EXHIBIT 4
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SERVOTRONICS, INC.
SHAREHOLDER RIGHTS PLAN
Dated as of August 26, 2002
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TABLE OF CONTENTS
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Section 1 Certain Definitions 1
Section 2 Authority to Appoint of Rights Agent 5
Section 3 Issue of Rights Certificates 6
Section 4 Form of Rights Certificates 7
Section 5 Registration 7
Section 6 Transfer. Split Up, Combination and Exchange of Rights Certificates;
Mutilated. Destroyed. Lost or Stolen Rights Certificates 8
Section 7 Exercise of Rights: Purchase Price; Expiration Date of Rights 8
Section 8 Cancellation and Destruction of Rights Certificates 10
Section 9 Reservation and Availability of Capital Stock 10
Section 10 Preferred Stock Record Date 11
Section 11 Subscription Right 12
Section 12 Merger Right 13
Section 13 Adjustment of Purchase Price 15
Section 14 Fractional Rights and Fractional Shares 19
Section 15 Rights of Action 19
Section 16 Agreement of Rights Holders 20
Section 17 Rights Certificate Holder Not Deemed a Stockholder 20
Section 18 Issuance of New Rights Certificates 21
Section 19 Redemption and Termination 21
Section 20 Exchange 22
Section 21 Indemnification of Corporate Officers and Directors 23
Section 22 Notice of Certain Events 24
Section 23 Notices 24
Section 24 Supplements and Amendments 25
Section 25 Successors 25
Section 26 Benefits of this Plan 25
Section 27 Severability 25
Section 28 Governing Law 25
Section 29 Descriptive Headings 25
Exhibit A - Form of Rights Certificate
Exhibit B - Summary of Rights to Purchase Preferred Stock
Exhibit C - Certificate of Designation, Preferences and Rights
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SHAREHOLDER RIGHTS PLAN
As of August 26, 2002, the Board of Directors of Servotronics, Inc., a Delaware
corporation (the "Company"), authorized and declared a dividend distribution of
one Right (as hereinafter defined) for each outstanding share of common stock,
par value $.20 per share, of the Company ("Common Stock") outstanding at the
close of business on August 28, 2002 (the "Record Date"), and contemplates the
issuance of one Right (subject to adjustment as provided herein) for each share
of Common Stock of the Company issued between the Record Date and the earlier of
the Distribution Date and the Expiration Date (as such terms are defined
herein), each Right representing the right to purchase one one-hundredth of a
share of Series A Junior Participating Preferred Stock of the Company having the
rights, powers and preferences set forth in the form of Certificate of
Designation, Preferences and Rights attached hereto as Exhibit C, upon the terms
and subject to the conditions hereinafter set forth (the "Rights");
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Plan, the
following terms have the meanings indicated.
(a) "ACQUIRING PERSON" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, without the prior
approval of a majority of the Continuing Directors, shall be the Beneficial
Owner of 25% or more of the then Outstanding Non-ESOT Shares, provided, however,
that Acquiring Person shall not mean (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or any Subsidiary of the
Company (including without limitation the Servotronics, Inc. Employee Stock
Ownership Plan [the "ESOP"]), (iv) any entity holding shares of Common Stock
organized, appointed, or established by the Company or any of its Subsidiaries
for or pursuant to the terms of any such plan (including without limitation the
Servotronics, Inc. Employee Stock Ownership Trust [the "ESOT"]), (v) Dr.
Nicholas D. Trbovich ("Dr. Trbovich") or any executor, administrator,
attorney-in-fact, agent, proxy or representative (acting in his or her capacity
as such) or lineal descendant of Dr. Trbovich) or (vi) a Person who
inadvertently becomes the beneficial owner of 25% or more of the then
Outstanding Non-ESOT Shares and who (A) represents to the Board of Directors of
the Company that the acquisition of such shares was inadvertent without intent
to make a tender offer; (B) undertakes to sell, within five Business Days, to a
Person other than the Company, enough shares so that his total Beneficial
Ownership is less than 25% of the then Outstanding Non-ESOT Shares; and (C) in
fact does sell such shares within five Business Days.
(b) "Affiliate" shall mean, with respect to a specified Person,
a Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the Person
specified.
(c) "Associate" shall mean, with respect to a specified Person,
(i) any corporation or organization (other than the Company or a Subsidiary of
the Company) of which such Person is an officer or partner or is, directly or
indirectly, the Beneficial Owner of 10% or more of any class of equity security
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as defined in Rule 3a-l1 of the General Rules and Regulations under the Exchange
Act, (ii) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a similar
fiduciary capacity, and (iii) any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person, or is an officer
or director of any corporation controlling or controlled by such Person.
(d) "Beneficial Ownership" shall be determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act (or any
successor rule or statutory provision) or, if Rule 13d-3 shall be rescinded and
there shall be no successor rule or statutory provision thereto, pursuant to
Rule 13d-3 as in effect on the date hereof; provided, however, that a Person
shall, in any event, also be deemed to be the "Beneficial Owner" of any
securities:
i) which such Person or any Affiliate or Associate thereof
beneficially owns, directly or indirectly;
ii) which such Person or any Affiliate or Associate thereof,
directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner of," or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any Affiliate or Associate
thereof until the tendered securities are accepted for purchase or
exchange, or (B) securities issuable upon exercise of Rights;
iii) which such Person or any Affiliate or Associate thereof,
directly or indirectly, has sole or shared voting or investment power
with respect thereto pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (iii) as a
result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act; or
iv) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate or Associate thereof with which such
Person or any Affiliate or Associate thereof has any agreement,
arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in subparagraph (iii) of this paragraph (d)) or
disposing of any voting securities of the Company.
Notwithstanding the foregoing, a Person shall not be deemed to be the
"Beneficial Owner of," or to "beneficially own," any security as to which such
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person may be deemed to have voting or investment power solely by reason of such
Person's position as a trustee of the ESOT or other entity described in clause
(iv) of Section 1(a).
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
New York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(g) "Common Stock" shall mean the common stock, par value $.20
per share, of the Company and "common stock" when used with reference to any
Person other than the Company shall mean the capital stock with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
(h) "Company" shall mean Servotronics, Inc., a Delaware
corporation, until a successor corporation shall have become such or until a
Principal Party shall assume, and thereafter be liable for, all obligations and
duties of the Company hereunder, pursuant to the applicable provisions of this
Plan, and thereafter "Company" shall mean such successor corporation or
Principal Party.
(i) "Continuing Director" shall mean any director of the Company
who is not an Acquiring Person or a representative or nominee of an Acquiring
Person, and (i) who was elected by the stockholders or appointed by the Board of
Directors of the Company prior to the date as of which the Acquiring Person in
question became an Acquiring Person, or (ii) who was designated (before his
initial election or appointment as a director) as a Continuing Director by a
majority of the Whole Board, but only if a majority of the Whole Board shall
then consist of Continuing Directors, or, if a majority of the Whole Board shall
not then consist of Continuing Directors, by a majority of the then Continuing
Directors.
(j) "Current Market Price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of such
Common Stock for the 30 consecutive Trading Days immediately prior to such date;
provided, however, that in the event that the current per share market price of
the Common Stock is determined during a period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible into
shares of such Common Stock, or (B) any subdivision, combination, or
reclassification of such Common Stock, 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 Market Price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the American Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the
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American Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if shares of Common Stock are not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if on any such
date the shares of Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is making a market
in the Common Stock, the fair market value of such shares on such date as
determined reasonably and with good faith by the Board of Directors of the
Company shall be used. If the Common Stock is not publicly held or not so listed
or traded, Current Market Price per share shall mean the fair value per share
determined reasonably and with good faith to the holders of Rights by the Board
of Directors of the Company, whose determination shall be conclusive for all
purposes.
"Current Market Price" of the preferred Stock shall be determined in
accordance with the preceding paragraph if the Preferred Stock is publicly
traded. If the Preferred Stock is not publicly traded, the Current Market Price
of the Preferred Stock shall be conclusively deemed to be the Current Market
Price of the Common Stock as determined pursuant to the preceding paragraph,
multiplied by one hundred. If neither the Common Stock nor the Preferred Stock
is publicly traded, the Current Market Price of the Preferred Stock shall be
determined in accordance with the last sentence of the proceeding paragraph.
(k) "Distribution Date" shall mean the earlier of (i) the Stock
Acquisition Date or (ii) the tenth day after the date of the commencement of, or
first public announcement of the intent of any Person to commence (which
intention to commence remains in effect for five Business Days after such
announcement) a tender or exchange offer which would result in such Person
becoming an Acquiring Person, unless such date is extended by a majority of the
Continuing Directors (including any such date which is after the date of this
Plan and prior to the issuance of the Rights).
(l) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and in effect on the date of this Plan, and all references to
any rule or regulation of the General Rules and Regulations under the Exchange
Act shall be, except as otherwise specifically provided herein, to such rule or
regulation as was in effect on the date of this Plan.
(m) "Merger Right" shall mean the Rights described in Section
12(a) hereof.
(n) "Outstanding Non-ESOT Shares" shall mean the number of
shares of Common Stock outstanding exclusive of shares held by the ESOT
(including both allocated and unallocated shares) as reported in whichever of
the following documents has most recently been filed with the Securities and
Exchange Commission as of the date the determination of the ESOT Shares is made:
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(i) the most recent amendment to the ESOT's Schedule 13G; (ii) the Company's
most recent amendment to its Form 10-KSB which contains the information required
by Part IV of Form 10-KSB; or (iii) the Company's most recent proxy statement.
(o) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger of
otherwise) of such entity, except that Person shall include any person who is
excluded from the definition of Acquiring Person by clauses (i) through (v) of
paragraph (a) of Section 1.
(p) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.20 per share, of the Company.
(q) "Stock Acquisition Date" shall mean the first date of a
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(r) "Subscription Right" shall mean the Rights described in
Section 11(a) hereof.
(s) "Subsidiary" shall mean, with reference to any Person, any
corporation of which a majority of any class of equity security is Beneficially
Owned, directly or indirectly, by such Person.
(t) "Trading Day" with respect to any security shall mean a day
on which the principal national securities exchange on which the security is
listed or admitted to trading is open for the transaction of business or, if the
security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(u) "Triggering Event" shall mean an event giving rise to the
Subscription Rights or Merger Rights.
(v) "Whole Board" shall mean the total number of directors which
the Company would have if there were no vacancies on the Board of Directors.
(w) "Voting Stock" shall mean (i) the Common Stock and (ii) any
other shares of capital stock of the Company entitled to vote generally in the
election of directors or entitled to vote together with the Common Stock in
respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up.
Any determination required by the definitions contained in this
Section 1 shall be made by the Board of Directors of the Company in its good
faith judgment, which determination shall be final and binding.
SECTION 2. AUTHORITY TO APPOINT OF RIGHTS AGENT. The Company may
appoint a rights agent (or one or more co-rights agents) to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof.
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SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the Distribution Date, (x) the Rights will be
evidenced by the certificates for the Common Stock registered in the names of
the holders of the Common Stock (which certificates for Common Stock shall be
deemed also to be certificates for Rights) and not by separate certificates, and
(y) the Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As soon
as practicable after the Distribution Date, the Company, or the Rights Agent, as
the case may be, will send by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company or the Rights Agent, if any, a Rights Certificate, in substantially the
form of Exhibit A hereto (the "Rights Certificates"), evidencing one Right for
each share of Common Stock so held, subject to adjustment as provided herein. As
of and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company or the Rights Agent, if any, will send a copy of a Summary of Rights to
Purchase Preferred Stock, in substantially the form attached hereto as Exhibit B
(the "Summary of Rights"), by first-class, postage prepaid mail to each record
holder of the Common Stock as of the Close of Business on the Record Date, at
the address of such holder shown on the records of the Company or the Rights
Agent, as the case may be.
(c) Rights shall be issued in respect of all shares of Common
Stock (whether originally issued or delivered from the Company's treasury)
issued after the Record Date but prior to the earlier of the Distribution Date
or the Final Expiration Date (as hereinafter defined). Certificates representing
such shares of Common Stock shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Shareholder Rights Plan of
Servotronics, Inc. (the "Company"), dated as of August 26, 2002 (the
"Rights Plan"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in the Rights
Plan, such Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. The Company will mail to
the holder of this certificate a copy of the Rights Plan without
charge promptly after receipt of a written request therefor. Under
certain circumstances, Rights beneficially owned by Acquiring Persons
(as that term is defined in the Rights Plan) and any subsequent holder
of such Rights may become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common Stock
represented by such certificates alone, and the surrender for transfer of any of
such certificates, shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
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SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit A hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Plan, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed or to conform to usage. Subject to the provisions of Section 11,
Section 12 and Section 18 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date and on their face shall entitle the holders
thereof to purchase such number of one one-hundredths of a share of preferred
Stock as shall be set forth therein at the price per share set forth therein
(the "Purchase Price"), but the number of such shares and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3 (a)
hereof that represents Rights beneficially owned by an Acquiring Person, or that
represents any Rights owned on or after the Distribution Date by any Person who
subsequently becomes an Acquiring Person or any Rights Certificate issued at any
time upon the transfer of any Rights to an Acquiring Person or any Affiliate or
Associate of an Acquiring Person or to any nominee of such Acquiring Person,
Affiliate or Associate and any Rights Certificate issued pursuant to Section 6
or Section 13 upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, may contain the following
legend:
The Rights represented by this Rights Certificate were issued to a
Person who was or became an Acquiring Person. This Rights Certificate
and the Rights represented hereby may become void in the circumstances
specified in Section 7(e) of the Rights Plan.
The provisions of Section 7(e) of this Rights Plan shall be operative whether or
not the foregoing legend is contained on any such Rights Certificate.
SECTION 5. REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board or any other executive officer, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be issued
and delivered by the Company with the same force and effect as though the person
who signed such Rights Certificates had not ceased to be such officer of the
Company and any Rights Certificates may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Rights Certificate,
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shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Plan any such person was
not such an officer.
(b) Following the Distribution Date, the Company or the Rights
Agent, if any, will keep or cause to be kept, at the principal executive office
of the Company or at the principal shareholder services office or offices of the
Rights Agent, as the case may be, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
SECTION6. TRANSFER. SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED. DESTROYED. LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase a like
number of one one-hundredths of a share of Preferred Stock as the rights
Certificate or Certificates surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Certificates
shall make such request in writing delivered to the Company or Rights Agent, if
any, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal executive office
of the Company or the principal office of the Rights Agent designated for such
purpose, as the case may be. Thereupon, the Secretary of the Company or the
Rights Agent, as the case may be, shall deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company or the Rights Agent, if any, of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to it, and reimbursement to the
Company or the Rights Agent, as the case may be, of all reasonable expenses
incidental thereto, and upon surrender to the Company or Rights Agent, as the
case may be, and cancellation of the Rights Certificate if mutilated, the
Company or the Rights Agent, as the case may be, will execute and deliver a new
Rights Certificate of like tenor to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS: PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Sections 7(e) and 19(a) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby in
whole or in part at any time after the Distribution Date upon surrender of the
Rights Certificate, with the form of election to purchase on the reverse side
thereof including the certificate contained therein duly executed, to the
Company or the Rights Agent, if any, at the principal executive office of the
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Company or the principal shareholder services office or offices of the Rights
Agent, as the case may be, together with payment of the Purchase Price for each
one one-hundredth of a share of Preferred Stock as to which the Rights are
exercised prior to the earlier of (i) the Close of Business on August 28, 2012
(the "Expiration Date"), or (ii) the time at which the Rights are redeemed as
provided in Section 19 hereof.
(b) The Purchase Price for each one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $32.00,
shall be subject to adjustment from time to time as provided in Section 13
hereof and shall be payable in lawful money of the United States of America in
accordance with Paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase including the
certificate contained therein duly executed, accompanied by payment of the
Purchase Price for the shares to be purchased and an amount equal to any
applicable transfer tax in cash, or by certified check or bank draft payable to
the order of the Company, and a completed letter of transmittal (which shall be
in such form as the Company, in its sole discretion shall determine), the
Company or the Rights Agent, if any, shall thereupon promptly (i) (A)
requisition from any transfer agent, if any (but only to the extent such
transfer agent expressly assumes such duty), or, if none, from the Company's
Secretary or Assistant Secretary, of the shares of Preferred Stock certificates
for the number of shares of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests or, (B) if the Company, at its sole discretion, shall have elected to
deposit the shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of shares of Preferred Stock as are
to be purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent, if any
(but only to the extent such transfer agent expressly assumes such duty), or, if
none, from the Company's Secretary or Assistant Secretary, with the depositary
agent) and the Company will direct the depositary agent to comply with such
request, (ii) when appropriate requisition from the Company the amount of cash,
if any, to be paid in lieu of fractional shares in accordance with Section 14,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt deliver such cash, if any, to or upon the order
of the registered holder of such Rights Certificate. Notwithstanding the
foregoing, the Company, at the sole discretion of the Board of Directors, may
permit holders of Rights to pay the Purchase Price by tendering a promissory
note in the principal amount of the Purchase Price in such form and with such
terms and conditions as the Board of Directors, in its sole discretion, may
determine. In the case of an exercise of the Rights by a holder pursuant to
Section 11(a), the Company or the Rights Agent, if any, shall return such Rights
Certificate to the registered holder thereof after imprinting, stamping, or
otherwise indicating thereon that the rights represented by such Rights
Certificate no longer include the rights provided by Section 11(a) of the Rights
Plan and if less than all the Rights represented by such Rights Certificate were
so exercised, the Company or the Rights Agent, as the case may be, shall
indicate on the Rights Certificate the number of Rights represented thereby
which continue to include the rights provided by Section 11 (a).
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(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Company or the Rights Agent, if any, and delivered to the
registered holder of such Rights Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Plan to the contrary, if
there occurs one or more of the transactions set forth in Section 11(a) or
Section 12(a) on or after the time an Acquiring Person has become such, then any
Rights that are or were on or after the earlier of the Distribution Date or the
Stock Acquisition Date beneficially owned by an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, shall become void and any holder
of such Rights shall thereafter have no right to exercise such Rights under any
provision of this Plan.
(f) Notwithstanding anything in this Plan to the contrary,
neither the Company nor the Rights Agent, if any, shall be obligated to
undertake any action with respect to a registered holder of any Rights
Certificate upon the occurrence of any purported exercise thereof unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any of its
agents or to the Rights Agent, if any, shall be cancelled by the Company or the
Rights Agent, as the case may be, and no Rights Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Rights Plan. The Company or the Rights Agent, if any, shall cancel and retire
any other Rights Certificates purchased or acquired by the Company or the Rights
Agent, as the case may be, otherwise than upon the exercise thereof.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company shall cause to be reserved and kept available
out of its authorized and unissued shares of Preferred Stock, or any authorized
and issued shares of preferred Stock held in its treasury (and, following the
occurrence of a Triggering Event, out of its authorized and unissued shares of
Common Stock and/or other securities or out of its authorized and unissued
shares held in treasury), the number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
upon the exercise of the Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to
be listed on such exchange upon official notice of issuance upon such exercise.
10
(c) The Company shall use its best efforts to (i) file, as soon
as practicable following the Stock Acquisition Date, or, if required under the
Securities Act of 1933, as amended (the "Act"), following the Distribution Date,
a registration statement under the 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 the filing, and (iii) cause
such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations thereunder)
until the expiration of the Subscription Period (as defined in Section 19 (a)
(ii)) and thereafter if required under the Act until the Expiration Date. The
Company will also take all action necessary to ensure compliance with the
securities laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statements. Upon any suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Notwithstanding any provision of this
Plan to the contrary, the Rights shall not be exercisable in any jurisdiction
unless the requisite qualifications in that jurisdiction shall have been
obtained.
(d) The Company shall take all such action as may be necessary
to ensure that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
(e) The Company shall pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of
the issuance or delivery of the Rights Certificates and of any certificates for
a number of one one-hundredths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of (i) any transfer or delivery of Rights Certificates to a
Person other than the registered holder of Rights Certificate, or (ii) the
issuance or delivery of a number of one one-hundredths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) in respect
of a name other than that of the registered holder of the Rights Certificates
evidencing the Rights surrendered for exercise, and may refuse to issue or
deliver any certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be) in
a name other than that of the registered holder of such Rights Certificates upon
the exercise of any Rights until such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each person in whose name any
certificate for a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
11
record of such fractional shares of preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated the date upon which the Rights Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are open.
SECTION 11. SUBSCRIPTION RIGHT.
(a) Subject to the provisions of Section 20, in the event that
any Person, alone or together with its Affiliates and Associates, shall become
an Acquiring Person, then proper provision shall be made so that each holder of
a Right, except as provided in Section 7(e) hereof, shall, for a period of 60
days (or such other shorter or longer period as may be established by action of
a majority of the Continuing Directors) after the later of the Stock Acquisition
Date and the effective date of an appropriate registration statement as
permitted pursuant to Section 9, have a right to receive ("Subscription Right"),
upon exercise thereof at the then current Purchase Price in accordance with the
terms of this Plan, in lieu of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one one-hundredths of a share
of Preferred Stock for which a Right is then exercisable and dividing that
product by (y) 33-1/3% of the Current Market Price per one share of Common Stock
on the date of the occurrence of the event set forth in this paragraph (such
number of shares being referred to as the "number of Adjustment Shares");
PROVIDED, HOWEVER, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 12 hereof,
then only the provisions of Section 12 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a).
(b) In the event that there shall not be sufficient authorized
but unissued Common Stock to permit the exercise in full of the Subscription
Rights, the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exercise of the Subscription
Rights, including the calling of a meeting of stockholders; provided, however,
that if the Company is unable to cause the authorization of a sufficient number
of additional shares of Common Stock, then, in the event the Rights become so
exercisable, the Company shall substitute, for each share of Common Stock that
would otherwise be issuable upon exercise of a Right, a number of shares of
Preferred Stock or fraction thereof such that the Current Market Price of one
share of Preferred Stock multiplied by such number or fraction is equal to the
Current Market Price of one share of Common Stock as of the date of issuance of
such Preferred Stock. To the extent that the Company determines that some action
need be taken pursuant to the provision of this Section 11 (b), the Board of
Directors may temporarily suspend the exercisability of the Subscription Rights
for a period of up to 75 days following the date on which the event described in
Section 11(a) shall have occurred, in order to seek any authorization of
additional shares of Common Stock. In the event of any such suspension, the
12
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended.
SECTION 12. MERGER RIGHT.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person, (y) any Person shall consolidate with the Company,
or merge with and into the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such merger, all or
part of the shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other Person (or the Company) or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell, mortgage or otherwise transfer), 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) to any
other Person or Persons, then, and in each such case, proper provision shall be
made so that (i) following the Distribution Date, each holder of a Right, except
as provided in Section 7(e), shall have the right ("Merger Right") to receive,
upon the exercise thereof at the then current Purchase Price in accordance with
the terms of this Plan, such number of shares of freely tradable common stock of
the Principal Party, free and clear of any liens, encumbrances, or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-hundredths of a share of
Preferred Stock for which a right is then exercisable (without taking into
account any adjustment previously made pursuant to a Subscription Right) and (2)
dividing that product by 33-1/3% of the Current Market Price per share of the
common stock of such Principal Party on the date of consummation of such
consolidation, merger, sale, or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Plan; (iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 13 hereof shall apply to such Principal Party; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its common stock) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of common stock thereafter deliverable upon the exercise of the Merger
Right.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or
(y) of the first sentence of this Section 12, the Person
that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the
Person that is the other party to the merger or
consolidation (including, if applicable, the Company, if it
is the surviving corporation); and
(ii) in the case of any transaction described in (z) of
the first sentence in this Section 12, the Person that is
13
the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or
transactions;
PROVIDED, HOWEVER, that in any such case, (1) if the common stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, as then in effect, and
such Person is a direct or indirect Subsidiary or Affiliate of another Person
the common stock of which is and has been so registered, "Principal Party" shall
refer to such other Person; (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the shares of common stock of two or more
of which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the common stock having the greatest
aggregate market value; and (3) in case such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth in (1) and (2)
above shall apply to each of the chains of ownership having an interest in such
joint venture as if such party were a "subsidiary" of both or all of such joint
venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 12 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its common stock that have not been issued or
reserved for issuance to permit the exercise in full of the Merger Rights and
unless prior thereto the Company and each Principal Party and each other Person
who may become a Principal Party, as a result of such consolidation, merger,
sale or transfer, shall have executed and delivered to the Rights Agent, if any,
or if no Rights Agent has been appointed, to the Company's Secretary or
Assistant Secretary, a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 12 and further providing that, as soon
as practicable after the date of any consolidation, merger, sale or transfer,
the Principal Party at its own expense will:
(i) prepare and file a registration statement under the
Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, will use its best efforts to cause such registration
statement to become effective as soon as practicable after
such filing and will use its best efforts to cause such
registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act)
until the Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the
Rights under the securities laws of such jurisdictions as
may be necessary or appropriate; and
(iii) will deliver to holders of the Rights
historical financial statements for the Principal Party and
each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act.
14
The rights under this Section 12 shall be in addition to the rights under
Section 11 and shall survive any exercise thereof.
SECTION 13. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 13 or as otherwise provided in this
Plan.
(a) In the event the Company shall at any time after the date of
this Plan (A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 13(a) and Section 7(e), the Purchase Price
in effect at the time of the record date for such dividend or 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
so that if a holder of Rights after such time were to exercise that number of
Rights which would result in the aggregate amount of the Purchase Price payable
upon such exercise (at the Purchase Price then in effect) being equal to the
amount of the Purchase Price that was payable prior to such time upon exercise
of a Right, he would be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Rights had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of the
Company were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both Section 11(a) hereof and this Section 13(a), the adjustment provided for in
this Section 13(a) shall be in addition to, and shall be made prior, to any
adjustment required pursuant to Section 11(a).
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Preferred Stock (or shares having the same rights, privileges
and preferences as the shares of Preferred Stock ["equivalent preference
stock"]) or securities convertible into Preferred Stock or equivalent preferred
stock at a price per share of Preferred Stock (or having a conversion price per
share, if a security convertible into Preferred Stock or equivalent preferred
stock) less than the Current Market Price per share of Preferred Stock on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Preferred Stock outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of shares
of Preferred Stock and/or equivalent preferred stock to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). In
case such subscription price may be paid 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 in good faith by the Board of Directors of the Company, whose
15
determination shall be conclusive for all purposes. Shares of Preferred Stock
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that such
rights or warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(c) If the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular
semi-annual cash dividend), assets (other than a dividend payable in Preferred
Stock), or subscription rights or warrants (excluding those referred to in
Section 13 (b)), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the Current
Market Price per share of the preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive for all purposes) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants in respect of one share of Preferred
Stock and the denominator of which shall be such Current Market Price per share
of Preferred Stock. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price which would
be in effect if such record date had not been fixed.
(d) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price; PROVIDED,
HOWEVER, that any adjustments which by reason of this Section 13 (d) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 13 shall be made to
the nearest cent or to the nearest ten-thousandth of a share of Common Stock or
other shares or one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 13(d), any adjustment
required by this Section 13 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.
(e) If as a result of an adjustment made pursuant to Section 11
or 12 (a), the holder of any Rights thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in Sections 11 and 13 (a), (b),
(c), (d), (f), (g), (h), (i), (j), and (1) and the provisions of Sections 7, 9,
10, 12, 14 and 20 hereof with respect to the Preferred Stock shall apply on like
terms to any such other shares.
16
(f) 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 shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(g) Unless the Company shall have exercised its election as
provided in Section 13(h), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 13 (b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of 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.
(h) 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 one one-hundredths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
the adjustment in the number of Rights shall be exercisable for the number of
one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one-millionth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
13(h), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date, Rights
Certificates evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-hundredth of a share and the number of one one-hundredths of a share which
were expressed in the initial Rights Certificates issued hereunder.
17
(j) Before taking any action that would cause an adjustment
reducing the Purchase Price below the par value or the then stated value, if
any, of the number of one one-hundredths of a share of Preferred Stock issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable such number of one
one-hundredths of a share of Preferred Stock at such adjusted Purchase Price.
(k) In any case in which this Section 13 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Rights exercised after such record date
the number of one one-hundredths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) upon the occurrence of the event requiring such
adjustment.
(l) Anything in this Section 13 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 13, as and to
the extent that in its sole discretion the Company shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less
than the Current Market Price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends, or (v)
issuance of rights, options or warrants referred to in this Section 13,
hereafter made by the Company to holders of its Preferred Stock shall, if
practicable, not be taxable to such stockholders.
(m) Anything in this Plan to the contrary notwithstanding, in
the event that the Company shall at any time after the date of this Plan and
prior to the Distribution Date (i) declare a dividend on the outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares of its capital stock in a
reclassification of the outstanding Common Stock, then in any such case (i) the
number of one one-hundredths of a share of Preferred Stock purchasable upon
proper exercise of each Right shall be determined by multiplying the number of
one one-hundredths of a share so purchasable immediately prior to such event by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and (ii) each share of Common Stock
outstanding immediately after such event shall have issued with respect to it
that number of Rights which each share of Common Stock outstanding immediately
prior to such event had issued with respect to it. The adjustments provided for
in this Section 13(m) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
18
effected. If an event occurs which would require an adjustment under this
Section 13 (m), the adjustments provided for in this Section 13 (m) shall be in
addition and prior to any adjustment required pursuant to the Triggering Event.
(n) The exercise of Rights under Section 11(a) shall only result
in the loss of rights under Section 11(a) to the extent so exercised and shall
not otherwise affect the rights represented by the Rights under this Rights
Plan, including the rights represented by Section 12.
(o) The Company shall not (i) consolidate with, (ii) merge with
or into, 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 consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the benefits intended
to be accorded by the Rights.
(p) After the Stock Acquisition Date, the Company shall not,
except as permitted by Section 19 or Section 24 hereof, take any action the
purpose or effect of which is to diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
Current Market Price of a whole Right as of the date on which such fractional
Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates, at the
time such Rights are exercised as herein provided, an amount in cash equal to
the same fraction of the Current Market Price of one one-hundredth of a share of
Preferred Stock as of the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares (other than fractions which are integral multiples of one one-hundredth
of a share of Preferred Stock) upon exercise of a Right.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect to this
Plan are vested in the respective registered holders of the Rights Certificates
and only such holders (and, prior to the Distribution Date, the registered
holders of the Common Stock and only such holders); and any registered holder of
19
any Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), without the consent of the holder of any other Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), may, in his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to execute the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Plan. 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 Plan and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder by any Person subject to this Plan.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Company, if surrendered at the
principal office of the Company, or Rights Agent if a Rights Agent is appointed
by the Company hereunder, only on the registry book of the Rights Agent, if
surrendered at the principal shareholder services office of the Rights Agent,
duly endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent, if any, may deem and treat
the person in whose name a Rights Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Rights Certificates or the associated Common
Stock certificate made by anyone other than the Company or any Rights Agent) for
all purposes whatsoever, and neither the Company nor any Rights Agent appointed
by the Company shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Plan to the contrary,
neither the Company nor any Rights Agent appointed by the Company shall have any
liability to any holder of a Right or other Person as a result of its inability
to perform any of its obligations under this Plan by reason of any preliminary
or permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. Except
as otherwise expressly provided in this Plan, no holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of the number of one one-hundredths of a share of Preferred
20
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting stockholders, or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.
SECTION 18. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Plan or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provision of this Plan.
SECTION 19. REDEMPTION AND TERMINATION.
(a) (i) The Board of Directors of the Company may, at its
option, at any time prior to 5:00 P.M., New York City time, on the earlier of
(x) the Stock Acquisition Date, or (y) the Final Expiration Date, redeem all but
not less than all the then outstanding Rights at a redemption price of $.00l per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price").
(ii) In addition, the Board of Directors of the Company may
redeem all but not less than all of the then outstanding Rights at the
Redemption Price following the occurrence of a Stock Acquisition Date, but prior
to any event described in Section 12 (a), either (x) prior to commencement of
the period under Section 11(a) during which the Subscription Right may be
exercised (the "Subscription period") if each of the following shall have
occurred and remain in effect: (1) a Person who is an Acquiring Person shall
have transferred or otherwise disposed of a number of shares of Common Stock in
a transaction, or series of transactions, such that such Person is thereafter a
Beneficial Owner of 5% or less of the outstanding shares of Common Stock, (2)
there are no other Persons, immediately following the transfer or other
disposition described in clause (1), who are Acquiring Persons, and (3) the
transfer or other disposition described in clause (1) of this Section 19(a)(ii)
was other than pursuant to a transaction, or series of transactions, which
directly or indirectly involved the Company or any of its Subsidiaries; (y) in
connection with any event specified in Section 12(a) in which all holders of
Common Stock are treated alike and not involving an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, or any other Person in which such
Acquiring Person, Affiliate or Associate has any interest, or any other Person
acting directly or indirectly on behalf of or in association with any such
Acquiring Person, Affiliate or Associate; or (z) following the expiration of the
Subscription period if and for as long as the Acquiring Person is not thereafter
the Beneficial Owner of 25% of the then Outstanding Non-ESOT Shares, and at the
time of redemption there are no other Persons who are Acquiring Persons.
21
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to Section 19 (a)(i), and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. In the case of a redemption permitted
only under Section 19 (a)(ii), the right to exercise the Rights will terminate
and represent only the right to receive the Redemption Price: (i) prior to
commencement of the Subscription Period, only after ten Business Days following
the giving of notice of such redemption to the holders of such Rights; and (ii)
after commencement of the Subscription Period, upon the later of ten Business
Days following the giving of such notice or the expiration of the Subscription
Period. Within ten days after the action of the Board of Directors ordering any
such Redemption of the Rights, 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 or the Rights Agent, if any, or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
The Company may, at its option, discharge all of its obligations with
respect to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights and (ii) mailing payment of the Redemption Price to the
registered holders of the Rights at their last addresses as they appear on the
registry books of the Company or the Rights Agent, if any, or, prior to the
Distribution Date, on the registry books of the Transfer Agent of the Common
Stock, and upon such action, all outstanding Rights Certificates shall be null
and void without any further action by the Company.
SECTION 20. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, 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 7(e) hereof) for shares
of Common Stock at an exchange ratio of two shares of Common Stock 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").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 20 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
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 Company. Any notice
22
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 will state the
method by which the exchange of the shares of Common Stock 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 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Stock
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 20, the Company shall
take all such action as may be necessary to authorize additional Common Stock
for issuance upon exchange of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Stock, the Company shall substitute, for each
share of Common Stock that would otherwise be issuable upon exchange of a Right,
a number of shares of Preferred Stock or fraction thereof such that the Current
Market Price of one share of Preferred Stock multiplied by such number or
fraction is equal to the Current Market Price of one share of Common Stock as of
the date of issuance of such Preferred Stock.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the Current Market Value of a whole share of Common Stock.
SECTION 21. INDEMNIFICATION OF CORPORATE OFFICERS AND DIRECTORS.
(a) The Company shall indemnify its officers and directors for,
and hold them harmless against, any loss, liability, or expense, incurred
without bad faith or willful misconduct on the part of such officers and
directors, for any acts or omissions by such officers and directors in
connection with the acceptance and administration of this Plan, including the
costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly, and will promptly reimburse such officers and
directors for any legal or other expenses reasonably incurred in investigating
or defending any such loss, expense, claim, damage or liability.
(b) The Company's officers and directors shall be protected by
the indemnity provided in this Section 21 and shall incur no liability for or in
respect to any action taken, suffered or omitted by any of them in connection
with their administration of this Plan in reliance upon any Rights Certificate
or certificate for Common Stock or for other securities of the Company,
instrument or assignment of transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by such officer or director to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper Person or
Persons. The indemnification provided to the officers and directors of the
Company pursuant to this Section 21, shall be in addition to, and not a
limitation upon, any and all other forms of indemnification which have been or
may be provided for these officers and directors.
23
SECTION 22. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
semi-annual cash dividend out of earnings or retained earnings of the Company),
or (ii) to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
subsidiaries to effect any sale or 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 (v) to effect the liquidation,
dissolution or winding-up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, in accordance with Section 23
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding-up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 10 days prior to the record
date for determining holders of the shares of Preferred Stock for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock, whichever shall be the
earlier.
(b) Upon the occurrence of an event giving rise to the
Subscription Rights or Merger Rights, the Company or Principal Party, as the
case may be, shall as soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 23
hereof, a notice of the occurrence of such event and the consequences thereof to
holders of Rights under Sections 11(a) or 12(a) hereof, as the case may be.
SECTION 23. NOTICES. Notices or demands authorized by this Plan to be
given or made by the Rights Agent, if any, or by the holder of any Rights
Certificate to or on the Company, shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed as follows:
Servotronics, Inc.
1110 Maple Street
P. O. Box 300
Elma, New York l4059-0300
Attention: Secretary
Notices or demands authorized by this Plan to be given or made by the Company or
the Rights Agent, if any, to the holder of any Rights 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 Company or the Rights Agent, as the case may be. The Company shall
24
deliver a copy of any notice or demand it delivers to the holder of any Rights
Certificate to the Rights Agent, if any, and the Rights Agent, if any, shall
deliver a copy of any notice or demand it delivers to the holder of any Rights
Certificate to the Company.
SECTION 24. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Plan without the approval of any holders of Right
Certificates 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 with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent, if any; PROVIDED, HOWEVER, that from and after such time as any Person
becomes an Acquiring Person, this Plan shall not be amended in any manner which
would adversely affect the interests of the holders of Rights. Without limiting
the foregoing, the Company may at any time prior to such time as any Person
becomes an Acquiring Person amend this Plan to lower the thresholds set forth in
Section 1(a) to not less than the greater of (i) the sum of .001% and the
largest percentage of the outstanding shares of Common Stock then known by the
Company to be beneficially owned by any Person and (ii) 10%.
SECTION 25. SUCCESSORS. All the covenants and provisions of this Plan by
or for the benefit of the Company shall bind and inure to the benefit of its
respective successors and assigns hereunder.
SECTION 26. BENEFITS OF THIS PLAN. Nothing in this Plan shall be
construed to give to any Person other than the Company and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
Common Stock) any legal or equitable right, remedy or claim under this Plan; but
this Plan shall be for the sole and exclusive benefit of the Company and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the Common Stock).
SECTION 27. SEVERABILITY. If any term, provision, covenant or
restriction of this Plan 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 Plan shall remain in full force
and effect and shall in no way be affected, impaired or invalidated.
SECTION 28. GOVERNING LAW. This Plan, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
SECTION 29. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Plan are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
25
SERVOTRONICS, INC.
By /s/ Raymond C. Zielinski
--------------------------------
Name: Raymond C. Zielinski
Title: Vice President
ATTEST:
/s/ Lee D. Burns
- ----------------------
Name: Lee D. Burns
Title: Secretary
26
EXHIBIT A
(Form of Rights Certificate]
Certificate No. R-
Rights
--------
NOT EXERCISABLE AFTER AUGUST 28, 2012 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS PLAN. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY ACQUIRING PERSONS (AS THAT TERM IS DEFINED IN THE RIGHTS
PLAN) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE SHAREHOLDER RIGHTS PLAN). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH PLAN.]1
Rights Certificate
------------------
SERVOTRONICS, INC.
This certifies that , or registered assigns, is the
---------------
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Plan dated as of August 26, 2002 the "Rights Plan") of Servotronics, Inc., a
Delaware corporation (the "Company"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Plan) and
prior to 5:00 P.M. (New York City time) on August 28, 2012 at the principal
corporate executive office of the Company or at the offices of the Rights Agent,
if any, designated for such purpose, one one-hundredth of a fully paid,
nonassessable share of Series A Junior Participating Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of $32.00 per
one-hundredth of a share (the "Purchase Price"), upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase duly executed.
- ------------------------
1 The Portion of the legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence
The number of Rights evidenced by this Rights Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price per share set forth above, are the number and Purchase
Price as of August 28, 2002. As provided in the Rights Plan, the Purchase Price,
the type of security, and the number of shares of Preferred Stock which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Plan, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights Plan
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Company and the
holders of the Rights Certificates. Copies of the Rights Plan are on file at the
above-mentioned office of the Company or the principal shareholder services
office of the Rights Agent, if one has been appointed, and are also available
upon written request to the Company or the Rights Agent, if any.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal executive office of the Company or the principal
shareholder services office of the Rights Agent, if any, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
one one-hundredths of a share of Preferred Stock as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised (other than
pursuant to Section 11(a) of the Rights Plan) in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised. If this Rights
Certificate shall be exercised in whole or in part pursuant to Section 11(a) of
the Rights Plan, the holder shall be entitled to receive this Rights Certificate
duly marked to indicate that such exercise has occurred as set forth in the
Rights Plan.
Subject to the provisions of the Rights Plan, the Rights evidenced by
this certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right. Subject to the provisions of the Rights Plan, the
Company, at its option, may elect to mail payment of the redemption price to the
registered holder of the Right at the time of redemption, in which event this
certificate may become void without any further action by the Company.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock), but in
lieu thereof of a cash payment will be made, as provided in the Rights Plan.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights Plan
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 Plan), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Plan.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been executed by the Company.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of
--------------------------
SERVOTRONICS, INC.
ATTEST:
- -------------------------- By:
--------------------------
Secretary President
(Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and
-----------------------
transfers unto
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- -----------------------------------------------------------------------------
This Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint as attorney to
---------
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
-----------, --------
-----------------------------
Signature
-----------------------------
Signature
Signature Guaranteed:
----------------------------------
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights Certificate pursuant to
Section 11(a) of the Rights Plan.)
To:
----------------------------------
The undersigned hereby irrevocably elects to exercise
Rights represented by this Rights Certificate to
- ---------------------------
purchase the shares of Preferred Stock issuable upon the exercise of the Rights
and requests that certificates for such shares be issued in the name of:
(Please insert social security or other identifying number):
- --------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Rights Certificate indicating the balance, if any, of such Rights
which may still be exercised pursuant to Section 11(a) of the Rights Plan shall
be returned to the undersigned unless such person requests that the Rights
Certificates be registered in the name of and delivered to:
Please insert social security or other identifying number (complete
only if Rights Certificate is to be registered in a name other than the
undersigned)
--------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: 20
-----------, --
-----------------------------
Signature
-----------------------------
Signature
Signature Guaranteed:
----------------------------------
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an
Acquiring Person, or an Affiliate or Associate of any such Acquiring
Person (as such term is defined in the Rights Plan); and
(2) After due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or Associate of any such
Acquiring Person.
Dated:
----------------------
-----------------------------
Signature
-----------------------------
Signature
NOTICE
------
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
As of August 26, 2002 the Board of Directors of Servotronics, Inc. (the
"Company") adopted a Shareholder Rights Plan (the "Rights Plan") to take effect
on August 28, 2002 upon expiration of the Company's existing Shareholder Rights
Plan which is due to expire at the close of business on August 28, 2002.
Pursuant to the new Rights Plan, the Board of Directors declared a dividend
distribution of one Right for each outstanding share of Company Common Stock to
shareholders of record at the close of business on August 28, 2002. The
description and terms of the Rights are set forth in a Rights Plan (the "Rights
Plan") adopted by the Board of Directors. Subject to becoming exercisable as
described below, each Right entitles its registered holder to purchase from the
Company one one-hundredth of a share (a "Unit") of Series A Junior Participating
Preferred Stock, par value $.20 per share (the "Preferred Stock"), at a Purchase
Price of $32.00 per Unit, subject to adjustment.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock on the
Distribution Date, which will occur on the earlier of (i) the date of the
Company's public announcement (the "Stock Acquisition Date") that a person or
group of affiliated or associated persons (an "Acquiring Person") has acquired,
or obtained the right to acquire, beneficial ownership of 25 % or more of the
shares of Common Stock outstanding, excluding shares of Common Stock held by the
Servotronics, Inc. Employee Stock Ownership Trust (the "ESOT"), or (ii) 10 days
following the commencement of a tender offer or exchange offer that would result
in a person or group becoming an Acquiring Person. The ESOT and Dr. Nicholas D.
Trbovich cannot be Acquiring Persons, as defined.
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 August 28, 2002
will contain a legend incorporating the Rights Plan by reference, but existing
Common Stock certificates will also incorporate the Rights Plan notwithstanding
the absence of such a legend, and (iii) the surrender for transfer of any
certificate for Common Stock outstanding will also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
SHAREHOLDERS NEED NOT SURRENDER THEIR EXISTING STOCK CERTIFICATES TO OBTAIN THE
BENEFITS OF THE RIGHTS PLAN.
The Rights are not exercisable until the Distribution Date and will expire at
the close of business on August 28, 2012, 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. All shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
After the Distribution Date and prior to the Stock Acquisition Date, each Right
will entitle the holder to purchase from the Company one-hundredth of a share of
Preferred Stock for $32.00, subject to adjustment. The Preferred Stock is
non-redeemable. Each share of Preferred Stock will be entitled to an annual
aggregate dividend equal to the greater of $1 per share or 100 times the
dividend declared on the common shares. In the event of liquidation, the holders
of the Preferred Stock will be entitled to receive an aggregate liquidation
payment equal to the greater of $1 or 100 times the payment made per share of
Common Stock. Each share of Preferred Stock will have 100 votes, voting together
with the common shares. The dividend, liquidation and voting rights, and the
non-redemption feature of the Preferred Stock are designed so that the value of
the one-hundredth interest in a preferred share purchasable with each right will
approximate the value of one share of Common Stock.
In the event any person becomes an Acquiring Person, each holder of a right will
have the right to receive, upon exercise of the Right and payment of the
Purchase Price, Common Stock (or, if sufficient Common Stock is unavailable,
Preferred Stock) having a value equal to three times the Purchase Price of the
Right (referred to as the "Subscription Right"). The Subscription Right is
exercisable during the 60-day period following the later of the Stock
Acquisition Date or the effective date of a registration statement covering the
Common Stock (or Preferred Stock, if applicable) subject to the Subscription
Right (referred to as the "Subscription Period"). The Board of Directors has the
discretion to permit the holders of Rights to tender promissory notes in payment
of the Purchase Price. Notwithstanding any of the foregoing, all Rights that
are, or (under certain circumstances specified in the Rights Plan) were,
beneficially owned by any Acquiring Person will be null and void.
For example, at a Purchase Price of $32 per Right, each Right not owned by an
Acquiring Person (or by certain related parties) following the Stock Acquisition
Date would entitle its holder to purchase $96 worth of Common Stock for $32.
Assuming that each share of Common Stock had a value of $8 at such time, the
holder of each valid Right would be entitled to purchase twelve shares of Common
Stock for $32.
In the event that, at any time following the Stock Acquisition Date, (i) the
Company engages in a merger or other business combination transaction or (ii)
50% or more of the Company's assets or earning power is sold or transferred,
each holder of a Right (except Rights which previously have been voided as set
forth above) shall thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to three times the Purchase
Price of the Right (referred to as the "Merger Right").
The Purchase Price payable, and the number of Units of Preferred Stock (or the
number and kind of other securities or property, as the case may be) 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 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 regular
semi-annual cash dividends) or of subscription rights or warrants (other than
those referred to above).
At any time after the Stock Acquisition Date, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such the Acquiring
Person, which will have become void), in whole or in part, at an exchange ratio
of two shares of Common Stock, or two one-hundredths of a share of Preferred
Stock, per Right (subject to adjustment).
No adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1 % of the Purchase Price. The Company is not
required to issue fractional Units and, in lieu thereof, an adjustment in cash
may 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 prior to the earlier of the Stock Acquisition Date or the Expiration
Date, the Board of Directors may redeem the outstanding Rights in whole, but not
in part, at a redemption price of $.00l per Right (the "Redemption Price"). In
addition, the Board of Directors may redeem the Rights after the Stock
Acquisition Date but prior to an event which gives rise to the exercisability of
the Merger Right if (1) prior to the Subscription Period, the Acquiring Person
shall have transferred a sufficient number of shares of Common Stock so that
such Person owns 5 % or less of the outstanding Common Stock excluding ESOT
shares (and there are no other Acquiring Persons) and such transfers did not
involve the Company; (2) in connection with a merger or business combination
involving the Company where all shareholders are treated alike and not involving
the Acquiring Person or any entity in which the Acquiring Person has an
interest; or (3) following the Subscription Period if there are no Acquiring
Persons.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the Company
without the consent of the holders of the Rights, including an amendment to
lower the threshold for a person becoming an Acquiring Person to not less than
the greater of (i) the sum of .001 % and, the largest percentage of the
outstanding Common Shares then known to the Company to be beneficially owned by
any person or group of affiliated or associated persons and (ii) 10%, except
that, after the Distribution Date, no amendment may be effected which would
adversely affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
Copies of the Rights Plan have been filed with the Securities and Exchange
Commission as an Exhibit to the Current Report on Form 8-K dated August 27,
2002. Copies of the Rights Plan are 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 Plan, which is incorporated
herein by reference.
EXHIBIT C
FORM OF CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
SERVOTRONICS, INC.
Pursuant to Section 151 of the General Corporation Law
of the
State of Delaware
We, Nicholas D. Trbovich, Sr., President, and Lee D. Burns, Secretary, of
Servotronics, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), in accordance with
the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, the Board of Directors on
August 10, 1992, adopted the following resolution creating a series of 50,000
shares of Preferred Stock designated as Series A Junior Participating Preferred
Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation by the Certificate of Incorporation, the Board of Directors
does hereby provide for the issue of a series of Junior Preferred Stock, $.20
par value, of the Corporation, to be designated "Series A Junior Participating
Preferred Stock" (hereinafter referred to as the "Series A Preferred Stock"),
initially consisting of 50,000 shares, and to the extent that the designations,
powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions of the Series A Preferred Stock are
not stated and expressed in the Certificate of Incorporation, does hereby fix
and herein state and express such designations, powers, preferences and relative
and other special rights and the qualifications, limitations and restrictions
thereof, as follows (all terms used herein which are defined in the Certificate
of Incorporation shall be deemed to have the meanings provided therein):
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the
number of shares constituting such series shall be 50,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose, semi-annual
dividends payable in cash on the 15th day of June and December in each year
(each such date being referred to herein as a "Semi-Annual Dividend Payment
Date"), commencing on the first Semi-Annual Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A Junior
Participating Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) fifty cents ($.50) or (b) subject
to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value
$.20 per share, of the Corporation (the "Common Stock") since the
immediately preceding Semi-Annual Dividend Payment Date, or, with respect
to the first Semi-Annual Dividend Payment Date, since the first issuance of
any share or fraction of a share of Series A Junior Participating Preferred
Stock. In the event the Corporation shall at any time after August 24, 1992
(the "Rights Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A)
above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Semi-Annual
Dividend Payment Date and the next subsequent Semi-Annual Dividend Payment
Date, a dividend of fifty cents ($.50) per share on the Series A Junior
Participating Preferred Stock shall nevertheless be payable on such
subsequent Semi-Annual Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the
Semi-Annual Dividend Payment Date next preceding the date of issue of such
shares of Series A Junior Participating Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Semi-Annual
Dividend Payment Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or unless the date of
issue is a Semi-Annual Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive a semi-annual dividend
and before such Semi-Annual Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Semi-Annual Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Junior
Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior to
the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A Junior
Participating preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the number of votes per share to
which holders of shares of Series A Junior Participating Preferred Stock
were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to three (3)
semi-annual dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a "default period") which
shall extend until such time when all accrued and unpaid dividends for all
previous semi-annual dividend periods and for the current semiannual
dividend period on all shares of Series A Junior Participating Preferred
Stock then outstanding shall have been declared and paid or set apart for
payment. During each default period, all holders of Preferred Stock
(including holders of the Series A Junior Participating Preferred Stock)
with dividends in arrears in an amount equal to three (3) semi-annual
dividends thereon, voting as a class, irrespective of series, shall have
the right to elect one (1) Director.
(ii) During any default period, such voting right of the holders
of Series A Junior Participating Preferred Stock may be exercised initially
at a special meeting called pursuant to subparagraph (iii) of this Section
3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such voting right nor the
right of the holders of any other series of Preferred Stock, if any, to
increase, in certain cases, the authorized number of Directors shall be
exercised unless the holders of ten percent (10%) in number of shares of
Preferred Stock outstanding shall be present in person or by proxy. The
absence of a quorum of the holders of Common Stock shall not affect the
exercise by the holders of Preferred Stock of such voting right. At any
meeting at which the holders of Preferred Stock shall exercise such voting
right initially during an existing default period, they shall have the
right, voting as a class, to elect a Director to fill any vacancy in the
Board of Directors as may then exist or, if such right is exercised at an
annual meeting, to elect one (1) Director. If the number which may be so
elected at any special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make such increase
in the number of Directors as shall be necessary to permit the election by
them of a Director. After the holders of the Preferred Stock shall have
exercised their right to elect a Director in any default period and during
the continuance of such period, the number of Directors shall not be
increased or decreased except by vote of the holders of Preferred Stock as
herein provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Junior Participating Preferred
Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect a
Director, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding, irrespective of
series, may request, the calling of special meeting of the holders of
Preferred Stock, which meeting shall thereupon be called by the President,
a Vice-President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this paragraph (C) (iii) shall be given to
each holder of record of Preferred Stock by mailing a copy of such notice
to him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than 20
days and not later than 60 days after such order or request or in default
of the calling of such meeting within 60 days after such order or request,
such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding. Notwithstanding the
provisions of this paragraph (C) (iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect one (1) Director
voting as a class, after the exercise of which right (x) the Director so
elected by the holders of Preferred Stock shall continue in office until
his or her successor shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C) (ii) of this Section 3)
be filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of stock which elected the Director
whose office shall have become vacant. References in this paragraph (C) to
Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect a Director
shall cease, (y) the term of any Director elected by the holders of
Preferred Stock as a class shall terminate, and (z) the number of Directors
shall be such number as determined by the Board of Directors pursuant to
the Certificate of Incorporation or By-Laws irrespective of any increase
made pursuant to the provisions of paragraph (C) (ii) of this Section 3
(such number being subject, however, to change thereafter in any manner
provided by law or in the Certificate of Incorporation or By-Laws). Any
vacancy in the Board of Directors effected by the provisions of clauses (y)
and (z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever semi-annual dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock
as provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares
of Series A Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series
A Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to
the Series A Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares
of Series A Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Junior
Participating preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. LIQUIDATION. DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares
of Series A Junior Participating preferred Stock shall have received one
dollar ($1.00) per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series A Liquidation Preference"). Following the
payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth
in subparagraph (C) below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock)
(hereinafter referred to as the "Adjustment Number"). Following the payment
of the full amount of the Series A Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series A Junior
Participating Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to
1 with respect to such Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of preferred stock, if
any, which rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to
the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then
in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
the shares of Series A Junior Participating Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to 100 times
the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share
of Common Stock is changed or exchanged. In the event the Corporation shall
at any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Series A Junior Participating Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. RANKING. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.
Section 10. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority or more
of the outstanding shares of Series A Junior Participating Preferred
-Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder,
in proportion to such holders' fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 14th day
of August, 1992.
/s/ Raymond C. Zielinski
-------------------------
Name: Raymond C. Zielinski
Title: Vice President
Attest:
/s/ Lee D. Burns
- -----------------------
Name: Lee D. Burns
Title: Secretary