Dear Shareholder:
The Board of Directors of Columbus McKinnon Corporation has announced the
adoption of a Shareholders Rights Plan. The Plan provides for a dividend of
Rights to purchase shares of a new series of Preferred Stock (or, in certain
circumstances, Common Stock or other consideration), exercisable upon the
occurrence of certain events.
We believe that the Plan protects your interests in the event that the Company
is confronted with coercive or unfair takeover tactics. The Plan contains
provisions to protect you in the event of an unsolicited offer to acquire the
Company. Although we are not aware of any such potential offers, the Plan offers
protection from offers that do not treat all shareholders equally, acquisitions
in the open market of shares constituting control without offering fair value to
all shareholders and other coercive or unfair takeover tactics that could impair
the Board's ability to represent your interests fully.
The Plan will not affect an offer at a fair price and otherwise in the best
interests of the Company and its shareholders as determined by its Board of
Directors. The Rights Plan will not interfere with a merger or other business
combination transaction that the Board of Directors approves as fair and as
constituting a recognition of full value to the shareholders.
The Rights would become exercisable to purchase shares of Preferred Stock (or,
in certain circumstances, Common Stock) only if (i) a person acquired 15% or
more of the Company's Common Stock, (ii) a person commenced a tender or exchange
offer for 15% or more of the Company's Common Stock, or (iii) the Board of
Directors determined that the beneficial owner of at least 15% of the Company's
Common Stock intended to cause the Company to take certain actions adverse to it
and its shareholders or that such ownership would have a material adverse effect
on the Company. In circumstances described in clauses (i) and (iii) above,
holders of Rights would be entitled to purchase, in lieu of Preferred Stock,
Common Stock of the Company at a 50% discount from market value. Moreover, in
the event that the Company were to enter into certain merger or asset sale
transactions, after the occurrence of circumstances described in clauses (i) or
(iii), holders would be entitled to exercise the Rights for common stock of the
acquiring entity.
The acquiring or adverse persons described in clauses (i) and (iii) would not be
entitled to exercise Rights.
The issuance of Rights does not in any way weaken the financial strength of the
Company or interfere with its business plans. The issuance of the Rights has no
dilutive effect, will not affect reported earnings per share and will not change
the way in which you can currently trade shares of the Company's Common Stock.
A summary of the Plan is enclosed. The Plan is complex, and we
urge you to read this summary carefully. Its premise, however, is
straightforward: to serve and protect the interests of the
Company's shareholders.
Sincerely,
Herbert P. Ladds, Jr.,
President and Chief Executive Officer
November 10, 1997.
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SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On October 25, 1997, the Board of Directors of Columbus McKinnon
Corporation (the "Company") declared a dividend of one Right for each
outstanding share of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), to shareholders of record at the close of business on November
10, 1997. Each Right entitles the registered holder to purchase from the Company
a unit consisting of one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), at a Purchase Price of $80.00 per unit of one one-hundredth of a share,
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and American
Stock Transfer & Trust Company, as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. A Distribution Date will occur and the Rights will separate from
the Common Stock upon the earliest of (i) ten days following a public
announcement that a Person or group of affiliated or associated Persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the shares of Common Stock then outstanding1 (the
"Stock Acquisition Date"), (ii) ten business days following the commencement of
a tender offer or exchange offer that would result in a Person or group
beneficially owning 15% or more of such outstanding shares of Common Stock
(unless such tender offer or exchange offer is an offer for all outstanding
shares of Common Stock which a majority of the unaffiliated Directors who are
not officers of the Company determine to be fair to and otherwise in the best
interests of the Company and its shareholders) or (iii) the date the Board of
Directors declares a person to be an "Adverse Person", upon a determination by
the Board that such Person, together with his affiliates or associates, is or
has become the beneficial owner of 15% or more of the shares of Common Stock
outstanding, and upon a determination by at least a majority of the Continuing
Directors (as defined below) who are not officers of the Company, after
reasonable inquiry and investigation, including consultation with such persons
as such Directors shall deem
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1 Under the Rights Agreement, for purposes of calculating percentages of Common
Stock outstanding, shares of Common Stock outstanding shall include all shares
of Common Stock deemed to be beneficially owned by a person and its affiliates
and associates, even if not actually then outstanding.
appropriate, that (a) such beneficial ownership by such person is intended to
cause the Company to repurchase the Common Stock beneficially owned by such
person or to cause pressure on the Company to take action or enter into a
transaction or series of transactions intended to provide such person with
short-term financial gain under circumstances where such Continuing Directors
determine that the best long-term interests of the Company and its shareholders
would not be served by taking such action or entering into such transactions or
series of transactions at that time, or (b) such beneficial ownership is causing
or reasonably likely to cause a material adverse impact (including, but not
limited to, impairment of relationships with customers, impairment of the
Company's ability to maintain its competitive position or impairment of the
Company's business reputation or ability to deal with governmental agencies) on
the business or prospects of the Company.
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after November 10,
1997 will contain a notation incorporating the Rights Agreement by reference,
and (iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on November 10, 2007, unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except (i) with respect to certain
shares of Common Stock issued or sold pursuant to the exercise of stock options
or under any employee plan or arrangement, or upon the exercise, conversion or
exchange of certain securities of the Company, or (ii) as otherwise determined
by the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that (i) a Person becomes the beneficial owner of 15% or
more of the then outstanding shares of Common Stock (except pursuant to an offer
for all outstanding shares of Common Stock which a majority of the Directors who
are not officers of the Company and who are not affiliates or associates of such
Person determine to be fair to and otherwise in the best interests of the
Company and its shareholders), or (ii) the Board of Directors declares, upon the
determination by at least a majority of the Continuing Directors who are not
officers of the
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Company, that a person is an Adverse Person (each such event, a "Flip-in
Event"), each holder of a Right will thereafter have the right to receive, upon
payment of the Purchase Price, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value (based on a formula
set forth in the Rights Agreement) equal to two times the Purchase Price of the
Right. Notwithstanding any of the foregoing, following the occurrence of the
Flip-in Event, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by an Acquiring Person or an
Adverse Person (or by certain related parties) will be null and void. However,
Rights are not exercisable following the occurrence of the Flip-in Event until
such time as the Rights are no longer redeemable by the Company as set forth
below.
For example, at a Purchase Price of $80.00 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following a Flip-in
Event would entitle its holder to purchase $160.00 worth of Common Stock (or
other consideration, as noted above) determined pursuant to a formula set forth
in the Rights Agreement, for $80.00. Assuming that the Common Stock had a per
share value of $20.00 at such time (as determined pursuant to such formula), the
holder of each valid Right would be entitled to purchase eight (8) shares of
Common Stock for $80.00.
In the event that, at any time following the Stock Acquisition Date or
the date on which a Person is determined to be an Adverse Person, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or in which it is the
surviving corporation but its Common Stock is changed or exchanged (other than a
merger meeting certain conditions which follows an offer for all outstanding
shares of Common Stock which a majority of the unaffiliated Directors who are
not officers of the Company determine to be fair to and otherwise in the best
interests of the Company and its shareholders), or (ii) 50% or more of the
Company's assets, earning power or cash flow is sold or transferred, each holder
of a Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon payment of the Purchase Price,
common stock of the acquiring company having a value equal to two times the
exercise price of the Right. The events set forth in this paragraph and the
Flip-in Events described in the second preceding paragraph are referred to as
the "Triggering Events."
The Purchase Price payable, and the number of units of one
one-hundredths of a share of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
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subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to holders
of the Preferred Stock of evidences of indebtedness or assets (excluding cash
dividends not in excess of 200% of regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock (other than fractions of one
one-hundredth of a share, or integral multiples thereof) will be issued and, in
lieu thereof, an adjustment in cash will be made based on the market price of
the Preferred Stock on the last trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (payable in cash, Common Stock or other consideration deemed appropriate
by the Board of Directors). Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority of
the Continuing Directors who are not officers of the Company. The Company may
not redeem the Rights if the Board of Directors has previously declared a Person
to be an Adverse Person. Immediately upon the action of the Board of Directors
ordering redemption of the Rights, with, where required, the concurrence of such
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
The term "Continuing Director" means any member of the Board of
Directors of the Company who was a member of the Board prior to the date of the
Rights Agreement, and any Person who is subsequently elected to the Board if
such Person is recommended or approved by a majority of the Continuing
Directors, but shall not include an Acquiring Person, an Adverse Person or an
affiliate or associate of any such Person, or any representative of any of the
foregoing.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above, or are redeemed as
provided in the second preceding paragraph.
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Other than certain provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board (in certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (other than an Acquiring
Person, an Adverse Person or an affiliate or associate thereof), or to shorten
or lengthen any time period under the Rights Agreement; provided, however, that
no amendment to adjust the time period governing redemption shall be made at
such time as the Rights are not redeemable.
The Rights have certain anti-takeover effects. Exercise of the Rights
will cause substantial dilution to a Person or group that attempts to acquire
the Company on terms not approved by the Company's Board of Directors. The
existence of Rights, however, should not affect an offer at a fair price and
otherwise in the best interests of the Company and its shareholders as
determined by the Board of Directors. The Rights should not interfere with any
merger or other business combination approved by the Board of Directors since
the Board of Directors may, at its option, at any time until ten days following
the Stock Acquisition Date or until a Person has been determined to be an
Adverse Person redeem all but not less than all of the then outstanding Rights
at the $.01 redemption price.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
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