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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
under Section 14(d)(4) of the
Securities Exchange Act of 1934
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CHASE INDUSTRIES INC.
(Name of Subject Company)
CHASE INDUSTRIES INC.
(Name of Persons Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
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161568-10-0
(CUSIP Number of Class of Securities)
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Martin V. Alonzo
President and Chief Executive Officer
Chase Industries Inc.
14212 County Road M-50
Montpelier, Ohio 43543
(419) 485-3193
(Name, address and telephone number of person
authorized to receive notices and communications
on behalf of the persons filing statement)
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With a copy to:
Rodney L. Moore, Esq.
Vinson & Elkins L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
(214) 220-7700
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Schedule 14D-9") relates to an offer by Chase Acquisition Corporation, a
Delaware corporation ("Purchaser") and a majority-owned subsidiary of Court
Square Capital Limited, a Delaware corporation ("Court Square"), to purchase up
to an aggregate of 2,300,000 shares of Common Stock (as defined below) of Chase
Industries Inc., a Delaware corporation (the "Company"), together with the
associated rights to purchase shares of Series A Junior Participating Preferred
Stock (the "Rights") issued pursuant to the Rights Agreement dated as of
December 28, 2000 (the "Rights Agreement") by and between the Company and Mellon
Investor Services LLC, as Rights Agent.
ITEM 1. SUBJECT COMPANY INFORMATION.
The name of the subject company is Chase Industries Inc., a Delaware
corporation. The Company's principal executive offices are located at 14212
County Road M-50, Montpelier, Ohio 43543, and its business telephone number is
(419) 485-3193. This Schedule 14D-9 relates to the Company's common stock, par
value $.01 per share (the "Common Stock"). As of January 11, 2001, there were
9,136,102 shares of Common Stock outstanding, excluding 6,150,118 shares of the
Company's nonvoting common stock, par value $0.01 per share (the "Nonvoting
Common Stock"), all of which currently are held of record by Court Square. The
Nonvoting Common Stock may be converted into shares of Common Stock at the rate
of one share of Common Stock for each share of Nonvoting Common Stock at the
option of the holder, subject to any applicable limitations under the Small
Business Investment Act of 1958, as amended, and the Bank Holding Company Act of
1956, as amended.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) Name and Address. The name, business address and business telephone
number of the Company, which is the person filing this statement, are set forth
in Item 1 above, which information is incorporated herein by reference.
(b) Tender Offer. This Schedule 14D-9 relates to the tender offer made
by Purchaser to purchase up to 2,300,000 shares of Common Stock of the Company,
together with the associated Rights, as disclosed in a Tender Offer Statement on
Schedule TO filed with the Securities and Exchange Commission (the "Commission")
on January 2, 2001 (the "Schedule TO"). According to the Schedule TO, Purchaser
is offering to purchase up to an aggregate of 2,300,000 shares of Common Stock,
together with the associated Rights, at a price (the "Offer Price") of $10.50
per share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated January 2,
2001 (as amended or supplemented from time to time, the "Offer to Purchase"),
and the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
According to the Schedule TO, the purpose of the Offer is for Court
Square to acquire the Company through the acquisition by Purchaser of up to an
aggregate of 2,300,000 shares of Common Stock in the Offer and, promptly
following consummation of the Offer, seeking to have the Company consummate a
second-step merger or similar business combination with Purchaser (the "Merger")
pursuant to which each then outstanding share of Common Stock (other than shares
held by Purchaser) will be converted into the right to receive an amount in cash
equal to the highest price per share paid in the Offer. Purchaser also has
reserved the right to pursue an alternative second-step merger or other business
combination transaction involving the Company in which the shares not owned by
Purchaser would be converted into or exchanged for cash, shares of Purchaser's
common stock and/or other securities or consideration. The Offer is subject to
the fulfillment of certain conditions, including without limitation the Rights
having been redeemed or otherwise being inapplicable to the Offer and the
proposed Merger, Purchaser receiving sufficient funding on terms at least as
favorable to Purchaser as are contained in the commitment letters received from
PNC Bank, National Association filed as exhibits to the Schedule TO, and the
absence of certain material adverse changes regarding the Company and its
business. Information in the Schedule 14D-9 regarding the Offer and the proposed
Merger, and Court Square's intentions with respect thereto, is based on and
derived from information set forth in the Purchaser's Schedule TO.
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Based on information set forth in the Schedule TO, the principal
executive office of Purchaser is located at 1209 Orange Street, Wilmington,
Delaware 19801.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Except as described in this Schedule 14D-9 and on pages 3 through 18 of
the Company's Proxy Statement dated April 10, 2000 (the "2000 Proxy Statement"),
sent by the Company to its stockholders in connection with its 2000 Annual
Meeting of Stockholders, which pages are attached to this Schedule 14D-9 as
Exhibit (e)(1) and incorporated herein by reference, there are no material
agreements, arrangements, or understandings, or any actual or potential
conflicts of interest between the Company or its affiliates and (i) its
executive officers, directors or affiliates or (ii) Purchaser, or any of its
executive officers, directors or affiliates.
As described in the 2000 Proxy Statement, the Company is a party to a
Voting Agreement, dated as of November 4, 1994 (the "Voting Agreement"), by and
among the Company, Citicorp Venture Capital, Ltd., an affiliate of Purchaser
("CVC"), and Martin V. Alonzo. By virtue of Court Square's acquisition of shares
of Common Stock previously owned by CVC, Court Square is obligated to vote those
shares of Common Stock in accordance with the Voting Agreement.
As also described in the 2000 Proxy Statement, the Company is a party
to a Registration Rights Agreement, dated as of November 10, 1994 (the
"Registration Rights Agreement"), by and among the Company, CVC and Mr. Alonzo.
Based on information set forth in the Schedule TO, Court Square has obtained
CVC's registration rights under the Registration Rights Agreement by virtue of
its acquisition of the shares of Common Stock and Nonvoting Common Stock
previously owned by CVC.
The Company is a party to an Exchange Agreement, dated as of November
4, 1994 (the "Exchange Agreement"), by and between CVC and the Company. Pursuant
to the Exchange Agreement, the Company has granted CVC the right to exchange all
or a portion of its shares of Common Stock for shares of Nonvoting Common Stock,
subject to availability of authorized shares of Nonvoting Common Stock. Court
Square has executed a joinder to the Exchange Agreement in connection with its
acquisition of shares of Common Stock and Nonvoting Common Stock previously
owned by CVC.
Chase Brass & Copper Company, Inc. ("CBCC"), the Company's brass rod
subsidiary, and John H. Steadman, President and Chief Operating Officer of CBCC,
are parties to an employment agreement. The employment agreement provides for an
annual base salary of $225,000. Under the employment agreement, if Mr.
Steadman's employment is terminated by CBCC without cause (as defined in Mr.
Steadman's employment agreement) or by Mr. Steadman for good reason (as defined
in Mr. Steadman's employment agreement), CBCC will be required to pay to Mr.
Steadman a severance payment in an amount equal to one-half of Mr. Steadman's
then-current base salary and maintain for six months health insurance for the
benefit of Mr. Steadman and his family to the extent in effect prior to this
termination. If Mr. Steadman's employment is terminated by CBCC in violation of
the agreement or by Mr. Steadman for good reason following a "change in control"
of the Company or at any time after the Company ceases to own a majority of the
voting stock of CBCC, Mr. Steadman will be entitled (in lieu of the cash
severance payments referred to above) to receive a lump sum payment in cash in
the amount equal to the sum of Mr. Steadman's base salary plus the most recent
annual bonus paid to Mr. Steadman. A "change in control" of the Company has the
same meaning as set forth in the Company's stock option plans as described under
"other change-in-control arrangements-stock option plans" on Exhibit (e)(1)
filed herewith.
Thomas F. McWilliams, an officer of Court Square and an officer and
director of Purchaser, is a director of the Company. Charles E. Corpening, an
officer of Court Square and a director of Purchaser, also is a director of the
Company.
If the directors and executive officers of the Company tender their
shares of Common Stock in the Offer, or their shares of Common Stock are
acquired in the proposed Merger, they will receive the Offer Price for their
shares of Common Stock on the same terms and conditions as the other public
stockholders.
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As of January 1, 2001, the directors and executive officers of the Company
beneficially owned in the aggregate 1,793,957 shares of Common Stock (including
approximately 698,363 shares issuable pursuant to stock options) and, if they
tender all of their shares of Common Stock in the Offer, they will receive
payment for their shares in the same manner and to the same extent as the other
stockholders of the Company.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation. THE BOARD OF DIRECTORS OF THE COMPANY (THE
"BOARD"), ACTING THROUGH A SUBCOMMITTEE ESTABLISHED AS DESCRIBED BELOW, URGES
COMPANY STOCKHOLDERS NOT TO TAKE ANY ACTION WITH RESPECT TO THE OFFER AT THIS
TIME. The Board of Directors of the Company is unable to make a recommendation
with respect to the Offer at the present time because it has not yet completed a
full and deliberate review of the material terms and provisions of the Offer and
has not yet received the complete advice of the Company's management and the
Board's legal and financial advisors with respect to the Offer, in each case,
sufficient to enable the Board to properly discharge its fiduciary duties under
Delaware law. In addition, the Board currently is seeking clarification of
certain aspects of the Offer and is investigating the feasibility of certain
alternatives to the Offer. The Board expects that it will be able to make a
recommendation with respect to the Offer, and to inform the Company's
stockholders of its recommendation, in the near future after it has completed
its review and the discussions that are proceeding with respect to the Offer and
possible alternatives.
(b)(i) Background of the Offer and Recommendation. As part of its
ongoing oversight of the management of the affairs of the Company, the Board
periodically over the last several years has initiated and evaluated various
alternatives to increase the value of the Common Stock to all of the Company's
stockholders. The alternatives evaluated have included, but were not limited to,
the following: (i) the sale of the Company, (ii) the sale or other disposition
of the Company's Leavitt Tube Company subsidiary ("Leavitt Tube"), and (iii) the
implementation of a leveraged recapitalization plan of the Company which could
have included either (a) the payment to the Company's stockholders of a special
one-time cash dividend or (b) the repurchase of some portion of the Common Stock
through a dutch auction self-tender or other means. As part of its evaluation of
such alternatives, the Board consulted with its outside legal and financial
advisors, Vinson & Elkins L.L.P. and, commencing October 1999, Donaldson, Lufkin
& Jenrette Securities Corporation ("DLJ").
At a Board meeting held on February 9, 2000, DLJ presented an
evaluation of the Company's debt capacity scenarios in conjunction with the
Board's evaluation of the long-term strategy for the Company and strategic
alternatives to provide value to the Company's stockholders, including a
potential sale of the Company as compared to a cash dividend or partial stock
repurchase. The Board members then requested Mr. Alonzo and DLJ to further
investigate financing options that may be available to enable the Company to
effect a dividend or stock repurchase, and requested DLJ to analyze the impact
of such a transaction on the Company, its stockholders and the Common Stock.
At a Board meeting held on March 8, 2000, DLJ presented to the Board an
evaluation of various strategic alternatives. Based upon the advice of DLJ and
the Board members' evaluation of the information presented by DLJ, the Board
members present, including Messrs. McWilliams and Corpening, concluded that the
Board should not currently pursue a sale of the Company, but may reconsider a
sale of the Company as certain issues and uncertainties that the Board believes
may adversely affect the valuation of the Company are resolved or further
quantified, including the sale of Leavitt Tube and certain material litigation
or at such time as the Board may otherwise determine that a sale of the Company
is in the best interest of the Company's stockholders.
At a Board meeting held on October 19, 2000, the Board further
discussed potential alternatives for Leavitt Tube and determined to engage an
investment bank to pursue a sale of Leavitt and simultaneously review other
strategic alternatives for Leavitt Tube. In November 2000, the Company engaged
Robinson-Humphrey to assist the Company in pursuing a sale of Leavitt Tube.
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On December 14 and 15, 2000, Mr. McWilliams telephoned each of the
other members of the Board to inform them that Purchaser, an affiliate of CVC,
planned to announce its intention to commence a tender offer for 2,300,000
shares and to complete the proposed Merger. Certain Board members requested Mr.
McWilliams to postpone the announcement until after January 1, 2001, so that the
Board could have an opportunity to meet with Mr. McWilliams to discuss
Purchaser's proposal. Mr. McWilliams refused to postpone the announcement. In
addition, the Board contacted its legal and financial advisors regarding Mr.
McWilliams' intentions and authorized such parties to commence work in the
evaluation of the proposed offer as communicated to the Board members by Mr.
McWilliams.
On the morning of December 18, 2000, the Board held a telephonic meeting to
consider Purchaser's intended transactions. During this meeting, each of the
Board members, other than Mr. Corpening, again requested Mr. McWilliams to
postpone the announcement until after January 1, 2001, to allow the Board to
engage in discussions with Mr. McWilliams regarding the proposal. Mr. McWilliams
again refused to postpone the announcement. Mr. McWilliams explained that he was
unwilling to defer the timing of the announcement of the tender offer and
proposed Merger because, in his opinion, the Board had not adequately addressed
Mr. McWilliams' requests to consider and approve a transaction to provide
liquidity to the Company's stockholders. After Messrs. McWilliams and Corpening
excused themselves from the meeting, the remaining Board members discussed terms
of the Offer as communicated to them by Mr. McWilliams and determined that the
Board should evaluate and implement such actions and processes as may be
necessary or appropriate to preserve its flexibility to adequately evaluate the
Offer and consider other alternatives and properly discharge its fiduciary
obligations in connection therewith.
On December 18, 2000, the Board amended and supplemented its original
engagement letter with DLJ dated October 27, 1999, to account for, among other
things, the recent acquisition of DLJ by Credit Suisse First Boston Corporation
("CSFB"). As such, CSFB would be replacing DLJ and acting as the Company's
exclusive financial advisor in its evaluation of the Offer and any alternative
transactions.
On December 26, 2000, the Company held a telephonic Board meeting to
discuss the Offer and the process the Board should take to preserve its ability
to adequately discharge its fiduciary duties. At this meeting, the Board members
(other than Messrs. McWilliams and Corpening) reviewed with legal and financial
advisors materials provided to them the prior week (which included a draft of a
stockholder rights plan and proposed amendments to the Company's bylaws) and
unanimously adopted a stockholder rights plan and certain amendments to the
Company's bylaws, copies of which have been filed with the Securities and
Exchange Commission on Form 8-K. Subsequent to the December 26th Board call, the
Board directed management and the Company's legal and financial advisors to
continue their evaluation of the Offer.
On January 9, 2001, the Board held a meeting to further review the
terms of the Offer and the Board's course of action with respect to the Offer.
Messrs. McWilliams and Corpening were present at the beginning of the meeting
and the Board determined at this meeting to establish a subcommittee of the
Board (the "Subcommittee") comprised of four outside independent directors to
act on behalf of the Board to evaluate the Offer and other alternatives and
provide a recommendation to the Company's stockholders regarding the Offer. The
members of the Subcommittee also constitute a majority of the whole Board.
On January 9, 2001, at the direction of the Subcommittee, CSFB
contacted Mr. McWilliams to discuss certain aspects of the Offer.
Between January 9, 2001, and January 12, 2001, at the direction of the
Subcommittee, CSFB and Mr. Alonzo contacted several other companies to inquire
as to their interest in a business combination transaction with the Company.
Discussions with several possible candidates are ongoing. The Subcommittee is
continuing to evaluate its alternatives. In the short-term, the Subcommittee may
authorize Company management to begin negotiations for a possible business
transaction involving the Company.
(b)(ii) Reasons for Recommendation. The Subcommittee, with the
assistance of CSFB, is continuing to consider and evaluate the terms of the
Offer and possible responses and alternatives to the Offer. The Subcommittee is
engaged in discussions with Purchaser regarding the Offer and other third
parties regarding alternatives to the Offer. The Subcommittee is hopeful that
this process will result in improvements in the terms of the Offer proposed by
Purchaser or negotiation of a definitive agreement with
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a third party on terms more attractive to the Company's stockholders than those
contained in the Offer. For these reasons, the Board recommends that the
Company's stockholders take no action and not tender their shares with respect
to the Offer at the current time.
(c) Intent to Tender. According to the Schedule TO, Purchaser, Court
Square, Thomas F. McWilliams and Charles E. Corpening intend to tender their
shares into the Offer, except to the extent that the tendering would subject any
of them to the "short-swing" profit rules of Section 16(b) of the Exchange Act.
To the knowledge of the Company, each other executive officer, director,
affiliate or subsidiary of the Company who or which owns shares of Common Stock
currently intends to hold and not tender any shares of Common Stock owned of
record or beneficially by such parties.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
The Company has retained CSFB as its exclusive financial advisor in
considering the Company's financial and strategic alternatives, including the
possible sale of (or other extraordinary transactions involving) the Company.
Pursuant to an engagement letter dated October 27, 1999, as supplemented and
amended by letter agreement dated December 18, 2000, the Company has agreed to
pay to CSFB a fee equal to the greater of (i) $2,500,000 and (ii) 1.3% of the
total consideration received, including debt assumed, in a transaction involving
a sale of control, merger or sale of all or substantially all of the assets of
the Company, but excluding proceeds received and debt assumed upon a sale of the
Company's subsidiary Leavitt Tube. CSFB received an initial retainer of $250,000
upon signing of the agreement, and has a right to receive additional retainer
fees which, to the extent paid, will be applied to the fee payable to CSFB upon
closing of a transaction. The Company also has agreed to reimburse CSFB for all
out-of-pocket expenses incurred by CSFB in connection with its engagement and to
indemnify CSFB and related parties against certain liabilities arising out of
CSFB's engagement.
The Company also has retained Morrow & Co. ("Morrow") to (i) assist the
Company in connection with its communications with the Company's stockholders,
(ii) monitor trading activity in the Common Stock and (iii) provide consultation
and advice on matters related to the Offer. Pursuant to an engagement letter
dated December 19, 2000, the Company agreed to pay Morrow $75,000 and to
reimburse Morrow for its reasonable expenses incurred in connection with the
engagement. The Company also agreed to indemnify Morrow against various
liabilities relating to its engagement.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Based on the information set forth in the Schedule TO, on December 12,
2000, Court Square purchased all shares of Common Stock and all 6,150,118 shares
of Nonvoting Common Stock owned by CVC at a price equal to $10.50 per share. To
the knowledge of the Company, except for the transaction described in the
immediately preceding sentence, no transactions in the Common Stock have been
effected during the past 60 days by the Company or any executive officer,
director, affiliate or subsidiary of the Company.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
The Board currently is engaged in discussions that relate to, or would
result in, one or more of the following or a combination thereof: (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any of its subsidiaries; (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any of its subsidiaries; or (iii) a
tender offer for or other acquisition of securities of the Company. The Board is
of the opinion that additional disclosure of the possible terms of or parties
(other than Purchaser) involved in such discussions would jeopardize the
continuation of such discussions.
As a result of the commencement by Purchaser of the Offer, a
Distribution Date (as defined in Annex A) with respect to the Rights would occur
on January 17, 2001, absent action by the Board to defer such Distribution Date.
On January 9, 2001, the Board took action to defer, until further action by the
Board, the occurrence of a Distribution Date as a result of the commencement of
the Offer. However, if Purchaser were to purchase any shares of Common Stock
pursuant to the Offer, the Rights would become exercisable and each Right would
permit the holder thereof (other than Purchaser) to purchase for $30.00 a number
of shares of Common Stock with a market value of $60.00 unless the Board amends
the Rights Agreement to prevent such occurrence. According to the Schedule TO,
consummation of the Offer is conditioned upon the Rights having been redeemed by
the Board or Purchaser being satisfied that the Rights are inapplicable to the
Offer and the proposed Merger.
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ITEM 8. ADDITIONAL INFORMATION.
On December 26, 2000, the Board authorized the issuance of one
preferred share purchase right (a "Right") with respect to each outstanding
share of Common Stock and Nonvoting Common Stock of the Company. The rights were
issued on January 5, 2001, to the holders of record 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, subject to adjustment. The description and terms of the
Rights are set forth in the Rights Agreement. A summary of the material terms of
the Rights (the "Summary") is attached hereto as Annex A. As a result of the
commencement by Purchaser of the Offer, a Distribution Date (as defined in the
Summary) would occur on January 17, 2001, absent action by the Board to defer
such Distribution Date. On January 9, 2001, the Board took action to defer,
until further action by the Board, the occurrence of a Distribution Date as a
result of the commencement of the Offer. However, if Purchaser were to purchase
any shares of Common Stock pursuant to the Offer, the Rights would become
exercisable and each Right would permit the holder thereof (other than
Purchaser) to purchase for $30.00 a number of shares of Common Stock with a
market value of $60.00 unless the Board amends the Rights Agreement to prevent
such occurrence. According to the Schedule TO, consummation of the Offer is
conditioned upon the Rights having been redeemed by the Board or Purchaser being
satisfied that the Rights are inapplicable to the Offer and the proposed Merger.
This Schedule 14D-9 may contain or incorporate by reference certain
"forward-looking statements." All statements other than statements of historical
fact included or incorporated by reference in this Schedule 14D-9, including
without limitation statements regarding the Company's financial position,
business strategy and growth prospects are forward-looking statements. Although
the Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. A number of risks and uncertainties could cause
actual results to differ materially from these statements, including, without
limitation, the risk factors described from time to time in the Company's
documents and reports filed with the Commission.
The information contained in all of the Exhibits referred to in Item 9
below is incorporated herein by reference.
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ITEM 9. EXHIBITS.
(e)(1) - Excerpts from the Company's Proxy Statement for the Annual
Meeting of Stockholders held on May 31, 2000.
(e)(2) - Exchange Agreement, dated as of November 4, 1994, by and
between CVC and the Company.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
CHASE INDUSTRIES INC.
By: /s/ Martin V. Alonzo
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Martin V. Alonzo
President and Chief Executive Officer
January 16, 2001
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ANNEX A
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.
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
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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.
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.
<PAGE> 12
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 or exchange 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 Current Report on Form 8-K dated December
26, 2000, filed with the Securities and Exchange Commission on January 4, 2001.
A copy of the Rights Agreement is available free of charge from the Company.
<PAGE> 13
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
(e)(1) - Excerpts from the Company's Proxy Statement for the Annual
Meeting of Stockholders held on May 31, 2000.
(e)(2) - Exchange Agreement, dated as of November 4, 1994, by and between
CVC and the Company.
</TABLE>
