AMENDMENT NO. 1 TO THE
RIGHTS AGREEMENT
This Amendment No. 1, dated as of this 24th day of September, 2001 (the
"Amendment"), to the Rights Agreement dated as of August 22, 1997 (the
"Agreement") between Snap-on Incorporated (the "Company"), a Delaware
corporation, and Equiserve Trust Company, N.A., a federally chartered national
trust company (as a successor rights agent to First Chicago Trust Company of New
York) (the "Rights Agent," which terms includes any successor Rights Agent under
the Agreement), is made and entered into between the Company and the Rights
Agent.
WITNESSETH:
WHEREAS, the Company and the Rights Agent entered into the Agreement for
the purposes set forth therein; and
WHEREAS, pursuant to Section 27 of the Agreement, the Agreement may be
amended by the Company and the Rights Agent without the approval of any holders
of certificates representing shares of common stock of the Company prior to the
Distribution Date.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 General. For all purposes of the Agreement and this Amendment,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the words "herein," "hereof" and "hereunder" and other words of
similar import used in this Amendment, refer to the Agreement and this
Amendment as a whole and not to any particular Article, Section or
subdivision; and
(b) capitalized terms used but not otherwise defined in this Amendment,
shall have the meanings set forth in the Agreement, as amended by this
Amendment.
10
ARTICLE II
AMENDMENT OF THE AGREEMENT
Section 2.1 Definition of Acquiring Person. Section 1(a) of the Agreement
is hereby amended and restated in its entirety to read as follows:
(a) "Acquiring Person" shall mean (x) any Person who or which,
together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the
Company, or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to
the terms of any such plan, (iv) any Person who becomes the Beneficial
Owner of fifteen percent (15%) or more of the shares of Common Stock
then outstanding as a result of a reduction in the number of shares of
Common Stock outstanding due to the repurchase of shares of Common
Stock by the Company other than during the Special Redemption Period
(as defined in Section 23(c) hereof) or at a time when the rights are
not redeemable, unless and until such Person, after becoming aware
that such Person has become the Beneficial Owner of fifteen percent
(15%) or more of the then outstanding shares of Common Stock, acquires
beneficial ownership of additional shares of Common Stock representing
one percent (1%) or more of the shares of Common Stock then
outstanding, or (v) any such Person who has reported or is required to
report such ownership (but less than 20%) on Schedule 13G under the
Securities and Exchange Act of 1934, as amended and in effect on the
date of the Agreement (the "Exchange Act") (or any comparable or
successor report) or on Schedule 13D under the Exchange Act (or any
comparable or successor report) which Schedule 13D does not state any
intention to or reserve the right to control or influence the
management or policies of the Company or engage in any of the actions
specified in Item 4 of such schedule (other than the disposition of
the Common Stock) and, within 10 Business Days of being requested by
the Company to advise it regarding the same, certifies to the Company
that such Person acquired shares of Common Stock in excess of 14.9%
inadvertently or without knowledge of the terms of the Rights and who,
together with all Affiliates and Associates,
11
thereafter does not acquire additional shares of Common Stock while
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding; provided, however, that if the Person requested to so
certify fails to do so within 10 Business Days, then such Person shall
become an Acquiring Person immediately after such 10-Business-Day
period, or (y) any Person who or which during the Special Redemption
Period has entered into any agreement or arrangement with the Company
or any Subsidiary of the Company providing for an Acquisition
Transaction (as defined in the following sentence). For purposes of
this Agreement, the term "Acquisition Transaction" shall mean (x) a
merger, consolidation or similar transaction involving the Company or
any of its Subsidiaries as a result of which the stockholders of the
Company will no longer own a majority of the outstanding shares of
Common Stock of the Company or a publicly traded entity which controls
the Company or, if appropriate, the entity into which the Company may
be merged, consolidated or otherwise combined (based solely on the
shares of Common Stock received or retained by such stockholders, in
their capacity as stockholders of the Company, pursuant to such
transaction), (y) a purchase or other acquisition of all or a
substantial portion of the assets of the Company and its Subsidiaries,
or (z) a purchase or other acquisition of securities representing 15%
or more of the shares of Common Stock then outstanding.
Section 2.2 Definition of Stock Acquisition Date. Section 1(ee) of the
Agreement is hereby amended and restated in its entirety to read as
follows:
(ee) "Stock Acquisition Date" shall mean the earlier of (i) the
first date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed or
amended pursuant to Section 13(d) under the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become
such pursuant to clause (x) of the definition of Acquiring Person
other than pursuant to a Qualified Offer, and (ii) the date that an
Acquiring Person has become such pursuant to clause (y) of the
definition of Acquiring Person.
Section 2.3 Amendment to Section 2 of the Agreement. Section 2 of the
Agreement is hereby amended and restated in its entirety to read as
follows:
12
The Company hereby appoints the Rights Agent to act as agent for
the Company and the holders of the Rights (who, in accordance with
Section 3 hereof, shall prior to the Distribution Date also be the
holders of the Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-rights
agents as it may deem necessary or desirable upon ten days prior
written notice to the Rights Agent. The Rights Agent shall have no
duty to supervise, and shall in no event be liable for, the acts or
omissions of any such co-Rights Agent.
Section 2.4 Amendment to Section 3(a) of the Agreement. Section 3(a) of the
Agreement is hereby amended and restated in its entirety to read as
follows:
(a) Until the earlier of (i) the Close of Business on the tenth
Business Day after the Stock Acquisition Date (or, if the tenth
Business Day after the Stock Acquisition Date occurs before the Record
Date, the Close of Business on the Record Date), or (ii) the Close of
Business on the tenth Business Day (or such later date as the Board
shall determine, provided, however, that no deferral of a Distribution
Date by the Board of Directors pursuant to this clause (ii) may be
made at any time during the Special Redemption Period) after the date
of commencement of a tender or exchange offer by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act,
or any successor provision thereto, if upon consummation thereof, such
Person would become an Acquiring Person, in either instance other than
pursuant to a Qualified Offer (as defined herein)(the earlier of (i)
and (ii) being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of paragraphs (b)
and (c) of this Section 3) by the certificates for the Common Stock
registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates
for Rights) and not by separate certificates, and (y) the Rights will
be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon
as practicable after the Distribution Date, the Rights
13
Agent will send by first-class, insured, postage-prepaid mail, to each
record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records
of the Company, one or more rights certificates, in substantially the
form of Exhibit B hereto (the "Rights Certificates"), evidencing one
Right for each share of Common Stock so held, subject to adjustment as
provided herein. In the event that an adjustment in the number of
Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates,
the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
Section 2.5 Amendment to Section 11(a)(ii) of the Agreement. Section
11(a)(ii) of the Agreement is hereby amended and restated in its entirety
to read as follows:
(ii) In the event any Person shall, at any time after the Rights
Dividend Declaration Date, become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is a
transaction set forth in Section 13(a) hereof, or is an acquisition of
shares of Common Stock pursuant to a tender offer or an exchange offer
for all outstanding shares of Common Stock at a price and on terms
determined by at least a majority of the members of the Board of
Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring
Person after receiving advice from one or more investment banking
firms, to be (A) at a price which is fair to stockholders and not
inadequate (taking into account all factors which such members of the
Board of Directors deem relevant, including, without limitation,
prices which could reasonably be achieved if the Company or its assets
were sold on an orderly basis designed to realize maximum value) and
(B) otherwise in the best interests of the Company and its
stockholders, other than the Person or an Affiliate or Associate
thereof on whose behalf the offer is made (provided, however, that no
such determination shall be made during the Special Redemption Period)
(a "Qualified Offer"), then, promptly following the occurrence of such
event, proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter
14
have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu
of a number of one one-hundred and fiftieths of a share of Preferred
Stock, such number of shares of Common Stock of the Company as shall
equal the result obtained by (x) multiplying the then current Purchase
Price by the then number of one one-hundred and fiftieths of a share
of Preferred Stock for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event, and (y) dividing
that product (which, following such first occurrence, shall thereafter
be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(d) hereof) per share of Common
Stock on the date of such first occurrence (such number of shares, the
"Adjustment Shares").
Section 2.6 Amendment to Section 18(a) of the Agreement. Section 18(a) of
the Agreement is hereby amended and restated in its entirety to read as
follows:
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the
premises.
Section 2.7 Amendment to Section 20(c) of the Agreement. Section 20(c) of
the Agreement is hereby amended and restated in its entirety to read as
follows:
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
Section 2.8 Amendment to Section 21 of the Agreement. Section 21 of the
Agreement is hereby amended and restated in its entirety to read as
follows:
The Rights Agent or any successor Rights Agent may resign and be
15
discharged from its duties under this Agreement upon thirty (30) days'
notice in writing mailed to the Company, and to each transfer agent of
the Common Stock and Preferred Stock, by registered or certified mail,
and, if such resignation occurs after the Distribution Date, to the
registered holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock and Preferred Stock, by registered or certified
mail, and, if such removal occurs after the Distribution Date, to the
holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable
of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder
of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court,
shall be a legal business entity organized and doing business under
the laws of the United States or of the State of Wisconsin or of the
States of Illinois or New York or of any other state of the United
States so long as such entity is authorized to do business as a
banking institution in the State of Wisconsin or the States of
Illinois or New York, in good standing, authorized under such laws to
exercise corporate trust or stock transfer or shareholder services
powers and which has at the time of its appointment as Rights Agent
along with its affiliate Equiserve, L.P. has a combined capital and
surplus of at least $50,000,000. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock,
and, if such appointment occurs after the Distribution Date, mail a
notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
16
Section 2.9 Amendment to Section 23(c) of the Agreement. Section 23(c) of
the Agreement is hereby amended and restated in its entirety to read as
follows:
(c) Notwithstanding the provisions of Section 23(a) hereof, if,
within 180 days of a public announcement by a third party of an intent
or proposal to engage (without the current and continuing concurrence
of the Board of Directors) in a transaction involving an acquisition
of or a business combination with the Company or otherwise to become
an Acquiring Person, there is an election of Directors (whether at one
or more stockholder meetings) and/or pursuant to written stockholder
consent resulting in a majority of the Board of Directors being
comprised of persons who were not nominated by the Board of Directors
in office immediately prior to such election, then following the
effectiveness of such election for a period of 180 days (the "Special
Redemption Period") the Rights, if otherwise then redeemable absent
the provisions of this paragraph (c), shall be redeemable upon either
of the following conditions being satisfied, but not otherwise:
(i) by a vote of a majority of the Directors then in office, provided
that:
(A) before such vote, the Board of Directors shall have
implemented the Value Enhancement Procedures (as defined
below) and
(B) promptly after such vote, the Company publicly announces
such vote and
(1) the manner in which the Value Enhancement Procedures
were implemented,
(2) any material financial, business, personal or other
benefit or relationship (an "Interest") which each
Director and each affiliate of such Director
(identifying each Director and Affiliate separately in
relation to each such Interest) has in connection with
any suggested, proposed or pending transaction with or
involving the Company (a "Transaction"), or with any
other party or Affiliate of any other party to a
Transaction, where such Transaction would or might,
17
or is intended to, be permitted or facilitated by
redemption of the Rights (an "Affected Transaction"),
other than treatment as a stockholder on a pro rata
basis with other stockholders or pursuant to
compensation arrangements as a Director or employee of
the Company or a subsidiary which have been previously
disclosed by the Company,
(3) the individual vote of each Director on the motion to
redeem the Rights, and
(4) the statement of any Director who voted for or against
the motion to redeem the Rights and desires to have a
statement included in such announcement, or
(ii) if clause (i) is not applicable, by a vote of a majority of the
Directors then in office, provided that (A) if there is a challenge to the
Directors' action approving redemption and/or any related Affected
Transaction as a breach of the fiduciary duty of care, loyalty or good
faith, the Directors, solely for purposes of determining the effectiveness
of such redemption pursuant to this clause (ii), are able to establish the
entire fairness of such redemption and, if applicable, such related
Affected Transaction; and (B) the Company shall have publicly announced the
vote of the Board of Directors approving such redemption and, if
applicable, such related Affected Transaction, which announcement shall set
forth the information prescribed by clauses (i) (B) (2), (3) and (4) above.
(iii) "Value Enhancement Procedures" shall mean:
(A) the selection by the Board of Directors of an independent
financial advisor (the "Independent Advisor") from among
financial advisors that have national standing, have
established expertise in advising on mergers, acquisitions
and related matters and have no Interest relating to an
Affected Transaction, and have not during the preceding year
provided services to, been engaged by or been a financing
source for any other party to an Affected Transaction or any
Affiliate of any such party or of any Director (other than
the Company and its subsidiaries);
18
(B) whether or not there is a then-pending Affected Transaction,
the receipt by the Board of Directors from its Independent
Advisor of (1) such advisor's view (expressed in such form
and subject to such qualifications and limitations as the
Independent Advisor deems appropriate) regarding whether the
redemption of the Rights will serve the best interests of
the Company and its stockholders or (2) such advisor's
statement that it is unable to express such a view, setting
forth the reasons therefor;
(C) if there is a then-pending Affected Transaction,
(1) the establishment and implementation by the Board of
Directors of a process and procedures approved by its
Independent Advisor which the Board of Directors and
such advisor conclude would be most likely to result in
the best value reasonably available to stockholders
(regardless of whether such Affected Transaction
involves a "sale of control" or "break-up" of the
Company for Delaware law purposes),
(2) the Board of Directors (x) receiving the opinion of its
Independent Advisor, in customary form and content for
transactions of the type involved, that the Affected
Transaction is fair to the Company's stockholders from
a financial point of view and (y) determining, and the
Independent Advisor confirming, that it has no reason
to believe that a superior transaction is reasonably
available for the benefit of the Company's
stockholders, and
(3) the execution of a definitive transaction agreement and
other definitive documentation necessary to effect the
Affected Transaction.
Section 2.10 Addition of Section 23(d) to the Agreement. A new Section
23(d) is hereby added to the Agreement to immediately follow new Section
23(c), which new Section 23(d) shall read as follows:
(d) Neither the Company nor any of its Affiliates or Associates
may redeem, acquire or purchase for value any Rights at any time in
any
19
manner other than that specifically set forth in this Section 23 and
other than in connection with the purchase or repurchase by any of
them of Common Stock prior to the Distribution Date.
Section 2.11 Amendment to Section 27 of the Agreement. Section 27 of the
Agreement is hereby amended and restated in its entirety to read as
follows:
(a) Prior to the Distribution Date, and subject to the provisions
of Section 27(b) hereof, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend any provision of this
Agreement (including, without limitation, any extension of the period
in which the Rights may be redeemed, any increase in the Purchase
Price and any extension of the Final Expiration Date) without the
approval of any holders of certificates representing shares of Common
Stock. From and after the Distribution Date, and subject to the
provisions of Section 27(b) hereof, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). Upon the delivery of a certificate
from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of
this Section 27, the Rights Agent shall execute such supplement or
amendment. Prior to this Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
(b) Notwithstanding anything herein to the contrary, this
Agreement may not be supplemented or amended during the Special
Redemption Period or at a time when the Rights are not then
redeemable, except as contemplated by clause (i) or (ii) of Section
27(a) hereof.
20
Section 2.12 Amendment to Exhibit B to the Agreement. Exhibit B (Form of
Rights Certificate) to the Agreement is hereby amended and restated in its
entirety to the effect set forth in Attachment 1 to this Amendment.
Section 2.13 Amendment to Exhibit C to the Agreement. Exhibit C (Summary of
Rights To Purchase Preferred Stock) to the Agreement is hereby amended and
restated in its entirety to the effect set forth in Attachment 2 to this
Amendment.
ARTICLE III
MISCELLANEOUS
Section 3.1 Effect of Amendment. Upon the execution and delivery of this
Amendment by the company and the Rights Agent, the Agreement shall be amended in
accordance herewith, and this Amendment shall form a part of the Agreement for
all purposes and the Agreement and this Amendment henceforth shall be read and
construed together.
Section 3.2 Agreement Remains in Full Force and Effect. Except as amended
hereby, all provisions of the Agreement shall remain and continue in full force
and effect and hereby are confirmed and preserved in all respects.
Section 3.3 Severability. In case any provision in this Amendment shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provision shall not in any way be affected or impaired thereby.
Section 3.4 Headings. The Article and Section headings of this Amendment
have been inserted for convenience of reference only, are not to be considered
part of this Amendment and shall in no way modify or restrict any of the terms
or provisions hereof.
Section 3.5 Benefits of the Amendment. Nothing in this Amendment, express
or implied, shall give to any Person, other than the parties hereto, their
successors and permitted assigns hereunder and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock), any benefit of any legal or equitable right, remedy or claim
under the Agreement or this Amendment.
Section 3.6 Entire Agreement. This Amendment, as it amends the Agreement,
21
constitutes the entire agreement and understanding of the parties with respect
to the subject matter hereof, and it supersedes all prior negotiations,
commitments, representations and undertakings of the parties with respect to the
subject matter hereof.
Section 3.7 Successors. This Amendment shall be binding upon and inure to
the benefit of the Company, the Rights Agent and their respective successors and
permitted assigns.
Section 3.8 Governing Law. This Amendment 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 performed entirely within such State.
Section 3.9 Counterparts. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and their respective corporate seals to be hereto affixed and attested,
all on the day and year first written above written.
Attest: Snap-on Incorporated
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------- ----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President, Title: President and Chief
Secretary and Executive Officer
General Counsel
Attest: Equiserve Trust Company, N.A.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------- ----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Director Title: Managing Director
22
Attachment No. 1
(Exhibit B to Rights Agreement)
[Form of Rights Certificate]
Certificate No. R- __________
Rights
NOT EXERCISABLE AFTER November 3, 2007 UNLESS EXTENDED PRIOR THERETO BY THE
BOARD OF DIRECTORS OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT
TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Rights Certificate
SNAP-ON INCORPORATED
This certifies that , or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of August 3, 1997, as amended (the "Rights
Agreement"), between Snap-on Incorporated, a Delaware corporation (the
"Company"), and Equiserve Trust Company, N.A. (as a successor rights agent to
First Chicago Trust Company of New York) (the "Rights Agent"), to purchase from
the Company at any time prior to 5:00 P.M. (Chicago, Illinois time) on November
3, 2007 (unless such date is extended prior thereto by the Board of Directors)
at the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one
23
one-hundred and fiftieth of a fully paid, non-assessable share of Series A
Junior Preferred Stock (the "Preferred Stock") of the Company, at a purchase
price of $190.00 per one one-hundred and fiftieth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly executed.
The number of Rights evidenced by this Rights Certificate (and the number
of shares which may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price as
of August 22, 1997, based on the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities, which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
24
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-hundred and fiftieths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right at any time prior to the earlier of the Close of
Business on (i) the tenth Business Day following the Stock Acquisition Date (as
such time period may be extended pursuant to the Rights Agreement), and (ii) the
Final Expiration Date. The foregoing notwithstanding, the Rights generally may
not be redeemed during the 180 day period following an election of Directors
resulting in a majority of the Board of Directors being comprised of persons who
were not nominated by the Board of Directors in office immediately prior to such
election, which election occurs within 180 days of a public announcement by a
third party of an intent or proposal to engage in a non-Board approved
transaction involving an acquisition of or a business combination with the
Company, unless the Directors have followed certain prescribed procedures or can
otherwise establish their actions satisfy certain fairness standards (as more
fully defined in the Rights Agreement). In addition, under certain circumstances
following the Stock Acquisition Date, the Rights may be exchanged, in whole or
in part, for shares of the Common Stock, or shares of Preferred Stock of the
Company at an exchange ratio of one share of Common Stock per Right. Immediately
upon the action of the Board of Directors of the Company authorizing any such
exchange, and without any further action or any notice, the Rights (other than
Rights which are not subject to such exchange) will terminate and the Rights
will only enable holders to receive the shares issuable upon such exchange.
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person together with all Affiliates
and Associates, becomes the Beneficial Owner of 50 or more of the Common Stock
then outstanding.
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-hundred and fiftieth of a share of Preferred Stock, which
may,
25
at the election of the Company, be evidenced by depositary receipts), but in
lieu thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give consent to or withhold consent from any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
26
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of __________ _____, _______.
ATTEST: SNAP-ON INCORPORATED
By
-------------------------------- --------------------------------
Secretary Title:
Countersigned:
EQUISERVE TRUST COMPANY, N.A.
By ___________________________
Authorized Signature
27
Attachment No. 2
(Exhibit C to Rights Agreement)
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On August 22, 1997, the Board of Directors of Snap-on Incorporated (the
"Company") declared a dividend distribution of one Right for each outstanding
share of Company Common Stock to stockholders of record at the close of business
on November 3, 1997 (the "Record Date"). The Rights Agreement (hereinafter
defined) also contemplates the issuance of one Right for each share of Common
Stock which is issued between the Record Date and the Distribution Date. Each
Right entitles the registered holder to purchase from the Company a unit
consisting of one one-hundred and fiftieth of a share (a "Unit") of Series A
Junior Preferred Stock, par value $1.00 per share (the "Series A Preferred
Stock") at a Purchase Price of $190.00 per Unit, subject to anti-dilutive
adjustments. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Equiserve Trust
Company, N.A. (a successor rights agent to First Chicago Trust Company of New
York), as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. Subject to certain exceptions specified in the Rights Agreement,
the Rights will be represented by the Common Stock certificates and will not be
exercisable or transferable apart from the Common Stock until the earlier to
occur of (i) 10 business days following the Stock Acquisition Date or (ii) 10
business days (or such later date as the Board shall determine, provided that
such deferral may not be made during the Special Redemption Period) following
the commencement of a tender offer or exchange offer that would result in a
person or group becoming an Acquiring Person, in either instance other than
pursuant to a Qualified Offer (as hereinafter defined) (the earlier of such
dates being called the "Distribution Date"). The Stock Acquisition Date is
generally defined as the earlier of (i) the public announcement that a person
has become an Acquiring Person by acquiring beneficial ownership of 15% or more
of the outstanding shares of Common Stock, other than as a result of repurchases
of stock by the Company or certain inadvertent actions by institutional or
certain other stockholders or (ii) the date such person becomes an Acquiring
Person by entering into any agreement or arrangement with the Company
28
providing for an Acquisition Transaction during the Special Redemption Period.
The Special Redemption Period is generally defined as the 180 day period
following an election of Directors resulting in a majority of the Board of
Directors being comprised of persons who were not nominated by the Board of
Directors in office immediately prior to such election, which election occurs
within 180 days of a public announcement by a third party of an intent or
proposal to engage in a non-Board approved transaction involving an acquisition
of or a business combination with the Company. Until the Distribution Date, (i)
the Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Record Date will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. Pursuant to the Rights Agreement, the Company reserves the right to
require prior to the occurrence of a Triggering Event (as defined below) that,
upon any exercise of Rights, a number of Rights be exercised so that only whole
shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and will expire
at 5:00 P.M. (Chicago, Illinois time) on November 3, 2007, unless such date is
extended or the Rights are earlier redeemed or exchanged by the Company as
described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, except pursuant to
an offer for all outstanding shares of Common Stock determined by at least a
majority of the independent directors to be at a price which is fair and not
inadequate and to otherwise be in the best interests of the Company and its
stockholders, after receiving advice from one or more investment banking firms
(provided such determination may not be made during the Special Redemption
Period) (a "Qualified Offer"), then each holder of a Right will thereafter have
the right to receive, upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right. Notwithstanding any of the foregoing,
following the occurrence of the
29
event set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. However, Rights are not exercisable
following the occurrence of the event set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $[A] per Right, each Right not owned
by an Acquiring Person (or by certain related parties) following an event set
forth in the preceding paragraph would entitle its holder to purchase $[2A]
worth of Common Stock (or other consideration, as noted above) for $[A].
Assuming that the Common Stock had a per share value of $[current market] at
such time, the holder of each valid Right would be entitled to purchase _ shares
of Common Stock for $[A].
In the event that, at any time following the Stock Acquisition Date, (i)
the Company engages in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than with an entity
which acquired the shares pursuant to a Qualified Offer), (ii) the Company
engages in a merger or other business combination transaction in which the
Company is the surviving corporation and the Common Stock of the Company is
changed or exchanged, or (iii) 50% or more of the Company's assets, cash flow or
earning power is sold or transferred, each holder of a Right (except Rights
which have previously been voided as set forth above) shall thereafter have the
right to receive, upon exercise, common stock of the acquiring company having a
value equal to two times the exercise price of the Right. The events set forth
in this paragraph and in the second preceding paragraph are referred to as the
"Triggering Events."
At any time after a person becomes an Acquiring Person and prior to the
acquisition by such person or group of fifty percent (50%) or more of the
outstanding Common Stock, the Board may exchange the Rights (other than Rights
owned by such person or group which have become void), in whole or in part, at
an exchange ratio of one share of Common Stock, or one one-hundred and fiftieth
of a share of Preferred Stock (or of a share of a class or series of the
Company's preferred stock having equivalent rights, preferences and privileges),
per Right (subject to adjustment).
At any time prior to the earlier of (i) the Close of Business on the tenth
business day following the Stock Acquisition Date, (or, if the Stock Acquisition
Date shall have occurred prior to the Record Date, the Close of Business on the
tenth Business Day following the Record Date), or (ii) Final Expiration Date,
the Board of
30
Directors may, at its option, redeem the Rights in whole, but not in part, at a
price of $.01 per Right (payable in cash, Common Stock or other consideration
deemed appropriate by the Board of Directors). Immediately upon the action of
the Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
$.01 redemption price. The foregoing notwithstanding, during the Special
Redemption Period, the Rights shall not be redeemable unless the Directors
follow certain proscribed procedures or can otherwise establish that their
actions satisfy certain fairness standards (as more fully described in the
Rights Agreement).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company or in the event of the redemption of the
Rights as set forth above.
Any of the provisions of the Rights Agreement may be amended by the Board
of Directors of the Company prior to the Distribution Date. After the
Distribution Date and subject to the next sentence, the provisions of the Rights
Agreement may be amended by the Board in order (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained in the Rights Agreement that
may be defective or inconsistent with any other provision contained therein,
(iii) to make changes that the company deems necessary or desirable and which do
not adversely affect the interests of holders of Rights (other than an Acquiring
Person or an Affiliate or Associate thereof), or (iv) to shorten or lengthen any
time period under the Rights Agreement. The foregoing notwithstanding, no
amendment may be made at such time as the Rights are not redeemable or during
the Special Redemption Period, except as described in clauses (i) or (ii) of the
preceding sentence.
A copy of the Rights Agreement was filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A on October 15,
1997 and to a Current Report on Form 8-K dated September 8, 1997. Amendment No.
1 to the Rights Agreement was filed with the Securities and Exchange Commission
as an Exhibit to the amended Registration Statement on Form 8-A on
______________, __, 2001. A copy of the Rights Agreement is available free of
charge from the Rights Agent. This summary description of the Rights does not
31
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
32