<PAGE> 1
Registration No. ________
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
THE TIMKEN COMPANY
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
Ohio 34-0577130
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
</TABLE>
1835 Dueber Avenue, S.W., Canton, Ohio 44706-2798
(Address of Principal Executive Offices Including Zip Code)
THE TIMKEN COMPANY LONG-TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED AS OF DECEMBER 20, 1995)
(Full Title of the Plan)
----------
Larry R. Brown
Vice President and General Counsel
1835 Dueber Avenue, S.W.
Canton, Ohio 44706-2798
(Name and Address of Agent For Service)
----------
330/438-3000
(Telephone Number, Including Area Code, of Agent For Service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Title of Proposed Maxi- Proposed Maxi- Amount of
Securities to Amount to be mum Offering mum Aggregate Registration
be Registered Registered(1) Price Per Share(2) Offering Price(2) Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock without
par value
1,500,000 $44.57 $68,855,000 $23,053.45
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Pursuant to Rule 416 of the Securities Act of 1933 (the "Securities Act"),
this Registration Statement also covers such additional shares of Common
Stock without par value as may become issuable pursuant to the
anti-dilution provisions of the Long-term Incentive Plan (as Amended and
Restated as of December 20, 1995).
(2) Estimated solely for calculating the amount of the registration fee,
pursuant to Rule 457(c) and (h) of the General Rules and Regulations under
the Securities Act, on the basis of the average of the high and low sale
prices of such securities on the New York Stock Exchange on April 11, 1996
within five business days prior to filing.
</TABLE>
Exhibit Index Appears on Page 5
Page 1 of 5 Pages
<PAGE> 2
Part II
Pursuant to General Instruction E to Form S-8, the contents of
Registration Statement No. 33-47185 on Form S-8 as filed by The Timken
Company (the "Registrant") with the Securities and Exchange Commission on April
21, 1992 are incorporated herein by reference.
Item 8. Exhibits
--------
The following Exhibits are being filed as part of this Registration Statement:
4(a) Amended Articles of Incorporation of the Registrant (Effective April 16,
1996).
4(b) Amended Regulations of the Registrant effective April 21, 1987, were
filed with Form 10-K for the period ended December 31, 1992, and are
incorporated herein by reference.
4(c) Long-term Incentive Plan was filed as Appendix A to Proxy Statement
dated March 6, 1996 and is incorporated herein by reference.
4(d) Rights Agreement dated as of December 18, 1986, as amended and restated
as of February 1, 1991, between the Registrant and First Chicago Trust
Company (formerly Morgan Shareholder Services Trust Company).
5 Opinion of Counsel.
23(a) Consent of Independent Auditors, Ernst & Young LLP, to the incorporation
by reference in this Registration Statement of their report on the
consolidated financial statements and schedule included in the
Registrant's Annual Report on Form 10-K for its fiscal year ended
December 31, 1995.
23(b) Consent of Counsel (included in Exhibit 5).
24 Power of Attorney.
Page 2 of 5 Pages
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Canton, State of Ohio, on April 16, 1996.
THE TIMKEN COMPANY
By: /s/Larry R. Brown
----------------------------------
Larry R. Brown
Vice President and General Counsel
Page 3 of 5 Pages
<PAGE> 4
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman - Board of Directors; April 16, 1996
------------------------------------ Director
W.R. Timken, Jr.
* President and Chief Executive April 16, 1996
------------------------------------ Officer; Director (Principal
Joseph F. Toot, Jr. Executive Officer)
* Vice President - Finance (Principal April 16, 1996
------------------------------------ Financial Officer and Principal
Gene E. Little Accounting Officer)
* Director April 16, 1996
------------------------------------
Robert Anderson
* Director April 16, 1996
------------------------------------
Stanley C. Gault
* Director April 16, 1996
------------------------------------
J. Clayburn La Force, Jr.
* Director April 16, 1996
------------------------------------
Robert W. Mahoney
* Director April 16, 1996
------------------------------------
Jay A. Precourt
* Director April 16, 1996
------------------------------------
John M. Timken, Jr.
* Director April 16, 1996
------------------------------------
Ward J. Timken
* Director April 16, 1996
------------------------------------
Martin D. Walker
* Director April 16, 1996
------------------------------------
Charles H. West
* Director April 16, 1996
------------------------------------
Alton W. Whitehouse
<FN>
* Larry R. Brown, the undersigned attorney-in-fact, by signing his name
hereto, does hereby sign and execute this Registration Statement on behalf of
the above officers and directors (constituting a majority of the directors)
pursuant to a power of attorney filed with the Securities and Exchange
Commission as Exhibit 24 to this Registration Statement.
</TABLE>
April 16, 1996 By: /s/Larry R. Brown
--------------------------------
Larry R. Brown, Attorney-in-Fact
Page 4 of 5 Pages
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
Exhibit Exhibit
Number Description
------ -----------
<S> <C>
4(a) Amended Articles of Incorporation of the Registrant (Effective April 16, 1996).
4(b) Amended Regulations of Registrant effective April 21, 1987, were filed with Form
10-K for the period ended December 31, 1992, and are incorporated herein by
reference.
4(c) Long-term Incentive Plan was filed as Appendix A to Proxy Statement dated
March 6, 1996 and is incorporated herein by reference.
4(d) Rights Agreement dated as of December 18, 1986, as amended and restated as of
February 1, 1991, between the Registrant and First Chicago Trust Company
(formerly Morgan Shareholder Services Trust Company).
5 Opinion of Counsel.
23(a) Consent of Independent Auditors, Ernst & Young LLP, to the incorporation by
reference in this Registration Statement of their report on the consolidated
financial statements and schedule included in the Registrant's Annual Report on
Form 10-K for its fiscal year ended December 31, 1995.
23(b) Consent of Counsel (included in Exhibit 5).
24 Power of Attorney.
</TABLE>
Page 5 of 5 Pages
<PAGE> 1
Exhibit 4(a)
CERTIFICATE OF AMENDMENT
TO AMENDED ARTICLES OF INCORPORATION
OF
THE TIMKEN COMPANY
Each of the undersigned hereby certifies that he is a duly
elected and qualified officer of The Timken Company, an Ohio corporation (the
"Company"), holding the respective offices indicated below, and is authorized
to execute and deliver this Certificate on behalf of the Company. Each of the
undersigned hereby further certifies that the following resolution amending the
Amended Articles of Incorporation of the Company was duly adopted by the
shareholders of the Company at a meeting duly held on the date hereof at which
a quorum was present and acting throughout and that such resolution has not
been amended or rescinded and remains in full force and effect.
WHEREAS, the Board of Directors, by a unanimous vote
of all present at its meeting on February 2, 1996, recommended
the approval and adoption of an amendment to the Amended
Articles of Incorporation of the Company to increase the
authorized number of shares of Common Stock as being in the
best interests of the Company and its shareholders.
NOW, THEREFORE, BE IT RESOLVED, that the amendment to
Article Fourth of the Amended Articles of Incorporation of the
Company, in the form presented in the 1996 Proxy Statement as
Appendix B and ordered filed in the records of the Minutes of
this meeting, is hereby approved and adopted.
A copy of the foregoing amendment to Article Fourth of the
Amended Articles of Incorporation of the Company is attached hereto as Appendix
B.
IN WITNESS WHEREOF, the undersigned have caused this
Certificate to be executed as of this 16th day of April, 1996.
/s/ Gene E. Little
-----------------------------
Gene E. Little
Vice President - Finance
/s/ Larry R. Brown
-----------------------------
Larry R. Brown
Vice President, General Counsel
and Secretary
<PAGE> 2
APPENDIX B
FOURTH: The authorized number of shares of the Corporation is
220,000,000 shares, consisting of 10,000,000 shares of Class I Serial Preferred
Stock without par value (the "Class I Serial Preferred Stock"), 10,000,000
shares of Class II Serial Preferred Stock without par value (the "Class II
Serial Preferred Stock"), and 200,000,000 shares of Common Stock without par
value (the "Common Stock").
[THE REMAINDER OF ARTICLE FOURTH IS UNCHANGED.]
<PAGE> 3
CERTIFICATE OF ADOPTION
OF
AMENDED ARTICLES OF INCORPORATION
OF
THE TIMKEN COMPANY
Joseph F. Toot, Jr., President, and J. Kevin Ramsey, Vice
President - Finance and Law, Secretary and Treasurer, of The Timken Company, an
Ohio corporation with its principal office in Canton, Stark County, Ohio do
hereby certify that a meeting of the Directors of said Corporation was duly
called and held on June 15, 1988, at which meeting the following resolution was
adopted pursuant to the authority granted to the Directors under Ohio Revised
Code 1701.72(B):
RESOLVED (a) that that portion of Article FOURTH of the Amended
Articles of Incorporation of The Timken Company (the "Company") prior
to Division A be amended to (1) increase the authorized number of
shares of the Company's Common Stock without par value (the "Common
Stock") from 40,000 to 100,000,000 shares and (2) split each of the
issued shares of Common Stock into two shares of Common Stock, so that
as amended said portion of Article FOURTH shall read in its entirety
as follows:
FOURTH: The authorized number of shares of the Corporation
is 120,000,000 shares, consisting of 10,000,000 shares of
Class I Serial Preferred Stock without par value
(the "Class I Serial Preferred Stock"), 10,000,000 shares of
Class II Serial Preferred Stock without par value (the "Class
II Serial Preferred Stock"), and 100,000,000 shares of Common
Stock without par value (the "Common Stock").
No holder of any shares of the Corporation shall have, as such
holder, any preemptive right to purchase any shares or any
other securities of the Corporation.
No holder of any shares of the Corporation shall have, as such
holder, any right to cumulate voting power in any election of
Directors.
Each share of Common Stock issued at the close of business on
the date on which this amendment becomes effective shall
automatically be changed into two validly issued, fully paid
and nonassessable shares of Common Stock. Upon this amendment
becoming effective, each certificate representing shares of
Common Stock immediately prior to the effectiveness of this
amendment shall represent an equal number of shares of Common
Stock from and after the effectiveness of this amendment, and
as soon as practicable
<PAGE> 4
Page 2
thereafter there shall be distributed to each holder of record
of shares of Common Stock at the close of business on the date
on which this amendment becomes effective an additional
certificate or certificates representing one additional share
of Common Stock for each share of Common Stock so held.
FURTHER RESOLVED that the proposed amendment to Article FOURTH of the
Amended Articles of Incorporation of the Company set forth above (the
"Amendment") be presented to the shareholders of the Company; and be
it
FURTHER RESOLVED that it be recommended to the shareholders of the
Company that they adopt the Amendment at the Special Meeting; and be
it
FURTHER RESOLVED that subject to the effectiveness of the Amendment,
there is hereby adopted effective immediately after effectiveness of
the Amendment, Amended Articles of Incorporation in the form attached
hereto as Exhibit A, which Amended Articles of Incorporation, pursuant
to Section 1701.72(B) and (C) of the Ohio Revised Code, consolidates
the current Amended Articles of Incorporation of the Company and all
previously adopted amendments to the Amended Articles of Incorporation
that are in force at this time (and the Amendment, upon its
effectiveness), and the Chairman - Board of Directors, the President
and any Vice President of the Company and the Secretary or any
Assistant Secretary of the Company are authorized, for and on behalf
of the Company, to execute a Certificate of Adoption of the Amended
Articles of Incorporation and to file the same with the Secretary of
State of the State of Ohio in accordance with the requirements of the
General Corporation Law of Ohio.
and that a true and complete copy of said Exhibit A is set forth below:
AMENDED ARTICLES OF INCORPORATION OF THE TIMKEN COMPANY
FIRST: The name of the Corporation shall be The Timken
Company.
SECOND: The principal office of the Corporation in the State
of Ohio is to be located in Canton in Stark County.
THIRD: The Corporation is formed for the purpose of
developing, producing, manufacturing, buying, selling and generally dealing in
products, goods, wares, merchandise, tangible and intangible property and
services of any and all kinds and doing any and all things necessary or
incidental thereto.
<PAGE> 5
Page 3
FOURTH: The authorized number of shares of the Corporation is
120,000,000 shares, consisting of 10,000,000 shares of Class I Serial Preferred
Stock without par value (the "Class I Serial Preferred Stock"), 10,000,000
shares of Class II Serial Preferred Stock without par value (the "Class II
Serial Preferred Stock"), and 100,000,000 shares of Common Stock without par
value (the "Common Stock").
No holder of any shares of the Corporation shall have, as such
holder, any preemptive right to purchase any shares or any other securities of
the Corporation.
No holder of any shares of the Corporation shall have, as such
holder, any right to cumulate voting power in any election of Directors.
DIVISION A
----------
EXPRESS TERMS OF THE CLASS I SERIAL PREFERRED STOCK
Section 1. The Class I Serial Preferred Stock may be issued
from time to time in one or more series. All shares of Class I Serial
Preferred Stock shall be of equal rank and shall be identical, except in
respect of the matters that may be fixed by the Board of Directors as
hereinafter provided, and each share of each series shall be identical with all
other shares of such series, except as to the date from which dividends are
cumulative. Subject to the provisions of Sections 2 to 7, inclusive, of this
Division A, which provisions shall apply to all Class I Serial Preferred Stock,
the Board of Directors hereby is authorized to cause such shares to be issued
in one or more series and with respect to each series to fix:
(a) The designation of the series, which may be by
distinguishing number, letter and/or title.
(b) The number of shares of the series, which number the
Board of Directors may (except where otherwise provided in the creation of the
series) increase or decrease (but not below the number of shares thereof then
outstanding).
(c) The annual dividend rate of the series.
(d) The dates at which dividends, if declared, shall be
payable, and the dates from which dividends shall be cumulative.
(e) The redemption rights and price or prices, if any, for
shares of the series.
(f) The terms and amount of any sinking fund provided for the
purchase or redemption of shares of the series.
(g) The amounts payable on shares of the series in the event
of any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation.
<PAGE> 6
Page 4
(h) Whether the shares of the series shall be convertible
into shares of any other class or series of stock of the Corporation, and, if
so, the specification of such other class or series, the conversion price or
prices, any adjustments thereof, the date or dates as of which such shares
shall be convertible, and other terms and conditions upon which such conversion
may be made.
(i) Restrictions (in addition to those set forth in Section
5(b) of this Division A) on the issuance of shares of the same series or of any
other class or series.
The Board of Directors is authorized to adopt from time to
time amendments to the Amended Articles of Incorporation fixing, with respect
to each such series, the matters described in clauses (a) to (i), inclusive, of
this Section 1 of this Division A.
Section 2. The holders of Class I Serial Preferred Stock of
each series, in preference to the holders of Class II Serial Preferred Stock,
of Common Stock and of any other class of shares ranking junior to the Class I
Serial Preferred Stock, shall be entitled to receive out of any funds legally
available for the Class I Serial Preferred Stock and when and as declared by
the Board of Directors dividends in cash at the rate for such series fixed in
accordance with the provisions of Section 1 of this Division A and no more,
payable on the dividend payment dates fixed for such series. Such dividends
shall be cumulative, in the case of shares of each particular series, from and
after the date or dates fixed with respect to such series. No dividend may be
paid upon or set apart for any of the Class I Serial Preferred Stock on any
dividend payment date unless (i) all dividends upon all Class I Serial
Preferred Stock then outstanding for all dividend payment dates prior to such
date shall have been paid or funds therefor set apart, and (ii) at the same
time a like dividend upon all Class I Serial Preferred Stock then outstanding
and having a dividend payment date on such date, ratably in proportion to the
respective annual dividend rates, shall be paid or funds therefor set apart.
For the purpose of this Division A, a dividend shall be deemed
to have been paid or funds therefor set apart on any date if on or prior to
such date the Corporation shall have deposited funds sufficient therefor with a
bank or trust company and shall have caused checks drawn against such funds in
appropriate amounts to be mailed to each holder of record entitled to receive
such dividend at his address then appearing on the books of the Corporation.
Section 3. In no event so long as any Class I Serial
Preferred Stock shall be outstanding shall any dividends, except a dividend
payable in Class II Serial Preferred Stock, Common Stock or other shares
ranking junior to the Class I Serial Preferred Stock, be paid or declared or
any distribution be made except as aforesaid on the Class II Serial Preferred
Stock, Common Stock or any other shares ranking junior to the Class I Serial
Preferred Stock, nor shall any Class II Serial Preferred Stock, Common Stock or
any other shares ranking junior to the Class I Serial Preferred Stock be
purchased, retired or otherwise acquired by the Corporation (except out of the
proceeds of the sale of Class II Serial Preferred Stock, Common Stock or other
shares ranking junior to the Class I Serial Preferred Stock received by the
Corporation on or
<PAGE> 7
Page 5
subsequent to April 16, 1985) unless (i) all dividends upon all Class I Serial
Preferred Stock then outstanding for all dividend payment dates on or prior to
the date of such action shall have been paid or funds therefore set apart, and
(ii) all mandatory sinking fund obligations pursuant to the terms of any series
of Class I Serial Preferred Stock for all sinking fund payments due on or prior
to the date of such date, shall have been complied with.
Section 4. (a) The holders of Class I Serial Preferred Stock
of any series shall, in the case of voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, be entitled to
receive in full out of the assets of the Corporation, including its capital,
before any amount shall be paid or distributed among the holders of the Class
II Serial Preferred Stock, Common Stock or any other shares ranking junior to
the Class I Serial Preferred Stock, the amounts fixed with respect to shares of
such series in accordance with Section 1 of this Division A, plus (i) all then
unpaid dividends upon such shares for all dividend payment dates on or prior to
the date of payment of the amount due pursuant to such liquidation, dissolution
or winding up, and (ii) a proportionate dividend, based on the number of
elapsed days, for the period from the day after the most recent such dividend
payment through the date of payment of the amount due pursuant to such
liquidation, dissolution or winding up. In case the net assets of the
Corporation legally available therefor are insufficient to permit the payment
upon all outstanding shares of Class I Serial Preferred Stock of the full
preferential amount to which they are respectively entitled, then such net
assets shall be distributed ratably upon outstanding shares of Class I Serial
Preferred Stock in proportion to the full preferential amount to which each
such share is entitled.
After payment to holders of Class I Serial Preferred Stock of
the full preferential amounts as aforesaid, holders of Class I Serial Preferred
Stock as such shall have no right or claim to any of the remaining assets of
the Corporation.
(b) The merger or consolidation of the Corporation into or
with any other corporation, for the merger of any other corporation into it, or
the sale, lease or conveyance of all or substantially all the property or
business of the Corporation, shall not be deemed to be a dissolution,
liquidation or winding up for the purposes of this Division A.
Section 5. (a) No holder of Class I Serial Preferred Stock
shall be entitled, as such holder, to notice of meetings of shareholders or to
vote upon any matter presented to the shareholders except as otherwise provided
by this Section 5 of this Division A or required by law.
If, and so often as, the Corporation shall be in default in
the payment of dividends in an amount equivalent to six full quarterly
dividends on any series of Class I Serial Preferred Stock at the time
outstanding whether or not earned or declared, the holders of Class I Serial
Preferred Stock of all series, voting separately as a class, shall thereafter
be entitled to elect, as hereinbelow provided, two members of the Board of
Directors of the Corporation who shall serve, except as hereinbelow provided,
until the next annual meeting of the shareholders and until their successors
<PAGE> 8
Page 6
have been elected and qualified. The special class voting rights provided for
herein when the same shall have become vested shall remain so vested until all
dividends on the Class I Serial Preferred Stock of all series then outstanding
for all past dividend payment dates shall have been paid or funds therefor set
apart, whereupon the terms of Directors elected by the holders of Class I
Serial Preferred Stock shall automatically terminate and the holders of Class I
Serial Preferred Stock shall be divested of their special class voting rights
in respect of subsequent elections of Directors, subject to the revesting of
such special class voting rights in the event hereinabove specified in this
paragraph.
In the event of default entitling the holders of Class I
Serial Preferred Stock to elect two directors as above specified, a special
meeting of the holders of Class I Serial Preferred Stock for the purpose of
electing such Directors shall be called by the Secretary of the Corporation
upon written request of, or upon written notice to the Secretary of the
Corporation may be called by, the holders of record of at least ten percent of
the shares of Class I Serial Preferred Stock of all series at the time
outstanding, and notice thereof shall be given in the same manner as that
required for the annual meeting of shareholders; provided, however, that the
Corporation shall not be required, and the holders of Class I Serial Preferred
Stock shall not be entitled, to call such special meeting if the annual meeting
of shareholders shall be held within 90 days after the date of receipt by the
Secretary of the Corporation of the foregoing written request or notice from
the holders of Class I Serial Preferred Stock. At any annual meeting of
shareholders or special meeting called for such purpose at which the holders of
Class I Serial Preferred Stock shall be entitled to elect Directors, the
holders of 35% of the then outstanding shares of Class I Serial Preferred Stock
of all series, present in person or by proxy, shall be sufficient to constitute
a quorum for such purpose, and the vote of the holders of a majority of such
shares so present at any such meeting at which there shall be such a quorum
shall be necessary and sufficient to elect the members of the Board of
Directors which the holders of Class I Serial Preferred Stock are entitled to
elect as hereinabove provided. If at any such meeting there shall be less
than a quorum for such purpose present, the holders of a majority of the
shares of Class I Serial Preferred Stock so present may adjourn the meeting
for such purpose only from time to time without notice other than announcement
at the meeting until a quorum shall attend.
The two Directors who may be elected by the holders of Class I
Serial Preferred Stock pursuant to the foregoing provisions shall be in
addition to any other Directors then in office or proposed to be elected
otherwise than pursuant to such provisions, and nothing in such provisions
shall prevent any change otherwise permitted in the total number of Directors
of the Corporation or require the resignation of any Director elected otherwise
than pursuant to such provisions.
(b) The affirmative vote of the holders of at least
two-thirds of the shares of Class I Serial Preferred Stock at the time
outstanding, given in person or by proxy at a meeting called for the purpose at
which the holders of Class I Serial Preferred Stock shall vote separately as a
class, shall be
<PAGE> 9
Page 7
necessary to adopt any amendment to the Amended Articles of Incorporation (but
so far as the holders of Class I Serial Preferred Stock are concerned, such
amendment may be adopted with such vote) which:
(i) changes issued shares of Class I Serial
Preferred Stock of all series then outstanding into a lesser
number of shares of the Corporation of the same class and
series or into the same or a different number of shares of the
Corporation of any other class or series; or
(ii) changes the express terms of the Class I Serial
Preferred Stock in any manner substantially prejudicial to the
holders of all series thereof then outstanding; or
(iii) authorizes shares of any class, or any
security convertible into shares of any class, or authorizes
the conversation of any security into shares of any class,
ranking prior to the Class I Serial Preferred Stock; or
(iv) changes in the express terms of issued shares
of any class ranking prior to the Class I Serial Preferred
Stock in any manner substantially prejudicial to the holders
of all series of Class I Serial Preferred Stock then
outstanding;
and the affirmative vote of the holders of at least two-thirds of the shares of
each affected series of Class I Serial Preferred Stock at the time outstanding,
given in person or by proxy at a meeting called for the purpose at which the
holders of each affected series of Class I Serial Preferred Stock shall vote
separately as a series, shall be necessary to adopt any amendment to the
Amended Articles of Incorporation (but so far as the holders of each such
series of Class I Serial Preferred Stock are concerned, such amendment may be
adopted with such vote) which:
(v) changes issued shares of Class I Serial
Preferred Stock of one or more but not all series then
outstanding into a lesser number of shares of the Corporation
of the same series or into the same or a different number of
shares of the Corporation of any other class or series; or
(vi) changes the express terms of any series of the
Class I Serial Preferred Stock in any manner substantially
prejudicial to the holders of one or more but not all series
thereof then outstanding; or
(vii) changes the express terms of issued shares of
any class ranking prior to the Class I Serial Preferred Stock
in any manner substantially prejudicial to the holders of one
or more but not all series of Class I Serial Preferred Stock
then outstanding.
<PAGE> 10
Page 8
Section 6. If the shares of any series of Class I Serial
Preferred Stock shall be convertible into shares of any other class or series
of stock of the Corporation, then upon conversion of shares of such series the
stated capital, if any, of the shares delivered upon such conversion shall be
an amount equal to the stated capital, if any, represented by each such share
outstanding at the time of such conversion multiplied by the number of such
shares delivered upon such conversion. The stated capital, if any, of the
Corporation shall be correspondingly increased or reduced to reflect the
difference between the stated capital, if any, of the shares of Class I Serial
Preferred Stock so converted and the stated capital, if any, of the shares
delivered upon such conversion.
Section 7. For the purpose of this Division A:
Whenever reference is made to shares "ranking prior to the
Class I Serial Preferred Stock," such reference shall mean and include all
shares of the Corporation in respect of which the rights of the holders thereof
either as to the payment of dividends or as to distributions in the event of a
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation are given preference over the rights of the holders of Class I
Serial Preferred Stock; whenever reference is made to shares "on a parity with
the Class I Serial Preferred Stock," such reference shall mean and include all
shares of the Corporation in respect of which the rights of the holders thereof
(i) neither as to the payment of dividends nor as to distributions in the event
of a voluntary or involuntary liquidation, dissolution or winding up of the
Corporation are given preference over the rights of the holders of Class I
Serial Preferred Stock, and (ii) either as to the payment of dividends or as to
distributions in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation rank on an equality (except as to
the amounts fixed therefor) with the rights of the holders of Class I Serial
Preferred Stock; and whenever reference is made to shares "ranking junior to
the Class I Serial Preferred Stock," such reference shall mean and include all
shares of the Corporation in respect of which the rights of the holders thereof
both as to the payment of dividends and as to distributions in the event of a
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation are junior and subordinate to the rights of the holders of the
Class I Serial Preferred Stock.
DIVISION B
----------
EXPRESS TERMS OF THE CLASS II SERIAL PREFERRED STOCK
Section 1. The Class II Serial Preferred Stock may be issued
from time to time in one or more series. All shares of Class II Serial
Preferred Stock shall be of equal rank and shall be identical, except in
respect of the matters that may be fixed by the Board of Directors as
hereinafter provided, and each share of each series shall be identical with all
other shares of such series, except as to the date from which
<PAGE> 11
Page 9
dividends are cumulative. Subject to the provisions of Sections 2 to 7,
inclusive, of this Division B, which provisions shall apply to all Class II
Serial Preferred Stock, the Board of Directors hereby is authorized to cause
such shares to be issued in one or more series and with respect to each series
to fix each of the same matters as are described in clauses (a) to (i),
inclusive, of Section 1 of Division A (provided that, for purposes of this
cross-reference, the reference in said clause (i) to "Section 5(b) of this
Division A" shall read "Section 5(b) of this Division B").
The Board of Directors is authorized to adopt from time to
time amendments to the Amended Articles of Incorporation fixing, with respect
to each such series, each of the same matters as are described in clauses (a) to
(i), inclusive, of Section 1 of Division A (subject to the aforesaid
cross-reference proviso).
Section 2. The holders of Class II Serial Preferred Stock of
each series, in preference to the holders of Common Stock and of any other
class of shares ranking junior to the Class II Serial Preferred Stock, shall be
entitled to receive out of any funds legally available for the Class II Serial
Preferred Stock and when and as declared by the Board of Directors dividends in
cash at the rate for such series fixed in accordance with the provisions of
Section 1 of this Division B and no more, payable on the dividend payment dates
fixed for such series. Such dividends shall be cumulative, in the case of
shares of each particular series, from and after the date or dates fixed with
respect to such series. No dividend may be paid upon or set apart for any of
the Class II Serial Preferred Stock on any dividend payment date unless (i) all
dividends upon all Class II Serial Preferred Stock then outstanding for all
dividend payment dates prior to such date shall have been paid or funds
therefor set apart, and (ii) at the same time a like dividend upon all Class II
Serial Preferred Stock then outstanding and having a dividend payment date on
such date, ratably in proportion to the respective annual dividend rates, shall
be paid or funds therefor set apart.
For the purpose of this Division B, a dividend shall be deemed
to have been paid or funds therefor set apart on any date if on or prior to
such date the Corporation shall have deposited funds sufficient therefor with a
bank or trust company and shall have caused checks drawn against such funds in
appropriate amounts to be mailed to each holder of record entitled to receive
such dividend at his address then appearing on the books of the Corporation.
Section 3. In no event so long as any Class II Serial
Preferred Stock shall be outstanding shall any dividends, except a dividend
payable in Common Stock or other shares ranking junior to the Class II Serial
Preferred Stock, be paid or declared or any distribution be made except as
aforesaid on the Common Stock or any other shares ranking junior to the
<PAGE> 12
Page 10
Class II Serial Preferred Stock, nor shall any Common Stock or any other shares
ranking junior to the Class II Serial Preferred Stock be purchased, retired or
otherwise acquired by the Corporation (except out of the proceeds of the sale
of Common Stock or other shares ranking junior to the Class II Serial Preferred
Stock received by the Corporation on or subsequent to April 16, 1985) unless
(i) all dividends upon all Class II Serial Preferred Stock then outstanding for
all dividend payment dates on or prior to the date of such action shall have
been paid or funds therefor set apart, and (ii) all mandatory sinking fund
obligations pursuant to the terms of any series of Class II Serial Preferred
Stock for all sinking fund payments due on or prior to the date of such action
shall have been complied with.
Section 4. (a) The holders of Class II Serial Preferred Stock
of any series shall, in case of voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, be entitled to
receive in full out of the assets of the Corporation, including its capital,
before any amount shall be paid or distributed among the holders of Common
Stock or any other shares ranking junior to the Class II Serial Preferred
Stock, the amounts fixed with respect to shares of such series in accordance
with Section 1 of this Division B, plus (i) all then unpaid dividends upon such
shares for all dividend payment dates on or prior to the date of payment of the
amount due pursuant to such liquidation, dissolution or winding up, and (ii) a
proportionate dividend, based on the number of elapsed days, for the period
from the day after the most recent such dividend payment date through the date
of payment of the amount due pursuant to such liquidation, dissolution or
winding up. In case the net assets of the Corporation legally available
therefor are insufficient to permit the payment upon all outstanding shares of
Class II Serial Preferred Stock of the full preferential amount to which they
are respectively entitled, then such net assets shall be distributed ratably
upon outstanding shares of Class II Serial Preferred Stock in proportion to the
full preferential amount to which each such share is entitled.
After payment to holders of Class II Serial Preferred Stock of
the full preferential amounts as aforesaid, holders of Class II Serial
Preferred Stock as such shall have no right or claim to any of the remaining
assets of the Corporation.
(b) The merger or consolidation of the Corporation into or
with any other corporation, or the merger of any other corporation into it, or
the sale, lease or conveyance of all or substantially all the property or
business of the Corporation, shall not be deemed to be a dissolution,
liquidation or winding up for the purposes of this Division B.
<PAGE> 1
Exhibit 4(d)
THE TIMKEN COMPANY
AND
FIRST CHICAGO TRUST COMPANY OF NEW YORK
RIGHTS AGREEMENT
December 18, 1986
Amended and Restated as of February 1, 1991
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(Not a part of Agreement)
PAGE
<S> <C>
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1 Certain Definitions . . . . . . . . . . . . . . . . . . 1
Section 2 Appointment of Rights Agent . . . . . . . . . . . . . . 8
Section 3 Issuance of Right Certificates. . . . . . . . . . . . . 8
Section 4 Form of Right Certificates. . . . . . . . . . . . . . . 12
Section 5 Countersignature and Registration . . . . . . . . . . . 13
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates . . . . . . . . . . . . . . . . . . 14
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . . . . . 16
Section 8. Cancellation of Right Certificates . . . . . . . . . . 19
Section 9. Reservation and Availability of
Common Shares . . . . . . . . . . . . . . . . . . . . . 20
Section 10. Common Share Record Date. . . . . . . . . . . . . . . . 23
Section 11. Adjustment of Purchase Price, Number
and Type of Shares or Number of Rights. . . . . . . . . 23
Section 12. Notice of Adjusted Purchase Price or
Number or Type of Shares to Holders of
Rights . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 13. Fractional Rights and Fractional
Shares . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 14. Rights of Action. . . . . . . . . . . . . . . . . . . . 51
Section 15. Agreement of Rights Holders . . . . . . . . . . . . . . 52
Section 16. Right Certificate Holder Not Deemed
a Shareholder . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(continued)
PAGE
<S> <C>
Section 17. Concerning the Rights Agent. . . . . . . . . . . . . . 53
Section 18. Merger or Consolidation or Change
of Name of Rights Agent. . . . . . . . . . . . . . . . 54
Section 19. Duties of Rights Agent . . . . . . . . . . . . . . . . 56
Section 20. Change of Rights Agent . . . . . . . . . . . . . . . . 59
Section 21. Issuance of New Right Certificates . . . . . . . . . . 61
Section 22. Redemption . . . . . . . . . . . . . . . . . . . . . . 62
Section 23. Notice of Certain Events . . . . . . . . . . . . . . . 63
Section 24. Notices. . . . . . . . . . . . . . . . . . . . . . . . 65
Section 25. Supplements and Amendments . . . . . . . . . . . . . . 66
Section 26. Successors . . . . . . . . . . . . . . . . . . . . . . 66
Section 27. Benefits of this Agreement . . . . . . . . . . . . . . 66
Section 28. Action by Directors . . . . . . . . . . . . . . . . . 67
Section 29. Severability . . . . . . . . . . . . . . . . . . . . . 67
Section 30. Governing Law. . . . . . . . . . . . . . . . . . . . . 67
Section 31. Counterparts . . . . . . . . . . . . . . . . . . . . . 67
Section 32. Descriptive Headings . . . . . . . . . . . . . . . . . 68
Exhibit A Right Certificate . . . . . . . . . . . . . . . . . . .A-1
Exhibit B Summary of Rights . . . . . . . . . . . . . . . . . . .B-1
</TABLE>
-ii-
<PAGE> 4
Rights Agreement, dated as of December 18, 1986,
amended and restated as of February 1, 1991, between The Timken
Company, an Ohio corporation (the "Company"), and First Chicago
Trust Company of New York (formerly Morgan Shareholder Services
Trust Company) (the "Rights Agent").
PREAMBLE
The Directors of the Company have authorized and declared a dividend
consisting of one right ("Right") for each share of Common Stock, without par
value, of the Company outstanding on the close of business on January 6, 1987
(the "Record Date"), each Right representing the right to purchase one Common
Share, and have authorized the issuance of one Right with respect to each
Common Share issued after the Record Date but prior to the earlier of the
Distribution Date, the Expiration Date or the Final Expiration Date (as such
terms are defined in Section 1 hereof), under certain other circumstances,
including without limitation Common Shares issued upon conversion of the
Company's convertible securities and upon exercise of employee stock options
and payment of restricted stock units.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. In addition to the terms defined
elsewhere herein, the following terms shall have the following meanings when
used herein with initial capital letters:
<PAGE> 5
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, after the date hereof and
before the Final Expiration Date, (i) shall, during any period, increase the
number of Common Shares Beneficially Owned by such Person or group by an amount
equal to or greater than 20% of the outstanding Common Shares, or (ii) shall be
the Beneficial Owner of 30% or more of the outstanding Common Shares, but shall
not include the Company, any Subsidiary of the Company or any employee benefit
or stock ownership plan of the Company or an entity holding Common Shares of
the Company for or pursuant to the terms of any such plan. Transfers of Common
Shares between a Person and the Affiliates or Associates of that Person shall
not be considered in determining the increase in the number of Common Shares
Owned Beneficially by such Person.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date hereof.
(c) "Agreement" shall mean this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Own Beneficially" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates Owns Beneficially, directly or
indirectly;
-2-
<PAGE> 6
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement
or understanding, or upon the exercise of conversion rights,
exchange or other rights, warrants or options (other than
the Rights) or otherwise, provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to Own
Beneficially, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or payment or (B) the
right to vote or dispose of pursuant to any agreement,
arrangement or understanding; or
(iii) which are Owned Beneficially, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of such securities;
provided, however, that a Person shall not be deemed the Beneficial Owner of,
or to Own Beneficially, any security if such Person has the right to vote such
security pursuant to an
-3-
<PAGE> 7
agreement, arrangement or understanding which (1) arises solely from a
revocable proxy given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report); provided,
further, however, that a Person will not be deemed the Beneficial Owner of, or
to Own Beneficially, any security solely by reason of (i) such Person's
position as a director (but not an officer) of another Person, or (ii) direct
or indirect ownership of less than a ten percent equity interest in another
Person by such Person and such Person's Affiliates and Associates, or (iii)
both such ownership and position.
(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 time, on such date, provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York time, on the next succeeding Business
Day.
(g) "Common Shares" when used with reference to the Company shall mean
the shares of Common Stock, without par value, of the Company, provided,
however, that, if the company is the continuing or surviving corporation in a
transaction
-4-
<PAGE> 8
described in Section 11(d) (ii) hereof, "Common Shares" when
used with reference to the Company shall mean the capital stock
with the greatest aggregate voting power of the Company, or, if
the Company is a Subsidiary of another Person, the Person
having outstanding equity securities which ultimately controls
the Company. "Common Shares" when used with reference to any
Person other than the Company shall mean the capital stock with
the greatest aggregate voting power of such Person, or, if such
Person is directly or indirectly owned by a Person having
outstanding equity securities, the capital stock with the
greatest aggregate voting power of the Person having
outstanding equity securities which ultimately controls such
first-mentioned Person.
(h) "Company" shall mean The Timken Company, an Ohio corporation.
(i) "Current Per Share Market Price" shall have the meaning given
thereto in Section 11(f) hereof.
(j) "Distribution Date" shall mean the earliest of (i) the Close of
business on the tenth calendar day (or, unless the Distribution Date shall have
previously occurred, such later date as may be specified by a majority of the
Directors of the Company) after the Share Acquisition Date, (ii) the Close of
business on the tenth calendar day (or, unless the Distribution Date shall have
previously occurred, such later date as may be specified by a majority of the
Directors of the Company) after the date of the commencement of
-5-
<PAGE> 9
a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company or any employee benefit or stock ownership plan of
the Company or an entity holding Common Shares of the Company for or pursuant
to the terms of any such plan), if upon the consummation thereof such Person
would be the Beneficial Owner of 20% or more of the outstanding Common Shares,
and (iii) the Close of business on the tenth calendar day after the first date
of public announcement by the Company or an Acquiring Person (by press release,
filing made with the Securities and Exchange Commission or otherwise) of the
first occurrence of a Triggering Event.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(l) "Expiration Date" shall mean the earliest of (i) the Close of
business on the Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 22 hereof, and (iii) the time at which all
exercisable Rights are exchanged as provided in Section 11(r) hereof.
(m) "Final Expiration Date" shall mean the tenth anniversary of the
Record Date.
(n) "Flip-In Event" shall mean any event described in clauses (A), (B)
or (C) of Section 11(a)(ii) hereof.
(o) "Flip-Over Event" shall mean any event described in clauses (i),
(ii) or (iii) of Section 11(d) hereof.
-6-
<PAGE> 10
(p) "Issuer" shall have the meaning given thereto in Section 11(d)
hereof.
(q) "Person" shall mean any individual, corporation or other legal
entity, and shall include any successor (by merger or otherwise) of such
entity.
(r) "Purchase Price" shall mean the price per Common Share set forth on
the face of the Right Certificate, subject to adjustment as provided for in
this Agreement.
(s) "Record Date" shall have the meaning given thereto in the Preamble
of this Agreement.
(t) "Redemption Price" shall mean $.05 ($.025 to reflect the
two-for-one stock split effected in August, 1988) per Right, appropriately
adjusted by resolution of the Board of Directors of the Company to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof.
(u) "Right" shall have the meaning given thereto in the Preamble of
this Agreement.
(v) "Right Certificate" shall have the meaning given thereto in Section
3(a) hereof.
(w) "Rights Agent" shall have the meaning given thereto in the Preamble
of this Agreement.
(x) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person (by press release, filing
made with the Securities and Exchange Commission or otherwise) that an
Acquiring Person has become such.
-7-
<PAGE> 11
(y) "Subsidiary" shall mean any corporation or other legal entity of
which a majority of the voting power of the voting equity securities or equity
interests is Owned Beneficially by another Person.
(z) "Summary of Rights" shall have the meaning given thereto in Section
3(d) hereof.
(aa) "Trading Days" shall have the meaning given thereto in Section
11(f) hereof.
(bb) "Triggering Event" shall mean any Flip-In Event or Flip-Over
Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof shall also be, prior to the
Distribution Date, the holders of the Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time act as Co-Rights Agent or
appoint such Co-Rights Agents as it may deem necessary or desirable. Any
actions which may be taken by the Rights Agent pursuant to the terms of this
Agreement may be taken by any such Co-Rights Agent.
Section 3. ISSUANCE OF RIGHT CERTIFICATES. (a) Until the Distribution
Date, (i) the Rights will be evidenced (subject to the provisions of Section
3(d) hereof) by the certificates for Common Shares registered in the names of
the record holders thereof (which certificates for Common Shares
-8-
<PAGE> 12
shall also be deemed to be Right Certificates) and not by separate Right
Certificates and (ii) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares in the stock
transfer books of the Company maintained by the Company or its appointed
transfer agent. As soon as practicable after the Distribution Date, the Rights
Agent shall send, by first-class, postage prepaid mail, to each record holder
of Common Shares as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit A hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held, together
with a notice setting forth the Purchase Price as in effect on the Distribution
Date. As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) Any Right Certificate issued pursuant to this Section 3 that
represents Rights Owned Beneficially by an Acquiring Person or any Affiliate or
Associate thereof and any Right Certificate issued at any time upon the
transfer of any Rights to an Acquiring Person or any Affiliate or Associate
thereof, and any Right Certificate issued pursuant to Sections 6 or 11 hereof
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall be subject to and contain the
following legend or such similar legend as the Company may deem appropriate and
-9-
<PAGE> 13
as is not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange, or
relating to any transaction reporting system, on which the Common Shares or the
Rights may from time to time be listed or quoted, or to conform to usage:
The Rights represented by this Right Certificate were issued to a Person
who was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person. This Right Certificate and the Rights represented hereby may become
void in the circumstances specified in the Rights Agreement.
(c) On the Record Date or as soon as practicable thereafter, the
Company shall send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit B (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of Common Shares as of the Record Date, at
the address of such holder shown on the stockholder list of the Company as of
the Record Date. With respect to certificates for Common Shares outstanding as
of the Record Date, until the Distribution Date, the Rights will be evidenced
by such certificates for Common Shares registered in the names of the holders
thereof. Until the Distribution Date (or earlier of the Expiration Date or the
Final Expiration Date), the surrender for transfer of any certificate for
Common Shares outstanding on the Record Date, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the
-10-
<PAGE> 14
transfer of the Rights associated with the Common Shares
represented thereby.
(d) Certificates representing Common Shares issued (including, without
limitation, any certificates for Common Shares issued upon conversion of the
Company's convertible securities or upon exercise of stock options or payment
of restricted stock units) or surrendered for transfer or exchange after the
Record Date but prior to the earlier of the Distribution Date or the Expiration
Date or the Final Expiration Date, shall have stamped on, impressed on, printed
on, written on or otherwise affixed to them the following legend or such
similar legend as the Company may deem appropriate and is not inconsistent with
the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange, or relating to any transaction
reporting system, on which the Common Shares or the Rights may from time to
time be listed or quoted, or to conform to usage:
This Certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between The Timken Company and
Morgan Shareholder Services Trust Company, dated as of December 18, 1986
(the "Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal executive
offices of The Timken Company. Under certain circumstances, as set forth
in the Rights Agreement, such Rights may be redeemed, may expire, may be
amended or
-11-
<PAGE> 15
may be evidenced by separate certificates and no longer be evidenced
by this Certificate. Rights Owned Beneficially by an Acquiring Person or
any Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement) and any subsequent holder of such Rights may become void in the
circumstances specified in the Rights Agreement. The Timken Company shall
mail to the holder of this Certificate a copy of the Rights Agreement
without charge within five business days after receipt of a written request
therefor.
With respect to certificates containing the legend described above, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and
the forms of election to purchase Common Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit A hereto
with such changes, 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 securities exchange or
relating to any transaction reporting system on which the Common Shares or the
Rights may from time
-12-
<PAGE> 16
to time be listed or quoted, or to conform to usage, or to reflect any
amendment or change herein or of the rights as hereafter provided. Subject to
the provisions of Section 11 and 21 hereof, the Right Certificates, whenever
issued, shall be dated as of the Record Date, and on their face shall entitle
the holders thereof to purchase such number of Common Shares as shall be set
forth therein at the Purchase Price, but the number of such shares and the
Purchase Price shall be subject to adjustment as provided in this Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right
Certificates shall be executed on behalf of the Company by its Chairman - Board
of Directors, President or any Vice President, either manually or by facsimile
signature, and 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 Right Certificates
shall be manually countersigned by the Rights 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 Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such
-13-
<PAGE> 17
officer of the Company; and any Right Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at its office in New York, New York and at such other offices
as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange, or relating to any transaction reporting system, on which the Common
Shares or the Rights may from time to time be listed or quoted, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. (a) TRANSFER. SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED. LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of Section 13 hereof, at any time after the close of business
on the Distribution Date, and at or prior to the close of business on the
earlier of the Expiration Date or the Final Expiration Date, any Right
Certificate or Certificates may be transferred,
-14-
<PAGE> 18
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of
Common Shares as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. Thereupon the Rights
Agent shall countersign and deliver to the person entitled thereto a Right
Certificate or Right 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 Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expense incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company shall make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu
-15-
<PAGE> 19
of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date and at or prior to the Close of
business on the Expiration Date upon surrender of the Right Certificate, with
the form of election to purchase on the reverse side thereof duly executed, to
the Rights Agent at an office of the Rights Agent designated for such purpose,
together with an amount in cash, in lawful money of the United States of
America by certified check or bank overdraft payable to the order of the
Company, equal to the Purchase Price for each Common Share as to which such
surrendered Rights are exercised, or, if applicable, the exercise price per
Right specified in Sections 11(a) (ii) or 11(d) hereof, as the case may be,
together with an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with Section 9
hereof; provided, however, that after the later of the first occurrence of a
Triggering Event and the Distribution Date, in lieu of the cash payment payable
to the Company referred to in this sentence, the registered holder of a Right
Certificate evidencing exercisable Rights (which shall not include Rights that
have become void pursuant to Section 11(a) (ii) hereof) may, at its option,
exercise the Rights evidenced thereby in whole or in
-16-
<PAGE> 20
part in accordance with this Section 7(a) upon surrender of the Right
Certificate as described above together with an election to exercise such
Rights without payment of cash on the reverse side thereof duly completed.
With respect to any Rights as to which such an election to exercise without
payment of cash is made, the holder shall receive, upon exercise, a number of
Common Shares or other securities, as the case may be, having a Current Per
Share Market Price (on the date of the first occurrence of any Triggering
Event) equal to the excess of (i) the aggregate Current Per Share Market Price
of the Common Shares or other securities (on the date of the first occurrence
of any Triggering Event) that would have been issuable upon payment of the cash
amount as described above over (ii) the amount of cash that would have been
payable to the Company upon exercise absent such election.
(b) The Purchase Price for each Common Share pursuant to the exercise
of a Right shall initially be $135.00 ($67.50 as adjusted to reflect the
two-for-one stock split effected in August, 1988), and shall be subject to
adjustment from time to time as provided in Section 11 hereof.
(c) Subject to Sections 7(d), 1l(a)(ii), and 11(d) hereof, upon receipt
of a Right Certificate representing exercisable Rights with the form of
election to purchase duly executed, accompanied by either payment as described
above or a duly completed election to exercise without payment of cash, the
Rights Agent shall promptly (i) requisition from any
-17-
<PAGE> 21
transfer agent of the Common Shares (or make available, if the Rights Agent is
the transfer agent) certificates representing the number of Common Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, (ii) promptly after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names
as may be designated by such holder, (iii) if appropriate, requisition from the
Company the amount of cash to be paid in lieu of the issuance of fractional
shares in accordance with Section 14 hereof or in lieu of the issuance of
Common Shares in accordance with Section 11(a) (iii) hereof, and (iv) if
appropriate, after receipt, promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to such holder's duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder of Rights upon the occurrence of any
-18-
<PAGE> 22
purported exercise as set forth in this Section 7 unless the certificate
contained in the form of election to purchase on the reverse side of the Right
Certificate surrendered for such exercise shall have been properly completed
and duly executed by the registered holder thereof and unless the registered
holder of Rights shall have provided such additional evidence of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company or the Rights Agent shall reasonably request.
Section 8. CANCELLATION OF RIGHT CERTIFICATES. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its stock transfer
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Right Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
-19-
<PAGE> 23
Section 9. RESERVATION AND AVAILABILITY OF COMMON SHARES. The Company
covenants and agrees that:
(a) it shall cause to be reserved and kept available out of its
authorized and unissued Common Shares or any authorized and issued Common
Shares held in its treasury not otherwise reserved for issuance, the number of
Common Shares that will be sufficient to permit the exercise pursuant to
Section 7 hereof of all outstanding Rights. Such number of Common Shares
reserved and kept available shall be adjusted from time to time, if and to the
extent required, upon the occurrence of any of the events described in Section
11 hereof;
(b) So long as the Company's Common Shares are listed on a national
securities exchange, the Company shall endeavor to cause, from and after such
time as the Rights become exercisable, all Common Shares reserved for issuance
upon exercise of the Rights to be listed on such exchange upon official notice
of issuance;
(c) The Company shall take all such action as may be necessary to
ensure that all Common Shares delivered upon exercise of Rights shall be, at
the time of delivery of the certificates for such shares (subject to payment of
the Purchase Price), duly and validly authorized and issued and fully paid and
nonassessable; and
(d) The Company shall pay when due and payable any and all federal and
state transfer taxes and similar charges which may be payable in respect of the
issuance or
-20-
<PAGE> 24
delivery of the Right Certificates or of any Common Shares 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 Right
Certificates to a Person other than, or the issuance or delivery of
certificates for the Common Shares in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for exercise, or
to issue or deliver any certificates for Common Shares upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due and
shall not have any liability in respect of any income tax imposed upon any
Person in respect of any Right.
(e) The Company will use its best efforts to (i) file on an appropriate
form, as soon as practicable following the later to occur of a Triggering Event
or the Distribution Date, a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities
purchasable upon exercise of the Rights, (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 Securities Act) until the earlier of (a) the
date as of which the Rights are no
-21-
<PAGE> 25
longer exercisable for such securities, and (b) the Expiration Date. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective and upon any such
suspension, the Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
Notwithstanding anything in this Agreement to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite registration or
qualification in such jurisdiction shall not have been effected or the exercise
of the Rights shall not be permitted under applicable law.
(f) Notwithstanding anything in this Agreement to the contrary, the
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 22 or Section 25 hereof, take any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish or otherwise eliminate the benefits intended to be afforded by
the Rights.
(g) In the event that the Company is obligated to pay cash and/or
distribute other property pursuant to Sections 11, 13, and 14 hereof, it will
make all arrangements
-22-
<PAGE> 26
necessary so that such cash and/or property are available for distribution by
the Rights Agent, if and when appropriate.
Section 10. COMMON SHARE RECORD DATE. Each Person in whose name any
certificate for Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made,
provided, however, that if the date of such surrender and payment is a date
upon which the Common Shares transfer books of the issuer of the Common Shares
are closed, such Person shall be deemed to have become the record holder of
such Common Shares on, and such certificates shall be dated, the next
succeeding Business Day on which such Common Shares transfer books are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a stockholder of the Company
with respect to Common 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 in
this Agreement.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND TYPE OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the
-23-
<PAGE> 27
number and type of Common Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event that the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) or in Section 11(d) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted, by resolution adopted by the Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes, so that the holder of
any Right exercised after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the Common Shares
transfer books of the Company were open, such holder would have owned upon such
exercise and been entitled to
-24-
<PAGE> 28
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a) (i) and Section 11(a) (ii) or Section 11(d) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a) (ii)
or Section 11(d) hereof.
(ii) In the event that:
(A) any Acquiring Person or any Affiliate or Associate of any
Acquiring Person, at any time after the date of this Agreement, directly or
indirectly, shall (1) merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of
such merger or combination, other than in a transaction subject to Section
11(d) (ii) hereof, (2) merge or otherwise combine with any Subsidiary of the
Company, (3) in one or more transactions, transfer any assets to the Company or
any Subsidiary of the Company in exchange (in whole or in part) for shares of
any class of capital stock of the Company, securities exercisable for or
convertible into shares of any class of capital stock of the Company or
securities of any Subsidiary of the Company, or otherwise obtain from the
Company or any Subsidiary of the Company, with or without
-25-
<PAGE> 29
consideration, any additional shares of any class of capital stock of the
Company, securities exercisable for or convertible into shares of any class of
capital stock of the Company or securities of any Subsidiary of the Company
(other than as part of a pro rata distribution to all holders of shares of any
class of capital stock of the Company), (4) sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise dispose (in one or more transactions),
to, from or with, as the case may be, the Company or any Subsidiary of the
Company, other than in a transaction subject to Section 11(d) hereof, assets on
terms and conditions less favorable to the Company than the Company would be
able to obtain in arm's-length negotiation with an unaffiliated third party,
(5) receive any compensation from the Company or any Subsidiary of the Company
other than compensation for full-time employment as a regular employee at rates
in accordance with the Company's (or its Subsidiaries') past practices, or (6)
receive the benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided by the Company or
any Subsidiaries of the Company,
-26-
<PAGE> 30
(B) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or other combination
of the Company with any Subsidiary of the Company or any other transaction or
series of transactions (whether or not with or into or otherwise involving an
Acquiring Person), other than a transaction subject to Section 11(d) hereof,
which has the effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities
or of securities exercisable for or convertible into equity securities of the
Company or any Subsidiary of the Company which is Owned Beneficially by any
Acquiring Person or any Affiliate or Associate of any Acquiring Person, or
(C) any Person (other than the Company, any Subsidiary of the
Company or any employee benefit or stock ownership plan of the Company or an
entity holding Common Shares of the Company for or pursuant to the terms of any
such plan) who or which, together with all Affiliates and Associates of such
Person, shall, after the date of this Agreement and prior to the Final
Expiration Date, be the Beneficial Owner of 32.5% or more of the outstanding
Common Shares,
-27-
<PAGE> 31
then, and in each such case, the Company shall make adjustments in the terms of
the Rights so that each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof in accordance with
the terms of this Agreement, at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of Common
Shares for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event, such number of Common Shares as shall equal
the result obtained by (x) multiplying the then-current Purchase Price by the
then number of Common Shares for which a Right was exercisable immediately
prior to the first occurrence of a Triggering Event and dividing that product
by (y) 50% of the Current Per Share Market Price of the Common Shares
(determined pursuant to Section 11(f) hereof) on the date of the first
occurrence of a Triggering Event. Notwithstanding anything in this Agreement
to the contrary, from and after the later of the Distribution Date and the
first occurrence of a Flip-In Event, (1) any Rights that are or were acquired
or Beneficially Owned by any Acquiring Person (or any Affiliate or Associate of
such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of this
Agreement, (2) no Right Certificate shall be issued pursuant to this Agreement
that represents Rights Beneficially Owned by an Acquiring Person or any
Affiliate or Associate thereof, (3) no Right Certificate shall be issued at
-28-
<PAGE> 32
any time upon the transfer of any Rights to an Acquiring Person or any
Affiliate or Associate thereof or to any nominee of such Acquiring Person or
Affiliate or Associate thereof, and (4) any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person or any Affiliate or Associate
thereof shall be cancelled.
(iii) Upon the occurrence of a Flip-In Event, if there shall not be
sufficient authorized but unissued Common Shares or issued Common Shares held
in treasury to permit the exercise in full of the Rights in accordance with the
foregoing subsection (ii), the Board of Directors of the Company shall use its
best efforts promptly to authorize and, subject to the provisions of Section
9(e) hereof, make available for issuance additional Common Shares; provided,
however, that if at any time after 90 calendar days after the first occurrence
of a Flip-In Event, there shall not be sufficient Common Shares available for
issuance upon the exercise of a Right, then the Company shall deliver, upon the
surrender of such Right and without requiring payment of the Purchase Price,
Common Shares (to the extent available), and then cash (to the extent permitted
by applicable law and any agreements or instruments to which the Company is a
party in effect immediately prior to the first occurrence of any Flip-In
Event), which Common Shares and cash shall have an aggregate value equal to the
excess of (1) the aggregate Current Per Share Market Price of all the Common
Shares issuable in accordance with subsection (ii) of
-29-
<PAGE> 33
this Section 11(a) upon the exercise of a Right over (2) the product of the
then-current Purchase Price multiplied by the number of Common Shares for which
a Right was exercisable immediately prior to the first occurrence of a
Triggering Event. To the extent that any legal or contractual restrictions
prevent the Company from paying the full amount of cash payable in accordance
with the foregoing sentence, the Company shall pay to holders of the Rights as
to which such payments are being made all amounts which are not then restricted
on a pro rata basis. The Company shall continue to make payments on a pro rata
basis as funds become available until such payments have been paid in full.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Shares (or securities convertible
into Common Shares) at a price per Common Share (or having a conversion price
per Common Share, if a security convertible into Common Shares) less than the
Current Per Share Market Price of the Common Shares on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common
-30-
<PAGE> 34
Shares which the aggregate offering price of the total number of Common Shares
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current Per
Share Market Price and the denominator of which shall be the number of Common
Shares outstanding on such record date plus the number of additional Common
Shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined by resolution adopted by the Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. Common Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.
(c) In the event that the Company shall fix a record date for the
making of a distribution to all holders of the Common Shares (including any
such distribution made in connection with a merger or other combination in
which the
-31-
<PAGE> 35
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend at a rate not
in excess of 125% of the rate of the highest regular periodic cash dividend
paid during the immediately preceding four years), assets, stock (other than a
dividend payable in Common Shares) or subscription rights, options or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Per Share Market Price of the
Common Shares on such record date, less the fair market value (as determined by
resolution adopted by the Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes) of the portion of the evidences of indebtedness so to be
distributed, cash (in the case of regular periodic cash dividends at a rate in
excess of 125% of the rate of the last cash dividend theretofore paid, only
that portion in excess of 125% of such rate), assets, stock or such
subscription rights, options or warrants applicable to one Common Share and the
denominator of which shall be such Current Per Share Market Price of the Common
Shares. Any adjustments pursuant to this Section 11(c) shall be made
successively whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall
-32-
<PAGE> 36
again be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
(d) In the event that, following the Share Acquisition Date, directly
or indirectly:
(i) the Company shall consolidate with, or merge with or into,
any other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger; or
(ii) any Person shall consolidate with the Company, or merge
with or into the Company and the Company shall be the continuing or
surviving corporation of such merger or consolidation and, in connection
with such merger or consolidation, all or part of the Common Shares shall
be changed into or exchanged for stock or other securities of any other
person or cash or any other property; or
(iii) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of
its Subsidiaries) representing in the aggregate more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any Person or Persons;
then, and in each such case, proper provision shall be made so that (A) each
holder of a Right (except as otherwise provided herein) shall thereafter have
the right to receive, upon the exercise thereof in accordance with the terms of
this Agreement at an exercise price per Right equal to the product of the
then-current Purchase Price multiplied by the number of Common Shares for which
a Right was exercisable immediately prior to the first occurrence of a
Triggering Event, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable Common Shares of the Issuer (as such term is
hereinafter defined), free and clear of any liens, encumbrances
-33-
<PAGE> 37
and other adverse claims and not subject to any rights of call or first
refusal, as shall be equal to the result obtained by (x) multiplying the
then-current Purchase Price by the number of Common Shares for which a Right is
exercisable immediately prior to the first occurrence of a Triggering Event and
dividing that product by (y) 50% of the Current Per Share Market Price of the
Common Shares of the Issuer (determined pursuant to Section 11(f) hereof), on
the date of consummation of such Flip-Over Event; (B) the Issuer shall
thereafter be liable for, and shall assume, by virtue of the consummation of
such Flip-Over Event, all the obligations and duties of the Company pursuant to
this Agreement; (C) the term "Company" shall thereafter be deemed to refer to
the Issuer; and (D) the Issuer shall take such steps (including, without
limitation, the reservation of a sufficient number of its Common Shares to
permit the exercise of all outstanding Rights) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be possible, in relation
to its Common Shares thereafter deliverable upon the exercise of the Rights.
The Company shall not consummate any of the transactions listed above in
clauses (i) through (iii), inclusive, unless (1) the Issuer shall have Common
Shares or proper provision (as, for example, if the Issuer shall not be a
corporation) shall be made so that the Issuer shall create or otherwise make
available for purposes of the exercise of the Rights in accordance with the
terms of this Agreement, a type or types of
-34-
<PAGE> 38
security or securities having a fair market value at least equal to the
economic value of the Common Shares which each holder of a Right would have
been entitled to receive if the Issuer had Common Shares; in which event such
securities shall be deemed to be Common Shares, and (2) prior thereto the
Company and the Issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. Notwithstanding the foregoing, upon the
occurrence of any of the events listed above in clauses (i) through (iii),
inclusive, any Rights that are or were at any time Owned Beneficially by any
Acquiring Person or any Affiliate or Associate of such Acquiring Person after
the date upon which such Acquiring Person became such shall become void and any
holder of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. The provisions of this Section 11(d)
shall similarly apply to successive mergers, combinations, or sales or other
transfers.
(e) For purposes of Section 11(d), "Issuer" shall mean (i) in the case
of any Flip-Over Event described in Sections 11(d)(i) or (ii) above, the Person
that is the continuing, surviving, resulting or acquiring Person (including the
Company as the continuing or surviving corporation of a transaction described
in Section 11(d)(ii) above), and (ii) in the case of any Flip-Over Event
described in Section 11(d) (iii) above, the Person that is the party receiving
the greatest portion of the assets or earning power (including, without
limitation, securities creating any obligation on the part of
-35-
<PAGE> 39
the Company and/or any of its Subsidiaries) transferred pursuant to such
transaction or transactions; PROVIDED, HOWEVER, that, in any such case, (A) if
(1) no class of equity security of such Person is, at the time of such merger,
consolidation or transaction and has been continuously over the preceding
12-month period, registered pursuant to Section 12 of the Exchange Act, and (2)
such Person is a Subsidiary, directly or indirectly, of another person, a class
of equity security of which is and has been so registered, the term "Issuer"
shall mean such other Person; and (B) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, a class of equity security of
two or more of which are and have been so registered, the term "Issuer" shall
mean whichever of such Persons is the issuer of the equity security having the
greatest aggregate market value. Notwithstanding the foregoing, if the Issuer
in any of the Flip-Over Events listed above is not a corporation or other legal
entity having outstanding equity securities, then, and in each such case, (x)
if the Issuer is directly or indirectly wholly owned by a corporation or other
legal entity having outstanding equity securities, then all references to
Common Shares of the Issuer shall be deemed to be references to the Common
Shares of the corporation or other legal entity having outstanding equity
securities which ultimately controls the Issuer, and (y) if there is no such
corporation or other legal entity having outstanding equity securities, (I)
proper provision shall be made so that the Issuer shall create or otherwise
make
-36-
<PAGE> 40
available for purposes of the exercise of the Rights in accordance with the
terms of this Agreement, a kind or kinds of security or securities having a
fair market value at least equal to the economic value of the Common Shares
which each holder of a Right would have been entitled to receive if the Issuer
had been a corporation or other legal entity having outstanding equity
securities; and (II) all other provisions of this Agreement shall apply to the
issuer of such securities as if such securities were Common Shares. The
Company shall not consummate any Flip-Over Event, unless the Issuer shall have
a sufficient number of authorized Common Shares (or other securities as
contemplated above) which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with Section 11(d) and
unless prior to such consummation the Company and the Issuer shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in subsections 11(d) and 11(e) and further providing
that as promptly as practicable after the consummation of any Flip-Over Event,
the Issuer shall:
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and securities issuable
upon exercise of the Rights on an appropriate form, and shall 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 Securities Act) until the Expiration Date;
(ii) take all 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;
and
-37-
<PAGE> 41
(iii) Deliver to holders of the Rights historical financial
statements for the Issuer 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 Section 11(d) and Section 11(e) shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Flip-Over Event occurs at any time after the occurrence of a Flip-In
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 11(d) hereof.
(f) For the purpose of any computation hereunder, the current per share
market price of Common Shares on any date (the "Current Per Share Market
Price") shall be deemed to be the average of the daily closing prices per share
of the Common Shares for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, provided, however, that in
the event that the Current Per Share Market Price of the Common Shares is
determined during a period following the announcement by the issuer of such
Common Shares (i) of a dividend or distribution on such Common Shares payable
in such Common Shares or securities convertible into such Common Shares or (ii)
any subdivision, combination or reclassification of such Common Shares, and
prior to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution or the record date for such subdivision, combination
or reclassification, then, and in each such case, the Current Per Share Market
Price shall be
-38-
<PAGE> 42
appropriately adjusted to take into account ex-dividend trading or to reflect
the Current Per Share Market Price per Common Share equivalent. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Shares are not listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Shares
are listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then
in use, or, if on any such date the Common Shares 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 Shares selected by the
Directors of the Company. The term "Trading Day" shall mean any day on which
the principal national securities exchange on which the Common Shares are
listed or admitted to trading is open for the transaction of business or, if
the Common Shares are not listed or admitted to trading on any national
securities exchange, a
-39-
<PAGE> 43
Business Day. If the Common Shares are not publicly held or not so listed or
traded, or not the subject of available bid and asked quotes, the Current Per
Share Market Price shall mean the fair value per share of the Common Shares as
determined in good faith by the Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(g) Except as set forth below, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in such price, provided, however, that any adjustments which by
reason of this Section 11(g) 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
thousandth of a share as the case may be. Notwithstanding the first sentence
of this Section 11(g), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the transaction
which requires such adjustment or (ii) the date of the expiration of the right
to exercise any Rights.
(h) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Common Shares,
thereafter the number of such other shares so
-40-
<PAGE> 44
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Shares contained in Section 11 hereof and
the provisions of Sections 7, 9, 10 and 13 hereof with respect to the Common
Shares shall apply on like terms to any such other shares.
(i) 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 Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(j) Unless the Company shall have exercised its election as provided in
Section 11(k) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Common Shares (calculated to the nearest thousandth) obtained by (i)
multiplying (x) the number of Common Shares covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
-41-
<PAGE> 45
(k) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of Common Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of Common Shares for which a Right
was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least
10 calendar days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(k), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
-42-
<PAGE> 46
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and 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 Right Certificates on the record date
specified in the public announcement.
(l) Irrespective of any adjustment or change in the Purchase Price or
the number or type of Common Shares issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price per Common Share and the number of Common Shares
which were expressed in the initial Right Certificate issued hereunder.
(m) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the Common Shares
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 Common
Shares at such adjusted Purchase Price.
-43-
<PAGE> 47
(n) 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 issuing to the holder of any Right exercised after such record date
the Common Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Common Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment, provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional Common Shares upon the occurrence of the event requiring such
adjustment.
(o) Anything in Sections 11(a) through 11(n), inclusive, hereof to the
contrary notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that a majority - Board of Directors of
Directors of the Company shall determine to be advisable in order that any
consolidation or subdivision of the Common Shares, issuance wholly for cash of
any of the Common Shares at less than the current market price, issuance wholly
for cash of Common Shares or securities which by their terms are convertible
into or exchangeable for Common Shares, stock
-44-
<PAGE> 48
dividends or issuance of rights, options or warrants referred to hereinabove in
this Section 11, hereafter made by the Company to holders of its Common Shares
shall not be taxable to such shareholders.
(p) The Company covenants and agrees that it shall not (i) merge with
or into, (ii) otherwise combine with, or (iii) sell or transfer to, in one or
more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries taken as a whole,
any other Person if at the time of or immediately after such merger,
combination or sale there would be any charter or by-law provisions or any
rights, options or warrants or other instruments or securities outstanding or
agreements in effect or any other actions taken which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights unless such action is approved by a majority of the Board of Directors
of the Company or the affirmative vote of the holders of at least 80% of the
then-outstanding Rights Owned Beneficially by Persons other than any Acquiring
Persons or any Affiliates or Associates thereof. The Company shall not
consummate any such merger, combination or sale unless prior thereto the
Company and such other Person shall have executed and delivered to the Rights
Agent a supplement to this Agreement so providing.
(q) The Company covenants and agrees that, after the Distribution
Date, it shall not, except as permitted by
-45-
<PAGE> 49
Section 22 hereof, take any action the purpose or effect of which is
substantially to diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, unless such action is approved by a majority of the
Board of Directors of the Company or 80% vote, as provided in Section 11(p)
hereof.
(r) Notwithstanding the provisions of Sections 11(a) (ii) and 11(d)
hereof, the Board of Directors of the Company may, at its option, at any time
after the later of the Distribution Date and the first occurrence of a
Triggering Event, exchange all or part of the then-outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a) (ii) hereof) for Common Shares at an exchange ratio
of one Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
such Subsidiary, or any entity holding Common Shares for or pursuant to the
terms of any such plan) together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding. Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights
-46-
<PAGE> 50
pursuant to this Section 11(r), and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
with respect to such Rights thereafter of the holder of such Rights shall be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. Promptly after the action of the
Board of Directors of the Company ordering the exchange of any Rights pursuant
to this Section 11(r), the Company shall publicly announce such action, and
within 10 calendar days thereafter shall give notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent; PROVIDED, HOWEVER, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. 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 exchange shall state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a) (ii)) held by each
holder of Rights. In any exchange pursuant to this Section 11(r), the Company,
at its option, may substitute for any Common Share exchangeable for a Right,
(i) cash, (ii) debt securities of the
-47-
<PAGE> 51
Company, (iii) other assets, or (iv) any combination of the foregoing, in any
event having an aggregate value which the Board of Directors of the Company
shall have determined in good faith to be equal to the Current Per Share Market
Price of one Common Share (determined pursuant to Section 11(f) hereof) on the
Trading Day immediately preceding the date of exchange pursuant to this Section
11(r). The Company shall not be required to issue fractions of Common Shares
or to distribute certificates which evidence fractional Common Shares upon the
exchange of a Right. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional Common Shares would otherwise be issuable an amount in
cash equal to the same fraction of the Current Per Share Market Price of a
whole Common Share (determined pursuant to Section 11(f) hereof) on the Trading
Day immediately preceding the date of exchange pursuant to this Section 11(r).
Section 12. NOTICE OF ADJUSTED PURCHASE PRICE OR NUMBER OR TYPE OF
SHARES TO HOLDERS OF RIGHTS. Whenever an adjustment is made as provided in
Section 11 hereof, the Company shall, as promptly as reasonably practicable,
(a) prepare a certificate setting forth such adjustment (including a
description of any Rights which have become void as a result thereof) and a
brief statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares a copy of
-48-
<PAGE> 52
such certificate, and (c) mail a brief summary of such
adjustment to each holder of a Right Certificate in accordance
with Section 24 hereof.
Section 13. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid as promptly as practicable to the registered
holders of the Right 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 the purposes of this Section
13(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 for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted
-49-
<PAGE> 53
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 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 by resolution adopted by the Directors of the
Company shall be used and shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of fractional Common Shares, the Company may
pay to the registered holders of Right 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 Common Share. For purposes of this Section
13(b), the current market value of a Common Share shall be the closing price of
a Common Share (as determined pursuant to the second sentence of Section 11(f)
hereof) for the Trading Day immediately prior to the date of such exercise.
-50-
<PAGE> 54
(c) The holder of a Right by the acceptance of the Rights expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
Section 14. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares), and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in such holder's own behalf
and for such holder's own benefit, enforce, and may, subject to the provisions
hereof, institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, such holder's right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of any Person
subject to this Agreement.
-51-
<PAGE> 55
Section 15. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Share certificate) is
registered on the transfer records maintained by the Rights Agent (or,
prior to the Distribution Date, by the Company's appointed transfer
agent) as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Share certificate made by
anyone other than the Company, its appointed transfer agent or the
Rights Agent) for all purposes whatsoever, and neither the
-52-
<PAGE> 56
Company nor the Rights Agent shall be affected by any notice to the contrary.
Section 16. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares 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 Right Certificate be construed to confer upon the holder of any Right
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 23 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof or exchanged pursuant to the provisions of Section 11(r)
hereof.
Section 17. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses incurred in the administration and execution of this Agreement and the
exercise and performance of
-53-
<PAGE> 57
its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, suit, action,
proceeding or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Shares 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 18. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent
-54-
<PAGE> 58
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 20 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned, and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned. In case at that
time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name
or in its changed name.
-55-
<PAGE> 59
In all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
Section 19. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter 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 any one of the Chairman - Board of
Directors, the President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
-56-
<PAGE> 60
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution and delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 hereof (including any adjustment which results in Rights becoming
void) 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 Right
Certificates after actual notice of any such adjustment or voidance); nor shall
it by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Common Shares to be issued pursuant to
this
-57-
<PAGE> 61
Agreement or any Right Certificate or as to whether any Common Shares will,
when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it shall perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent or the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman - Board of Directors, the President, the Secretary, the
Treasurer, any Vice President, the General Counsel or any Assistant or
Associate General Counsel of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein
-58-
<PAGE> 62
shall preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
default, neglect or misconduct, provided reasonable care was exercised in the
selection and continued employment thereof. The Rights Agent shall not be
under any duty or responsibility to insure compliance with any applicable
federal or state securities laws in connection with the issuance, transfer or
exchange of Right Certificates.
(j) The Rights Agent shall promptly remit to the Company any funds paid
to it upon exercise of the Rights pursuant to Section 7 hereof.
Section 20. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 calendar days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 calendar days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and
-59-
<PAGE> 63
to each transfer agent of the Common Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 60 calendar days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Right Certificate (who shall, with such notice, submit
such holder's Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the States of New York or Ohio, (or of any other state of the United States
so long as such corporation is authorized to do business as a banking
institution in the States of New York or Ohio), in good standing, having a
principal office in the States of New York or Ohio which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $500
million and maintains such offices as may be required to comply
-60-
<PAGE> 64
with any applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange, or relating to any
transaction reporting system, on which the Common Shares or the Rights may from
time to time be listed or quoted. After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 20, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 21. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Directors to reflect any adjustment or
-61-
<PAGE> 65
change in the Purchase Price per share and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement.
Section 22. REDEMPTION. (a) Prior to the Expiration Date, the Board
of Directors of the Company may, at its option, redeem all but not less than
all of the then-outstanding Rights at the Redemption Price at any time prior to
the Close of business on the later of (i) the Distribution Date and (ii) the
Share Acquisition Date.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights shall terminate and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Promptly after the action of its Board of Directors ordering
the redemption of the Rights, the Company shall publicly announce such action,
and within 10 calendar days thereafter, the Company shall give notice of such
redemption to the holders of the then-outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Company; PROVIDED, HOWEVER, that the failure to give, or any
defect in, any such notice shall not affect the validity of the redemption of
the Rights. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder
-62-
<PAGE> 66
receives the notice. The notice of redemption mailed to the holders of Rights
shall state the method by which the payment of the Redemption Price will be
made. The Company may, at its option, pay the Redemption Price in cash, Common
Shares (based upon the Current Per Share Market Price of the Common Shares
(determined pursuant to Section 11(f) hereof) at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors of the
Company (based upon the fair market value of such other consideration,
determined by the Board of Directors of the Company in good faith) or any
combination thereof.
(c) At any time following the Share Acquisition Date, the Directors of
the Company may relinquish their rights to redeem the Rights under paragraphs
(a) and (b) above by duly adopting a resolution to that effect. Immediately
upon adoption of such resolution, the rights of the Directors under the
portions of this Section 22 specified in such resolution shall terminate
without further action and without any notice.
Section 23. NOTICE OF CERTAIN EVENTS. (a) In case, after the
Distribution Date, the Company shall propose (a) to pay any dividend payable in
stock of any class to the holders of Common Shares or to make any other
distribution to the holders of Common Shares (other than a regular periodic
cash dividend at a rate which does not require an adjustment to the Purchase
Price pursuant to Section 11(c) hereof), or (b) to
-63-
<PAGE> 67
offer to the holders of Common Shares rights, options or warrants to subscribe
for or to purchase any additional Common Shares or shares of stock of any class
or any other securities, rights or options, or (c) to effect any
reclassification of its Common Shares (other than a reclassification involving
only the subdivision of outstanding Common Shares), or (d) to effect any merger
into or with, or other combination with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries, taken as a whole, to any
other Person or Persons, or (e) 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 Right Certificate, in accordance with Section 24 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution or rights, options or warrants,
or the date on which such reclassification, merger, combination, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Common Shares, if any such date
is to be fixed, and such notice shall be so given, in the case of any action
covered by clause (a) or (b) above, at least 20 calendar days prior to the
record date for determining holders of the Common Shares for purposes of such
action, and, in the case of any such other action, at
-64-
<PAGE> 68
least 20 calendar days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares,
whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a) (ii) or 11(d)
hereof shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to the Rights Agent and each holder of a Right
Certificate, in accordance with Section 24 hereof, a notice of the occurrence
of such event, which shall specify the event and the consequences of the event
to holders of Rights.
Section 24. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
The Timken Company
1835 Dueber Avenue, S.W.
Canton, Ohio 44706
Attention: Vice President and General
Counsel
Subject to the provisions of Section 20 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
-65-
<PAGE> 69
First Chicago Trust Company of New York
30 West Broadway
New York, New York 10007-2192
Attention: Charles D. Keryc, Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Rights Agent.
Section 25. SUPPLEMENTS AND AMENDMENTS. The Company and the Rights
Agent may supplement or amend this Agreement without the approval of any
holders of Rights at any time and from time to time, in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Rights Agent may deem necessary or desirable and which shall
not adversely affect the interests of the holders of the Rights.
Section 26. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 27. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders
-66-
<PAGE> 70
of the Right Certificates (and, prior to the Distribution Date, the Common
Shares) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates.
Section 28. ACTION BY DIRECTORS. Whenever any action hereunder or in
connection with the Rights is required or permitted to be taken by the
Directors of the Company, such action may be taken by the Executive Committee
of such Directors or by any other duly authorized committee thereof.
Section 29. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 30. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Ohio and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 31. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an
-67-
<PAGE> 71
original, and all such counterparts shall together constitute but one and the
same instrument.
Section 32. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
THE TIMKEN COMPANY
By /s/ J. Kevin Ramsey
-----------------------------
J. Kevin Ramsey
Vice President - Finance
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By /s/ Charles D. Keryc
-----------------------------
Charles D. Keryc
Vice President
-68-
<PAGE> 72
Exhibit A
Form of Right Certificate
Certificate No. R- ___________Rights
NOT EXERCISABLE AFTER JANUARY 6, 1997 OR EARLIER IF REDEEMED.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $.025 PER RIGHT PAYABLE, AT THE OPTION OF THE COMPANY, IN CASH,
COMMON SHARES OR OTHER CONSIDERATION ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT, AND ARE GOVERNED BY AND SUBJECT TO CHANGE PURSUANT
TO A RIGHTS AGREEMENT AS HEREIN DESCRIBED. [THE RIGHTS REPRESENTED BY
THIS CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES
SPECIFIED IN THE RIGHTS AGREEMENT. *]
Right Certificate
THE TIMKEN COMPANY
This certifies that _________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of December 18, 1986, amended and restated as of
February __, 1991 (the "Rights Agreement"), between The Timken Company, an Ohio
corporation (the "Company"), and First Chicago Trust Company of New York
- --------------
* The portion of the legend in brackets shall be inserted only if applicable.
A-1
<PAGE> 73
(formerly Morgan Shareholder Services Trust Company) (collectively, the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(Eastern Standard Time) on January 6, 1997 at the principal office of the
Rights Agent, in New York City, or its successor as Rights Agent, one fully
paid nonassessable share of the Common Stock, without par value (a "Common
Share") of the Company, at a purchase price of $135.00 ($67.50 as adjusted to
reflect the two-for-one stock split effected in August, 1988) per share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase and related Certificate duly executed.
If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised. The number of
Rights evidenced by this Right Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of February __, 1991, based on
the Common Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of securities issuable upon the exercise of the Rights evidenced by
this Right Certificate are subject to adjustment upon the happening of certain
events.
A-2
<PAGE> 74
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
the Rights under the circumstances specified in the Rights Agreement. Copies
of the Rights Agreement are on file at the above-mentioned office of the Rights
Agent.
Pursuant to the Rights Agreement, from and after the later of the
Distribution Date and the first occurrence of a Flip-In Event (as such term is
defined in the Rights Agreement), (i) any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Affiliate or Associate of
such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of the
Rights Agreement, (ii) no Right Certificate shall be issued pursuant to the
Rights Agreement that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof, (iii) no Right Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person or
any Affiliate or Associate thereof or to any nominee of such Acquiring Person
or Affiliate or Associate thereof, and
A-3
<PAGE> 75
(iv) any Right Certificate delivered to the Rights Agent for transfer to an
Acquiring Person or any Affiliate or Associate thereof shall be cancelled.
This Right Certificate, with or without other Right Certificates, may
be transferred, split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the holder to purchase a like number of Common
Shares (or other securities, as the case may be) as the Right Certificate or
Right Certificates surrendered shall have entitled such holder (or former
holder in the case of a transfer) to purchase, upon presentation and surrender
hereof at the principal office of the Rights Agent designated for such purpose,
with the Form of Assignment (if appropriate) and the related Certificate duly
executed.
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 $.05 ($.025 to reflect the two-for-one stock split effected
in August, 1988) per Right payable, at the option of the Company, in cash,
Common Shares or other consideration. The Rights Agreement may be supplemented
and amended by the Company, as provided therein.
The Company is not required to issue fractional Common Shares or other
securities issuable upon the exercise of any Right or Rights evidenced hereby.
In lieu of issuing such fractional Common Shares or other securities, the
Company may make a cash payment, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
A-4
<PAGE> 76
entitled to vote or receive dividends or be deemed for any purpose the holder
of the Common Shares or of any other securities of the Company which may at any
time be issuable upon the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of the [the issuance date].
ATTEST: THE TIMKEN COMPANY
By_________________________ By_________________________
COUNTERSIGNED:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By_________________________
A-5
<PAGE> 77
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED, ______________________________ hereby sells,
assigns and transfers unto _____________________________________________
__________________________________________________________________________
(Please print name and address of transferee)
__________________________________________________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated:______________ , 19______
________________________________
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) The Rights evidenced by this Right Certificate [ ] are [ ]
are not being sold, assigned, transferred, split up, combined or exchanged by
or on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in 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 Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ______________, 19__
___________________________
Signature
A-6
<PAGE> 78
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate)
To The Timken Company:
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Right Certificate to purchase the Common Shares or
other securities issuable upon the exercise of such Rights and requests that
certificates for such securities be issued in the name of:
Please insert social security
or other identifying number:_________________________________________________
_____________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:__________________________________________________
_____________________________________________________________________________
(Please print name and address)
Optional Election to Exercise without Payment of Cash:
With respect to the exercise of _____________ of the Rights specified
above, the undersigned hereby elects to exercise such Rights without payment of
cash and to receive a number of Common Shares or other securities having a
value (as determined pursuant to the Rights Agreement) equal to the difference
between (i) the value of the Common Shares or other securities that would have
been issuable upon the exercise thereof upon payment of the cash amount as
provided in the Rights Agreement, and (ii) the amount of such cash payment.
Dated: ______________, 19__
___________________________
Signature
Signature Guaranteed:
A-7
<PAGE> 79
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined in 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 Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ______________, 19__
___________________________
Signature
NOTICE
------
Signatures on the foregoing Form of Assignment and Form of Election to
Purchase and in the related Certificates must correspond to the name as written
upon the face of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
A-8
<PAGE> 80
Exhibit B
---------
SUMMARY OF RIGHTS
-----------------
On December 18, 1986, the Board of Directors of The Timken Company (the
"Company") declared a dividend distribution of one right (a "Right") for each
outstanding share of Common Stock, without par value (the "Common Shares"), of
the Company. The distribution was payable on January 6, 1987 (the "Record
Date") to the shareholders of record as of the close of business on the Record
Date. The description and terms of the Rights are set forth in a Rights
Agreement, dated as of December 18, 1986 (the "Rights Agreement"), between the
Company and First Chicago Trust Company of New York (formerly Morgan
Shareholder Services Trust Company), as Rights Agent (collectively, the "Rights
Agent"). On February 1, 1991, the Directors of the Company and the Rights
Agent amended and restated the Rights Agreement. This Summary of Rights
describes the Rights Agreement as amended and restated on February 1, 1991.
Each Right entitles the registered holder to purchase from the Company,
at any time after the Distribution Date (as defined below), one Common Share at
a price of $135.00 ($67.50 to reflect the two-for-one stock split effected in
August, 1988) per share (the "Purchase Price"), subject to adjustment. The
Rights Agreement provides that initially the Rights will be evidenced by, and
transferred with and only with, the Common Shares. Each certificate for Common
Shares issued after the Record Date will contain a legend indicating that the
certificate also evidences the Rights associated with the Common Shares and
incorporates the terms of the Rights Agreement. Separate certificates for the
Rights will not be distributed until the Distribution Date. Until the
Distribution Date, the surrender for transfer of any certificates for Common
Shares will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. Until the Distribution Date,
whenever the Company issues Common Shares, those shares will also have Rights
associated with them, and the certificates representing those shares will have
the legend indicating the existence of the Rights and incorporating the Rights
Agreement.
The Rights are not exercisable until the earliest to occur of (1) 10
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has (a) acquired, or obtained the
right to acquire, beneficial ownership of 30% or more of the outstanding Common
Shares, or (b) during any period, increased the number of Common Shares
beneficially owned by such Acquiring Person by an amount equal to or greater
than 20% of the outstanding Common Shares (or, in each case, such later date as
the Directors may specify), (2) 10 days following the commencement
B-1
<PAGE> 81
of a tender offer or exchange offer for 20% or more of such outstanding Common
Shares (or such later date as the Directors may specify), or (3) 10 days
following a public announcement that a Triggering Event (as defined below) has
occurred (the earliest of such dates being hereinafter called the "Distribution
Date").
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on January 6, 1997, unless earlier redeemed or exchanged by the
Company as described below.
The Purchase Price payable, and the number of Common Shares or amount
of property issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution.
The basic events which can cause adjustment are: (1) a stock dividend
on, or a subdivision, combination or reclassification of, the Common Shares;
(2) the grant to holders of the Common Shares of certain rights, options or
warrants to subscribe for Common Shares or convertible securities at less than
the current market price of the Common Shares; or (3) the distribution to
holders of the Common Shares of evidences of indebtedness or cash (excluding
specified regular periodic cash dividends), assets, stock (other than dividends
payable in Common Shares) or of subscription rights or warrants (other than
those referred to above).
In addition, there will be an adjustment in the event that (1) an
Acquiring Person mergers into the Company and the Common shares are not changed
or exchanged, (2) an Acquiring Person engages in one of a number of
self-dealing transactions specified in the Rights Agreement, or (3) a person or
group of affiliated or associated persons shall become the beneficial owner of
32.5% or more of the outstanding Common Shares (collectively, a "Flip-In
Event"). If a Flip-In Event shall occur, proper provision shall be made so
that each holder of a Right will thereafter have the right to receive upon
exercise of the Right at the then-current Purchase Price of the Right, that
number of Common Shares having a market value of two times the Purchase Price
of the Right. However, on the occurrence of such an event, Rights that are
beneficially owned by the Acquiring Person, or were beneficially owned by the
Acquiring Person at any time after the date upon which the Acquiring Person
became an Acquiring Person, will become void.
B-2
<PAGE> 82
An adjustment will also occur upon the happening of any of the
following three events: (1) the Company engages in a merger or other business
combination transaction in which the Company is not the surviving corporation,
other than any merger or combination involving the Company which does not have
the effect, directly or indirectly, of increasing or decreasing by more than 1%
the proportionate share of the outstanding shares of any class of equity
securities or of securities exercisable for or convertible into equity
securities of the surviving corporation that is owned beneficially by any
person other than an Acquiring Person; (2) the Company engages in a merger or
other business combination transaction in which the Company is the surviving
corporation, but in which its Common Shares are changed or exchanged; or (3)
50% or more of the Company's assets or earning power are sold (collectively, a
"Flip-Over Event," Flip-In Events and Flip-Over Events are referred to
collectively as "Triggering Events"). If a Flip-Over Event shall occur, proper
provision shall be made so that each holder of a Right shall thereafter have
the right to receive, upon the exercise of the Right at the then-current
Purchase Price of the Right, that number of shares of common stock of the
surviving, resulting or acquiring person which at the time of such transaction
would have a market value of two times the Purchase Price of the Right. In
certain circumstances, instead of shares of common stock, the holder of a Right
would receive an economically equivalent security or securities of the
surviving, resulting, or acquiring person. As was the case above, Rights that
are or were beneficially owned by any Acquiring Person at any time after the
date upon which such Acquiring Person became an Acquiring Person, will become
void.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued and, in lieu thereof,
a payment in cash will be made based on the market price of the Common Shares
on the last trading day prior to the date of exercise.
At any time prior to the later of the Distribution Date or the date of
public announcement that an Acquiring Person has become such, the Company may
redeem the Rights in whole, but not in part, at a price of $.05 ($.025 to
reflect the two-for-one stock split effected in August, 1988) per Right (the
"Redemption Price") payable in cash, Common Shares or other consideration.
Immediately upon the action of the Directors of the Company causing the
redemption of the Rights, the right to exercise the Rights will terminate and
the sole right of the holders of Rights will be to receive the Redemption
Price.
Following the later of the first occurrence of a Triggering Event or
the Distribution Date, Rights may be
B-3
<PAGE> 83
exercised, at the option of the holder thereof, without the payment of the
Purchase Price in cash that would otherwise be required. In any such case, the
number of securities which such person would otherwise be entitled to receive
upon the exercise of such Rights will be reduced as provided in the Rights
Agreement.
The Directors may, at their option, at any time after the later of the
Distribution Date or the first occurrence of a Triggering Event and prior to
the time that a person or group has acquired or obtained the right to acquire
50% or more of the outstanding Common Shares, exchange all or part of the
exercisable Rights for Common Shares at an exchange ratio of one Common Share
per Right, subject to adjustment.
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.
The Rights Agreement may be amended by the Company and the Rights Agent
without the approval of any holders of Rights at any time and from time to
time, provided that the amendment will not adversely affect the interests of
holders of the Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
December 24, 1986, which Registration Statement was amended by a Form 8 dated
February 5, 1991. 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 hereby incorporated herein by reference.
B-4
<PAGE> 84
THE TIMKEN COMPANY
1835 Dueber Avenue, S.W.
Canton, Ohio 44706
February 1, 1991
First Chicago Trust Company
of New York
30 West Broadway
New York, New York 10007-2192
Attention: Charles D. Keryc, Vice President
Re: Amendment No. 1 to Rights Agreement
-----------------------------------
Gentlemen:
Pursuant to Section 25 of the Rights Agreement (the "Rights
Agreement"), dated as of December 18, 1986, between The Timken Company, an Ohio
corporation (the "Company"), and First Chicago Trust Company of New York
(formerly Morgan Shareholder Services Trust Company) (collectively, the "Rights
Agent"), the Company, by resolutions adopted by the unanimous vote of its Board
of Directors, hereby amends the Rights Agreement as follows:
1. To delete the reference to "Morgan Shareholder Services
Trust Company" appearing on page 1 of the Rights Agreement and to
replace such reference with the following: "First Chicago Trust
Company of New York (formerly Morgan Shareholder Services Trust
Company)."
2. To delete Section 1(i) thereof in its entirety and to amend
Sections 11(o), 11(p) and 11(q) thereof to remove each reference to
"Continuing Directors" and replace each such reference with the
phrase "Board of Directors of the Company".
3. To renumber Sections 1(j) through 1(n), inclusive, as, respectively,
Sections 1(i) through 1(m), inclusive, to reflect the deletion of
Section 1(i).
4. To amend Section 1(j), as renumbered pursuant to Item 3
above, to read in its entirety as follows:
<PAGE> 85
2
"(j) "Distribution Date" shall mean the earliest of
(i) the Close of business on the tenth calendar day (or, unless the
Distribution Date shall have previously occurred, such later date as
may be specified by a majority of the Directors of the Company)
after the Share Acquisition Date, (ii) the Close of business on the
tenth calendar day (or, unless the Distribution Date shall have
previously occurred, such later date as may be specified by a
majority of the Directors of the Company) after the date of the
commencement of a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company or any employee benefit
or stock ownership plan of the Company or an entity holding Common
Shares of the Company for or pursuant to the terms of any such
plan), if upon the consummation thereof such Person would be the
Beneficial Owner of 20% or more of the outstanding Common Shares,
and (iii) the Close of business on the tenth calendar day after the
first date of public announcement by the Company or an Acquiring
Person (by press release, filing made with the Securities and
Exchange Commission or otherwise) of the first occurrence of
a Triggering Event."
5. To amend Section 1(l), as renumbered pursuant to Item 3 above, to
read in its entirety as follows:
"(l) "Expiration Date" shall mean the earliest of (i) the Close
of business on the Final Expiration Date, (ii) the time at which the
Rights are redeemed as provided in Section 22 hereof, and (iii) the
time at which all exercisable Rights are exchanged as provided in
Section 11(r) hereof."
6. To add new Section 1(n) to read in its entirety as follows:
"(n) "Flip-In Event" shall mean any event described in clauses
(A), (B) or (C) of Section 11(a)(ii) hereof."
7. To add new Section 1(o) to read in its entirety as follows:
"(o) "Flip-Over Event" shall mean any event described in
clauses (i), (ii) or (iii) of Section 11(d) hereof."
8. To renumber Sections 1(o) through 1(z), inclusive, as, respectively,
Sections 1(p) through 1(aa), inclusive, to reflect the addition of
Sections 1(n) and (o) as stated in items 6 and 7 above.
9. To amend Section 1(t), as renumbered pursuant to Item 8 above, to
read in its entirety as follows:
"(t) "Redemption Price" shall mean $.05 ($.025 to reflect the
two-for-one stock split effected in August,
<PAGE> 86
3
1988) per Right, appropriately adjusted by resolution of the Board
of Directors of the Company to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof."
10. To add new Section 1(bb) to read in its entirety as follows:
"(bb) "Triggering Event" shall mean any Flip-In Event or
Flip-Over Event."
11. To delete all references to "Chairman of the Board" appearing on
pages 13 and 58 of the Rights Agreement and to replace each such
reference with the following: "Chairman - Board of Directors."
12. To amend Section 7(a) to read in its entirety as follows:
"(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date
and at or prior to the Close of business on the Expiration Date upon
surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights
Agent at an office of the Rights Agent designated for such purpose,
together with an amount in cash, in lawful money of the United
States of America by certified check or bank draft payable to the
order of the Company, equal to the Purchase Price for each Common
Share as to which such surrendered Rights are exercised, or, if
applicable, the exercise price per Right specified in Sections 11(a)
(ii) or 11(d) hereof, as the case may be, together with an amount
equal to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with Section 9
hereof; PROVIDED, HOWEVER, that after the later of the first
occurrence of a Triggering Event and the Distribution Date, in lieu
of the cash payment payable to the Company referred to in this
sentence, the registered holder of a Right Certificate evidencing
exercisable Rights (which shall not include Rights that have become
void pursuant to Section 11(a) (ii) hereof) may, at its option,
exercise the Rights evidenced thereby in whole or in part in
accordance with this Section 7(a) upon surrender of the Right
Certificate as described above together with an election to
exercise such Rights without payment of cash on the reverse side
thereof duly completed. With respect to any Rights as to which such
an election to exercise without payment of cash is made, the holder
shall receive, upon exercise, a number of Common Shares or other
securities, as the case may be, having a Current Per Share Market
Price (on the date of the first occurrence of any Triggering Event)
equal to the excess of (i) the aggregate Current Per Share Market
Price of the Common Shares or other securities (on the date of the
first occurrence of any Triggering Event) that would
<PAGE> 87
4
have been issuable upon payment of the cash amount as
described above over (ii) the amount of cash that would have been
payable to the Company upon exercise absent such election."
13. To amend Section 7(b) to read in its entirety as follows:
"(b) The Purchase Price for each Common Share pursuant to
exercise of a Right shall initially be $135 ($67.50 as adjusted to
reflect the two-for-one stock split effected in August, 1988), and
shall be subject to adjustment from time to time as provided in
Section 11 hereof."
14. To amend Section 7(c) to read in its entirety as follows:
"(c) Subject to Sections 7(d), 11(a)(ii), and 11(d) hereof,
upon receipt of a Right Certificate representing exercisable Rights
with the form of election to purchase duly executed, accompanied by
either payment as described above or a duly completed election to
exercise without payment of cash, the Rights Agent shall promptly
(i) requisition from any transfer agent of the Common Shares (or
make available, if the Rights Agent is the transfer agent)
certificates representing the number of Common Shares to be
purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, (ii) promptly after receipt
of such certificates, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder, (iii) if
appropriate, requisition from the Company the amount of cash to be
paid in lieu of the issuance of fractional shares in accordance with
Section 14 hereof or in lieu of the issuance of Common Shares in
accordance with Section 11(a) (iii) hereof, and (iv) if appropriate,
after receipt, promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate."
15. To amend Section 7(e) by adding at the end thereof the following:
"and unless the registered holder of Rights shall have provided
such additional evidence of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company or the Rights Agent shall reasonably request"
16. To add new Sections 9(e), 9(f) and 9(g) as follows:
"(e) The Company will use its best efforts to (i) file on an
appropriate form, as soon as practicable following the later to
occur of a Triggering Event or the Distribution Date, a registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"),
<PAGE> 88
5
with respect to the securities purchasable upon exercise of the
Rights, (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 Securities Act) until the
earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date. The
Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights.
The Company may temporarily suspend the exercisability of the Rights
in order to prepare and file such registration statement and permit
it to become effective and upon any such suspension, the Company
will issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding anything in this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
registration or qualification in such jurisdiction shall not have
been effected or the exercise of the Rights shall not be permitted
under applicable law.
(f) Notwithstanding anything in this Agreement to the
contrary, the Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 22 or
Section 25 hereof, take any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights.
(g) In the event that the Company is obligated to pay cash
and/or distribute other property pursuant to Sections 11, 13, and 14
hereof, it will make all arrangements necessary so that such cash
and/or property are available for distribution by the Rights Agent,
if and when appropriate."
17. To amend Sections 11(a) (ii) by deleting the language following
Section 11(a) (ii) (C) in its entirety and replacing such language
with the following:
"then, and in each such case, the Company shall make
adjustments in the terms of the Rights so that each holder of a
Right, except as provided below, shall thereafter have a right to
receive, upon exercise thereof in accordance with the terms of this
Agreement, at an exercise price per Right equal to the product of
the then-current Purchase Price multiplied by the number of Common
Shares for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event, such number of Common
<PAGE> 89
6
Shares as shall equal the result obtained by (x) multiplying the
then-current Purchase Price by the then number of Common Shares for
which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event and dividing that product by (y)
50% of the Current Per Share Market Price of the Common Shares
(determined pursuant to Section 11(f) hereof) on the date of the
first occurrence of a Triggering Event. Notwithstanding anything in
this Agreement to the contrary, from and after the later of the
Distribution Date and the first occurrence of a Flip-In Event, (1)
any Rights that are or were acquired or Beneficially Owned by any
Acquiring Person (or any Affiliate or Associate of such Acquiring
Person) shall be void and any holder of such Rights shall thereafter
have no right to exercise such Rights under any provision of this
Agreement, (2) no Right Certificate shall be issued pursuant to this
Agreement that represents Rights Beneficially Owned by an Acquiring
Person or any Affiliate or Associate thereof, (3) no Right
Certificate shall be issued at any time upon the transfer of any
Rights to an Acquiring Person or any Affiliate or Associate thereof
or to any nominee of such Acquiring Person or Affiliate or Associate
thereof, and (4) any Right Certificate delivered to the Rights Agent
for transfer to an Acquiring Person or any Affiliate or Associate
thereof shall be cancelled."
18. To delete Section 11(a) (iii) in its entirety and to replace
it with the following:
"(iii) Upon the occurrence of a Flip-In Event, if there shall
not be sufficient authorized but unissued Common Shares or issued
Common Shares held in treasury to permit the exercise in full of the
Rights in accordance with the foregoing subsection (ii), the Board
of Directors of the Company shall use its best efforts promptly to
authorize and, subject to the provisions of Section 9(e) hereof,
make available for issuance additional Common Shares; PROVIDED,
HOWEVER, that if at any time after 90 calendar days after the first
occurrence of a Flip-In Event, there shall not be sufficient Common
Shares available for issuance upon the exercise of a Right, then the
Company shall deliver, upon the surrender of such Right and without
requiring payment of the Purchase Price, Common Shares (to the
extent available), and then cash (to the extent permitted by
applicable law and any agreements or instruments to which the
Company is a party in effect immediately prior to the first
occurrence of any Flip-In Event), which Common Shares and cash shall
have an aggregate value equal to the excess of (1) the aggregate
Current Per Share Market Price of all the Common Shares issuable in
accordance with subsection (ii) of this Section 11(a) upon the
exercise of a Right over (2) the product of the then-current
Purchase Price multiplied by the number of
<PAGE> 90
7
Common Shares for which a Right was exercisable immediately
prior to the first occurrence of a Triggering Event. To the extent
that any legal or contractual restrictions prevent the Company from
paying the full amount of cash payable in accordance with the
foregoing sentence, the Company shall pay to holders of the Rights
as to which such payments are being made all amounts which are not
then restricted on a pro rata basis. The Company shall continue to
make payments on a pro rata basis as funds become available until
such payments have been paid in full."
19. To amend Section 11(d) by deleting the first sentence in its
entirety and replacing the first sentence with the following:
"(d) In the event that, following the Share Acquisition Date,
directly or indirectly:
(i) the Company shall consolidate with, or merge with
or into, any other Person and the Company shall not be the
continuing or surviving corporation of such consolidation
or merger; or
(ii) any Person shall consolidate with the Company, or
merge with or into the Company and the Company shall be the
continuing or surviving corporation of such merger or
consolidation and, in connection with such merger or
consolidation, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any
other Person or cash or any other property; or
(iii) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning
power (including, without limitation, securities creating any
obligation on the part of the Company and/or any of its
Subsidiaries) representing in the aggregate more than 50% of
the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or
Persons;
then, and in each such case, proper provision shall be made so that
(A) each holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement at an
exercise price per Right equal to the product of the then-current
Purchase Price multiplied by the number of Common Shares for which a
Right was exercisable immediately prior to the first occurrence of a
Triggering Event, such number of validly authorized and issued,
fully paid, nonassessable and freely tradeable
<PAGE> 91
8
Common Shares of the Issuer (as such term is hereinafter
defined), free and clear of any liens, encumbrances and other
adverse claims and not subject to any rights of call or first
refusal, as shall be equal to the result obtained by (x) multiplying
the then-current Purchase Price by the number of Common Shares for
which a Right is exercisable immediately prior to the first
occurrence of a Triggering Event and dividing that product by (y)
50% of the Current Per Share Market Price of the Common Shares of
the Issuer (determined pursuant to Section 11(f) hereof), on the
date of consummation of such Flip-Over Event; (B) the Issuer shall
thereafter be liable for, and shall assume, by virtue of the
consummation of such Flip-Over Event, all the obligations and duties
of the Company pursuant to this Agreement; (C) the term "Company"
shall thereafter be deemed to refer to the Issuer; and (D) the
Issuer shall take such steps (including, without limitation, the
reservation of a sufficient number of its Common Shares to permit
the exercise of all outstanding Rights) in connection with such
consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may
be possible, in relation to its Common Shares thereafter deliverable
upon the exercise of the Rights."
20. To amend Section 11(e) to read in its entirety as follows:
"(e) For purposes of Section 11(d), "Issuer" shall mean (i) in
the case of any Flip-Over Event described in Sections 11(d)(i) or
(ii) above, the Person that is the continuing, surviving, resulting
or acquiring Person (including the Company as the continuing or
surviving corporation of a transaction described in Section 11(d)
(ii) above), and (ii) in the case of any Flip-Over Event described
in Section 11(d) (iii) above, the Person that is the party receiving
the greatest portion of the assets or earning power (including,
without limitation, securities creating any obligation on the part
of the Company and/or any of its Subsidiaries) transferred pursuant
to such transaction or transactions; PROVIDED, HOWEVER, that, in any
such case, (A) if (1) no class of equity security of such Person is,
at the time of such merger, consolidation or transaction and has
been continuously over the preceding 12-month period, registered
pursuant to Section 12 of the Exchange Act, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of
equity security of which is and has been so registered, the term
"Issuer" shall mean such other Person; and (B) in case such Person
is a Subsidiary, directly or indirectly, of more than one Person, a
class of equity security of two or more of which are and have been
so registered, the term "Issuer"
<PAGE> 92
9
shall mean whichever of such Persons is the issuer of the
equity security having the greatest aggregate market value.
Notwithstanding the foregoing, if the Issuer in any of the Flip-Over
Events listed above is not a corporation or other legal entity
having outstanding equity securities, then, and in each such case,
(x) if the Issuer is directly or indirectly wholly owned by a
corporation or other legal entity having outstanding equity
securities, then all references to Common Shares of the Issuer shall
be deemed to be references to the Common Shares of the corporation
or other legal entity having outstanding equity securities which
ultimately controls the Issuer, and (y) if there is no such
corporation or other legal entity having outstanding equity
securities, (I) proper provision shall be made so that the Issuer
shall create or otherwise make available for purposes of the
exercise of the Rights in accordance with the terms of this
Agreement, a kind or kinds of security or securities having a fair
market value at least equal to the economic value of the Common
Shares which each holder of a Right would have been entitled to
receive if the Issuer had been a corporation or other legal entity
having outstanding equity securities; and (II) all other provisions
of this Agreement shall apply to the issuer of such securities as if
such securities were Common Shares. The Company shall not
consummate any Flip-Over Event, unless the Issuer shall have a
sufficient number of authorized Common Shares (or other securities
as contemplated above) which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance
with Section 11(d) and unless prior to such consummation the Company
and the Issuer shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in
subsections 11(d) and 11(e) and further providing that as promptly
as practicable after the consummation of any Flip-Over Event, the
Issuer shall:
(i) prepare and file a registration statement under
the Securities Act, with respect to the Rights and the
securities issuable upon exercise of the Rights on an
appropriate form, and shall 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
Securities Act) until the Expiration Date;
(ii) take all 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; and
<PAGE> 93
10
(iii) deliver to holders of the Rights historical
financial statements for the Issuer 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 Section 11(d) and Section 11(e) shall similarly
apply to successive mergers or consolidations or sales or other
transfers. In the event that a Flip-Over Event occurs at any time
after the occurrence of a Flip-In Event, the Rights which have not
theretofore been exercised shall thereafter become exercisable in the
manner described in Section 11(d) hereof."
21. To add new Section 11(r) to read in its entirety as follows:
"(r) Notwithstanding the provisions of Sections 11(a) (ii) and
11(d) hereof, the Board of Directors of the Company may, at its option,
at any time after the later of the Distribution Date and the first
occurrence of a Triggering Event, exchange all or part of the
then-outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 11(a) (ii)
hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other
than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any such Subsidiary, or any entity holding
Common Shares for or pursuant to the terms of any such plan) together
with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to this Section 11(r), and
without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right with respect to
such Rights thereafter of the holder of such Rights shall be to receive
that number of Common Shares equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. Promptly after the
action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to this Section 11(r), the Company shall
publicly announce such action, and within 10 calendar days thereafter
shall give notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books
of the Rights Agent; PROVIDED, HOWEVER, that the failure to give, or
any defect in, such notice shall
<PAGE> 94
11
not affect the validity of such exchange. 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 exchange shall
state the method by which the exchange of the Common Shares for Rights
will be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 11(a)(ii))
held by each holder of Rights. In any exchange pursuant to this
Section 11(r), the Company, at its option, may substitute for any
Common Share exchangeable for a Right, (i) cash, (ii) debt securities
of the Company, (iii) other assets, or (iv) any combination of the
foregoing, in any event having an aggregate value which the Board of
Directors of the Company shall have determined in good faith to be
equal to the Current Per Share Market Price of one Common Share
(determined pursuant to Section 11(f) hereof) on the Trading Day
immediately preceding the date of exchange pursuant to this Section
11(r). The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common
Shares upon the exchange of a Right. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of
the Current Per Share Market Price of a whole Common Share (determined
pursuant to Section 11(f) hereof) on the Trading Day immediately
preceding the date of exchange pursuant to this Section 11(r)."
22. To amend Section 16 to add at the end of the first sentence thereof
the following:
"or exchanged pursuant to the provisions of Section 11(r)
hereof"
23. To delete the reference to "the chief financial officer" appearing
on page 58 of the Rights Agreement and to replace such reference with
the following: "any Vice President."
24. To amend Section 22(a) to read in its entirety as follows:
"(a) Prior to the Expiration Date, the Board of Directors of
the Company may, at its option, redeem all but not less than all of the
then-outstanding Rights at the Redemption Price at any time prior to
the Close of business on the later of (i) the Distribution Date and
(ii) the Share Acquisition Date."
<PAGE> 95
12
25. To delete Sections 22(b), 22(c) and 22(d) in their entirety, and to
renumber Section 22(e) as Section 22(c).
26. To add new Section 22(b) to read in its entirety as follows:
"(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, and without any
further action and without any notice, the right to exercise the Rights
shall terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. Promptly after the action of
its Board of Directors ordering the redemption of the Rights, the
Company shall publicly announce such action, and within 10 calendar
days thereafter, the Company shall give notice of such redemption to
the holders of the then-outstanding Rights by mailing such notice to
all such holders at their last addresses as they appear upon the
registry books of the Company; PROVIDED, HOWEVER, that the failure to
give, or any defect in, any such notice shall not affect the validity
of the redemption of the Rights. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. The notice of redemption mailed to the holders of
Rights shall state the method by which the payment of the Redemption
Price will be made. The Company may, at its option, pay the Redemption
Price in cash, Common Shares (based upon the Current Per Share Market
Price of the Common Shares (determined pursuant to Section 11(f)
hereof) at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors of the Company (based upon
the fair market value of such other consideration, determined by the
Board of Directors of the Company in good faith) or any combination
thereof.
27. To amend Section 22(c), as renumbered pursuant to Item 25 above, to
read in its entirety as follows:
"(c) At any time following the Share Acquisition Date, the
Directors of the Company may relinquish their rights to redeem the
Rights under paragraphs (a) and (b) above by duly adopting a resolution
to that effect. Immediately upon adoption of such resolution, the
rights of the Directors under the portions of this Section 22
specified in such resolution shall terminate without further
action and without any notice."
28. To delete the reference to "Secretary" appearing on page 65 of the
Rights Agreement and to replace such reference with the following:
"Vice President and General Counsel."
13
<PAGE> 96
13
29. To delete each reference to "Morgan Shareholder Services Trust
Company" appearing on pages 66 and 68 of the Rights Agreement and
to replace each such reference with the following: "First Chicago
Trust Company of New York."
30. The form of Right Certificate attached as Exhibit A to the Rights
Agreement and the form of Summary of Rights attached as Exhibit B
to the Rights Agreement are hereby amended to reflect the
provisions of this amendment.
31. This Amendment No. 1 to Rights Agreement is effective as of
February 1, 1991, and all references to the Rights Agreement shall,
as of such date, be deemed to be references to the Rights
Agreement, as amended by this Amendment No. 1 to Rights Agreement.
Very truly yours,
THE TIMKEN COMPANY
By:____________________________
Larry R. Brown
Vice President and
General Counsel
Agreed to and Accepted:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By:_____________________________
Charles D. Keryc
Vice President
<PAGE> 1
Exhibit 5
April 16, 1996
The Timken Company
1835 Dueber Avenue, S.W.
Canton, Ohio 44706-2798
Re: Long-term Incentive Plan (as Amended and Restated as of December 20,
--------------------------------------------------------------------
1995)
-----
Ladies and Gentlemen:
We have acted as counsel for The Timken Company, an Ohio corporation
(the "Registrant"), in connection with The Timken Company Long-term Incentive
Plan (as Amended and Restated as of December 20, 1995) (the "Plan"). We have
examined such documents, records and matters of law as we have deemed necessary
for purposes of this opinion, and based thereon, we are of the opinion that the
Registrant's shares of Common Stock without par value (the "Common Stock") that
may be issued or transferred and sold pursuant to the Plan and the authorized
forms of agreements thereunder (the "Agreements") will be, when issued or
transferred and sold in accordance with the Plan and such Agreements, duly
authorized, validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement on Form S-8 filed by the Registrant to effect
registration of the Common Stock to be issued and sold pursuant to the Plan
under the Securities Act of 1933.
Very truly yours,
Jones, Day, Reavis & Pogue
<PAGE> 1
Exhibit 23(a)
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to The Timken Company Long-Term Incentive Plan of our
report dated February 1, 1996, with respect to the consolidated financial
statements and schedule of The Timken Company included in its Annual Report
(Form 10-K) for the year ended December 31, 1995, filed with the Securities and
Exchange Commission.
Ernst & Young LLP
Canton, Ohio
April 15, 1996
<PAGE> 1
Exhibit 24
THE TIMKEN COMPANY
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and officers of The Timken Company, an Ohio corporation (the "Company"), hereby
constitutes and appoints Larry R. Brown and Scott A. Scherff, and each of them,
his true and lawful attorney or attorneys-in-fact, with full power of
substitution and revocation, for him and in his name, place, and stead, to sign
on his behalf as a director or officer, or both, as the case may be, of the
Company's Registration Statement pursuant to the Securities Act of 1933 on Form
S-8 concerning the Common Stock of the Company to be offered in connection with
the Company's Long-Term Incentive Plan (as Amended and Restated as of December
20, 1995) and to sign any and all amendments or post-effective amendments to
such Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission or any state regulatory authority, granting unto said attorney or
attorneys-in-fact, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they might or could do in
person, hereby ratifying and confirming all that said attorney or
attorneys-in-fact or any of them or their substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the 16th day of April, 1996.
<TABLE>
<S> <C>
/s/W.R. Timken, Jr. /s/Jay A. Precourt
- ----------------------- -------------------------
W.R. Timken, Jr. Jay A. Precourt
/s/Joseph F. Toot, Jr. /s/John M. Timken, Jr.
- -------------------------- -------------------------
Joseph F. Toot, Jr. John M. Timken, Jr.
/s/Gene E. Little /s/Ward J. Timken
- ---------------------- -------------------------
Gene E. Little Ward J. Timken
/s/Robert Anderson /s/Martin D. Walker
- ---------------------- -------------------------
Robert Anderson Martin D. Walker
/s/Stanley C. Gault /s/Charles H. West
- ----------------------- -------------------------
Stanley C. Gault Charles H. West
/s/J. Clayburn La Force, Jr. /s/Alton W. Whitehouse
- ------------------------------ -------------------------
J. Clayburn La Force, Jr. Alton W. Whitehouse
/s/Robert W. Mahoney
- -------------------------
Robert W. Mahoney
</TABLE>
