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
TAYLOR DEVICES, INC.
(Exact name of registrant as specified in its charter)
New York 16-0797789
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
90 Taylor Drive, PO Box 748 North Tonawanda, NY 14120-0748
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Preferred Stock Purchase Rights NASDAQ
If this form relates to the registration of a class of
securities pursuant to Section 12(b) of the Exchange Act and is
effective pursuant to General Instruction A.(c), check the
following box: [ ]
If this form relates to the registration of a class of
securities pursuant to Section 12(g) of the Exchange Act and is
effective pursuant to General Instruction A.(d), check the
following box: [X]
Securities Act registration statement file number of which this
form relates:
________________ (if applicable)
Securities to be registered pursuant to Section 12(g) of the Act:
none
---------------------------
(title of class)
Item 1. Description of Registrant's Securities to be Registered.
On October 5, 1998, the Board of Directors of TAYLOR
DEVICES, INC. (the "Company") declared a dividend of one Right
for each outstanding share of the Company's Common Stock, par
value $.025 per share (the "Common Stock"), to shareholders of
record at the close of business on October 19, 1998 (the "Record
Date"). Each Right entitles the registered holder to purchase
from the Company a unit consisting of one two-thousandths
(1/2000) of a share of Series A Junior Participating Preferred
Stock, par value $.05 per share (the "Series A Preferred Stock"),
at a Purchase Price of $5.00 per unit of one two-thousandths of a
share, subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and Regan & Associates, Inc., as
Rights Agent. The Company currently acts as its own Transfer
Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. A Distribution
Date will occur and the Rights will separate from the Common
Stock upon the earliest of (i) 10 days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 30% or more of the
shares of Common Stock then outstanding (the "Stock Acquisition
Date"), (ii) 10 business days following the commencement of a
tender offer or exchange offer that would result in a person or
group beneficially owning 24% or more of such outstanding shares
of Common Stock (unless such tender offer or exchange offer is an
offer for all outstanding shares of Common Stock which a majority
of the unaffiliated Directors who are not officers of the Company
determine to be fair to and otherwise in the best interests of
the Company and its shareholders) and (iii) the date the Board of
Directors declares a person to be an "Adverse Person", upon a
determination by the Board that such Person, together with his
affiliates or associates, is or has become the beneficial owner
of 24% or more of the shares of Common Stock outstanding, and
upon a determination by at least a majority of the Continuing
Directors (as defined below) who are not officers of the Company,
after reasonable inquiry and investigation, that (a) such
beneficial ownership by such person is intended to cause the
Company to repurchase the Common Stock beneficially owned by such
person or to cause pressure on the Company to take action or
enter into a transaction or series of transactions intended to
provide such person with short-term financial gain under
circumstances where such Continuing Directors determine that the
best long-term interests of the Company and its shareholders
would not be served by taking such action or entering into such
transactions or series of transactions at that time, or (b) such
beneficial ownership is causing or reasonably likely to cause a
material adverse impact (including, but not limited to,
impairment of relationships with customers, impairment of the
Company's ability to maintain its competitive position or
impairment of the Company's business reputation or ability to
deal with governmental agencies) on the business or prospects of
the Company.
Under the Rights Agreement, for purposes of calculating
percentages of Common Stock outstanding, shares of Common Stock
outstanding shall include all shares of Common Stock deemed to be
beneficially owned by a Person and its affiliates and associates,
even if not actually then outstanding.
Under the Rights Agreement, Tayco Developments, Inc.
("Tayco") shall not be deemed to be either an Acquiring Person or
an Adverse Person solely as a result of its ownership of shares
of Common Stock.
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 October 19, 1998
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. The Rights are not exercisable
until the Distribution Date and will expire at the close of
business on October 5, 2008, unless earlier redeemed 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 (i) with respect to certain shares of Common
Stock issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise,
conversion or exchange of certain securities of the Company, or
(ii) as otherwise determined by the Board of Directors, only
shares of Common Stock issued prior to the Distribution Date will
be issued with Rights.
In the event that (i) a person becomes the beneficial owner
of 30% or more of the then outstanding shares of Common Stock
(except pursuant to an offer for all outstanding shares of Common
Stock which a majority of the Directors who are not officers of
the Company and who are not affiliates or associates of such
person determine to be fair to and otherwise in the best
interests of the Company and its shareholders) or (ii) the Board
of Directors declares that a person is an Adverse Person (each
such event, a "Flip-in Event"), each holder of a Right will
thereafter have the right to receive, upon payment of the
Purchase Price, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value
(based on a formula set forth in the Rights Agreement) equal to
two times the Purchase Price of the Right. Notwithstanding any of
the foregoing, following the occurrence of the Flip-in Event, all
Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by an Acquiring Person
or an Adverse Person (or by certain related parties) will be null
and void. However, Rights are not exercisable following the
occurrence of the Flip-in Event until such time as the Rights are
no longer redeemable by the Company as set forth below.
For example, at a Purchase Price of $5.00 per Right, each
Right not owned by an Acquiring Person or an Adverse Person (or
by certain related parties) following a Flip-in Event would
entitle its holder to purchase $10.00 worth of Common Stock (or
other consideration, as noted above) determined pursuant to a
formula set forth in the Rights Agreement, for $5.00. Assuming
that the Common Stock had a per share value of $5.00 at such time
(as determined pursuant to such formula), the holder of each
valid Right would be entitled to purchase two shares of Common
Stock for $5.00.
In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation or in which it is the surviving
corporation but its Common Stock is changed or exchanged (other
than a merger meeting certain conditions which follows an offer
for all outstanding shares of Common Stock which a majority of
the unaffiliated Directors who are not officers of the Company
determine to be fair to and otherwise in the best interests of
the Company and its shareholders), or (ii) 50% or more of the
Company's assets, earning power or cash flow is sold or
transferred ("Flip-over Event"), each holder of a Right (except
Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon payment of the
Purchase Price, common stock of the acquiring company having a
value equal to two times the exercise price of the Right. The
Flip-over Events set forth in this paragraph and the Flip-in
Event described in the second preceding paragraph are referred to
as the "Triggering Events"; provided, however, that a Triggering
Event shall not include the ownership by Tayco of shares of
Common Stock.
The Purchase Price payable, and the number of units of one
two-thousandths of a share of Series A Preferred Stock or other
securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) if
holders of the Series A Preferred Stock are granted certain
rights or warrants to subscribe for Series A Preferred Stock or
convertible securities at less than the current market price of
the Series A Preferred Stock, or (iii) upon the distribution to
holders of the Series A Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least
1% of the Purchase Price. No fractional shares of Series A
Preferred Stock (other than fractions of one two-thousandths of a
share, or integral multiples thereof) will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market
price of the Series A Preferred Stock on the last trading date
prior to the date of exercise.
The term "Continuing Director" means any member of the Board
of Directors of the Company who was a member of the Board prior
to the date of the Rights Agreement, and any person who is
subsequently elected to the Board if such person is recommended
or approved by a majority of the Continuing Directors, but shall
not include an Acquiring Person, an Adverse Person or an
affiliate or associate of any such person, or any representative
of any of the foregoing.
At any time until 10 days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (payable in cash, Common
Stock or other consideration deemed appropriate by the Board of
Directors). Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence
of a majority of the Continuing Directors who are not officers of
the Company. Immediately upon the action of the Board of
Directors ordering redemption of the Rights, with, where
required, the concurrence of such Continuing Directors, the
Rights will terminate and the only right of the holders of Rights
will be to receive the $0.01 redemption price.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder 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
shareholders or to the Company, shareholders 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, or are redeemed as provided
in the preceding paragraph.
Other than certain provisions relating to the principal
economic terms of the Rights, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company
prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board
(in certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights (other
than an Acquiring Person, an Adverse Person or an affiliate or
associate thereof), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment
to adjust the time period governing redemption shall be made at
such time as the Rights are not redeemable.
The Rights have certain anti-takeover effects. Exercise of
the Rights will cause substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by the
Company's Board of Directors. The existence of Rights, however,
should not affect an offer at a fair price and otherwise in the
best interests of the Company and its shareholders as determined
by the Board of Directors. The Rights should not interfere with
any merger or other business combination approved by the Board of
Directors since the Board of Directors may, at its option, at any
time until 10 days following the Stock Acquisition Date redeem
all but not less than all of the then outstanding Rights at the
$0.01 redemption price.
The Rights Agreement between the Company and the Rights
Agent specifying the terms of the Rights, which includes as
Exhibit B the Form of Rights Certificate, the press release
announcing the declaration of the Rights and a letter to the
holders of the Company's Common Stock (together with a summary of
the Rights attached thereto) are attached hereto as exhibits and
are incorporated herein by reference. The foregoing description
of the Rights does not purport to be complete and is qualified in
its entirety by reference to such exhibits.
Item 2. Exhibits
4 Rights Agreement, dated as of October 5, 1998, between
Taylor Devices, Inc. and Regan & Associates, Inc., as
Rights Agent
20 Letter to the holders of Taylor Devices, Inc. Common
Stock, dated October 5, 1998 (including Summary of
Rights)
99 Press Release, dated October 5, 1998
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, thereto duly authorized.
Date: October 5, 1998
TAYLOR DEVICES, INC.
By: /s/ Douglas P. Taylor
Name: Douglas P. Taylor
Title: President
<PAGE>
Exhibit 4
TAYLOR DEVICES, INC.
AND
REGAN & ASSOCIATES, INC.
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF OCTOBER 5, 1998
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 5, 1998 (the
"Agreement"), between Taylor Devices, Inc., a New York
corporation (the "Company"), and Regan & Associates, Inc., a
Delaware corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on October 5, 1998 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for
each share of common stock, par value $0.025 per share, of the
Company (the "Common Stock") outstanding at the close of business
on October 19, 1998 (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(k) 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 earlier of the Distribution Date or the
Expiration Date, each whole Right initially representing the
right to purchase one two thousandths (1/2000) 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 of the
Company attached hereto as Exhibit A, upon the terms and subject
to the conditions hereinafter set forth (the "Rights").
TERMS OF AGREEMENT
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 30% 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, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any
such plan, (iv) Tayco Developments, Inc., or (v) any Person who
becomes an Acquiring Person solely as a result of a reduction in
the number of shares of Common Stock outstanding due to the
repurchase of shares of Common Stock by the Company, unless and
until such Person shall purchase or otherwise become (as a result
of actions taken by such Person or its Affiliates or Associates)
the Beneficial Owner of additional shares of Common Stock.
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would
otherwise be an Acquiring Person, as defined pursuant to the
foregoing provisions of this paragraph, has become such
inadvertently (including, without limitation, because (i) such
Person was unaware that it beneficially owned a percentage of
Common Stock that would otherwise cause such Person to be an
Acquiring Person, or (ii) such Person was aware of the extent of
its Beneficial Ownership of Common Stock but had no actual
knowledge of the consequences of such Beneficial Ownership under
this Agreement) and without any intention of changing or
influencing control of the Company, and such Person divests as
promptly as practicable a sufficient number of shares of Common
Stock so that such Person would no longer be an Acquiring Person
as defined pursuant to the foregoing provisions of this
paragraph, then such Person shall not be deemed to be or to have
become an Acquiring Person for any purposes of this Agreement.
For purposes of the foregoing and all other provisions of
this Agreement, in computing the percentage of the shares of
Common Stock outstanding at any time which are beneficially owned
by a Person and its Affiliates and Associates, the shares of
Common Stock then outstanding shall be deemed to include all
shares of Common Stock beneficially owned by such Person and its
Affiliates and Associates but not actually then outstanding,
including the shares of Common Stock, if any, then issuable to
such Person and its Affiliates and Associates upon the exercise
of conversion rights, exchange rights, rights, warrants or
options.
(b) "Adverse Person" shall mean any Person declared to
be an Adverse Person by the Board of Directors of the Company,
upon a determination by the Continuing Directors who are not
officers of the Company that the criteria set forth in Section
11(a)(ii)(B) apply to such Person.
(c) "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 (the "Exchange Act").
(d) 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(e) 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 or Schedule 13G under the Exchange Act (or
any comparable or successor reports); 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 (d)) or disposing of any voting securities of the
Company; provided, however, that nothing in this paragraph (d)
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.
(e) "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.
(f) "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.
(g) "Common Stock" shall mean the common stock, par
value $0.025 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.
(h) "Continuing Director" shall mean (i) any member of
the Board of Directors of the Company, while such individual is a
member of such Board, who is not an Acquiring Person or Adverse
Person, or an Affiliate or Associate of an Acquiring Person or
Adverse Person, or a representative of an Acquiring Person,
Adverse Person or any such Affiliate or Associate, and was a
member of such Board prior to the date of this Agreement, or (ii)
any individual who subsequently becomes a member of the Board of
Directors of the Company, while such individual is a member of
such Board, who is not an Acquiring Person or an Adverse Person,
or an Affiliate or Associate of an Acquiring Person or Adverse
Person, or a representative of an Acquiring Person or Adverse
Person or any such Affiliate or Associate, if such individual's
nomination for election or election to such Board is recommended
or approved by a majority of the Continuing Directors.
(i) "Person" shall mean any individual, firm,
corporation, partnership, trust, limited partnership, limited
liability corporation, or other entity.
(j) "Preferred Stock" shall mean shares of Series A
Junior Participating Preferred Stock, par value $.05 per share,
of the Company.
(k) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii)(A) or (B) 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) or Section 13(g) under the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has
become such.
(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) "Transfer Agent" shall mean the Company in its
capacity as transfer agent, or any designated transfer agent or
successor transfer agent registered in accordance with Section
17A(c)(2) of the Exchange Act.
(p) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event; provided, however, that
a "Triggering Event" shall not include the ownership by Tayco
Developments of the Company's Common Stock.
Section 2. APPOINTMENT OF RIGHTS AGENT OR SUCCESSOR
TRANSFER AGENT.
The Company hereby appoints the Rights Agent to act as agent
for the Company in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it
may deem necessary or desirable. The Rights Agent is not be
authorized to and shall not perform duties required of the
Transfer Agent, including, but not limited to, countersigning
securities upon issuance, monitoring issuance of securities with
a view to preventing unauthorized issuance, registering the
transfer of securities, exchanging or converting securities, or
transferring record ownership of securities by bookkeeping entry
without physical issuance of securities certificates. In all
instances, whether or not expressly stated in this Agreement,
such duties shall be performed by the Transfer Agent.
Section 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the earliest of (i) the close of business on
the 10th day after the Stock Acquisition Date (or, if the 10th
day after the Stock Acquisition Date occurs before the Record
Date, the close of business on the Record Date), (ii) the close
of business on the 10th Business Day (or such later date as the
Board of Directors of the Company 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 be the Beneficial Owner
of 24% or more of the shares of Common Stock then outstanding and
(iii) the close of business on the day that the Board of
Directors of the Company determines, upon determination of the
Continuing Directors, pursuant to the criteria set forth in
Section 11(a)(ii)(B) hereof that a Person is an Adverse Person
(the earliest of (i), (ii) and (iii) 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 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, or redemption by, the Company).
As soon as practicable after the Distribution Date, the Rights
Agent will send by first-class, 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(k) hereof, at
the time of distribution of the Right 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) As promptly as practicable following the Record
Date, the Company will send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit C (the "Summary
of Rights") to each record holder of the Common Stock as of the
close of business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to
certificates for the Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced
by such certificates 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) Unless otherwise specifically decided by a
majority of the Company's Board of Directors, 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 Taylor
Devices, Inc. (the "Company") and Regan &
Associates, Inc., dated as of October 5, 1998
(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 the Company. Under
certain circumstances, as set forth in the
Rights Agreement, such Rights will be
evidenced by separate certificates and will
no longer be evidenced by this certificate.
The Company will mail to the holder of this
certificate a copy of the Rights Agreement,
as in effect on the date of mailing, without
charge promptly after receipt of a written
request 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, an Adverse
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, and with respect to certificates for shares of Common
Stock which were issued and outstanding on the Record Date, until
the earlier of (i) the Distribution Date or (ii) the Expiration
Date or redemption 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 two-thousandths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such
exercise price per one two-thousandths of a share is referred to
as 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, an Adverse Person or any
Associate or Affiliate of an Acquiring Person or Adverse Person,
(ii) a transferee of an Acquiring Person or an Adverse Person (or
of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person or Adverse Person becomes such, or
(iii) a transferee of an Acquiring Person or an Adverse Person
(or of any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person or Adverse
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person or Adverse Person to holders of equity interests
in such Acquiring Person or Adverse Person or to any Person with
whom such Acquiring Person or Adverse Person has any continuing
agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Continuing Directors of the
Company have 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, Section 11 or Section 22 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][Adverse Person] or an Affiliate or
Associate of an [Acquiring Person][Adverse
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 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 manually countersigned by the Transfer
Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such
officer of the Company before countersignature by the Transfer
Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Transfer
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 Transfer
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
two-thousandths 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 Transfer Agent, or 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 Transfer Agent designated for such
purpose. Neither the Transfer 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 Transfer 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 Transfer 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 Transfer Agent of all reasonable expenses incidental
thereto, and upon surrender to the Transfer Agent and
cancellation of the Rights Certificate if mutilated, the Company
will execute and deliver a new Rights Certificate of like tenor
to the Transfer 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 Transfer Agent at the principal office or
offices of the Transfer Agent designated for such purpose,
together with payment of the aggregate Purchase Price with
respect to the total number of one two-thousandths of a share of
Preferred Stock (or other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then
exercisable, and an amount equal to any applicable transfer tax,
at or prior to the earlier of (i) the close of business on
October 5, 2008 (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 two-thousandths of
a share of Preferred Stock pursuant to the exercise of a Right
shall initially be $5.00, 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
two-thousandths 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 Transfer 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 Transfer Agent is the transfer agent for such
shares) certificates for the total number of one two-thousandths
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 two-thousandths 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 check
or official bank check payable to the order of the Company. In
the event that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash or distribute
other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities,
cash and other property is available for distribution by the
Transfer 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 Transfer
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 Adverse Person or an Associate or
Affiliate of an Acquiring Person or an Adverse Person, (ii) a
transferee of an Acquiring Person or an Adverse Person (or of any
such Associate or Affiliate) who becomes a transferee after the
Acquiring Person or an Adverse Person becomes such, or (iii) a
transferee of an Acquiring Person or an Adverse Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person or an Adverse Person
becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring
Person or an Adverse Person to holders of equity interests in
such Acquiring Person or an Adverse Person or to any Person with
whom the Acquiring Person or an Adverse Person has any continuing
agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Continuing Directors of the
Company have 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 an Adverse
Person or any of its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, not any of the Rights Agent, the Transfer Agent or 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 Transfer Agent for cancellation or in cancelled form, or, if
surrendered to the Transfer 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 Transfer Agent for cancellation
and retirement, and the Transfer Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Transfer
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 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 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) If and 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 will take all such action as may be
necessary to ensure that all one two-thousandths of a share of
Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and 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 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
two-thousandths of a share of Preferred Stock (or Common Stock
and 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 two-thousandths of a
share of Preferred Stock (or Common Stock and 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 two-thousandths of a share of Preferred Stock
(or Common Stock and 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 two-thousandths of
a share of Preferred Stock (or Common Stock and 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
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 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
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 shareholder 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) [RESERVED]
(ii) In the event:
(A) 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 or Tayco
Developments, Inc. [but only to the extent of
their Beneficial Ownership of any shares of Common
Stock which were issued and outstanding on the
Record Date]), alone or together with its
Affiliates and Associates, shall, at any time
after the Rights Dividend Declaration Date, become
the Beneficial Owner of 30% or more of the shares
of Common Stock then outstanding, unless the event
causing the 30% threshold to be crossed 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 Continuing Directors of the
Company and who are not representatives, nominees,
Affiliates or Associates of the Person making such
tender or exchange offer, to be (a) at a price
which is fair to shareholders (taking into account
all factors which Continuing Directors of the
Company 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 shareholders, or
(B) the Board of Directors of the Company
shall declare any Person to be an Adverse Person,
upon a determination that such Person, alone or
together with its Affiliates and Associates, had,
at any time after this Agreement has been filed
with the Securities and Exchange Commission as an
exhibit to a filing under the Exchange Act, become
the Beneficial Owner of at least 24% of the shares
of Common Stock then outstanding, and a
determination by at least a majority of the
Continuing Directors who are not officers of the
Company, after reasonable inquiry and
investigation, including consultation which such
Persons as such Continuing Directors shall deem
appropriate, that (a) such Beneficial Ownership by
such Person is intended to cause the Company to
repurchase the Common Stock beneficially owned by
such Person or to cause pressure on the Company to
take action or enter into a transaction or series
of transactions intended to provide such Person
with short-term financial gain under circumstances
where such Continuing Directors determine that the
best long-term interests of the Company and its
shareholders would not be served by taking such
action or entering into such transactions or
series of transactions at that time or (b) such
Beneficial Ownership is causing or reasonably
likely to cause a material adverse impact on the
business or prospects of the Company (including,
but not limited to, impairment of relationships
with customers, impairment of the Company's
ability to maintain its competitive position or
impairment of the Company's business reputation or
ability to deal with governmental agencies) to the
detriment of the Company's shareholders,
then, promptly following the occurrence of any such event
described in Section (11(a)(ii)(A) or (B) hereof, 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 two-thousandths 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 two-thousandths
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 is 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 of
Directors of the Company 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); 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 of Directors of the Company 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 period, as 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) (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 Business 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 Business 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) Business Day or ten
(10) Business 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 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 ("NASDAQ")
or such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock
selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common Stock, the
fair value of such shares on such date as determined in good
faith by the Board of Directors of the Company shall be used. 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 of Directors of
the Company, whose determination shall be described in a
statement filed with the Rights Agent and the Transfer 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(b) (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(b),
the Current Market Price per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 2,000 (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 of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent and the Transfer Agent, and shall be
conclusive for all purposes.
(c) 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(c) 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(c), 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.
(d) 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 two-thousandths 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.
(e) 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 two-thousandths 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
two-thousandths 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-thousandths) 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) calendar 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(e), 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.
(f) Irrespective of any adjustment or change in the
Purchase Price or the number of one two-thousandths 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 two-thousandths of
a share and the number of one two-thousandths of a share which
were expressed in the initial Rights Certificates issued
hereunder.
(g) 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 two-thousandths 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
two-thousandths of a share of Preferred Stock at such adjusted
Purchase Price.
(h) 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 two-thousandths 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 two-thousandths 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.
(i) The Company will not, at any time after the
Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies
with Section 11(j) hereof), (ii) merge with or into any other
Person [other than a Subsidiary of the Company in a transaction
which complies with Section 11(i) hereof], or (iii) sell or
transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets, cash
flow or earning power aggregating more than 50% of the assets,
cash flow 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(j) 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.
(j) After the Distribution Date, the Company 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.
(k) 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 then outstanding, or
issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of
Rights outstanding following any such event shall equal the
result obtained by multiplying the number of Rights outstanding
immediately prior to such event by a fraction the denominator of
which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and
the numerator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of
such event.
(l) The failure by the Board of Directors of the
Company to declare a Person to be an Adverse Person following
such Person becoming the Beneficial Owner of 24% or more of the
outstanding Common Stock shall not imply that such Person is not
an Adverse Person or limit the right at any time in the future of
the Board of Directors of the Company to declare such Person to
be an Adverse Person.
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, (b) promptly file
with the Transfer Agent, a copy of such certificate, and (c) mail
a brief summary thereof to each holder of a Rights Certificate
(or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance
with Section 25 hereof. The Transfer 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, CASH FLOW 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(j) 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(j) 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, cash flow 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(j) 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 two-thousandths 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 two-thousandths 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(b) 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; and (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 Right.
(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,
cash flow 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, cash flow or earnings
power 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) 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
complies with the provisions of 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(k) 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 NASDAQ or, if the Rights are not listed or admitted to
trading on NASDAQ, 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 two-thousandths 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
two-thousandths of a share of Preferred Stock). In lieu of
fractional shares of Preferred Stock that are not integral
multiples of one two-thousandths 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 two-thousandths of a share of
Preferred Stock. For purposes of this Section 14(b), the current
market value of one two-thousandths of a share of Preferred Stock
shall be one two-thousandths of the closing price of a share of
Preferred Stock (as determined pursuant to Section 11(b)(ii)
hereof) for the Business 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 and the Transfer 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, the Rights Agent and the Transfer 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
Transfer Agent if surrendered at the principal office or offices
of the Rights Agent or the Transfer 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 Transfer 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 Transfer Agent) for
all purposes whatsoever, and neither the Company nor the Transfer
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, not any of the Company, or the Rights Agent, or the
Transfer 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
SHAREHOLDER.
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 two-thousandths 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 shareholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
shareholders (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 AND TRANSFER
AGENT.
(a) The Company agrees to pay to the Rights Agent (and
Transfer Agent, if other than the Company) reasonable
compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, or the Transfer
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 (or the Transfer Agent, if other than the Company)
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 or the Transfer Agent,
for anything done or omitted by the Rights Agent or the Transfer
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 (and Transfer Agent, if other
than the Company) 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 OR SUBSTITUTION OF TRANSFER
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, such entity 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. In the event that the Company designates another entity
to serve as Transfer Agent, such corporation shall be eligible
for appointment as a successor Transfer Agent under the
provisions of Section 21 hereof. In case at the time such
successor Transfer 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 Transfer
Agent may adopt the countersignature of a predecessor Transfer
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 Transfer Agent may
countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Transfer 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 Transfer Agent
shall be changed and at such time any of the Rights Certificates
shall have been countersigned but not delivered, the Transfer
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 Transfer 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 AND TRANSFER AGENT.
The Rights Agent and Transfer Agent undertake 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 and the Transfer 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 and
Transfer 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 either or both of the Rights Agent or Transfer
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 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 the Transfer Agent; and such certificate shall be full
authorization to the Rights Agent or Transfer 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 and Transfer Agent each shall be
liable hereunder only for its own negligence, bad faith or
willful misconduct.
(d) Neither the Rights Agent nor the Transfer Agent
shall 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 or Transfer 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
countersignature thereof by the Transfer Agent); nor shall they
be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights
Certificate; nor shall they 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 they 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 or the Transfer Agent for the carrying out or
performing by the Rights Agent or Transfer Agent of the
provisions of this Agreement.
(g) The Rights Agent and Transfer Agent are each
hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from 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, or Transfer Agent, and any
shareholder, director, officer or employee of the Rights Agent,
or such Transfer 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 or Transfer Agent under this Agreement. Nothing herein
shall preclude the Rights Agent or Transfer Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent and Transfer Agent each 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 and the Transfer
Agent each 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 or Transfer 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 Transfer 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 Transfer 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 OR TRANSFER AGENT.
The Rights Agent, or any successor Rights Agent, or any successor
Transfer 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, or any successor Transfer Agent, upon thirty (30) days'
notice in writing, mailed to the Rights Agent, or successor
Rights Agent, or successor Transfer 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 or
the Transfer Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor
to the Rights Agent or Transfer 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 Transfer 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 or Transfer Agent. In the case of the Transfer
Agent, any successor, whether appointed by the Company or by such
a court, shall be a corporation organized and doing business
under the laws of the United States or of the State of New York
or of any other state 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. After appointment, the successor Transfer Agent
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Transfer
Agent without further act or deed; but the predecessor Transfer
Agent shall deliver and transfer to the successor Transfer 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 Transfer 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
Transfer Agent or the appointment of the successor Transfer
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 the Board of Directors of the Company 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 issued by the Company prior
to the Distribution Date, 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) to the
extent that any adjustments in the Company's securities have been
made as a result of the issuance of Rights Certificates
(including, without limitation, adjustments to conversion ratios
or other adjustments resulting from the operation of
anti-dilution provisions in convertible securities, stock options
or similar securities), the number of Rights, or fractions
thereof, issuable shall equal, and not exceed, the number
necessary to enable the holder to receive, upon such conversion,
exchange or exercise of such security and after exercise of such
Rights, the number of shares of Common Stock such holder would
have received if it had converted, exchanged or exercised such
security immediately prior to the Distribution Date and had
subsequently exercised the Rights issuable in respect of such
shares.
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 10th 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 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 $0.01 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");
provided, however, if the Board of Directors of the Company
authorizes redemption of the Rights in either of the
circumstances set forth in clauses (x) and (y) below, then there
must be Continuing Directors then in office and such
authorization shall require the concurrence of a majority of such
Continuing Directors: (x) such authorization occurs on or after
the time a Person becomes an Acquiring Person, or (y) such
authorization occurs on or after the date of a change (resulting
from a proxy or consent solicitation) in a majority of the
directors in office at the commencement of such solicitation if
any Person who is a participant in such solicitation has stated
(or, if upon the commencement of such solicitation, a majority of
the Board of Directors of the Company has determined in good
faith) that such Person (or any of its Affiliates or Associates)
intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which would
cause the occurrence of a Triggering Event unless, concurrent
with such solicitation, such Person (or one or more of its
Affiliates or Associates) is making a cash tender offer pursuant
to a Schedule 14D-1 (or any successor form) filed with the
Securities and Exchange Commission for all outstanding shares of
Common Stock not beneficially owned by such Person (or by its
Affiliates or Associates). Notwithstanding the foregoing, the
Board of Directors of the Company may not redeem any Rights
following a determination made pursuant to section 11(a)(ii)(B)
that any person is an Adverse Person. 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(b)(i) hereof, of
the Common Stock at the time of redemption] or any other form of
consideration deemed appropriate by the Board of Directors of the
Company.
(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
the Transfer 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 of the Company
ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the Transfer
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 Transfer 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(j) 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, cash flow or
earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons [other than the Company or
any of its Subsidiaries in one or more transactions each of which
complies with Section 11(j) 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 event set forth in Section 11(a)(ii)
hereof shall occur, then, in 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, if appropriate,
other securities.
Section 25. NOTICES. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent, the
Transfer 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 or the Transfer
Agent) as follows:
The Company: Taylor Devices, Inc.
90 Taylor Drive
North Tonawanda, New York 14120
Attention: President
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 or the Transfer 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 Rights Agent: Regan & Associates, Inc.
15 Park Row
New York, New York 10038
The Transfer Agent: Taylor Devices, Inc.
100 Taylor Drive
North Tonawanda, New York 14120
Attention: Shareholder Relations Manager
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent, or the Transfer 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 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 any term, definition or
other provision of this Agreement without the approval of any
holders of certificates representing shares of Common Stock;
provided, however, that no such supplement or amendment shall
diminish any rights granted to holders of Common Stock in the
Company's Certificate of Incorporation; and provided, further
that any supplement or amendment of this Agreement after the
Stock Acquisition Date must be approved by a majority of the
Continuing Directors. From and after the Distribution Date and
subject to the penultimate sentence of this Section 26, the
Company and the Transfer Agent or Rights Agent, as appropriate,
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 Adverse Person
or an Affiliate or Associate of such Acquiring Person or Adverse
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 or Transfer
Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the
Redemption Price, the Final Expiration Date, the Purchase Price
or the number of one two-thousandths of a share of Preferred
Stock for which a Right is exercisable; provided, however, that
any time prior to (i) the existence of an Acquiring Person or
(ii) 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 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 be
the Beneficial Owner of 24% or more of the shares of Common Stock
then outstanding, the Board may amend this Agreement to increase
the Purchase Price or extend the Final Expiration Date. 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 or the Transfer 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 (with, where specifically provided for
herein, the concurrence of the Continuing Directors) shall have
the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to
such Board (with, where specifically provided for herein, the
concurrence of the Continuing Directors) or to the Company, or as
may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(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). 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 of
Directors of the Company (with, where specifically provided for
herein, the concurrence of the Continuing Directors) in good
faith, shall (x) be final, conclusive and binding on the Company,
the Rights Agent, the Transfer Agent, the holders of the Rights
and all other parties, and (y) not subject the Board of Directors
of the Company or the Continuing 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, the Transfer 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, the Transfer 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 day following the date of such
determination by the Board of Directors of the Company.
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 New York 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. It is not necessary that all
parties sign all or any one of the counterparts, but each party
must sign at least one counterpart for this agreement to be
effective.
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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
Attest: TAYLOR DEVICES, INC.
By: By:
Name: Douglas P. Taylor
Title: President and
Chief Executive Officer
Attest: REGAN & ASSOCIATES, INC.
By: By:
Name: Artie Regan
Title: President
Exhibit A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
TAYLOR DEVICES, INC.
under Section 805 of the Business Corporation Law
FIRST: The name of the corporation is TAYLOR DEVICES,
INC. (the "Corporation").
SECOND: The Certificate of Incorporation of the
Corporation was filed by the Department of State on July 22,
1955.
THIRD: The Certificate of Incorporation is hereby amended
by addition of a provision stating the number, designation,
relative rights, preferences and limitations of Preferred Shares
of a series of the par value $.05 each, as fixed by the Board of
Directors before the issuance of such series, under authority
contained in the Certificate of Incorporation.
Five thousand (5,000) authorized Preferred Shares of
the par value of $.05 each, none of which has been issued, shall
be issued in and as a series to be designated, "Series A Junior
Participating Preferred Stock." The term Preferred Shares, as
used herein shall include all 2,000,000 of the Preferred Shares,
$.05 par value, authorized by the Certificate of Incorporation of
the Corporation, of which "Series A Junior Participating
Preferred Stock" is the first series.
The designation, relative rights, preferences, and
limitations of all shares of Series A Junior Participating
Preferred Stock, insofar as not already fixed by the Certificate
of Incorporation, shall, as fixed by the Corporation's Board of
Directors in the exercise of authority conferred by the
Certificate of Incorporation, and as permitted by Section 502 of
the Business Corporation Law, be, as follows:
Section 1. NUMBER AND DESIGNATION. There is hereby
authorized for issuance as a series of the Corporation's
Preferred Shares, par value $.05 per share, five thousand
(5,000) shares to be designated as "Series A Junior
Participating Preferred Stock" (hereinafter, "Series A
Preferred Stock").
Section 2. DIVIDENDS, DISTRIBUTIONS.
(a) Subject to the prior and superior rights of
the holders of shares of any other class of capital stock
not by its terms ranking on a parity with, or junior to, the
Series A Preferred Stock with respect to dividends, the
holders of Series A Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out
of the assets of the Corporation legally available therefor,
quarterly dividends payable in cash in an amount per whole
share of Series A Preferred Stock equal to the greater of
(1) 25% of the Purchase Price (the "Purchase Price"), as
adjusted, per unit of one two-thousandths (1/2000) of a
share of Series A Preferred Stock, as set forth in the
Rights Agreement (the "Rights Agreement") between the
Corporation and Regan & Associates, Inc., as Rights Agent,
dated as of October 5, 1998 (so that, for example, if the
Purchase Price, as adjusted, were $5.00, the quarterly
dividend amount per whole share of Series A Preferred Stock
would be $1.25, which would equal a quarterly dividend of
$0.000625 per unit of one two-thousandths (1/2000) of a
share of Series A Preferred Stock), and (2) dividends
payable in cash on the payment date for each cash dividend
(if any) declared on the Corporation's Common Stock in an
amount per whole share (rounded to the nearest cent) equal
to the Formula Number then in effect times the cash
dividends then to be paid on each outstanding share of
Common Stock, payable on the date declared by the Board of
Directors for the payment of quarterly dividends on each of
the outstanding shares of Common Stock, but in no event
later than the 15th 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 a fraction of a share of Series A
Preferred Stock, since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of
any share or fraction of a share of Series A Preferred
Stock. In addition, if the Corporation shall pay any
dividend or make any distribution on its Common Stock
payable in assets, securities or other forms of noncash
consideration (other than dividends or distributions payable
solely in Common Stock), then, in each such case, the
Corporation shall simultaneously pay or make on each
outstanding share of Series A Preferred Stock, a dividend or
distribution in like kind, of the Formula Number then in
effect times such dividend or distribution on each of the
shares of Common Stock. As used herein, the "Formula Number"
shall be 2,000; provided, however, that if at any time after
October 5, 1998, the Corporation shall (i) declare or pay
any dividend on its Common Stock payable in Common Stock or
make any distribution on its Common Stock payable in Common
Stock, (ii) subdivide (by a stock split or otherwise) the
outstanding Common Stock into a larger number of shares of
Common Stock or (iii) combine (by a reverse stock split or
otherwise) the outstanding Common Stock into a smaller
number of shares of Common Stock, then in each such event
the Formula Number shall be adjusted to a number determined
by multiplying the Formula Number in effect immediately
prior to such event by a fraction, the numerator of which is
the number of shares of Common Stock that are outstanding
immediately after such event and the denominator of which is
the number of shares that are outstanding immediately prior
to such event (and rounding the result to the nearest whole
number); and provided further that if at any time after
October 5, 1998, the Corporation shall issue any shares of
its capital stock in a reclassification or change of the
outstanding Common Stock (including any such
reclassification or change in connection with a merger in
which the Corporation is the surviving corporation), then in
such event the Formula Number shall be appropriately
adjusted to reflect such reclassification or change.
(b) The Board of Directors shall declare a
dividend or distribution on the Series A Preferred Stock as
provided in Section 2(a) above immediately prior to or at
the same time it declares a dividend or distribution on the
Common Stock (other than a dividend or distribution payable
solely in Common Stock). The Board of Directors may fix a
record date for the determination of holders of Series A
Preferred Stock entitled to receive a dividend or
distribution declared thereon, which record date shall be
the same as the record date for any corresponding dividend
or distribution on the Common Stock.
(c) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Preferred Stock
from and after the Quarterly Dividend Payment Date next
preceding the date of original issue of such Series A
Preferred Stock; provided, however, that dividends on such
shares which are originally issued after the record date for
the determination of holders of Series A Preferred Stock
entitled to receive a quarterly dividend and on or prior to
the next succeeding Quarterly Dividend Payment Date shall
begin to accrue and be cumulative from and after such
Quarterly Dividend Payment Date. Notwithstanding the
foregoing, dividends on shares of Series A Preferred Stock
which are originally issued prior to the record date for the
first Quarterly Dividend Payment, shall be calculated as if
cumulative from and after the date (if any) declared by the
Board of Directors for the payment of the quarterly dividend
on the outstanding Common Stock, but in no event later than
the 15th day of March, June, September and December, as the
case may be, next preceding the date of original issuance of
such shares. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the Series A 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.
(d) So long as any shares of Series A Preferred
Stock are outstanding, no dividends or other distributions
shall be declared, paid or distributed, or set aside for
payment or distribution, on the Common Stock unless, in each
case, the dividend required by this Section 2 to be declared
on the shares of Series A Preferred Stock shall have been
declared and paid or distributed.
(e) The holders of shares of Series A Preferred
Stock shall not be entitled to receive any dividends or
other distributions, except as provided herein.
(f) Nothing in this Certificate of Incorporation
shall require the Corporation to pay any dividend on Common
Stock.
Section 3. VOTING RIGHTS. The holders of shares of
Series A Preferred Stock shall have the following voting rights:
(a) Each holder of a whole share of Series A
Preferred Stock shall be entitled to a number of votes equal
to the Formula Number then in effect for each share of
Series A Preferred Stock held of record on all matters on
which holders of the Common Stock or shareholders generally
are entitled to vote. Each holder of a fraction of a whole
share of Series A Preferred Stock shall be entitled to a
number of votes equal to the numerator of the fraction of a
whole share so owned (so that, for example, if the Formula
Number is 2000 and a person holds 5 units of one
two-thousandths of a share, that person would be entitled to
cast 5 votes).
(b) Except as otherwise provided herein or by
applicable law, the holders of shares of Series A Preferred
Stock and the holders of Common Stock and any other class or
series of voting stock shall vote together as one class for
the election of directors of the Corporation and on all
other matters submitted to a vote of shareholders of the
Corporation.
(c) Except as provided herein, in Section 10
below or by applicable law, holders of shares of Series A
Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock and
any other class or series of voting stock as set forth
herein) for authorizing or taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(a) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Preferred
Stock, as provided in Section 2 above, are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series
A Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
(1) declare or pay dividends on, make any
other distributions on, or redeem or purchase or otherwise
acquire for consideration any shares ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(2) declare or pay dividends on or make any
other distributions on any shares ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and
all such parity shares on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(3) redeem or purchase or otherwise acquire
for consideration any shares ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire any of such parity shares in exchange for any shares
of the Corporation ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(4) purchase or otherwise acquire for
consideration any Series A Preferred Stock, or any shares
ranking on a parity with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
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 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. LIQUIDATION RIGHTS. Upon the
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, no distribution shall be
made (a) to the holders of shares ranking junior (either as
to dividends or upon liquidation, dissolution, or winding
up) to the Series A Preferred Stock unless, prior thereto,
the holders of shares of Series A Preferred Stock shall have
received an amount equal to the accrued and unpaid dividends
and distributions thereon, whether or not declared, to the
date of such payment, plus an amount equal to the greater of
(1) 50% of the Purchase Price, as adjusted, per unit of one
two-thousandths of a share of Series A Preferred Stock set
forth in the Rights Agreement (so that if, for example, the
Purchase Price is $5.00, the liquidation amount would be
$2.50 per unit), or (2) an aggregate amount per share equal
to the Formula Number then in effect times the aggregate
amount to be distributed per share to holders of Common
Stock, or (b) to the holders of shares ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock
and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up.
Section 6. CONSOLIDATION, MERGER, ETC. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which its Common Stock
is exchanged for or changed into other stock or securities,
cash or any other property, then in any such case the then
outstanding shares of Series A Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per
share equal to the Formula Number then in effect times the
aggregate amount of stock, securities, cash or any other
property (payable in kind), as the case may be, into which
or for which each of the shares of Common Stock is exchanged
or changed.
Section 7. NO REDEMPTION; NO SINKING FUND.
(a) The shares of Series A Preferred Stock shall
not be subject to redemption by the Corporation or at the
option of any holder of Series A Preferred Stock; provided,
however, that the Corporation may purchase or otherwise
acquire outstanding shares of Series A Preferred Stock in
the open market or by offer to any holder or holders of
shares of Series A Preferred Stock.
(b) The Series A Preferred Stock shall not be
subject to or entitled to the operation of a retirement or
sinking fund.
Section 8. FRACTIONAL SHARES. The Series A
Preferred Stock shall be issuable upon exercise of the
Rights issued pursuant to the Rights Agreement in whole
shares or in any fraction of a share that is one
two-thousandths (1/2000th) of a share or any integral
multiple of such fraction. At the election of the
Corporation prior to the first issuance of a share or a
fraction of a share of Series A Preferred Stock, either (1)
certificates may be issued to evidence any such authorized
fraction of a share of Series A Preferred Stock, or (2) any
such authorized fraction of a share of Series A Preferred
Stock may be evidenced by depositary receipts pursuant to an
appropriate agreement between the Corporation and a
depositary selected by the Corporation provided that such
agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners
of shares of Series A Preferred Stock.
Section 9. REACQUIRED SHARES. Any shares of Series
A 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 Preferred Shares, without designation as to series
until such shares are once more designated as part of a
particular series by the Board of Directors pursuant to the
provisions of the Certificate of Incorporation.
Section 10. AMENDMENT. None of the relative rights,
preferences and limitations of the Series A Preferred Stock
as provided in Sections 1 through 9 above and in this
Section 10 or elsewhere in this Certificate of Incorporation
shall be amended in any manner which would alter or change
the relative rights, preferences and limitations of the
holders of shares of Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the
holders of at least 66-2/3% of the outstanding shares of
Series A Preferred Stock, voting as though such series were
a separate class.
FOURTH: This Amendment to the Certificate of Incorporation
of the Corporation was authorized by the Board of Directors of
the Corporation at a meeting duly called and held.
IN WITNESS WHEREOF, this Amendment to the Certificate of
Incorporation of the Corporation has been subscribed by the
undersigned this day of October, 1998.
Douglas P. Taylor, President and
Chief Executive Officer
Exhibit B
[Form of Rights Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER OCTOBER 5, 2008 OR EARLIER IF REDEEMED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING OR AN ADVERSE
PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING OR AN ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE
OF SUCH 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
TAYLOR DEVICES, 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 October 5, 1998 (the "Rights Agreement"),
between Taylor Devices, Inc., a New York corporation (the
"Company"), and Regan & Associates, Inc. (the "Rights Agent"), to
purchase from the Company at any time prior to 5:00 p.m. (New
York City time) on October 5, 2008 at the office or offices of
the Company, as Transfer Agent, or other transfer agent
designated for such purpose, one two-thousandths (1/2000) of a
fully paid, non-assessable share of Series A Junior Participating
Preferred Stock (the "Series A Preferred Stock") of the Company,
at a purchase price (the "Purchase Price") of $5.00 per unit of
one two-thousandths of a share, 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 of
Preferred Stock 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 October 19, 1998, based
on the Preferred Stock as constituted at such date. The Company
reserves the right to require 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 Series A 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, an Adverse Person or an Affiliate or Associate
of any such Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person,
Adverse 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, an
Adverse Person or an Affiliate or Associate of any such 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 Series A 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 office of the
Company and are also available upon written request to the
Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the shareholder services 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
two-thousandths of a share of Series A 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 $.01 per Right at
any time prior to the earlier of the close of business on (a) the
10th day following the Stock Acquisition Date (as such time
period may be extended pursuant to the Rights Agreement), and (b)
the Final Expiration Date. Under certain circumstances set forth
in the Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Continuing Directors (as such
term is defined in the Rights Agreement).
No fractional shares of Series A Preferred Stock will be
issued upon the exercise of any right or rights evidenced hereby
(other than fractions which are integral multiples of one
two-thousandths of a share of Series A 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 Series A 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 shareholder of the Company or any right to
vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (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
Transfer Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of ______________, _____
ATTEST: TAYLOR DEVICES, INC.
By: By:
Secretary Title: President
Countersigned:
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 transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ___________________ Attorney, to transfer the within
Rights Certificate on the books of the within-named Company, with
full power of substitution.
Dated: __________________________, _____
________________________________________
Signature
Signature Guaranteed:
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 Adverse Person or an Affiliate or
Associate of any such 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, an Adverse Person or an
Affiliate or Associate of such Person.
Dated: ___________________, _____
________________________________________
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: TAYLOR DEVICES, INC.
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to
purchase the shares of Series A 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: _________________, _____
____________________________________________
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, an Adverse Person or an Affiliate or
Associate of any such 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, an Adverse Person or an Affiliate or
Associate of such Person.
Dated: _________________, _____
__________________________________
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
SERIES A PREFERRED STOCK
On October 5, 1998, the Board of Directors of Taylor
Devices, Inc. (the "Company") declared (i) a dividend of one
Right for each outstanding share of the Company's Common Stock,
par value $.025 per share (the "Common Stock"), to shareholders
of record at the close of business on October 19, 1998 (the
"Record Date"). Each Right entitles the registered holder to
purchase from the Company a unit consisting of one
two-thousandths (1/2000) of a share of Series A Junior
Participating Preferred Stock, par value $.05 per share (the
"Series A Preferred Stock"), at a Purchase Price of $5.00 per
unit of one two-thousandths of a share, subject to adjustment.
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Regan
& Associates, Inc., as Rights Agent. The Company currently acts
as its own Transfer Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. A Distribution
Date will occur and the Rights will separate from the Common
Stock upon the earliest of (i) ten days following a public
announcement that a Person or group of affiliated or associated
Persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 30% or more of the
shares of Common Stock then outstanding (the "Stock Acquisition
Date"), (ii) 10 business days following the commencement of a
tender offer or exchange offer that would result in a Person or
group beneficially owning 24% or more of such outstanding shares
of Common Stock (unless such tender offer or exchange offer is an
offer for all outstanding shares of Common Stock which a majority
of the unaffiliated Directors who are not officers of the Company
determine to be fair to and otherwise in the best interests of
the Company and its shareholders) or (iii) the date the Board of
Directors declares a person to be an "Adverse Person", upon a
determination by the Board that such Person, together with his
affiliates or associates, is or has become the beneficial
owner of 24% or more of the shares of Common Stock outstanding,
and upon a determination by at least a majority of the Continuing
Directors (as defined below) who are not officers of the Company,
after reasonable inquiry and investigation, including
consultation with such persons as such Directors shall deem
appropriate, that (a) such beneficial ownership by such person is
intended to cause the Company to repurchase the Common Stock
beneficially owned by such person or to cause pressure on the
Company to take action or enter into a transaction or series of
transactions intended to provide such person with short-term
financial gain under circumstances where such Continuing
Directors determine that the best long-term interests of the
Company and its shareholders would not be served by taking such
action or entering into such transactions or series of
transactions at that time, or (b) such beneficial ownership is
causing or reasonably likely to cause a material adverse impact
(including, but not limited to, impairment of relationships with
customers, impairment of the Company's ability to maintain its
competitive position or impairment of the Company's business
reputation or ability to deal with governmental agencies) on
the business or prospects of the Company.
Under the Rights Agreement, Tayco Developments, Inc.
("Tayco") shall not be deemed to be either an Acquiring Person or
an Adverse Person solely as a result of their ownership of shares
of Common Stock.
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 October 19, 1998
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.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on October 5, 2008,
unless earlier redeemed 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 (i) with respect to certain shares of Common
Stock issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise,
conversion or exchange of certain securities of the Company, or
(ii) as otherwise determined by the Board of Directors, only
shares of Common Stock issued prior to the Distribution Date will
be issued with Rights.
In the event that (i) a Person becomes the beneficial owner
of 30% or more of the then outstanding shares of Common Stock
(except pursuant to an offer for all outstanding shares of Common
Stock which a majority of the Directors who are not officers of
the Company and who are not affiliates or associates of such
Person determine to be fair to and otherwise in the best
interests of the Company and its shareholders), or (ii) the Board
of Directors declares, upon the determination by at least a
majority of the Continuing Directors who are not officers of the
Company, that a person is an Adverse Person (each such event, a
"Flip-in Event"), each holder of a Right will thereafter have the
right to receive, upon payment of the Purchase Price, Common
Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value (based on a formula set
forth in the Rights Agreement) equal to two times the Purchase
Price of the Right. Notwithstanding any of the foregoing,
following the occurrence of the Flip-in Event, all Rights that
are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by an Acquiring Person or an
Adverse Person (or by certain related parties) will be null and
void. However, Rights are not exercisable following the
occurrence of the Flip-in Event until such time as the Rights are
no longer redeemable by the Company as set forth below.
For example, at a Purchase Price of $5.00 per Right, each
Right not owned by an Acquiring or an Adverse Person (or by
certain related parties) following a Flip-in Event would entitle
its holder to purchase $10.00 worth of Common Stock (or other
consideration, as noted above) determined pursuant to a formula
set forth in the Rights Agreement, for $5.00. Assuming that the
Common Stock had a per share value of $5.00 at such time (as
determined pursuant to such formula), the holder of each valid
Right would be entitled to purchase two (2) shares of Common
Stock for $5.00.
In the event that, at any time following the Stock
Acquisition Date or the date on which a Person is determined to
be an Adverse Person, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation or in which it is the surviving
corporation but its Common Stock is changed or exchanged (other
than a merger meeting certain conditions which follows an offer
for all outstanding shares of Common Stock which a majority of
the unaffiliated Directors who are not officers of the Company
determine to be fair to and otherwise in the best interests of
the Company and its shareholders), or (ii) 50% or more of the
Company's assets, earning power or cash flow is sold or
transferred ("Flip-over Event"), each holder of a Right (except
Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon payment of the
Purchase Price, common stock of the acquiring company having a
value equal to two times the exercise price of the Right. The
Flip-over Events set forth in this paragraph and the Flip-in
Events described in the second preceding paragraph are referred
to as the "Triggering Events."
The Purchase Price payable, and the number of units of one
two-thousandths of a share of Series A Preferred Stock or other
securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision,
combination or reclassification of,the Series A Preferred Stock,
(ii) if holders of the Preferred Stock are granted certain rights
or warrants to subscribe for Series A Preferred Stock or
convertible securities at less than the current market price of
the Series A Preferred Stock, or (iii) upon the distribution to
holders of the Series A Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least
1% of the Purchase Price. No fractional shares of Series A
Preferred Stock (other than fractions of one two-thousandth of a
share, or integral multiples thereof) will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market
price of the Series A Preferred Stock on the last trading date
prior to the date of exercise.
At any time until 10 days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (payable in cash, Common
Stock or other consideration deemed appropriate by the Board of
Directors). Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence
of a majority of the Continuing Directors who are not officers of
the Company. The Company may not redeem the Rights if the Board
of Directors has previously declared a Person to be an Adverse
Person. Immediately upon the action of the Board of Directors
ordering redemption of the Rights, with, where required, the
concurrence of such Continuing Directors, the Rights will
terminate and the only right of the holders of Rights will be to
receive the $0.01 redemption price.
The term "Continuing Director" means any member of the Board
of Directors of the Company who was a member of the Board prior
to the date of the Rights Agreement, and any Person who is
subsequently elected to the Board if such Person is recommended
or approved by a majority of the Continuing Directors, but shall
not include an Acquiring Person, an Adverse Person or an
affiliate or associate of any such Person, or any representative
of any of the foregoing.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder 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
shareholders or to the Company, shareholders 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, or are redeemed as provided
in the second preceding paragraph.
Other than certain provisions relating to the principal
economic terms of the Rights, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company
prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board
(in certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights (other
than an Acquiring Person, an Adverse Person or an affiliate or
associate thereof), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment
to adjust the time period governing redemption shall be made at
such time as the Rights are not redeemable.
The Rights have certain anti-takeover effects. Exercise of
the Rights will cause substantial dilution to a Person or group
that attempts to acquire the Company on terms not approved by the
Company's Board of Directors. The existence of Rights, however,
should not affect an offer at a fair price and otherwise in the
best interests of the Company and its shareholders as determined
by the Board of Directors. The Rights should not interfere with
any merger or other business combination approved by the Board of
Directors since the Board of Directors may, at its option, at any
time until ten days following the Stock Acquisition Date or until
a Person has been determined to be an Adverse Person redeem all
but not less than all of the then outstanding Rights at the $0.01
redemption price.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A. 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. <PAGE>
EXHIBIT 20
LETTER TO HOLDERS OF COMMON STOCK
Dear Shareholder:
The Directors of Taylor Devices, Inc. have adopted a
Shareholder Rights Plan that protects your interests in the event
that the Company is confronted with coercive or unfair takeover
tactics. The plan provides for a dividend of Rights to purchase
shares of a new series of Series A Preferred Stock (or, in
certain circumstances, Common Stock or other consideration), that
are exercisable upon the occurrence of certain events.
This Plan contains provisions to protect you in the event of
an unsolicited offer to acquire the Company. The Plan provides
protection from offers that do not treat all shareholders
equally, acquisitions in the open market of shares constituting
control without offering fair value to all shareholders, and
other coercive or unfair takeover tactics that could impair the
Directors' ability to represent your interests fully.
The Plan will not affect an offer at a fair price and
otherwise in the best interests of the Company and its
shareholders as determined by its Board of Directors. The Plan
will not interfere with a merger or other business combination
that the Board approves as fair and as constituting a recognition
of full value to the shareholders.
The Rights become exercisable to purchase shares of
Preferred Stock (or, in certain circumstances, Common Stock) only
if (i) a person acquired 30% or more of the Company's Common
Stock, or (ii) a person commenced a tender or exchange offer for
24% or more of the Company's Common Stock, or (iii) the Board of
Directors determined that the beneficial owner of at least 24% of
the Company's Common Stock intended to cause the Company to take
certain actions adverse to it and its shareholders or that such
ownership would have a material adverse effect on the Company. In
circumstances described in clauses (i) and (iii) above, holders
of Rights would be entitled to purchase, in lieu of Preferred
Stock, Common Stock of the Company at a 50% discount from market
value. Moreover, in the event that the Company were to enter into
certain merger or asset sale transactions, after the occurrence
of circumstances described in clauses (i) or (iii), holders would
be entitled to exercise the Rights for common stock of the
acquiring entity. The acquiring or adverse persons described in
clauses (i) and (iii) would not be entitled to exercise Rights.
The Rights attach to and trade with your shares. No separate
Rights Certificates will be mailed to you unless an event
triggering the Rights occurs. The issuance of Rights does not in
any way weaken the financial strength of the Company or interfere
with its business plans, and will not change the way in which you
can currently trade shares of the Company's Common Stock.
A summary of the Plan is enclosed. The Plan is complex, and
we urge you to read this summary carefully. Its premise, however,
is straightforward: to serve and protect the interests of the
Company's shareholders.
Sincerely,
/s/ Douglas P. Taylor
Chairman, President and CEO
October 5, 1998
Exhibit 99
PRESS RELEASE DATED OCTOBER 5, 1998
Contact: Rockwell Associates
Henry Rockwell
203-262-6596
FOR IMMEDIATE RELEASE
TAYLOR DEVICES, INC. ADOPTS SHAREHOLDER RIGHTS PLAN
North Tonawanda, N.Y., October 5, 1998, -- Taylor Devices, Inc.
(NASDAQ:TAYD) announced today that its Board of Directors has
adopted a Shareholder Rights Plan designed to deter coercive or
unfair takeover tactics and to prevent an acquiror from gaining
control of the company without offering a fair price to all
shareholders.
Under the Plan, Rights will be distributed as a dividend on
each share of Common Stock (1 Right for each share of Common
Stock) held as of the close of business on October 19, 1998.
The Rights will expire at the close of business on
October 5, 2008.
Each whole Right will entitle the holder to buy one
two-thousandths (1/2000) of a newly-issued share of Taylor
Devices, Inc, Series A Junior Participating Preferred Stock at an
exercise price of $5.00.
The Rights attach to and trade with the shares of the
Company's Common Stock. No separate Rights Certificates will be
issued unless an event triggering the Rights occurs.
The Rights will detach from the Common Stock and will
initially become exercisable for shares of a new class of Series
A Preferred Stock if: a person or group acquires beneficial
ownership of 30% or more of Devices' Common Stock, except through
a tender or exchange offer for all shares which the Board
determines to be fair and otherwise in the best interest of
Devices and its shareholders; a person or group commences a
tender or exchange offer which would result in such person or
group beneficialy owning 24% or more of Devices' Common Stock; or
the Board determines that a person holding at least 24% of
Devices' Common Stock intends to cause the corporation to take
certain actions adverse to it and its shareholders or that such
holder's ownership would have a material adverse effect on
Devices.
If any person becomes the beneficial owner of 30% or more of
Devices' Common Stock (except through an offer which the Board
determines to be fair) and the Board of Directors does not within
10 days thereafter redeem the Rights, or a person announces a
tender offer for 24% or more of Devices' Common Stock and the
Board of Directors does not thereafter delay the effectiveness of
the Rights, or a 24% holder is determined by the Board to be an
adverse person, each Right not owned by such person or related
parties will then enable its holder to purchase, at the Right's
then-current exercise price, Devices Common Stock (or, in certain
circumstances as determined by the Board, a combination of cash,
property, common stock or other securities) having a value of
twice the Right's exercise price.
Under certain circumstances, if Devices is acquired in a
merger or similar transaction with another entity, or sells more
than 50% of its assets, earning power or cash flow to another
entity, each Right that has not previously been exercised will
entitle its holder to purchase, at the Right's then-current
exercise price, common stock of such other entity having a value
of twice the Right's exercise price.
Tayco Developments, Inc., which is the owner of 697,567
issued and outstanding shares of Common Stock, will not be deemed
to be either an acquiring person for purposes of the 30%
threshold or an adverse person for purposes of the 24% threshold,
referred to above, solely as a result of its ownership of Common
Stock.
Details of the Shareholder Rights Plan are outlined in a
letter which will be mailed to all Devices shareholders.
Taylor Devices, which employs over 80 people in Western New
York, is a product development and manufacturing company which is
engaged in the design, development, manufacture and marketing of
tension control, energy storage and shock absorption devices for
use in various types of machinery, equipment and structures, as
well as products in the seismic protection field and in the
isolation of wind-induced vibrations.
