SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
CULLIGAN WATER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0350629
(State of Incorporation or Organization) (IRS Employer
Identification No.)
One Culligan Parkway, Northbrook, Illinois 60062
(Address of principal executive offices) (Zip Code)
If this Form relates to the If this Form relates to
registration of a class of debt the registration of a class
securities and is effective upon of debt securities and is to
filing pursuant to General become effective simultaneously
Instruction A(c)(1) please check with the effectiveness of a
the following box. ( ) concurrent registration
statement under the
Securities Act of 1933
General Instruction A(c)(2)
please check the following
box. ( )
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each class is
to be so registered to be registered
Preferred Stock Purchase New York Stock Exchange, Inc.
Rights
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On September 13, 1996, the Board of Directors of
Culligan Water Technologies, Inc. (the "Company"), acting
through its Executive Committee, declared a dividend
distribution of one Right for each outstanding share of
Common Stock to stockholders of record at the close of
business on September 26, 1996 (the "Record Date"). Each
Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the
"Series A Preferred Stock"), at a Purchase Price of $78,
subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and The First National Bank
of Boston, as Rights Agent.
Initially, the Rights will be attached to all
Common Stock certificates representing shares then
outstanding, and no separate Rights Certificates will be
distributed. The Rights will separate from the Common Stock
and a Distribution Date will occur upon the earlier of (i)
ten (10) business days following a public announcement that
a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of
fifteen percent (15%) or more of the outstanding shares of
Common Stock, other than an Exempted Person (the "Stock
Acquisition Date"), or (ii) ten (10) business days (or such
later date as the Board shall determine) following the
commencement of a tender offer or exchange offer that would
result in a person or group becoming an Acquiring Person.
"Exempted Person" indicates any person who is (together with
its affiliates and associates) the beneficial owner, on
September 3, 1996, of 15% or more of the outstanding Common
Stock, and such person's affiliates and associates, provided
that such person, together with such person's affiliates and
associates, does not increase its percentage ownership of
the Common Stock by more than five (5) percentage points
over its percentage ownership on September 3, 1996.
Until the Distribution Date, (i) the Rights will
be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation incorporating
the Rights Agreement by reference and (iii) the surrender
for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such
certificate. Pursuant to the Rights Agreement, the Company
reserves the right to require prior to the occurrence of a
Triggering Event (as defined below) that, upon any exercise
of Rights, a number of Rights be exercised so that only
whole shares of Series A Preferred Stock will be issued.
The Rights are not exercisable until the
Distribution Date and will expire at 5:00 P.M. (New York
City time) on September 13, 1997, unless earlier redeemed or
extended prior thereto by the Company as described below.
As soon as practicable after the Distribution
Date, Rights Certificates will be mailed to holders of
record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as
otherwise determined by the Board, only shares of Common
Stock issued prior to the Distribution Date will be issued
with Rights.
In the event that a person becomes an Acquiring
Person (except pursuant to an offer for all outstanding
shares of Common Stock that the disinterested directors
determine not to be inadequate and to otherwise be in the
best interests of the Company and its stockholders), each
holder of a Right will thereafter have the right to receive,
upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a
value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the
occurrence of the event set forth in this paragraph, all
Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. However, Rights are
not exercisable following the occurrence of the event set
forth above until such time as the Rights are no longer
redeemable by the Company as set forth below.
For example, at an exercise price of $78 per
Right, each Right not owned by an Acquiring Person (or by
certain related parties) following an event set forth in the
preceding paragraph would entitle its holder to purchase
$156 worth of Common Stock (or other consideration, as noted
above) for $78. Assuming that the Common Stock had a per
share value of $39 at such time, the holder of each valid
Right would be entitled to purchase four shares of Common
Stock for $78.
In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction (other than a merger
which follows an offer described in the second preceding
paragraph), or (ii) fifty percent (50%) or more of the
Company's assets, cash flow or earning power is sold or
transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to two
times the exercise price of the Right. The events set forth
in this paragraph and in the second preceding paragraph are
referred to as the "Triggering Events."
At any time until ten (10) business days following
the Stock Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.005 per
Right (payable in cash, Common Stock or other consideration
deemed appropriate by the Board). Immediately upon the
action of the Board ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of
Rights will be to receive the $.005 redemption price.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to
receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company,
stockholders may, depending upon the circumstances,
recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the
Company or for common stock of the acquiring company as set
forth above.
Any of the provisions of the Rights Agreement may
be amended by the Board prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board in order to cure any
ambiguity, to make changes which do not adversely affect the
interests of holders of Rights, or to shorten or lengthen
any time period under the Rights Agreement; provided,
however, that no amendment to lengthen a time period
relating to when the Rights may be redeemed may be made at
such time as the Rights are not redeemable.
As of September 12, 1996, there were 19,930,550
shares of Common Stock of the Company outstanding. As of
September 12, 1996, options to purchase 1,650,594 shares of
Common Stock were outstanding. Each share of Common Stock
of the Company outstanding at the close of business on
September 26, 1996, will receive one Right. So long as the
Rights are attached to the Common Stock, one additional
Right (as such number may be adjusted pursuant to the
provisions of the Rights Agreement) shall be deemed to be
delivered for each share of Common Stock issued or
transferred by the Company in the future. In addition,
following the Distribution Date and prior to the expiration
or redemption of the Rights, the Company may issue Rights
when it issues Common Stock only if the Board deems it to be
necessary or appropriate, or in connection with the issuance
of shares of Common Stock pursuant to the exercise of stock
options or under employee plans or upon the exercise,
conversion or exchange of certain securities of the Company.
Three hundred thousand shares of Series A Preferred Stock
are initially reserved for issuance upon exercise of the
Rights.
The Rights may have certain anti-takeover effects.
The Rights will cause substantial dilution to a person or
group that attempts to acquire the Company in a manner which
causes the Rights to become discount Rights unless the offer
is conditional on a substantial number of Rights being
acquired. The Rights, however, should not affect any
prospective offeror willing to make an offer at a fair price
and otherwise in the best interests of the Company and its
stockholders as determined by a majority of the Directors
who are not affiliated with the person making the offer, or
willing to negotiate with the Board. The Rights should not
interfere with any merger or other business combination
approved by the Board since the Board may, at its option, at
any time until ten days following the Stock Acquisition Date
redeem all but not less than all the then outstanding Rights
at the Redemption Price.
In addition, certain provisions of the Company's
Restated Certificate of Incorporation (the "Certificate of
Incorporation") may have anti-takeover effects. The
Certificate of Incorporation provides, among other things,
for a classified Board of Directors divided into three
classes.
The Rights Agreement, dated as of September 13,
1996, between the Company and The First National Bank of
Boston, as Rights Agent, specifying the terms of the Rights
and including the form of Certificate of Designation,
Preferences and Rights setting forth the terms of the Series
A Preferred Stock as an exhibit thereto, is attached hereto
as an exhibit and is incorporated herein by reference. The
foregoing description of the Rights is qualified in its
entirety by reference to such exhibit.
ITEM 2. EXHIBITS.
1 Restated Certificate of Incorporation*
2 Amended and Restated By-laws*
3 Rights Agreement, dated as of September 13, 1996,
between Culligan Water Technologies, Inc. and The
First National Bank of Boston, as Rights Agent,
including the form of Certificate of Designation,
Preferences and Rights setting forth the terms of
the Series A Junior Participating Preferred Stock,
par value $.01 per share, as Exhibit A, the form
of Rights Certificate as Exhibit B and the Summary
of Rights to Purchase Preferred Stock as Exhibit
C. Pursuant to the Rights Agreement, printed
Rights Certificates will not be mailed until after
the Distribution Date (as such term is defined in
the Rights Agreement).
___________________
* Incorporated by reference to the Company's Registration
Statement on Form 10 (File No. 0-26630)
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the Registrant has duly
caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: September 16, 1996 Culligan Water Technologies, Inc.
By:___________________________
Name: Edward A. Christensen
Title: Vice-President, General
Counsel and Secretary
EXHIBIT INDEX
Exhibit Description
1 Restated Certificate of Incorporation*
2 Amended and Restated By-laws*
3 Rights Agreement, dated as of September 13, 1996,
between Culligan Water Technologies, Inc. and The
First National Bank of Boston, as Rights Agent,
including the form of Certificate of Designation,
Preferences and Rights setting forth the terms of
the Series A Junior Participating Preferred Stock,
par value $.01 per share, as Exhibit A, the form
of Rights Certificate as Exhibit B and the Summary
of Rights to Purchase Preferred Stock as Exhibit
C. Pursuant to the Rights Agreement, printed
Rights Certificates will not be mailed until after
the Distribution Date (as such term is defined in
the Rights Agreement).
* Incorporated by reference to the Company's
Registration Statement on Form 10 (File No. 0-26630)
CULLIGAN WATER TECHNOLOGIES, INC.
and
THE FIRST NATIONAL BANK OF BOSTON,
as Rights Agent
Rights Agreement
Dated as of September 13, 1996
Table of Contents
Section Page
1. Certain Definitions . . . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . . . 5
3. Issue of Rights Certificates . . . . . . . 5
4. Form of Rights Certificates . . . . . . . . 7
5. Countersignature and Registration . . . . . 8
6. Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates . . . . . . . . . . . . 9
7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . 10
8. Cancellation and Destruction of Rights
Certificates . . . . . . . . . . . . . . . 13
9. Reservation and Availability of Capital
Stock . . . . . . . . . . . . . . . . . . 14
10. Preferred Stock Record Date . . . . . . . 16
11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights . . . . 16
12. Certificate of Adjusted Purchase Price or
Number of Shares . . . . . . . . . . . . . 29
13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power . . . . . . . . 29
14. Fractional Rights and Fractional Shares . 33
15. Rights of Action . . . . . . . . . . . . . 34
16. Agreement of Rights Holders . . . . . . . 35
17. Rights Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . 36
18. Concerning the Rights Agent . . . . . . . 36
19. Merger or Consolidation or Change of Name
of Rights Agent . . . . . . . . . . . . . 37
20. Duties of Rights Agent . . . . . . . . . . 38
21. Change of Rights Agent . . . . . . . . . . 41
22. Issuance of New Rights Certificates . . . 42
23. Redemption and Termination . . . . . . . . 43
24. Notice of Certain Events . . . . . . . . . 44
25. Notices . . . . . . . . . . . . . . . . . 45
26. Supplements and Amendments . . . . . . . . 46
27. Successors . . . . . . . . . . . . . . . . 46
28. Determinations and Actions by the Board of
Directors, etc. . . . . . . . . . . . . . 47
29. Benefits of this Agreement . . . . . . . . 47
30. Severability . . . . . . . . . . . . . . . 47
31. Governing Law . . . . . . . . . . . . . . 48
32. Counterparts . . . . . . . . . . . . . . . 48
33. Descriptive Headings . . . . . . . . . . . 48
Exhibit A -- Certificate of Designation, Preferences and Rights
Exhibit B -- Form of Rights Certificate
Exhibit C -- Summary of Rights to Purchase Preferred Stock
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of September 13, 1996 (the
"Agreement"), between Culligan Water Technologies, Inc., a
Delaware corporation (the "Company"), and The First National Bank
of Boston, a national banking association (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on September 13, 1996 (the "Rights Dividend
Declaration Date"), the Executive Committee of the Board of
Directors of the Company, pursuant to authority expressly granted
to it by the Board of Directors of the Company, authorized and
declared a dividend distribution of one Right for each share of
common stock, par value $0.01 per share, of the Company (the
"Common Stock") outstanding at the close of business on September
26, 1996 (the "Record Date"), and has authorized the issuance of
one Right (as such number may hereinafter be adjusted pursuant to
the provisions of Section 11(p) hereof) for each share of Common
Stock of the Company issued between the Record Date (whether
originally issued or delivered from the Company's treasury) and
the Distribution Date each Right initially representing the right
to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock of the Company having the rights,
powers and preferences set forth in the form of Certificate of
Designation, Preferences and Rights attached hereto as Exhibit A,
upon the terms and subject to the conditions hereinafter set
forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of fifteen percent (15%) or
more of the shares of Common Stock then outstanding, but shall
not include (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, (iv) any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan or (v) any Exempted Person.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement
(the "Exchange Act").
(c) A Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "beneficially own," any
securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement
or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A)
securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities
are accepted for purchase or exchange, or (B)
securities issuable upon exercise of Rights at any time
prior to the occurrence of a Triggering Event, or (C)
securities issuable upon exercise of Rights from and
after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof
in connection with an adjustment made with respect to
any Original Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially
own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to
vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable
proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not also
then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of
such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not
in writing), for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this
paragraph (c)) or disposing of any voting securities of
the Company; provided, however, that nothing in this
paragraph (c) shall cause a person engaged in business
as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities
acquired through such person's participation in good
faith in a firm commitment underwriting until the
expiration of forty days after the date of such
acquisition; and provided further, however, that any
stockholder of the Company, with affiliate(s),
associate(s) or other person(s) who may be deemed
representatives of it serving as director(s) of the
Company, shall not be deemed to beneficially own
securities held by other Persons as a result of (i)
persons affiliated or otherwise associated with such
stockholder serving as directors or taking any action
in connection therewith, (ii) discussing the status of
its shares with the Company or other stockholders of
the Company similarly situated or (iii) voting or
acting in a manner similar to other stockholders
similarly situated, absent a specific finding by the
Board of Directors of an express agreement among such
stockholders to act in concert with one another as
stockholders so as to cause, in the good faith judgment
of the Board of Directors, each such stockholder to be
the Beneficial Owner of the shares held by the other
stockholder(s).
(d) "Business Day" shall mean any day other than
a Saturday, Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
(e) "Close of business" on any given date shall
mean 5:00 P.M., New York City time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 P.M., New York City time, on the next succeeding Business
Day.
(f) "Common Stock" shall mean the common stock,
par value $0.01 per share, of the Company, except that "Common
Stock" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of
such Person.
(g) "Exempted Person" shall mean any Person who
(i) was the Beneficial Owner, on September 3, 1996, of securities
representing fifteen percent (15%) or more of the shares of
Common Stock outstanding on September 3, 1996, and such Person's
Affiliates and Associates, provided that such Person, together
with such Person's Affiliates and Associates, does not increase
its percentage ownership of the outstanding Common Stock by more
than five (5) percentage points over its percentage ownership on
September 3, 1996; or, (ii) becomes, after the date hereof, the
Beneficial Owner of securities representing fifteen percent (15%)
or more of the outstanding shares of Common Stock as a result of
a Qualified Offer.
(h) "Person" shall mean any individual, firm
corporation, partnership or other entity.
(i) "Preferred Stock" shall mean shares of Series
A Junior Participating Preferred Stock, par value $0.01 per
share, of the Company, and, to the extent that there are not a
sufficient number of shares of Series A Junior Participating
Preferred Stock authorized to permit the full exercise of the
Rights, any other series of Preferred Stock, par value $0.01 per
share, of the Company designated for such purpose containing
terms substantially similar to the terms of the Junior
Participating Preferred Stock.
(j) "Qualified Offer" shall have the meaning set
forth in Section 11(a)(ii) hereof.
(k) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii) hereof.
(l) "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of Section 13(a) hereof.
(m) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) under the Exchange Act) by the Company
or an Acquiring Person that an Acquiring Person has become such
other than pursuant to a Qualified Offer (as defined in Section
11(a)(ii) hereof).
(n) "Subsidiary" shall mean, with reference to
any Person, any corporation of which an amount of voting
securities sufficient to elect at least a majority of the
directors of such corporation is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such
Person.
(o) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders
of the Common Stock) 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, subject to the Rights
Agent's reasonable consent.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of
business on the tenth business day after the Stock Acquisition
Date (or, if the tenth business day after the Stock Acquisition
Date occurs before the Record Date, the close of business on the
Record Date), or (ii) the close of business on the tenth business
day (or such later date as the Board shall determine) after the
date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would become an Acquiring
Person (the earlier of (i) and (ii) being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Stock registered in the names of
the holders of the Common Stock (which certificates for Common
Stock shall be deemed also to be certificates for Rights) and not
by separate certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will
send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on
the Distribution Date, at the address of such holder shown on the
records of the Company, one or more right certificates, in
substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p) hereof, at
the time of distribution of the Rights Certificates, the Company
shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) With respect to certificates for the Common
Stock outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates for the
Common Stock and the registered holders of the Common Stock shall
also be the registered holders of the associated Rights. Until
the earlier of the Distribution Date or the Expiration Date (as
such term is defined in Section 7 hereof), the transfer of any
certificates representing shares of Common Stock in respect of
which Rights have been issued shall also constitute the transfer
of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all
shares of Common Stock which are issued (whether originally
issued or from the Company's treasury) after the Record Date but
prior to the earlier of the Distribution Date or the Expiration
Date. Certificates representing such shares of Common Stock
shall also be deemed to be certificates for Rights, and shall
bear the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the
Rights Agreement between Culligan Water Technologies,
Inc. (the "Company") and the Rights Agent thereunder
(the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is
on file at the principal offices of Culligan Water
Technologies, 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. Culligan Water
Technologies, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly
after receipt of a written request therefor. Under
certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or any Affiliate
or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii)
the Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set
forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable
law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject
to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof
to purchase such number of one one-hundredths of a share of
Preferred Stock as shall be set forth therein at the price set
forth therein (such exercise price per one one-hundredth of a
share, the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided
herein.
(b) Any Rights Certificate issued pursuant to
Section 3(a) or Section 22 hereof that represents Rights
beneficially owned by: (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement
or understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following
legend:
The Rights represented by this Rights Certificate are
or were beneficially owned by a Person who was or
became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may
become null and void in the circumstances specified in
Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President
or any Vice President, either manually or by facsimile signature,
and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature and shall
not be valid for any purpose unless so countersigned. In case
any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the
person who signed such Rights Certificates had not ceased to be
such officer of the Company; and any Rights Certificates may be
signed on behalf of the Company by any person who, at the actual
date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Agreement
any such person was not such an officer.
(b) Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at its principal office or
offices designated as the appropriate place for surrender of
Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates
and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates. (a) Subject to the provisions of
Section 4(b), Section 7(e) and Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like
number of one one-hundredths of a share of Preferred Stock (or,
following a Triggering Event, Common Stock, other securities,
cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as
so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, and, in
case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation
of the Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner
in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) Subject to Section 7(e)
hereof, the registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation,
the restrictions on exercisability set forth in Section
9(c), Section 11(a)(iii) and Section 23(a) hereof) in
whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form
of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number
of one one-hundredths of a share (or other securities,
cash or other assets, as the case may be) as to which
such surrendered Rights are then exercisable, at or prior
to the expiration of the Rights, which shall occur at the
earlier of (i) 5:00 P.M. (New York City time) on
September 13, 1997, or such later date as may be
established by the Board of Directors prior to the
expiration of the Rights (such date, as it may be
extended by the Board, the "Final Expiration Date"), or
(ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the earlier of (i) and
(ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one
one-hundredth of a share of Preferred Stock pursuant to
the exercise of a Right shall initially be $78, and shall
be subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of
election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one one-hundredth of
a share of Preferred Stock (or other shares, securities,
cash or other assets, as the case may be) to be purchased
as set forth below and an amount equal to any applicable
transfer tax, the Rights Agent shall, subject to Section
20(k) hereof, thereupon promptly (i) (A) requisition from
any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the
total number of shares of Preferred Stock issuable upon
exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a share
of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such
request, (ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of
such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, and
(iv) after receipt thereof, deliver such cash, if any, to
or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii)
hereof) shall be made in cash or by certified bank check
or bank draft payable to the order of the Company. In
the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section
11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or
other property are available for distribution by the
Rights Agent, if and when appropriate. The Company
reserves the right to require prior to the occurrence of
a Triggering Event that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares
of Preferred Stock would be issued.
(d) In case the registered holder of any
Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder
of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee
of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person
has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall become null and
void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with,
but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure
to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) completed
and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of
Rights Certificates. All Rights Certificates surrendered
for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the
Company or any of its agents, be delivered to the Rights
Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to
the Company, or shall, at the written request of the
Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of
Capital Stock. (a) The Company covenants and agrees
that it will cause to be reserved and kept available out
of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out
of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and
issued shares held in its treasury), the number of shares
of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities)
that, as provided in this Agreement including Section
11(a)(iii) hereof, will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred
Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed
on any national securities exchange, the Company shall
use its best efforts to cause, from and after such time
as the Rights become exercisable, all shares reserved for
such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
(c) The Company shall use its best
efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has
been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Securities Act
of 1933 (the "Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for
such securities, and (B) the date of the expiration of
the Rights. The Company will also take such action as
may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states
in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not
to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c),
the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall
issue a public announcement stating that the
exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time
as the suspension is no longer in effect. In addition,
if the Company shall determine that a registration
statement is required following the Distribution Date,
the Company may temporarily suspend the exercisability of
the Rights until such time as a registration statement
has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights
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.
(d) The Company covenants and agrees that
it will take all such action as may be necessary to
ensure that all one one-hundredths of a share of
Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and
agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the
Rights Certificates and of any certificates for a number
of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or
delivery of a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities,
as the case may be) in respect of a name other than that
of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of one
one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in a
name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that
no such tax is due.
Section 10. Preferred Stock Record Date. Each
person in whose name any certificate for a number of one
one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such
fractional shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment
is a date upon which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer
books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall
be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities,
as the case may be) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company
with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number of Rights. The
Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event the Company
shall at any time after the date of this
Agreement (A) declare a dividend on the
Preferred Stock payable in shares of Preferred
Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares, or (D)
issue any shares of its capital stock in a
reclassification of the Preferred Stock
(including any such reclassification in
connection with a consolidation or merger in
which the Company is the continuing or
surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e)
hereof, the Purchase Price in effect at the
time of the record date for such dividend or of
the effective date of such subdivision,
combination or reclassification, and the number
and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable on
such date, shall be proportionately adjusted so
that the holder of any Right exercised after
such time shall be entitled to receive, upon
payment of the Purchase Price then in effect,
the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case
may be, which, if such Right had been exercised
immediately prior to such date and at a time
when the Preferred Stock transfer books of the
Company were open, he would have owned upon
such exercise and been entitled to receive by
virtue of such dividend, subdivision,
combination or reclassification. If an event
occurs which would require an adjustment under
both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for
in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person shall,
at any time after the Rights Dividend
Declaration Date, become an Acquiring Person
unless the event causing such Person to become
an Acquiring Person is a transaction set forth
in Section 13(a) hereof, or is an acquisition
of shares of Common Stock pursuant to a tender
offer or an exchange offer for all outstanding
shares of Common Stock at a price and on terms
determined by at least a majority of the
members of the Board of Directors who are not
officers of the Company and who are not
representatives, nominees, Affiliates or
Associates of an Acquiring Person, after
receiving advice from one or more investment
banking firms, to be (a) at a price which is
not inadequate (taking into account all factors
which such members of the Board deem relevant
including, without limitation, prices which
could reasonably be achieved if the Company or
its assets were sold on an orderly basis
designed to realize maximum value) and (b)
otherwise in the best interests of the Company
and its stockholders (a "Qualified Offer"),
then, promptly following the occurrence of such an event,
proper provision shall be made so that each holder of a
Right (except as provided below and in Section 7(e)
hereof) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a
number of one one-hundredths of a share of Preferred
Stock, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then
number of one one-hundredths of a share of Preferred
Stock for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event, and
(y) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes of
this Agreement) by 50% of the current market price
(determined pursuant to Section 11(d) hereof) per share
of Common Stock on the date of such first occurrence
(such number of shares, the "Adjustment Shares").
(iii) In the event that the number
of shares of Common Stock which 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 (ii) of this
Section 11(a), the Company shall (A) determine
the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current
Value"), and (B) with respect to each Right
(subject to Section 7(e) hereof), make adequate
provision to substitute for the Adjustment
Shares, upon the exercise of a Right and
payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of
the Company (including, without limitation,
shares, or units of shares, of preferred stock,
such as the Preferred Stock, which the Board
has deemed to have essentially the same value
or economic rights as shares of Common Stock
(such shares of preferred stock being referred
to as "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an
aggregate value equal to the Current Value
(less the amount of any reduction in the
Purchase Price), where such aggregate value has
been determined by the Board based upon the
advice of a nationally recognized investment
banking firm selected by the Board; 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 later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y)
the date on which the Company's right of
redemption pursuant to Section 23(a) expires
(the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a
Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate
value equal to the Spread. For purposes of the
preceding sentence, the term "Spread" shall
mean the excess of (i) the Current Value over
(ii) the Purchase Price. If the Board
determines in good faith that it is likely that
sufficient additional shares of Common Stock
could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day
period set forth above may be extended to the
extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date,
in order that the Company may seek shareholder
approval for the authorization of such
additional shares (such thirty (30) day period,
as it may be extended, is herein called the
"Substitution Period"). To the extent that
action is to be taken pursuant to the first
and/or third sentences of this Section
11(a)(iii), the Company (1) shall provide,
subject to Section 7(e) hereof, that such
action shall apply uniformly to all outstanding
Rights, and (2) may suspend the exercisability
of the Rights until the expiration of the
Substitution Period in order to seek such
shareholder approval for such 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 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. For purposes of this
Section 11(a)(iii), the value of each
Adjustment Share shall be the Current Market
Price per share of the Common Stock on the
Section 11(a)(ii) Trigger Date and the per
share or per unit value of any Common Stock
Equivalent shall be deemed to equal the Current
Market Price per share of the Common Stock on
such date.
(b) In case the Company shall fix a
record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them
to subscribe for or purchase (for a period expiring
within forty-five (45) calendar days after such record
date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred
Stock ("equivalent preferred stock")) or securities
convertible into Preferred Stock or equivalent preferred
stock at a price per share of Preferred Stock or per
share of equivalent preferred stock (or having a
conversion price per share, if a security convertible
into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on
such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall
be the number of shares of Preferred Stock outstanding on
such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total
number of shares of Preferred Stock and/or equivalent
preferred stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so
to be offered) would purchase at such current market
price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record
date, plus the number of additional shares of Preferred
Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible).
In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form
other than cash, the value of such consideration shall be
as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the
Rights. Shares of Preferred Stock owned by or held for
the account of the Company shall not be deemed
outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such
a record date is fixed, and in the event that such rights
or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be
in effect if such record date had not been fixed.
(c) In case the Company shall fix a
record date for a distribution to all holders of
Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash
dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in
stock other than Preferred Stock) or subscription rights
or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the
current market price (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock on such record
date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed
with the Rights Agent) of the portion of the cash, assets
or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to a
share of Preferred Stock and the denominator of which
shall be such current market price (as determined
pursuant to Section 11(d) hereof) per share of Preferred
Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event
that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price which would
have been in effect if such record date had not been
fixed.
(d) (i) For the purpose of any
computation hereunder, other than computations made
pursuant to Section 11(a)(iii) hereof, the Current Market
Price per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per
share of such Common Stock for the thirty (30)
consecutive Trading Days immediately prior to such date,
and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the Current Market Price per share of
Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days
immediately following such date; provided, however, that
in the event that the Current Market Price per share of
the Common Stock is determined during a period following
the announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock
payable in shares of such Common Stock or securities
convertible into shares of such Common Stock (other than
the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and the
ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or
reclassification shall not have occurred prior to the
commencement of the requisite thirty (30) Trading Day or
ten (10) Trading Day period, as set forth above, then,
and in each such case, the Current Market Price shall be
properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares
of Common Stock are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities
exchange on which the shares of Common Stock are listed
or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc.
Automated Quotation System or such other system then in
use, or, if on any such date the shares of Common Stock
are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a
professional market maker making a market in the Common
Stock selected by the Board. If on any such date no
market maker is making a market in the Common Stock, the
fair value of such shares on such date as determined in
good faith by the Board shall be used. The term "Trading
Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock
are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock
are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock
is not publicly held or not so listed or traded, Current
Market Price per share shall mean the fair value per
share as determined in good faith by the Board, whose
determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation
hereunder, the Current Market Price per share of
Preferred Stock shall be determined in the same manner as
set forth above for the Common Stock in clause (i) of
this Section 11(d) (other than the last sentence
thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly
held or listed or traded in a manner described in clause
(i) of this Section 11(d), the Current Market Price per
share of Preferred Stock shall be conclusively deemed to
be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the
Common Stock occurring after the date of this Agreement)
multiplied by the Current Market Price per share of the
Common Stock. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded,
Current Market Price per share of the Preferred Stock
shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. For all purposes
of this Agreement, the Current Market Price of a Unit
shall be equal to the Current Market Price of one share
of Preferred Stock divided by 100.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or
other share or one-millionth of a share of Preferred
Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required
by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment, or (ii) the
Expiration Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof,
the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other
than Preferred Stock, thereafter the number of such other
shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect
to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preferred Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the Purchase
Price hereunder shall evidence the right to purchase, at
the adjusted Purchase Price, the number of one
one-hundredths of a share of Preferred Stock purchasable
from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have
exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock
(calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust
the number of Rights, in lieu of any adjustment in the
number of one one-hundredths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each of
the Rights outstanding after the adjustment in the number
of Rights shall be exercisable for the number of one
one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Rights Certificates
have been issued, shall be at least ten (10) days later
than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates
on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause
to be distributed to such holders of record in
substitution and replacement for the Rights Certificates
held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or
change in the Purchase Price or the number of one one-
hundredths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express
the Purchase Price per one one-hundredth of a share and
the number of one one-hundredth of a share which were
expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would
cause an adjustment reducing the Purchase Price below the
then stated value, if any, of the number of one
one-hundredths of a share of Preferred Stock issuable
upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable
such number of one one-hundredths of a share of Preferred
Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11
shall require that an adjustment in the Purchase Price be
made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right
exercised after such record date the number of one
one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of
one one-hundredths of a share of Preferred Stock and
other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a
due bill or other appropriate instrument evidencing such
holder's right to receive such additional shares
(fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith
judgment the Board of Directors of the Company shall
determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any shares of Preferred Stock
at less than the current market price, (iii) issuance
wholly for cash of shares of Preferred Stock or
securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that
it shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the
shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates
and Associates.
(o) The Company covenants and agrees
that, after the Distribution Date, it will not, except as
permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the
contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a
dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number
of shares, the number of Rights associated with each
share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date,
shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common
Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such
event by a fraction the numerator which shall be the
total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares
of Common Stock outstanding immediately following the
occurrence of such event.
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares. Whenever an adjustment is
made as provided in Section 11 and Section 13 hereof, the
Company shall (a) promptly prepare a certificate setting
forth such adjustment and a brief statement of the facts
accounting for such adjustment, and (b) promptly file
with the Rights Agent, and with each transfer agent for
the Preferred Stock and the Common Stock, a copy of such
certificate. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment
therein contained.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.
(a) In the event that, following the
Stock Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o)
hereof), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,
(y) any Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof)
shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all
or part of the outstanding shares of Common Stock shall
be changed into or exchanged for stock or other
securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series of
related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o) hereof), then,
and in each such case (except as may be contemplated by
Section 13(d) hereof), proper provision shall be made so
that: (i) each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued,
fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number
of one one-hundredths of a share of Preferred Stock for
which a Right is exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section
11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number
of such one one-hundredths of a share for which a Right
was exercisable immediately prior to the first occurrence
of a Section 11(a)(ii) Event by the Purchase Price in
effect immediately prior to such first occurrence), and
dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as
the "Purchase Price" for each Right and for all purposes
of this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per
share of the Common Stock of such Principal Party on the
date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following
the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary
to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation
to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following
the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any
transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person
that is the issuer of any securities into which
shares of Common Stock of the Company are
converted in such merger or consolidation, and
if no securities are so issued, the Person that
is the other party to such merger or
consolidation; and
(ii) in the case of any
transaction described in clause (z) of the
first sentence of Section 13(a), the Person
that is the party receiving the greatest
portion of the assets or earning power
transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the
Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has
been so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and
have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value.
(c) The Company shall not consummate any
such consolidation, merger, sale or transfer unless the
Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of
any consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party
will
(i) prepare and file a
registration statement under the Act, with
respect to the Rights and the securities
purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts
to cause such registration statement to (A)
become effective as soon as practicable after
such filing and (B) remain effective (with a
prospectus at all times meeting the
requirements of the Act) until the Expiration
Date; and
(ii) will deliver to holders of
the Rights historical financial statements for
the Principal Party and each of its Affiliates
which comply in all respects with the
requirements for registration on Form 10 under
the Exchange Act.
The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or other
transfers. In the event that a Section 13 Event shall
occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the
manner described in Section 13(a).
(d) Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be
applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares
of Common Stock pursuant to a tender offer or exchange
offer for all outstanding shares of Common Stock which is
a Qualified Offer as such term is defined in Section
11(a)(ii) hereof (or a wholly owned subsidiary of any
such Person or Persons), (ii) the price per share of
Common Stock offered in such transaction is not less than
the price per share of Common Stock paid to all holders
of shares of Common Stock whose shares were purchased
pursuant to such tender offer or exchange offer and (iii)
the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such
transaction is the same as the form of consideration paid
pursuant to such tender offer or exchange offer. Upon
consummation of any such transaction contemplated by this
Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional
Shares.
(a) The Company shall not be required to
issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or
to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of
a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the
closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be the last sale
price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on
which the Rights are listed or admitted to trading, or if
the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported
by NASDAQ or such other system then in use or, if on any
such date the Rights are not quoted by any such
organization, the average of the closing bid and asked
prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker
is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the
Board of Directors of the Company shall be used.
(b) The Company shall not be required to
issue fractions of shares of Preferred Stock (other than
fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock). In lieu of
fractional shares of Preferred Stock that are not
integral multiples of one one-hundredth of a share of
Preferred Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights
are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one
one-hundredth of a share of Preferred Stock. For
purposes of this Section 14(b), the current market value
of one one-hundredth of a share of Preferred Stock shall
be one one-hundredth of the closing price of a share of
Preferred Stock (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior
to the date of such exercise.
(c) Following the occurrence of a
Triggering Event, the Company shall not be required to
issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company may pay to
the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market
value of one (1) share of Common Stock. For purposes of
this Section 14(c), the current market value of one share
of Common Stock shall be the closing price of one share
of Common Stock (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by the
acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of
action in respect of this Agreement are vested in the
respective registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder
of any Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate
in the manner provided in such Rights Certificate and in
this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach
of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the
obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents
and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the
transfer of Common Stock;
(b) after the Distribution Date, the
Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and
certificates fully executed;
(c) subject to Section 6(a) and Section
7(f) hereof, the Company and the Rights Agent may deem
and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on
the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last
sentence of Section 7(e) hereof, shall be required to be
affected by any notice to the contrary; and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts
to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not
Deemed a Stockholder. No holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of
one one-hundredths of a share of Preferred Stock or any
other securities of the Company which may at any time be
issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder
of any Rights Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof),
or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the
Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements
incurred in the administration and execution of this
Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence,
bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of
this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected
and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged,
by the proper Person or Persons.
Section 19. Merger or Consolidation or Change
of Name of Rights Agent.
(a) Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a
party, or any corporation 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, however, that such corporation
would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall
not have been countersigned, any successor Rights Agent
may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor
Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the
Rights Agent shall be changed and at such time any of the
Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights
Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The
Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with
legal counsel (who may be legal counsel for the Company),
and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and
in accordance with such opinion.
(b) Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter
(including, without limitation, the identity of any
Acquiring Person and the determination of "current market
price") be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any
Vice President, the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable
hereunder only for its own gross negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable
for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as
to its countersignature on such Rights Certificates), but
all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under
any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or
in any Rights Certificate; nor shall it be responsible
for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the
manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise
of Rights evidenced by Rights Certificates after actual
notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any
shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock or Preferred
Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized
and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of
the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with
its duties, and it shall not be liable for any action
taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may
buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily
interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct; provided,
however, reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds
or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable
grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability
is not reasonably assured to it.
(k) If, with respect to any Right
Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the
Rights Agent shall not take any further action with
respect to such requested exercise of transfer without
first consulting with the Company.
Section 21. Change of Rights Agent. The
Rights Agent or any successor Rights Agent may resign and
be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the
Company, and to each transfer agent of the Common Stock
and Preferred Stock, by registered or certified mail, and
to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of
the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty (30)
days after giving notice of such removal or after it has
been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Rights Certificate (who shall, with
such notice, submit his Rights Certificate for inspection
by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation or
other form of entity organized and doing business under
the laws of the United States or of any of the states of
the United States, in good standing, which is authorized
under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal or state
authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an affiliate of a corporation or other
entity described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Not later than
the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Stock
and the Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights
Certificates. Notwithstanding any of the provisions of
this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under
the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, granted or
awarded as of the Distribution Date, or upon the
exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of
Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would
create a significant risk of material adverse tax
consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been
made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company
may, at its option, at any time prior to the earlier of
(i) the close of business on the tenth business day
following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record
Date, the close of business on the tenth business day
following the Record Date), or (ii) the Final Expiration
Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.005 per
Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the
"Redemption Price"). Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not
be exercisable after the first occurrence of a Section
11(a)(ii) Event until such time as the Company's right of
redemption hereunder has expired. The Company may, at
its option, pay the Redemption Price in cash, shares of
Common Stock (based on the "current market price", as
defined in Section 11(d)(i) hereof, of the Common Stock
at the time of redemption) or any other form of
consideration deemed appropriate by the Board of
Directors.
(b) Immediately upon the action of the
Board of Directors of the Company ordering the redemption
of the Rights, evidence of which shall have been filed
with the Rights Agent and without any further action and
without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price for each
Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the
Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry
books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the
Common Stock. 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 will state the method by which the payment of
the Redemption Price will be made.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of
Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders
of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities,
rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect
any consolidation or merger into or with any other Person
(other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), or to effect
any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer),
in one transaction or a series of related transactions,
of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each
of which complies with Section 11(o) hereof), or (v) to
effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give
to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 25 hereof, a
notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the
holders of the shares of Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii)
above at least twenty (20) days prior to the record date
for determining holders of the shares of Preferred Stock
for purposes of such action, and in the case of any such
other action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of
participation therein by the holders of the shares of
Preferred Stock whichever shall be the earlier.
(b) In case any of the events set forth
in Section 11(a)(ii) hereof shall occur, then, in any
such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate,
to the extent feasible and in accordance with Section 25
hereof, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event
to holders of Rights under Section 11(a)(ii) hereof, and
(ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.
Section 25. Notices. Notices or demands
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate
to or on the 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:
Culligan Water Technologies, Inc.
One Culligan Parkway
Northbrook, Illinois 60062-6209
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or
demand authorized by this Agreement to be given or made
by the Company or by the holder of any Rights Certificate
to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with
the Company) as follows:
The First National Bank of Boston
c/o Boston EquiServe, L.P.
150 Royall Street
Canton, Massachusetts 02021
Attention: Client Administration
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the
holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be
sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address
of such holder as shown on the registry books of the
Company.
Section 26. Supplements and Amendments. Prior
to the Distribution Date, the Company and the Rights
Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the
approval of any holders of certificates representing
shares of Common Stock. From and after the Distribution
Date and subject to the penultimate sentence of this
Section 26, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein
which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time
period hereunder or (iv) to change or supplement the
provisions hereunder in any manner which the Company may
deem necessary or desirable and which shall not adversely
affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided,
this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A)
a time period relating to when the Rights may be redeemed
at such time as the Rights are not then redeemable, or
(B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights.
Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms
of this Section 26, the Rights Agent shall execute such
supplement or amendment. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common
Stock.
Section 27. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns
hereunder.
Section 28. Determinations and Actions by the
Board of Directors, etc. For all purposes of this
Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time,
including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of
which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Company
shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and
powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the
administration of this Agreement, including, without
limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including a
determination to redeem or not redeem the Rights or to
amend the Agreement and any determination as to whether
actions of any Person shall be such as to cause such
Person to beneficially own shares held by another
Person). All such actions, calculations, interpretations
and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties,
and (y) not subject the Board or any of the directors to
any liability to the holders of the Rights.
Section 29. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and,
prior to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be
for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
Section 30. Severability. If any term,
provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable
and the Board of Directors of the Company determines in
its good faith judgment that severing the invalid
language from this Agreement would adversely affect the
purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of
business on the tenth business day following the date of
such determination by the Board of Directors.
Section 31. Governing Law. This Agreement,
each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of
such State applicable to contracts made and to be
performed entirely within such State.
Section 32. Counterparts. This Agreement may
be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed, all as of the
day and year first above written.
CULLIGAN WATER TECHNOLOGIES, INC.
By
Name: Edward A. Christensen
Title: Vice-President, General
Counsel and Secretary
THE FIRST NATIONAL BANK OF BOSTON
By
Name:
Title:
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
of
CULLIGAN WATER TECHNOLOGIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned officers of Culligan Water
Technologies, Inc., a corporation organized and existing
under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section
103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon
the Board of Directors by the Certificate of
Incorporation of the said Corporation, the Executive
Committee of the said Board of Directors on September 13,
1996, adopted, pursuant to authority expressly granted to
it by the Board of Directors, the following resolution
creating a series of 300,000 shares of Preferred Stock
designated as Series A Junior Participating Preferred
Stock:
RESOLVED, that pursuant to the authority vested
in the Board of Directors of this Corporation in
accordance with the provisions of its Restated
Certificate of Incorporation, a series of Preferred Stock
of the Corporation be and it hereby is created, and that
the designation and amount thereof and the voting powers,
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:
Section 1. Designation and Amount. The shares
of such series shall be designated as "Series A Junior
Participating Preferred Stock" and the number of shares
constituting such series shall be 300,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Junior
Participating Preferred 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 in cash on the last day of
March, June, September and December in each year (each
such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior
Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate
per share amount (payable in 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, par value
$0.01 per share, of the Corporation (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 Junior
Participating Preferred Stock. In the event the
Corporation shall at any time after August 26, 1996 (the
"Rights Declaration Date") (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which
holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend
or distribution on the Series A Junior Participating
Preferred Stock as provided in Paragraph (A) above
immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event 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 $1.00 per share on
the Series A Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such
shares of Series A Junior Participating Preferred Stock,
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 Junior
Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Preferred Stock
in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of
holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall
be no more than 30 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of
shares of Series A Junior Participating Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Junior
Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote
of the stockholders of the Corporation. In the event the
Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to
which holders of shares of Series A Junior Participating
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 were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein or by
law, the holders of shares of Series A Junior
Participating Preferred Stock and the holders of shares
of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the
Corporation.
(C) (i) If at any time dividends on
any Series A Junior Participating Preferred
Stock shall be in arrears in an amount equal to
six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the
beginning of a period (herein called a "default
period") which shall extend until such time
when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the
current quarterly dividend period on all shares
of Series A Junior Participating Preferred
Stock then outstanding shall have been declared
and paid or set apart for payment. During each
default period, all holders of Preferred Stock
(including holders of the Series A Junior
Participating Preferred Stock) with dividends
in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to
elect two (2) Directors.
(ii) During any default period, such
voting right of the holders of Series A Junior
Participating Preferred Stock may be exercised
initially at a special meeting called pursuant
to subparagraph (iii) of this Section 3(C) or
at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders,
provided that such voting right shall not be
exercised unless the holders of ten percent
(10%) in number of shares of Preferred Stock
outstanding shall be present in person or by
proxy. The absence of a quorum of the holders
of Common Stock shall not affect the exercise
by the holders of Preferred Stock of such
voting right. At any meeting at which the
holders of Preferred Stock shall exercise such
voting right initially during an existing
default period, they shall have the right,
voting as a class, to elect Directors to fill
such vacancies, if any, in the Board of
Directors as may then exist up to two (2)
Directors or, if such right is exercised at an
annual meeting, to elect two (2) Directors. If
the number which may be so elected at any
special meeting does not amount to the required
number, the holders of the Preferred Stock
shall have the right to make such increase in
the number of Directors as shall be necessary
to permit the election by them of the required
number. After the holders of the Preferred
Stock shall have exercised their right to elect
Directors in any default period and during the
continuance of such period, the number of
Directors shall not be increased or decreased
except by vote of the holders of Preferred
Stock as herein provided or pursuant to the
rights of any equity securities ranking senior
to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of
Preferred Stock shall, during an existing
default period, have previously exercised their
right to elect Directors, the Board of
Directors may order, or any stockholder or
stockholders owning in the aggregate not less
than ten percent (10%) of the total number of
shares of Preferred Stock outstanding,
irrespective of series, may request, the
calling of special meeting of the holders of
Preferred Stock, which meeting shall thereupon
be called by the President, a Vice-President or
the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote
pursuant to this Paragraph (C)(iii) shall be
given to each holder of record of Preferred
Stock by mailing a copy of such notice to him
at his last address as the same appears on the
books of the Corporation. Such meeting shall
be called for a time not earlier than 20 days
and not later than 60 days after such order or
request or in default of the calling of such
meeting within 60 days after such order or
request, such meeting may be called on similar
notice by any stockholder or stockholders
owning in the aggregate not less than 10
percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding
the provisions of this Paragraph (C)(iii), no
such special meeting shall be called during the
period within 60 days immediately preceding the
date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the
holders of Common Stock, and other classes of
stock of the Corporation if applicable, shall
continue to be entitled to elect the whole
number of Directors until the holders of
Preferred Stock shall have exercised their
right to elect two (2) Directors voting as a
class, after the exercise of which right (x)
the Directors so elected by the holders of
Preferred Stock shall continue in office until
their successors shall have been elected by
such holders or until the expiration of the
default period, and (y) any vacancy in the
Board of Directors may (except as provided in
Paragraph (C)(ii) of this Section 3) be filled
by vote of a majority of the remaining
Directors theretofore elected by the holders of
the class of stock which elected the Director
whose office shall have become vacant.
References in this Paragraph (C) to Directors
elected by the holders of a particular class of
stock shall include Directors elected by such
Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration
of a default period, (x) the right of the
holders of Preferred Stock as a class to elect
Directors shall cease, (y) the term of any
Directors elected by the holders of Preferred
Stock as a class shall terminate, and (z) the
number of Directors shall be such number as may
be provided for in the certificate of
incorporation or by-laws irrespective of any
increase made pursuant to the provisions of
Paragraph (C)(ii) of this Section 3 (such
number being subject, however, to change
thereafter in any manner provided by law or in
the certificate of incorporation or by-laws).
Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and
(z) in the preceding sentence may be filled by
a majority of the remaining Directors.
(D) Except as set forth herein, holders of
Series A Junior Participating 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 Junior
Participating 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 Junior Participating
Preferred Stock outstanding shall have been paid in full,
the Corporation shall not
(i) declare or pay dividends
on, make any other distributions on, or redeem
or purchase or otherwise acquire for
consideration any shares of stock ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends
on or make any other distributions on any
shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution
or winding up) with the Series A Junior
Participating Preferred Stock, except dividends
paid ratably on the Series A Junior
Participating 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;
(iii) redeem or purchase or
otherwise acquire for consideration shares of
any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or
winding up) with the Series A Junior
Participating Preferred Stock, provided that
the Corporation may at any time redeem,
purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any
stock of the Corporation ranking junior (either
as to dividends or upon dissolution,
liquidation or winding up) to the Series A
Junior Participating Preferred Stock; or
(iv) purchase or otherwise
acquire for consideration any shares of Series
A Junior Participating Preferred Stock, or any
shares of stock ranking on a parity with the
Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made
in writing or by publication (as determined by
the Board of Directors) to all holders of such
shares upon such terms as the Board of
Directors, after consideration of the
respective annual dividend rates and other
relative rights and preferences of the
respective series and classes, shall determine
in good faith will result in fair and equitable
treatment among the respective series or
classes.
(B) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under Paragraph
(A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of
Series A Junior Participating Preferred Stock purchased
or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after
the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares
of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding
Up. (A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received an
amount equal to $100 per share of Series A Junior
Participating Preferred Stock, plus an amount equal to
accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the
payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to
the holders of shares of Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient
obtained by dividing (i) the Series A Liquidation
Preference by (ii) 100 (as appropriately adjusted as set
forth in subparagraph (C) below to reflect such events as
stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and
the Common Adjustment in respect of all outstanding
shares of Series A Junior Participating Preferred Stock
and Common Stock, respectively, holders of Series A
Junior Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1
with respect to such Preferred Stock and Common Stock, on
a per share basis, respectively.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of
the Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if
any, which rank on a parity with the Series A Junior
Participating Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such
parity shares in proportion to their respective
liquidation preferences. In the event, however, that
there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In
case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other
property, then in any such case the shares of Series A
Junior Participating Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per
share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into
which or for which each share of Common Stock is changed
or exchanged. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior
Participating 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 were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of
Series A Junior Participating Preferred Stock shall not
be redeemable.
Section 9. Amendment. The Certificate of
Incorporation of the Corporation shall not be further
amended in any manner which would materially alter or
change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to
affect them adversely without the affirmative vote of the
holders of a majority or more of the outstanding shares
of Series A Junior Participating Preferred Stock, voting
separately as a class.
Section 10. Fractional Shares. Series A
Junior Participating Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in
proportion to such holders fractional shares, to exercise
voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights
of holders of Series A Junior Participating Preferred
Stock.
IN WITNESS WHEREOF, we have executed and
subscribed this Certificate and do affirm the foregoing
as true under the penalties of perjury this 13th day of
September, 1996.
CULLIGAN WATER TECHNOLOGIES, INC.
Name:
Title:
Attest:
Secretary
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER September 13, 1997 (UNLESS EXTENDED
PRIOR THERETO BY THE BOARD OF DIRECTORS), OR EARLIER IF
REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.005 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED
BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
Culligan Water Technologies, 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 September
13, 1996 (the "Rights Agreement"), between Culligan Water
Technologies, Inc., a Delaware corporation (the
"Company"), and The First National Bank of Boston, a
national banking association (the "Rights Agent"), to
purchase from the Company at any time prior to 5:00 P.M.
(New York City time) on September 13, 1997 (unless such
date is extended prior thereto by the Board of Directors)
at the office or offices of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one
one-hundredth of a fully paid, non-assessable share of
Series A Junior Participating Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of
$78 per one one-hundredth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of
shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of September
13, 1996 based on the Preferred Stock as constituted at
such date. The Company reserves the right to require
________________
* The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
prior to the occurrence of a Triggering Event (as such
term is defined in the Rights Agreement) that a number of
Rights be exercised so that only whole shares of
Preferred Stock will be issued.
Upon the occurrence of a Section 11(a)(ii)
Event (as such term is defined in the Rights Agreement),
if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified
in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof
shall have any right with respect to such Rights from and
after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the
Purchase Price and the number and kind of shares of
Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by
this Rights Certificate are subject to modification and
adjustment upon the happening of certain events,
including Triggering Events.
This Rights 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
Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such
Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on
file at the above-mentioned office of the Rights Agent
and are also available upon written request to the Rights
Agent.
This Rights Certificate, with or without other
Rights Certificates, upon surrender at the principal
office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate
or Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate
number of one one-hundredths of a share of Preferred
Stock as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate
shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights
Agreement, the Rights evidenced by this Certificate may
be redeemed by the Company at its option at a redemption
price of $0.005 per Right at any time prior to the
earlier of the close of business on (i) the tenth
business day following the Stock Acquisition Date (as
such time period may be extended pursuant to the Rights
Agreement), and (ii) the Final Expiration Date. In
addition, the Rights may be exchanged, in whole or in
part, for shares of the Common Stock, or shares of
preferred stock of the Company having essentially the
same value or economic rights as such shares.
Immediately upon the action of the Board of Directors of
the Company authorizing any such exchange, and without
any further action or any notice, the Rights (other than
Rights which are not subject to such exchange) will
terminate and the Rights will only enable holders to
receive the shares issuable upon such exchange.
No fractional shares of Preferred Stock will be
issued upon the exercise of any Right or Rights evidenced
hereby (other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock, 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 Rights Certificate shall be
entitled to vote or receive dividends or be deemed for
any purpose the holder of shares of Preferred Stock 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 Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.
Dated as of ,
ATTEST: CULLIGAN WATER TECHNOLOGIES, INC.
____________________ By_______________________________
Secretary Title:
Countersigned:
THE FIRST NATIONAL BANK
OF BOSTON
By______________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfer unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute
and appoint _________________ Attorney, to transfer the
within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ___________________, 19__
___________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not
being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge
of the undersigned, it [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person
who is, was or subsequently became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
Dated: __________________, 19__ ______________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon the
face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: CULLIGAN WATER TECHNOLOGIES, INC.
The undersigned hereby irrevocably elects to
exercise __________ Rights represented by this Rights
Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may
be issuable upon the exercise of the Rights) and requests
that certificates for such shares be issued in the name of
and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the
Rights evidenced by this Rights Certificate, a new Rights
Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: _______________, 19__
______________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights
Certificate [ ] are [ ] are not being exercised by or on
behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge
of the undersigned, it [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person
who is, was or became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated: ___________, 19__ ___________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to
Purchase and Certificate must correspond to the name as
written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On September 13, 1996, the Board of Directors
of Culligan Water Technologies, Inc. (the "Company"),
acting through its Executive Committee, declared a
dividend distribution of one Right for each outstanding
share of Common Stock to stockholders of record at the
close of business on September 26, 1996 (the "Record
Date"). Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of
Series A Junior Participating Preferred Stock, par value
$0.01 per share (the "Series A Preferred Stock"), at a
Purchase Price of $78, subject to adjustment. The
description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the
Company and The First National Bank of Boston, as Rights
Agent.
Initially, the Rights will be attached to all
Common Stock certificates representing shares then
outstanding, and no separate Rights Certificates will be
distributed. The Rights will separate from the Common
Stock and a Distribution Date will occur upon the earlier
of (i) ten (10) business days following a public
announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired
beneficial ownership of fifteen percent (15%) or more of
the outstanding shares of Common Stock, other than an
Exempted Person (the "Stock Acquisition Date"), or (ii)
ten (10) business days (or such later date as the Board
shall determine) following the commencement of a tender
offer or exchange offer that would result in a person or
group becoming an Acquiring Person. "Exempted Person"
indicates any person who was (together with its
affiliates and associates) the beneficial owner, on
September 3, 1996, of fifteen percent (15%) or more of
the outstanding Common Stock, and such person's
affiliates and associates, provided that such person,
together with such person's affiliates and associates,
does not increase its percentage ownership of the Common
Stock by more than five (5) percentage points over its
percentage ownership on September 3, 1996.
Until the Distribution Date, (i) the Rights
will be evidenced by the Common Stock certificates and
will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation
incorporating the Rights Agreement by reference and (iii)
the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of
the Rights associated with the Common Stock represented
by such certificate. Pursuant to the Rights Agreement,
the Company reserves the right to require prior to the
occurrence of a Triggering Event (as defined below) that,
upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Series A Preferred
Stock will be issued.
The Rights are not exercisable until the
Distribution Date and will expire at 5:00 P.M. (New York
City time) on September 13, 1997, unless earlier redeemed
or extended by the Company.
As soon as practicable after the Distribution
Date, Rights Certificates will be mailed to holders of
record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
Except as otherwise determined by the Board, only shares
of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that a person becomes an Acquiring
Person (except pursuant to an offer for all outstanding
shares of Common Stock that the disinterested directors
determine not to be inadequate and to otherwise be in the
best interests of the Company and its stockholders), each
holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise
price of the Right. Notwithstanding any of the
foregoing, following the occurrence of the event set
forth in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person will be
null and void. However, Rights are not exercisable
following the occurrence of the event set forth above
until such time as the Rights are no longer redeemable by
the Company as set forth below.
For example, at an exercise price of $78 per
Right, each Right not owned by an Acquiring Person (or by
certain related parties) following an event set forth in
the preceding paragraph would entitle its holder to
purchase $156 worth of Common Stock (or other
consideration, as noted above) for $78. Assuming that
the Common Stock had a per share value of $39 at such
time, the holder of each valid Right would be entitled to
purchase four shares of Common Stock for $78.
In the event that, at any time following the
Stock Acquisition Date, (i) the Company is acquired in a
merger or other business combination transaction (other
than a merger which follows an offer described in the
second preceding paragraph), or (ii) fifty percent (50%)
or more of the Company's assets, cash flow or earning
power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set
forth above) shall thereafter have the right to receive,
upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of
the Right. The events set forth in this paragraph and in
the second preceding paragraph are referred to as the
"Triggering Events."
At any time until ten (10) business days
following the Stock Acquisition Date, the Company may
redeem the Rights in whole, but not in part, at a price
of $.005 per Right (payable in cash, Common Stock or
other consideration deemed appropriate by the Board).
Immediately upon the action of the Board ordering
redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to
receive the $.005 redemption price.
Until a Right is exercised, the holder thereof,
as such, will have no rights as a stockholder of the
Company, including, without limitation, the right to vote
or to receive dividends. While the distribution of the
Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of the
acquiring company as set forth above.
Any of the provisions of the Rights Agreement
may be amended by the Board prior to the Distribution
Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board in order to
cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights, or
to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to
lengthen a time period relating to when the Rights may be
redeemed may be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement is being filed
with the Securities and Exchange Commission as an Exhibit
to a Current Report on Form 8-K. A copy of the Rights
Agreement is available free of charge from the Company.
This summary description of the Rights does not purport
to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated
herein by reference.
