Shares (determined pursuant to Section 12(d)) on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a reasonably
detailed statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one Preferred Share and the denominator of which shall be
such current per share market price of the Preferred Shares; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the
Company to be issued upon the exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and, if such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d)(1) For the purpose of any computation hereunder, the
"current per share market price" of the Common Shares on any date shall
be deemed to be the average of the daily Closing Prices per share of
such Common Shares for the 30 consecutive Trading Days immediately
prior to, but not including, such date; provided, however, that, if the
issuer of such Common Shares shall announce (A) a dividend or
distribution on such Common Shares payable in such Common Shares or
securities convertible into such Common Shares or (B) any subdivision,
combination or reclassification of such Common Shares, and the
ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, shall occur
during such period of 30 Trading Days, then, and in each such case, the
current per share market price of the Common Shares shall be
appropriately adjusted to reflect the current market price per Common
Share equivalent.
(2) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be determined in
the same manner as set forth above for Common Shares in paragraph (1)
of this Section 12(d). If the current per share market price of the
Preferred Shares cannot be determined in the manner provided above, the
"current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the
Common Shares (determined in the manner provided above) multiplied by
one thousand.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 12(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 12 shall be made to the nearest cent or to the nearest ten thousandth of
a Common Share or other share or one ten-millionth of a Preferred Share, as the
case may be, and references herein to the "number of one one-thousandths of a
Preferred Share" (or similar phrases) shall be construed to include fractions of
one one-thousandth of a Preferred Share. Notwithstanding the first sentence of
this Section 12(e), any adjustment required by this Section 12 shall be made no
later than the earlier of (1) three years from the date of the transaction which
requires such adjustment or (2) the thirtieth day preceding the Final Expiration
Date.
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<PAGE> 24
(f) If as a result of an adjustment made pursuant to Section
12(a), the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the shares
contained in this Section 12, and the provisions of this Agreement, including
without limitation Sections 8, 10, 11 and 14, with respect to the Preferred
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall, whether or not the
Right Certificate evidencing such Rights reflects such adjusted Purchase Price,
evidence the right to purchase, at the adjusted Purchase Price, the number of
one one-thousandths of a Preferred Share purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as
provided in Section 12(i), upon each adjustment of the Purchase Price pursuant
to Section 12(b) or 12(c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price per one one-thousandth of a Preferred Share, that
number of one one-thousandths of a Preferred Share obtained by (1) multiplying
(x) the number of one-thousandths of a share covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (2) 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 outstanding in
lieu of any adjustment in the number of one one-thousandths of a Preferred Share
purchasable upon the exercise of a Right. Each Right outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment of the Purchase Price. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall promptly notify the Rights Agent in writing of
such election and shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. Until such record date, however, any
adjustment in the number of one one-thousandths of a Preferred Share for which a
Right shall be exercisable made as required by this Agreement shall remain in
effect. If Right Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 12(i), the Company shall, as promptly
as practicable (with prompt written notice thereof to the Rights Agent), cause
to be distributed to
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<PAGE> 25
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 15 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and authenticated in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a Preferred Share issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the amount of
consideration per Preferred Share determined by the Board of Directors of the
Company to be capital, or below one one-thousandth of the par value, if any, per
Preferred Share issuable upon exercise of the Rights, the Company agrees to take
such corporate action as is within its power, including without limitation
appropriate action by its Board of Directors, and which is, in the opinion of
its counsel, necessary in order that the Company may validly and legally issue
fully paid and nonassessable one one-thousandths of Preferred Shares at such
adjusted Purchase Price.
(l) In any case in which this Section 12 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (with prompt written notice
thereof to the Rights Agent) until the occurrence of such event the issuance to
the holder of any Right exercised after such record date of the Preferred Shares
or other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares or other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional securities
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 12 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 12, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any combination or subdivision of the Preferred
Shares, issuance wholly for cash of any of the Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to in subsection (b) of this Section 12, hereafter
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<PAGE> 26
effected by the Company to holders of its Preferred Shares shall not be taxable
to such stockholders.
(n) If at any time prior to the Distribution Date, the Company
shall (1) declare or pay any dividend on the Common Shares payable in Common
Shares or (2) effect a subdivision or combination of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision or combination shall be adjusted by
multiplying such Purchase Price by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (B) the number of Rights outstanding immediately after
such event shall be adjusted, either through cancellation of outstanding Rights
or through distribution of additional Rights (but without duplication of the
Company's obligations under Section 3(c)), so that the certificate evidencing
each Common Share outstanding immediately after such event shall also evidence
the associated Right to purchase the same number of one one-thousandths of a
Preferred Share as to which a Right would have entitled the holder thereof to
purchase immediately prior to such event. The adjustment provided for in this
Section 12(n) shall be made successively whenever such a dividend is declared or
paid or such a subdivision or combination is effected. If an event occurs which
would require an adjustment under Section 12(a)(2) and this Section 12(n), the
adjustments provided for in this Section 12(n) shall be in addition and prior to
any adjustment required pursuant to Section 12(a)(2).
Section 13. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 12 or 14 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief, reasonably detailed statement of the facts, computations and
methodology accounting for such adjustment, (b) promptly file with the Rights
Agent and with each transfer agent for the Common Shares of the Company and the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of record of a Right Certificate in accordance with Section 28
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment contained therein, and shall have no duty with
respect to and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such a certificate.
Section 14. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. If, directly or indirectly, at any time after a Person has become
an Acquiring Person, (a) the Company shall consolidate with, or merge with and
into, any other Person, (b) any Person shall merge with and into the Company and
the Company shall be the continuing or surviving corporation of such merger and,
in connection with any such merger, all or part of the Common Shares of the
Company shall be changed into or exchanged for stock or other securities of any
other Person (or the Company) or cash or any other property, or (c) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one or a series of two or more transactions, assets
of the Company or its Subsidiaries which constitute more than 50% of the assets
or which produce more than 50% of the earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or any Affiliate or Associate of
such Person other than the Company or one or more of its Wholly-Owned
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<PAGE> 27
Subsidiaries, then, and in each such case, the Company agrees that, as a
condition to engaging in any such transaction, it will make or cause to be made
proper provision so that (1) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of Common Shares of such other Person (including the Company
as successor thereto or as the surviving corporation) or, if such other Person
is a Subsidiary of another Person, of the Person or Persons (other than
individuals) which ultimately control such first-mentioned Person, as shall be
equal to the result obtained by (X) multiplying the then current Purchase Price
by the number of one one-thousandths of a Preferred Share for which a Right is
then exercisable (without taking into account any adjustment previously made
pursuant to Section 12(a)(2)) and dividing that product by (Y) 50% of the
current per share market price of the Common Shares of such other Person
(determined pursuant to Section 12(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (2) the issuer of such Common
Shares shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (3) the term "Company," as used herein,
shall thereafter be deemed to refer to such issuer; and (4) such issuer shall
take such steps (including without limitation the reservation of a sufficient
number of shares of its Common Shares in accordance with Section 10) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights. The Company shall not enter into any transaction of the kind
referred to in this Section 14 if at the time of such transaction there are
outstanding any rights, warrants, instruments or securities or any agreement,
understanding or arrangements which, as a result of the consummation of such
transaction, would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent an agreement
supplemental to this Agreement complying with the provisions of this Section 14.
The provisions of this Section 14 shall similarly apply to successive mergers or
consolidations or sales or other transfers. For the purposes of this Section 14,
50% of the assets of the Company and its Subsidiaries shall be determined by
reference to the book value of such assets as set forth in the most recent
consolidated balance sheet of the Company and its Subsidiaries (which need not
be audited) and 50% of the earning power of the Company and its Subsidiaries
shall be determined by reference to the mathematical average of the operating
income resulting from the operations of the Company and its Subsidiaries for the
two most recent full fiscal years as set forth in the consolidated and
consolidating financial statements of the Company and its Subsidiaries for such
years; provided, however, that, if the Company has, during such period, engaged
in one or more transactions to which purchase accounting is applicable, such
determination shall be made by reference to the pro forma operating income of
the Company and its Subsidiaries giving effect to such transactions as if they
had occurred at the commencement of such two-year period. Notwithstanding the
foregoing provisions of this Section 14, this Section 14 shall not apply to a
sale or transfer of all of the outstanding capital stock or all or any portion
of the assets of Leavitt Tube Company, Inc., a Delaware corporation and wholly
owned subsidiary of the Company ("Leavitt"), or Holco Corporation, an Illinois
corporation and a wholly owned subsidiary of Leavitt.
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<PAGE> 28
Section 15. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue or distribute Right Certificates which evidence
fractional Rights. If, on the Distribution Date or thereafter, as a result of
any adjustment effected pursuant to Section 12(i) or otherwise hereunder, a
Person would otherwise be entitled to receive a Right Certificate evidencing a
fractional Right, the Company shall, in lieu thereof, pay or cause to be paid to
such Person an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purpose of this Section 15(a), the current
market value of a whole Right shall be the Closing Price of the Rights for the
Trading Day immediately prior to, but not including, the date on which such
fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-thousandth of a Preferred
Share may, at the election of the Company (with prompt written notice thereof to
the Rights Agent), be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares. If, on the Distribution
Date or thereafter, as a result of any adjustment effected hereunder in the
number of one one-thousandths of a Preferred Share as to which a Right has
become exercisable, a Person would otherwise be entitled to receive a fractional
Preferred Share that is not an integral multiple of one one-thousandth of a
Preferred Share, the Company shall, in lieu thereof, pay to such Person at the
time such Right is exercised as herein provided an amount in cash equal to the
same fraction (which is not an integral multiple of one one-thousandth of a
Preferred Share) of the current market value of one Preferred Share. For
purposes of this Section 15(b), the current market value of a Preferred Share
shall be the Closing Price of a Preferred Share for the Trading Day immediately
prior to, but not including, the date of such exercise.
(c) Should any adjustment contemplated by Section 12(a)(2) or any
mandatory redemption and exchange contemplated by Section 25 occur, the Company
shall not be required to issue fractions of Common Shares upon exercise of the
Rights or to distribute certificates which evidence fractional Common Shares. If
after any such adjustment or mandatory redemption and exchange, a Person would
otherwise be entitled to receive a fractional Common Share of the Company upon
exercise of any Right Certificate or upon mandatory redemption and exchange as
contemplated by Section 25, the Company shall, in lieu thereof, pay to such
Person at the time such Right is exercised as herein provided or upon such
mandatory redemption and exchange an amount in cash equal to the same fraction
of the current market value of one Common Share. For purposes of this Section
15(c), the current market value of a Common Share shall be the Closing Price of
a Common Share for the Trading Day immediately prior to, but not including, the
date of such exercise or the date of such mandatory redemption and exchange.
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<PAGE> 29
(d) The holder of a Right by the acceptance thereof expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise or mandatory redemption and exchange of a Right (except as provided
above).
(e) Whenever a payment for fractional Rights or fractional shares is to
be made by the Rights Agent, the Company shall (i) promptly prepare and deliver
to the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payment and the prices and/or formulas utilized in calculating
such payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments. The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any Section of this Agreement
relating to the payment of fractional Rights or factional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.
Section 16. Rights of Action. (a) All rights of action in respect of
the obligations and duties owed to the holders of the Rights under this
Agreement, except the rights of action given to the Rights Agent pursuant to
Section 19 and Section 20 hereof, are vested in the registered holders of the
Rights; and, without the consent of the Rights Agent or of the holder of any
other Rights, any registered holder of any Rights may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding, judicial or otherwise, against the Company to enforce, or otherwise
to act in respect of, such holder's right to exercise such Rights in the manner
provided in the Right Certificate evidencing such Rights 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, and injunctive relief
against actual or threatened violations of, the obligations of any Person
subject to this Agreement.
(b) No right or remedy herein conferred upon or reserved to the
registered holder of Rights is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy, whether hereunder or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate right or
remedy.
(c) No delay or omission of any registered holder of Rights to exercise
any right or remedy accruing hereunder shall impair any such right or remedy or
constitute a waiver of any default hereunder or an acquiescence therein. Every
right and remedy given hereunder or by law to such holders may be exercised from
time to time, and as often as may be deemed expedient, by such holders.
Section 17. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
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<PAGE> 30
(a) Prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares of the
Company;
(b) After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates properly executed;
(c) The Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, judgment or ruling (whether
interlocutory or final) issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree, judgment or ruling lifted or otherwise overturned as soon as possible.
Section 18. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right (whether or not then evidenced by a Right
Certificate) shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of Preferred Shares, Common Shares of the Company or any
other securities of the Company which may at any time be issuable on the
exercise (or mandatory redemption and exchange) of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon any such holder, as such, any of the rights of a
stockholder of the Company, including without limitation any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, to give or withhold consent to any corporate action, to receive
notice of meetings or other actions affecting stockholders (except as provided
in Section 26) or to receive dividends or subscription rights or otherwise.
Section 19. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the preparation,
delivery, administration, execution and amendment of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense, incurred without gross negligence, bad faith
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<PAGE> 31
or willful misconduct (each as finally determined by a court of competent
jurisdiction) on the part of the Rights Agent, for any action taken, suffered or
omitted by the Rights Agent in connection with the acceptance and administration
of this Agreement or the exercise and performance of its duties hereunder,
including, without limitation, the costs and expenses of defending against any
claim of liability in the premises. The indemnity provided herein shall survive
the termination of this Agreement, the termination and the expiration of the
Rights, and the resignation or removal of the Rights Agent. The costs and
expenses incurred in enforcing this right of indemnification shall be paid by
the Company.
(b) The Rights Agent shall be authorized and protected and shall incur
no liability for, or in respect of any action taken, suffered or omitted by it
in connection with, the acceptance and administration of this Agreement in
reliance upon any Right Certificate or certificate for Preferred Shares, Common
Shares or other securities of the Company, Company Order, 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 executed and, where necessary, verified
or acknowledged, by the proper person or persons, or otherwise upon the advice
of its counsel as set forth in Section 20 hereof. The Rights Agent shall not be
deemed to have any notice of any matter conditioned under this Agreement upon
notice from the Company to the Rights Agent unless and until the Company has
provided the Rights Agent with actual written notice.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only
the duties and obligations expressly imposed by this Agreement (and no implied
duties or obligations) upon the following terms and conditions, by all of which
the Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, suffering or omitting any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent and
the Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted in good faith by it under the provisions of this Agreement
in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company or any
other Person only for its own gross negligence, bad faith or willful misconduct
(each as finally determined by a final, non-appealable order, judgment, decree
or ruling of a court of competent jurisdiction).
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<PAGE> 32
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Rights Agent be liable for special, indirect, incidental, punitive or
consequential loss or damage of any kind whatsoever (including, but not limited
to, lost profits), even if the Rights Agent has been advised of the likelihood
of such loss or damage and regardless of the form of action. Any liability of
the Rights Agent under this Agreement shall be limited to the amount of fees
paid by the Company to the Rights Agent.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its authentication thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not have any liability for, nor have any
responsibility with respect to the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or
with respect to the validity or execution of any Right Certificate (except its
authentication thereof); nor shall it be liable, nor be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it liable, nor be responsible for any
change in the exercisability of the Rights (including the Rights becoming null
and void pursuant to Section 12(a)(2) hereof) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in
Sections 3, 12, 14, 24 and 25, or the ascertainment of the existence of facts
that would require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice that such
change or adjustment is required); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation of
any Preferred Shares or Common Shares to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Preferred Shares or Common Shares
will, when issued, be duly authorized, validly issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and such advice or instructions shall be full
authorization and protection to the Rights Agent and the Rights Agent shall not
be liable for any action taken or suffered to be taken by it in good faith in
accordance with such advice or instructions of any such officer or for any delay
in acting while awaiting those instructions. The Rights Agent shall be fully
protected and authorized in relying upon the most recent instructions received
by any such officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken, suffered or omitted by the Rights
Agent under this Agreement and the date on and/or after which such action shall
be taken
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or suffered or such omission shall be effective. The Rights Agent shall not be
liable for any action taken, suffered or omitted by the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking, suffering or omitting any such action,
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken, suffered or omitted.
(h) The Rights Agent and any stockholder, affiliate, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss of the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence or willful misconduct (each as
finally determined by a court of competent jurisdiction) in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
it believes the repayment of such funds or adequate indemnification against such
risk or liability is not assured it.
Section 21. Merger or Consolidation or Change of Name of Rights Agent.
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any Person succeeding to the shareholder services business
of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
Person would be eligible for appointment as a successor Rights Agent under the
provisions of Section 22. If at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Right Certificates
shall have been authenticated but not delivered, any such successor Rights Agent
may adopt the authentication of the predecessor Rights Agent and deliver such
Right Certificates so authenticated, and, if at that time any of the Right
Certificates shall not have been authenticated, any successor Rights Agent may
authenticate such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
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If at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been authenticated but not
delivered, the Rights Agent may adopt the authentication under its prior name
and deliver Right Certificates so authenticated; and, in case at that time any
of the Right Certificates shall not have been authenticated, the Rights Agent
may authenticate such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 22. 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
for the Common Shares of the Company and the Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent for the Common Shares of
the Company and the Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the registered holder of a
Right Certificate (or, prior to the Distribution Date, of Common Shares), then
any registered holder of a Right Certificate (or, prior to the Distribution
Date, of Common Shares) may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be either (a) a Person organized and
doing business under the laws of the United States or of any state of the United
States, which is authorized under such laws to exercise shareholder services
business and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million, or (b) an Affiliate of
such a Person. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent for
the Common Shares of the Company and the Preferred Shares, and mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure
to give any notice provided for in this Section 22, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 23. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new 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 per share and the number or kind or
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<PAGE> 35
class of shares or other securities purchasable under the Right Certificates
made in accordance with the provisions of this Agreement.
Section 24. Redemption. (a) The Rights may be redeemed by action of the
Board of Directors of the Company pursuant to paragraph (b) of this Section 24,
or may be redeemed and exchanged by action of the Board of Directors of the
Company pursuant to Section 25 herein, but shall not be redeemed in any other
manner.
(b) The Board of Directors of the Company may, at its option, at any
time prior to the time any Person becomes an Acquiring Person redeem all but not
less than all the then outstanding Rights at a redemption price of one
one-hundredth of one cent ($0.0001) per Right then outstanding, appropriately
adjusted to reflect any adjustment in the number of Rights outstanding pursuant
to Section 12(i) herein (such redemption price being hereinafter referred to as
the "Redemption Price"). Any such redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
(c) The right of the registered holders of Right Certificates to
exercise the Rights evidenced thereby or, if the Distribution Date has not
theretofore occurred, the inchoate right of the registered holders of Rights to
exercise the same shall, without notice to such holders or to the Rights Agent
and without further action, terminate and be of no further force or effect
effective as of the time of adoption by the Board of Directors of the Company of
a resolution authorizing and directing the redemption of the Rights pursuant to
paragraph (b) of this Section 24 (or, alternatively, if the Board of Directors
qualified such action as to time, basis or conditions, then at such time, on
such basis and with such conditions as the Board of Directors may have
established pursuant to such paragraph (b)); thereafter, the only right of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly notify the Rights Agent in writing of such redemption and shall
promptly give public notice of any redemption resolution pursuant to paragraph
(b) of this Section 24; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after the adoption of any redemption resolution pursuant to
paragraph (b) of this Section 24, the Company shall give notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agents for the Common Shares. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption shall state the method by
which the payment of the Redemption Price will be made.
(d) Neither the Company nor any of its Affiliates or Associates may
acquire (other than, in the case of such Affiliates and Associates, in their
capacity as holders of Common Shares of the Company), redeem or purchase for
value any Rights at any time in any manner other than as specifically set forth
in this Section 24 or in Section 25 herein, and other than in connection with
the purchase of Common Shares prior to the Distribution Date.
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<PAGE> 36
Section 25. Mandatory Redemption and Exchange. (a) The Board of
Directors of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, issue Common Shares of the Company in mandatory
redemption of, and in exchange for, all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become null and
void pursuant to the provisions of Section 8(e) hereof) at an exchange ratio of
one Common Share for each Right outstanding. Notwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such redemption and exchange
at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any such Subsidiary, or
any trustee of or fiduciary with respect to any such plan when acting in such
capacity), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Voting Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the mandatory redemption and exchange of any Rights pursuant to
subsection (a) of this Section 25 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 such number of Common
Shares as is provided in paragraph (a) of this Section 25. The Company shall
promptly notify the Rights Agent in writing of such redemption and exchange and
shall promptly give public notice of any such redemption and exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such redemption and exchange. The Company promptly shall
mail a notice of any such redemption and exchange to the Rights Agent and to all
the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of mandatory redemption and exchange shall state the
method by which the redemption and exchange of the Common Shares for Rights will
be effected and, in the event of any partial redemption and exchange, the number
of Rights which will be redeemed and exchanged. Any partial redemption and
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become null and void pursuant to the provisions of Section
8(e) hereof) held by each holder of Rights.
(c) In any mandatory redemption and exchange pursuant to this Section
25, the Company, at its option, may substitute Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 12(b) hereof) for Common
Shares, at the initial rate of one one-thousandth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted.
(d) In any exchange pursuant to this Section 25, the Company, at its
option, may substitute for any Common Shares exchangeable for a Right (i) Common
Share Equivalents, (ii) cash, (iii) debt securities of the Company, (iv) other
assets, or (v) any combination of the foregoing, having an aggregate value which
the Board of Directors of the Company shall have determined in good faith to be
equal to the current market price of one share of Common Share (determined
pursuant to Section 12(d) hereof) on the Trading Day immediately preceding the
date of exchange pursuant to this Section 25.
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<PAGE> 37
Section 26. Notice of Certain Events. If the Company shall, on or after
the Distribution Date, propose (a) to pay any dividend or other distribution
payable in stock of any class of the Company or any Subsidiary of the Company to
the holders of its Preferred Shares, (b) to distribute to the holders of its
Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (c) to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend), (d) to
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (e) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of more than
50% of the assets or earning power of the Company and its Subsidiaries
(determined as provided in Section 14 herein) to, any other Person (other than
the Company or a Wholly-Owned Subsidiary or Wholly-Owned Subsidiaries), (f) to
effect the liquidation, dissolution or winding up of the Company or (g) if the
Rights have theretofore become exercisable with respect to Common Shares
pursuant to Section 12(a)(2) herein, to declare or pay any dividend or other
distribution on the Common Shares payable in Common Shares or in stock of any
other class of the Company or any Subsidiary of the Company or to effect a
subdivision or combination of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) then, in each such
case, the Company shall give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 28 hereof, notice of such proposed
action, which shall specify the date of authorization by the Board of Directors
of the Company of, and record date for, such stock dividend or such distribution
of rights or warrants or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, winding up, subdivision or
combination is to take place and the date of participation therein by the
holders of the Common Shares of the Company or the Preferred Shares, or both, if
any such date is to be fixed. Such notice shall be so given in the case of any
action covered by clause (a), (b) or (g) above at least 20 days prior to the
record date for determining holders of the Preferred Shares or of the Common
Shares of the Company, as the case may be, 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 Preferred Shares or Common Shares of the Company, as the case may
be, whichever shall be the earlier.
If any of the events set forth in Section 12(a)(2) of this Agreement
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in accordance with
Section 28 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
12(a)(2) hereof.
Section 27. Securities Laws Registrations. To the extent legally
required, the Company agrees that it will prepare and file, as soon as
practicable following the Distribution Date, and will use its best efforts to
cause to be declared effective, a registration statement under the Securities
Act registering the offering, sale and delivery of the Preferred Shares issuable
upon exercise of the Rights, and the Company will, thereafter, use its best
efforts to maintain such registration statement (or another) continuously in
effect so long as any Rights remain outstanding and exercisable with respect to
Preferred Shares. Should the Rights become exercisable with respect to
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<PAGE> 38
securities of the Company or one of its Subsidiaries other than Preferred
Shares, the Company agrees that it will, to the extent legally required,
promptly thereafter prepare and file, or cause to be prepared and filed, and
will use its best efforts to cause to be declared effective, a registration
statement under such Act registering the offering, sale and delivery of such
other securities and the Company will, thereafter, use its best efforts to
maintain such registration statement (or another) continuously in effect so long
as any outstanding Rights are exercisable with respect to such securities. The
Company further agrees to use its best efforts, from and after the Distribution
Date, to qualify or register for sale the Preferred Shares or other securities
of the Company or one of its Subsidiaries issuable upon exercise of the Rights
under the securities or "blue sky" laws (to the extent legally required
thereunder) of all jurisdictions in which registered holders of Right
Certificates reside determined by reference to the Rights Register. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days
after the Distribution Date, the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension the Company shall promptly notify the Rights Agent in
writing of such suspension and shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect (with
prompt written notice to the Rights Agent that such suspension is no longer in
effect). Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, the exercise
thereof shall not be permitted under applicable law or a registration statement
shall not have been declared effective.
Section 28. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Chase Industries Inc.
14212 County Road M-50
Montpelier, OH 43543
Attention: Michael T. Segraves
Subject to the provisions of Section 22 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Mellon Investor Services LLC
44 Wall Street - 6th Floor
New York, NY 10005
Attention: Relationship Manager
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<PAGE> 39
with a copy to:
Mellon Investor Services LLC
85 Challenger Road
Ridgefield Park, NJ 07660
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the Rights
Register of the Company or, prior to the Distribution Date, on the stock
transfer records for the Common Shares of the Company.
Section 29. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement (which supplement or amendment shall be
evidenced by a writing signed by the Company and the Rights Agent) without the
approval of any holders of any certificates representing Common Shares or any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, to make any other provisions in regard to
matters or questions arising hereunder, or to add, delete, modify or otherwise
amend any provision, which the Company may deem necessary or desirable,
including without limitation extending the Final Expiration Date, provided that
the period during which the Rights may be redeemed may not be extended at a time
when the Rights are not then redeemable; provided, however, that, from and after
the Shares Acquisition Date, any such amendment or supplement shall not
materially and adversely affect the interests of the holders of Right
Certificates other than an Acquiring Person or transferees of such Acquiring
Person. Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 29 and, provided such supplement or amendment
does not change or increase the Rights Agent's rights, duties, liabilities or
obligations hereunder, the Rights Agent shall execute such supplement or
amendment.
Section 30. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 31. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights.
Section 32. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 33. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for
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<PAGE> 40
all purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely within such
State; provided, however, that all provisions regarding the rights, duties and
obligations of the Rights Agent shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such State.
Section 34. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 35. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Section 36. Board of Directors. The Board of Directors shall have the
exclusive power and authority to administer this Agreement and to exercise the
rights and powers specifically granted to the Board of Directors or to the
Company. All such actions, calculations, interpretations and determinations that
are done or made by the Board of Directors in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other Persons. The Rights Agent shall always be
entitled to assume that the Company's Board of Directors acted in good faith and
shall be fully protected and incur no liability in reliance thereon.
Section 37. Rights Issued with respect to Nonvoting Shares.
(a) All Right Certificates distributed from and after the Distribution
Date with respect to Nonvoting Shares shall include a legend noting that such
Rights have been distributed with respect to Nonvoting Shares;
(b) Subject to Section 37(c), notwithstanding anything contained in
this Agreement, in the event any record holder of any Rights distributed with
respect to Nonvoting Shares becomes entitled upon the exercise or exchange of
such Rights to purchase or receive any Voting Shares of the Company, then, at
the option of the Company or such holder of Rights, in lieu of receiving Voting
Shares upon any exercise or exchange of such Rights such holder shall receive,
to the extent available (including without limitation through the designation of
a new class of preferred stock of the Company), shares of capital stock of the
Company having rights and preferences substantially identical to the Voting
Shares of the Company to which such holder otherwise would be entitled except
that such shares shall have no voting rights and shall be convertible at the
option of the holder into the number and type of Voting Shares to which such
holder otherwise would have been entitled subject only to restrictions on
conversion as applicable to the Nonvoting Shares;
(c) In the event the Company issues or distributes, in lieu of Common
Shares, (i) securities or other assets upon exercise of the Rights pursuant to
Section 12(a)(3) or (ii) preferred shares or other securities or assets upon
exchange of Rights pursuant to Section 25(c) or (d), then the rights of the
Company and the holder under Section 37(b) shall apply only to the Voting Shares
otherwise proposed to be issued with respect to such Rights.
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<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
CHASE INDUSTRIES INC.
Attest:
By /s/ MICHAEL T. SEGRAVES By /s/ MARTIN V. ALONZO
----------------------------- -----------------------------
Title: Secretary Title: President
MELLON INVESTOR SERVICES LLC
As Rights Agent
Attest:
By /s/ NATHANIEL HILL By /s/ ROBERT KAVANAGH
----------------------------- -----------------------------
Title: Authorized Officer Authorized Officer
Nathaniel Hill Robert Kavanagh
Asst. Vice President Vice President
<PAGE> 42
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
CHASE INDUSTRIES INC.
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
Chase Industries Inc., a Delaware corporation (the "Corporation"),
through the undersigned duly authorized officer, in accordance with the
provisions of Sections 103 and 151 of the General Corporation Law of the State
of Delaware, DOES HEREBY CERTIFY:
That, the Board of Directors of the Corporation on December 26, 2000,
pursuant to the authority conferred upon the Board of Directors by the Restated
Certificate of Incorporation, as amended, of the Corporation (the "Certificate
of Incorporation") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, adopted the following
resolution creating a series of 36,310 shares of Preferred Stock, par value $.01
per share:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation in accordance with the
provisions of Article 4.2 of its Certificate of Incorporation, a series of the
Preferred Stock of the Corporation, par value $.01 per share, be, and it hereby
is, created and that the voting powers, designations, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 36,310. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
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<PAGE> 43
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
A Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common Stock, par value $0.01
per share (the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable on the first business day of April, July, October and January in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date") as provided in paragraphs (b) and (c) of this Section 2 in an amount per
share (rounded to the nearest cent) equal to the greater of (1) $.01 in cash or
(2) subject to the provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount (payable in cash) of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all non- cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. If the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (2) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that was
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, if no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $.01 per share payable in cash
on the Series A Preferred Stock shall nevertheless accrue and be cumulative on
the outstanding shares of Series A Preferred Stock as provided in paragraph (c)
of this Section 2.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear
A-2
<PAGE> 44
interest. Dividends paid on the shares of Series A Preferred Stock in an amount
less than the total amount of such dividends at the timeaccrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(a) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
If the Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that was outstanding immediately
prior to such event.
(b) Except as otherwise provided herein, in the Certificate of
Incorporation, in any other Certificate of Designation creating a series of
Preferred Stock or any similar stock, or by law, the holders of shares of Series
A Preferred Stock and the holders of shares of Common Stock and any other
capital stock of the Corporation, having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(c) Except as set forth herein or as otherwise provided by law, holders
of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, or declared and a sum sufficient for the payment therefor be
set apart for payment and be in the process of payment, the Corporation shall
not:
(1) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
A-3
<PAGE> 45
(2) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(3) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (as to both
dividends and upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(4) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock or any shares of stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the holders of the
respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designation
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (a) to the holders of shares of stock ranking junior (either as to
dividends or as to amounts payable upon liquidation, dissolution or winding up)
to the Series A Preferred Stock unless, prior thereto, the holders of Series A
Preferred Stock shall have received an amount per share (rounded to the nearest
cent) equal to the greater of (1) $10.00 per share, or (2) an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of Common
Stock, plus, in either case, an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(b) to the holders of stock ranking on a parity (either as to dividends or as to
amounts payable upon
A-4
<PAGE> 46
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
Shares are entitled upon such liquidation, dissolution or winding up. If the
Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (a)(2) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that was outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. If the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, or any combination thereof, then in any
such case each share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount of stock, securities, cash or any other property (payable in
kind), or any combination thereof, as the case may be, into which or for which
each share of Common Stock is changed or exchanged. If the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that was outstanding immediately
prior to such event.
Section 8. Redemption. The shares of Series A Preferred Stock shall not
be redeemable. So long as any shares of Series A Preferred Stock remain
outstanding, the Corporation shall not purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless
the Corporation shall substantially concurrently also purchase or acquire for
consideration a proportionate number of shares of Series A Preferred Stock.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect
to payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock; provided that any class or
series of the Corporation's Preferred Stock hereafter created may expressly
provide that such class or series shall be pari passu with the Series A
Preferred Stock with respect to the payment of dividends and distributions,
voting rights and/or distributions upon liquidation, dissolution or winding up
of the Corporation.
Section 10. Amendment. The Certificate of Incorporation shall not be
amended in any manner which would materially alter or change the powers,
preferences, privileges or special rights of the Series A Preferred Stock so as
to affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
A-5
<PAGE> 47
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its President, and attested by its Secretary, this
____ day of December, 2000.
CHASE INDUSTRIES INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ATTEST:
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 48
EXHIBIT B
Form of Right Certificate
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER DECEMBER 26, 2010 OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.0001 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS
DEFINED IN SECTION 1 OF THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
CHASE INDUSTRIES INC.
This certifies that _____________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of December 28, 2000 (the "Rights
Agreement"), between CHASE INDUSTRIES INC., a Delaware corporation (the
"Company"), and Mellon Investor Services LLC, a New Jersey limited liability
company (the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m., Montpelier, Ohio time, on December 26, 2010, at the office of the
Rights Agent designated for such purpose (or at the office of its successor as
Rights Agent), one one-thousandth (1/1000) of a fully paid non-assessable share
of Series A Junior Participating Preferred Stock, par value $.01 per share (the
"Preferred Shares"), of the Company, at a purchase price of $30.00 per one
one-thousandth (1/1000) of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-thousandths of a Preferred Share which
may be purchased upon exercise hereof) set forth above, and the Purchase Price
set forth above, are the number and Purchase Price as of January 5, 2001, based
on the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-thousandths of a
Preferred Share which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon that
happening of certain events.
B-1
<PAGE> 49
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the office of the Rights Agent designated for such purpose.
This Right Certificate, with or without other Right Certificates, upon
surrender at the designated office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.0001 per Right or (ii) may be exchanged by the Company in whole or in part for
Preferred Shares or shares of the Company's common stock, par value $0.01 per
share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to 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 Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be entitled to any benefit under the
Rights Agreement or be valid or obligatory for any purpose until it shall have
been authenticated by the Right Agent.
B-2
<PAGE> 50
WITNESS the facsimile signatures of the proper officers of the Company
and its corporate seal.
Dated as of , .
------------------- ----
ATTEST: CHASE INDUSTRIES INC.
[SEAL]
By:
---------------------------------- ----------------------------------
Secretary Chairman
Authentication:
This is one of the Right Certificates referred to in the within-mentioned Rights
Agreement.
Mellon Investor Services LLC, as Rights Agent
By:
----------------------------------
Authorized Signature
<PAGE> 51
[Form of Reverse Side of Right Certificate)
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate)
FOR VALUE RECEIVED, ____________________________________________ hereby
sells, assigns and transfers unto_______________________________________________
_________________________________________________
(Please print name and address of transferee)
________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated as of , .
------------------- ----
---------------------------------
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.
--------------------------------------------------------------------------------
[To be executed if statement is correct]
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
---------------------------------
Signature
--------------------------------------------------------------------------------
B-4
<PAGE> 52
[Form of Reverse Side of Right Certificate -- continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
TO CHASE INDUSTRIES INC.:
The undersigned hereby irrevocably elects to exercise _____________
Rights represented by this Right Certificate to purchase the Preferred Shares
(or other securities) issuable upon the exercise of such Rights and requests
that certificates for such Preferred Shares (or other securities) be issued in
the name of:
Please insert social security
or other identifying number:
-----------------------------
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
-----------------------------
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated as of , .
------------------- ----
---------------------------------
Signature
B-5
<PAGE> 53
[Form of Reverse Side of Right Certificate -- continued]
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.
--------------------------------------------------------------------------------
[To be executed if statement is correct]
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
---------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Form of Assignment or Form of Election
to Purchase must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
<PAGE> 54
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On December 26, 2000, the Board of Directors of Chase Industries Inc.
(the "Company"), authorized the issuance of one preferred share purchase right
(a "Right") with respect to each outstanding share of common stock, $0.01 par
value (the "Common Shares"), of the Company. The rights were issued on January
5, 2001, to the holders of record of Common Shares on that date. Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series A Junior Participating Preferred Stock, $.01 par value (the
"Preferred Shares"), of the Company at a price of $30 per one one-thousandth of
a Preferred Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") dated as of December 28, 2000, between the Company and Mellon
Investor Services LLC, a New Jersey limited liability company, as Rights Agent
(the "Rights Agent").
Detachment of Rights; Exercise. Initially, the Rights will attach to
all Common Share certificates representing outstanding shares and no separate
Right Certificate will be distributed. The Rights will separate from the Common
Shares and a "Distribution Date" will occur upon the earlier of (i) 10 business
days following a public announcement that a person or group of affiliated or
associated persons has become an Acquiring Person, or (ii) 10 business days
following the commencement or announcement of an intention to commence a tender
offer or exchange offer the consummation of which would result in a person or
group becoming an Acquiring Person, subject to the right of the Board of
Directors to defer the occurrence of a Distribution Date upon the occurrence of
an event described in this clause (ii).
In general, a person becomes an Acquiring Person if such person or a
group of which such person is a member acquires beneficial ownership of 20% or
more of the Company's outstanding voting common stock, or any additional shares
of the Company's common stock in the case of any person or group that owned 20%
or more of the Company's outstanding voting common stock as of December 26,
2000. Holders of shares of Chase Industries nonvoting common stock are deemed to
have beneficial ownership of the number of shares of voting common stock into
which such nonvoting shares are convertible.
Until the Distribution Date (or earlier redemption or expiration of the
Rights) (i) the Rights will be evidenced, with respect to any of the Common
Shares outstanding on January 5, 2001, by the certificates representing such
Common Shares with a copy of this Summary of Rights attached thereto, (ii) the
Rights will be transferred with and only with the Common Shares, (iii) new
Common Share certificates issued after January 5, 2001, upon transfer or new
issuance of the Common Shares will contain a notation incorporating the Rights
Agreement by reference, and (iv) the surrender for transfer of any certificates
for Common Shares outstanding as of January 5, 2001, even without such notation
or a copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by such
certificate.
C-1
<PAGE> 55
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 thereafter
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on December 26, 2010 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or the Rights are earlier redeemed or exchanged by
the Company as described below.
If a person or group were to become an Acquiring Person, then each
Right then outstanding (other than Rights beneficially owned by the Acquiring
Person which would become null and void) would become a right to buy that number
of Common Shares (or under certain circumstances, receive the equivalent number
of one one-thousandths of a Preferred Share or other assets or securities of the
Company) that at the time of such acquisition would have a market value of two
times the Purchase Price of the Right.
If at any time after a person or group of affiliated or associated
persons becomes an Acquiring Person, the Company were acquired in a merger or
other business combination transaction or more than 50% of its consolidated
assets or earning power were sold, proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price of the Right, that number of shares
of common stock of the acquiring company which at the time of such transaction
would have a market value of two times the Purchase Price of the Right.
Preferred Shares. The dividend and liquidation rights, and the
non-redemption feature, of the Preferred Shares are designed so that the value
of one one-thousandth of a Preferred Share purchasable upon exercise of each
Right will approximate the value of one Common Share. The Preferred Shares
issuable upon exercise of the Rights will be non-redeemable and rank junior to
all other series of the Company's preferred stock. Each whole Preferred Share
will be entitled to receive a quarterly preferential dividend in an amount per
share equal to the greater of (i) $0.01 in cash, or (ii) 1,000 times the
dividend declared on each Common Share. In the event of liquidation, the holders
of the Preferred Shares will be entitled to receive a preferential liquidation
payment equal to the greater of (i) $10.00 per share, or (ii) an amount per
share equal to 1,000 times the payment made on each Common Share. In the event
of any merger, consolidation or other transaction in which Common Shares are
exchanged for or changed into other stock or securities, cash or other property,
each whole Preferred Share will be entitled to receive 1,000 times the amount
received per Common Share. Each whole Preferred Share shall be entitled to 1,000
votes on all matters submitted to a vote of the stockholders of the Company, and
Preferred Shares shall generally vote together as one class with the Common
Stock, and any other capital stock, entitled to vote thereon on all matters
submitted to a vote of stockholders of the Company.
The offer and sale of the Preferred Shares issuable upon exercise of
the Rights will be registered with the Securities and Exchange Commission and
such registration will not be effective until the Rights become exercisable.
C-2
<PAGE> 56
Antidilution and Other Adjustments. The number of one one-thousandths
of a Preferred Share or other securities or property issuable upon exercise of
the Rights, and the Purchase Price payable, are subject to customary adjustments
from time to time to prevent dilution.
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Exchange Option. At any time after a person or group of affiliated or
associated persons becomes an Acquiring Person and before the acquisition by a
person or group of 50% or more of the outstanding Voting Shares, the Board of
Directors may, at its option, issue Common Shares (or Preferred Shares) in
mandatory redemption of, and in exchange for, all or part of the then
outstanding and exercisable Rights (other than Rights owned by such person or
group which would become null and void) at an exchange ratio of one Common Share
(or one one-thousandth of a Preferred Share) for each Right then outstanding.
Redemption of Rights. At any time prior to the time that a person or
group has become an Acquiring Person, the Board of Directors of the Company may
redeem all but not less than all the then outstanding Rights at a price of
$0.0001 per Right (the "Redemption Price"). The redemption of the Rights may be
made effective at such time, on such basis and with such conditions as the Board
of Directors in its sole discretion may establish. Immediately upon the action
of the Board of Directors ordering 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.
No Rights as Stockholder. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.
Amendment of Rights. 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, and,
provided a Distribution Date has not occurred, to extend the period during which
the Rights may be redeemed, except that after the first public announcement that
a person or group has become an Acquiring Person, no such amendment may
materially and adversely affect the interests of the holders of the Rights other
than the Acquiring Person and transferees of the Acquiring Person.
Nonvoting Common Shares. Upon any exercise of Rights distributed with
respect to nonvoting shares of common stock of the Company, at the option of the
Company or the holder of such Rights, shares of nonvoting securities of the
Company may be issued in lieu of any shares of voting securities of the Company
otherwise issuable with respect to the Rights, which nonvoting securities shall
be convertible into voting securities of the Company to the same extent as the
shares of nonvoting common stock are convertible into voting common stock.
THIS SUMMARY DESCRIPTION OF THE RIGHTS DOES NOT PURPORT TO BE COMPLETE
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT, WHICH IS
HEREBY INCORPORATED HEREIN BY REFERENCE.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
____________. A copy of the Rights Agreement is available free of charge from
the Company.
C-3
