Exhibit 1
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STOCKHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
April 21, 1997
between
Goulds Pumps, Inc.
and
The Bank of New York
as Rights Agent
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STOCKHOLDER PROTECTION RIGHTS AGREEMENT
Table of Contents
Page
Article I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions ..................................... 2
Article II
THE RIGHTS
Section 2.1 Summary of Rights ...................................... 12
Section 2.2 Legend on Common Stock Certificates .................... 13
Section 2.3 Exercise of Rights; Separation of Rights ............... 14
Section 2.4 Adjustments to Exercise Price; Number of Rights ........ 17
Section 2.5 Date on Which Exercise is Effective .................... 20
Section 2.6 Execution, Authentication, Delivery and Dating
of Rights Certificates ............................... 21
Section 2.7 Registration, Registration of Transfer and
Exchange ............................................. 22
Section 2.8 Mutilated, Destroyed, Lost and Stolen Rights
Certificates ......................................... 23
Section 2.9 Persons Deemed Owners .................................. 25
Section 2.10 Delivery and Cancellation of Certificates .............. 25
Section 2.11 Agreement of Rights Holders ............................ 26
Article III
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF
CERTAIN TRANSACTIONS
Section 3.1 Flip-in ................................................ 27
Section 3.2 Flip-over .............................................. 32
Article IV
THE RIGHTS AGENT
Section 4.1 General ................................................ 33
Section 4.2 Merger or Consolidation or Change of Name of Rights
Agent ............................................... 34
Section 4.3 Duties of Rights Agent ................................. 36
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Section 4.4 Change of Rights Agent ................................. 40
Article V
MISCELLANEOUS
Section 5.1 Termination ............................................ 42
Section 5.2 Expiration ............................................. 43
Section 5.3 Issuance of New Rights Certificates .................... 43
Section 5.4 Supplements and Amendments ............................. 44
Section 5.5 Fractional Shares ...................................... 44
Section 5.6 Rights of Action ....................................... 45
Section 5.7 Holder of Rights Not Deemed a Stockholder .............. 46
Section 5.8 Notice of Proposed Actions ............................. 46
Section 5.9 Notices ................................................ 47
Section 5.10 Suspension of Exercisability ........................... 48
Section 5.11 Costs of Enforcement ................................... 48
Section 5.12 Successors ............................................. 49
Section 5.13 Benefits of this Agreement ............................. 49
Section 5.14 Determination and Actions by the Board of
Directors, etc........................................ 49
Section 5.15 Descriptive Headings ................................... 50
Section 5.16 Governing Law .......................................... 50
Section 5.17 Counterparts ........................................... 50
Section 5.18 Severability ........................................... 50
EXHIBITS
Exhibit A Form of Rights Certificate
(Together with Form of
Election to Exercise)
Exhibit B Form of Certificate of
Designation and Terms of
Participating Preferred Stock
Exhibit C Summary of Rights to Purchase
Participating Preferred Stock
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STOCKHOLDER PROTECTION RIGHTS AGREEMENT
STOCKHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to time,
this "Agreement"), dated as of April 21, 1997, between Goulds Pumps, Inc., a
Delaware corporation (the "Company"), and The Bank of New York, as Rights Agent
(the "Rights Agent", which term shall include any successor Rights Agent
hereunder).
WITNESSETH:
WHEREAS, the Board of Directors of the Company has (a) authorized and
declared a dividend of one right ("Right") in respect of each share of Common
Stock (as hereinafter defined) held of record as of the close of business on
April 21, 1997 (the "Record Time") and (b) as provided in Section 2.4,
authorized the issuance of one Right in respect of each share of Common Stock
issued after the Record Time and prior to the Separation Time (as hereinafter
defined) and, to the extent provided in Section 5.3, each share of Common Stock
issued after the Separation Time;
WHEREAS, subject to the terms and conditions hereof, each Right
entitles the holder thereof, after the Separation Time, to purchase securities
or assets of the Company (or, in certain cases, securities of certain other
entities) pursuant to the terms and subject to the conditions set forth herein;
and
WHEREAS, the Company desires to appoint the Rights Agent to act on
behalf of the Company, and the Rights Agent is willing so to act, in connection
with the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein;
NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial Owner of
20% or more of the outstanding shares of Common Stock; provided, however, that
the term "Acquiring Person" shall not include any Person (i) who is the
Beneficial Owner of 20% or more of the outstanding shares of Common Stock on the
date of this Agreement or who shall become the Beneficial Owner of 20% or more
of the outstanding shares of Common Stock solely as a result of an acquisition
by the Company of shares of Common Stock, until such time hereafter or
thereafter as any of such Persons shall become the Beneficial Owner (other than
by means of a stock dividend or stock split) of any additional shares of Common
Stock, (ii) who becomes the Beneficial Owner of 20%
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or more of the outstanding shares of Common Stock but who acquired Beneficial
Ownership of shares of Common Stock without any plan or intention to seek or
affect control of the Company, if such Person promptly enters into an
irrevocable commitment to divest, and thereafter promptly divests (without
exercising or retaining any power, including voting, with respect to such
shares), sufficient shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock) so that such Person ceases to
be the Beneficial Owner of 20% or more of the outstanding shares of Common
Stock, (iii) who Beneficially Owns shares of Common Stock consisting solely of
one or more of (A) shares of Common Stock Beneficially Owned pursuant to the
grant or exercise of an option granted to such Person (an "Option Holder") by
the Company in connection with an agreement to merge with, or acquire, the
Company entered into prior to a Stock Acquisition Date, (B) shares of Common
Stock (or securities convertible into, exchangeable into or exercisable for
Common Stock), Beneficially Owned by such Option Holder or its Affiliates or
Associates at the time of grant of such option or (C) shares of Common Stock (or
securities convertible into, exchangeable into or exercisable for Common Stock)
acquired by Affiliates or Associates of such Option Holder after the time of
such grant which amount to less than 1% of the outstanding shares of Common
Stock. In addition, the
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Company, any wholly-owned Subsidiary of the Company and any employee stock
ownership or other employee benefit plan of the Company or a wholly-owned
Subsidiary of the Company shall not be an Acquiring Person.
"Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 under the Securities Exchange Act of 1934 (the
"Exchange Act"), as such Rule is in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner", and to have
"Beneficial Ownership" of, and to "Beneficially Own", any securities as to which
such Person or any of such Person's Affiliates or Associates is or may be deemed
to be the beneficial owner of pursuant to Rule 13d-3 and 13d-5 under the
Exchange Act, as such Rules are in effect on the date of this Agreement, as well
as any securities as to which such Person or any of such Person's Affiliates or
Associates has the right to become Beneficial Owner (whether such right is
exercisable immediately or only after the passage of time or the occurrence of
conditions) pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner", or to have "Beneficial Ownership" of, or to
"Beneficially Own", any security (i) solely because such security has been
tendered pursuant to a tender or exchange
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offer made by such Person or any of such Person's Affiliates or Associates until
such tendered security is accepted for payment or exchange or (ii) solely
because such Person or any of such Person's Affiliates or Associates has or
shares the power to vote or direct the voting of such security pursuant to a
revocable proxy given in response to a public proxy or consent solicitation made
to more than ten holders of shares of a class of stock of the Company registered
under Section 12 of the Exchange Act and pursuant to, and in accordance with,
the applicable rules and regulations under the Exchange Act, except if such
power (or the arrangements relating thereto) is then reportable under Item 6 of
Schedule 13D under the Exchange Act (or any similar provision of a comparable or
successor report) or (iii) solely as a result of any Person entering into an
agreement with the Company with respect to the Approved Offer. For purposes of
this Agreement, in determining the percentage of the outstanding shares of
Common Stock with respect to which a Person is the Beneficial Owner, all shares
as to which such Person is deemed the Beneficial Owner shall be deemed
outstanding.
"Approved Offer" shall mean a tender offer to purchase shares of Common
Stock pursuant to and on the terms and conditions set forth in an Agreement and
Plan of Merger among ITT Industries, ▇▇▇▇▇▇ Acquisition Inc. and the
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Company, dated as of April 20, 1997, as approved by the Board of Directors of
the Company.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in The City of New York are generally
authorized or obligated by law or executive order to close.
"Close of business" on any given date shall mean 5:00 p.m. New York
City time on such date or, if such date is not a Business Day, 5:00 p.m. New
York City time on the next succeeding Business Day.
"Common Stock" shall mean the shares of Common Stock, par value $1.00
per share, of the Company.
"Exchange Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 3.1(c) hereof.
"Exercise Price" shall mean, as of any date, the price at which a
holder may purchase the securities issuable upon exercise of one whole Right.
Until adjustment thereof in accordance with the terms hereof, the Exercise Price
shall equal $80.00.
"Expiration Time" shall mean the earliest of (i) the Exchange Time,
(ii) the Termination Time, (iii) the Close of business on the tenth anniversary
of the Record Time and (iv) immediately prior to the effective time of a
consolidation, merger or share exchange (each, a "Business
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Combination") of the Company (A) into another corporation or (B) with another
corporation in which the Company is the surviving corporation but Common Stock
is converted into cash and/or securities of another corporation, in either case
pursuant to an agreement entered into by the Company prior to a Stock
Acquisition Date.
"Flip-in Date" shall mean any Stock Acquisition Date or such later date
as the Board of Directors of the Company may from time to time fix by resolution
adopted prior to the Flip-in Date that would otherwise have occurred.
"Flip-over Entity," for purposes of Section 3.2, shall mean (i) in the
case of a Flip-over Transaction or Event described in clause (i) of the
definition thereof, the Person issuing any securities into which shares of
Common Stock are being converted or exchanged and, if no such securities are
being issued, the other party to such Flip-over Transaction or Event and (ii)
in the case of a Flip-over Transaction or Event referred to in clause (ii) of
the definition thereof, the Person receiving the greatest portion of the assets,
operating income or cash flow being transferred in such Flip-over Transaction or
Event, provided in all cases if such Person is a subsidiary of a corporation,
the parent corporation shall be the Flip-Over Entity.
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"Flip-over Stock" shall mean the capital stock (or similar equity
interest) with the greatest voting power in respect of the election of directors
(or other persons similarly responsible for direction of the business and
affairs) of the Flip-Over Entity.
"Flip-over Transaction or Event" shall mean a transaction or series of
transactions after a Flip-in Date in which, directly or indirectly, (i) the
Company shall consolidate or merge or participate in a share exchange with any
other Person if, at the time of the consolidation, merger or share exchange or
at the time the Company enters into any agreement with respect to any such
consolidation, merger or share exchange, the Acquiring Person Controls the Board
of Directors of the Company and either (A) any term of or arrangement concerning
the treatment of shares of capital stock in such consolidation, merger or share
exchange relating to the Acquiring Person is not identical to the terms and
arrangements relating to other holders of the Common Stock or (B) the Person
with whom the transaction or series of transactions occurs is the Acquiring
Person or an Affiliate or Associate of the Acquiring Person or (ii) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer) assets (A) aggregating more than 50% of the assets
(measured by either book value or fair market value) or (B) generating more than
50% of the operating income or cash flow, of the
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Company and its Subsidiaries (taken as a whole) to any Person (other than the
Company or one or more of its wholly owned Subsidiaries) or to two or more such
Persons which are Affiliates or Associates or otherwise acting in concert, if,
at the time of the entry by the Company (or any such Subsidiary) into an
agreement with respect to such sale or transfer of assets, the Acquiring Person
Controls the Board of Directors of the Company. An Acquiring Person shall be
deemed to Control the Company's Board of Directors when, following a Flip-in
Date, the persons who were directors of the Company before the Stock Acquisition
Date (or persons nominated and/or appointed as directors by vote of a majority
of such persons) shall cease to constitute a majority of the Company's Board of
Directors.
"Market Price" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined as
described below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in Section
2.4 hereof shall have caused the closing prices used to determine the Market
Price on any Trading Days during such period of 20 Trading Days not to be fully
comparable with the closing price on such date, each such closing price so used
shall be appropriately adjusted in order to make it fully comparable with the
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closing price on such date. The closing price per share of any securities on any
date shall be the last reported sale price, regular way, or, in case no such
sale takes place or is quoted on such date, the average of the closing bid and
asked prices, regular way, for each share of such securities, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange, Inc.
or, if the securities are not listed or admitted to trading on the New York
Stock Exchange, Inc., as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the securities are listed or admitted to trading
or, if the securities are not listed or admitted to trading on any national
securities exchange, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, or,
if on any such date the securities are not listed or admitted to trading on any
national securities exchange or 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 securities selected by the Board of Directors of the
Company; provided, however, that if on any such date the securities are not
listed or admitted to trading on a national securities exchange or traded in
the over-the-counter market,
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the closing price per share of such securities on such date shall mean the fair
value per share of securities on such date as determined in good faith by the
Board of Directors of the Company, after consultation with a nationally recog-
nized investment banking firm, and set forth in a certificate delivered to the
Rights Agent.
"Person" shall mean any individual, firm, partnership, association,
group (as such term is used in Rule 13d-5 under the Exchange Act, as such Rule
is in effect on the date of this Agreement), corporation or other entity.
"Preferred Stock" shall mean the series of Participating Preferred
Stock, par value $20.00, of the Company created by a Certificate of Designation
and Terms in substantially the form set forth in Exhibit B hereto appropriately
completed.
"Termination Time" shall mean the time at which the right to exercise
the Rights shall terminate pursuant to Section 5.1 hereof.
"Separation Time" shall mean the close of business on the earlier of
(i) the tenth Business Day (or such later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Separation
Time that would otherwise have occurred) after the date on which any Person
commences a tender or exchange offer (other than the Approved Offer) which, if
consummated, would result in such Person's becoming an Acquiring Person, and
(ii) the
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Flip-in Date; provided, that if the foregoing results in the Separation Time
being prior to the Record Time, the Separation Time shall be the Record Time and
provided further, that if any tender or exchange offer referred to in clause (i)
of this paragraph is cancelled, terminated or otherwise withdrawn prior to the
Separation Time without the purchase of any shares of Common Stock pursuant
thereto, such offer shall be deemed, for purposes of this paragraph, never to
have been made.
"Stock Acquisition Date" shall mean the first date of public
announcement by the Company (by any means) that a Person has become an Acquiring
Person.
"Subsidiary" of any specified Person shall mean any corporation or
other entity of which a majority of the voting power of the equity securities or
a majority of the equity interest is Beneficially Owned, directly or indirectly,
by such Person.
"Trading Day," when used with respect to any securities, shall mean a
day on which the New York Stock Exchange, Inc. is open for the transaction of
business or, if such securities are not listed or admitted to trading on the New
York Stock Exchange, Inc., a day on which the principal national securities
exchange on which such securities are listed or admitted to trading is open for
the transaction of business or, if such securities are not
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listed or admitted to trading on any national securities exchange, a Business
Day.
ARTICLE II
THE RIGHTS
2.1 Summary of Rights. Within a reasonable time after the Record Time,
the Company shall send to each holder of record of Common Stock as of the Record
Time, at such holder's address as shown by the records of the Company, a letter
summarizing the terms of the Rights.
2.2 Legend on Common Stock Certificates. Certificates for the Common
Stock issued after the Record Time but prior to the Separation Time shall
evidence one Right for each share of Common Stock represented thereby and shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
Until the Separation Time (as defined in the Rights Agreement referred
to below), this certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Stockholder Protection
Rights Agreement, dated as of April 21, 1997 (as such may be amended
from time to time, the "Rights Agreement"), between Goulds Pumps, Inc.
(the "Company") and The Bank of New York, as Rights Agent, the terms
of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, may become exercisable for securities or
assets of the Company or securities of another entity, may be
exchanged for shares of Common Stock or other securities or assets of
the Company, may expire, may become void (if they are "Beneficially
Owned" by an "Acquiring Person" or an "Affiliate" or "Associate"
thereof, as such terms are defined in the Rights Agreement, or by any
transferee of any of the fore-
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going) or may be evidenced by separate certificates and may no longer
be evidenced by this certificate. The Company will mail or arrange for
the mailing of a copy of the Rights Agreement to the holder of this
certificate without charge after the receipt of a written request
therefor.
Certificates representing shares of Common Stock that are issued and outstanding
at the Record Time shall evidence one Right for each share of Common Stock
evidenced thereby notwithstanding the absence of the foregoing legend.
2.3 Exercise of Rights; Separation of Rights. (a) Subject to Sections
3.1, 5.1 and 5.10 and subject to adjustment as herein set forth, each Right will
entitle the holder thereof, after the Separation Time and prior to the
Expiration Time, to purchase, for the Exercise Price, one one-hundredth of a
share of Preferred Stock or, if the Preferred Stock is for any reason determined
not to be authorized for issuance, one share of Common Stock.
(b) Until the Separation Time, (i) no Right may be exercised and (ii)
each Right will be evidenced by the certificate for the associated share of
Common Stock and will be transferable only together with, and will be
transferred by a transfer of, such associated share.
(c) Subject to the terms and conditions hereof, after the Separation
Time and prior to the Expiration Time, the Rights (i) may be exercised and (ii)
may be transferred independent of shares of Common Stock. Promptly following the
Separation Time, the Rights Agent will mail to each
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holder of record of Common Stock as of the Separation Time (other than any
Person whose Rights have become void pursuant to Section 3.1(b)), at such
holder's address as shown by the records of the Company (the Company hereby
agreeing to furnish, or causing to be furnished, copies of such records to the
Rights Agent for this purpose), (x) a certificate (a "Rights Certificate") in
substantially the form of Exhibit A hereto appropriately completed, repre-
senting the number of Rights held by such holder at the Separation Time and
having such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any national securities exchange or quotation system
on which the Rights may from time to time be listed or traded, or to conform to
usage, and (y) a disclosure statement describing the Rights, a copy of which is
attached as Exhibit C hereto.
(d) Subject to the terms and conditions hereof, Rights may be exercised
on any Business Day after the Separation Time and prior to the Expiration Time
by submitting to the Rights Agent the Rights Certificate evidencing such Rights
with an Election to Exercise (an "Election to Exercise") substantially in the
form attached
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to the Rights Certificate duly completed, accompanied by payment in cash, or by
certified or official bank check or money order payable to the order of the
Company, of a sum equal to the Exercise Price multiplied by the number of Rights
being exercised and a sum sufficient to cover any transfer tax or charge which
may be payable in respect of any transfer involved in the transfer or delivery
of Rights Certificates or the issuance or delivery of certificates for shares or
depositary receipts (or both) in a name other than that of the holder of the
Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to Exercise
accompanied by payment as set forth in Section 2.3(d), and subject to the terms
and conditions hereof, the Rights Agent will thereupon promptly (i)(A)
requisition from a transfer agent stock certificates evidencing such number of
shares or other securities to be purchased (the Company hereby irrevocably
authorizing its transfer agents to comply with all such requisitions) and (B) if
the Company elects pursuant to Section 5.5 not to issue certificates
representing fractional shares, requisition from the depositary selected by the
Company depositary receipts representing the fractional shares to be purchased
or requisition from the Company the amount of cash to be paid in lieu of
fractional shares in accordance with Section 5.5 and (ii) after receipt of such
certificates, depositary receipts and/or cash, deliver the same to or upon
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the order of the registered holder of such Rights Certificate, registered (in
the case of certificates or depositary receipts) in such name or names as may be
designated by such holder.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by the Rights Agent
to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all such
action as may be necessary to ensure that all shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares (sub-
ject to payment of the Exercise Price), be duly and validly authorized,
executed, issued and delivered and fully paid and nonassessable; (ii) take all
such action as may be necessary to comply with any applicable requirements of
the Securities Act of 1933 or the Exchange Act, and the rules and regulations
thereunder, and any other applicable law, rule or regulation, in connection with
the issuance of any securities upon exercise of Rights; and (iii) pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the original issuance or delivery of the Rights
Certificates or of any shares issued upon the exercise of Rights, provided that
the
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Company shall not be required to pay any transfer tax or charge which may be
payable in respect of any transfer involved in the transfer or delivery of
Rights Certificates or the issuance or delivery of certificates for shares in a
name other than that of the holder of the Rights being transferred or exercised.
2.4 Adjustments to Exercise Price; Number of Rights. (a) In the event
the Company shall at any time after the Record Time and prior to the Separation
Time (i) declare or pay a dividend on Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares of Common Stock, (x) the Exercise Price in
effect after such adjustment will be equal to the Exercise Price in effect
immediately prior to such adjustment divided by the number of shares of Common
Stock (the "Expansion Factor") that a holder of one share of Common Stock
immediately prior to such dividend, subdivision or combination would hold
thereafter as a result thereof and (y) each Right held prior to such adjustment
will become that number of Rights equal to the Expansion Factor, and the
adjusted number of Rights will be deemed to be distributed among the shares of
Common Stock with respect to which the original Rights were associated (if they
remain outstanding) and the shares issued in respect of such dividend,
subdivision or combination, so that each such share of Common Stock will
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have exactly one Right associated with it. Each adjustment made pursuant to this
paragraph shall be made as of the payment or effective date for the applicable
dividend, subdivision or combination.
In the event the Company shall at any time after the Record Time and
prior to the Separation Time issue any shares of Common Stock otherwise than in
a transaction referred to in the preceding paragraph, each such share of Common
Stock so issued shall automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such share. To the
extent provided in Section 5.3, Rights shall be issued by the Company in respect
of shares of Common Stock that are issued or sold by the Company after the
Separation Time.
(b) In the event the Company shall at any time after the Record Time
and prior to the Separation Time issue or distribute any securities or assets in
respect of, in lieu of or in exchange for Common Stock (other than pursuant to a
regular periodic cash dividend or a dividend paid solely in Common Stock)
whether by dividend, in a reclassification or recapitalization (including any
such transaction involving a merger, consolidation or share exchange), or
otherwise, the Company shall make such adjustments, if any, in the Exercise
Price, number of Rights and/or securities or other property purchasable upon
exercise of Rights as the Board of Directors of the Company, in
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its sole discretion, may deem to be appropriate under the circumstances in order
to adequately protect the interests of the holders of Rights generally, and the
Company and the Rights Agent shall amend this Agreement as necessary to provide
for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this Section
2.4 shall be calculated to the nearest cent. Whenever an adjustment to the
Exercise Price is made pursuant to this Section 2.4, the Company shall (i)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a copy
of such certificate.
(d) Rights certificates shall represent the securities purchasable
under the terms of this Agreement, including any adjustment or change in the
securities purchasable upon exercise of the Rights, even though such
certificates may continue to express the securities purchasable at the time of
issuance of the initial Rights Certificates.
2.5 Date on Which Exercise is Effective. Each Person in whose name any
certificate for shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares represented
thereby on the date upon which the Rights
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Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price for such Rights (and any applicable taxes and other governmental
charges payable by the exercising holder hereunder) was made; provided, however,
that if the date of such surrender and payment is a date upon which the stock
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 stock transfer books of the
Company are open.
2.6 Execution, Authentication, Delivery and Dating of Rights
Certificates. (a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, President,
Treasurer, Chief Operating Officer or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of such Rights
Certificates.
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Promptly after the Separation Time, the Company will notify the Rights
Agent of such Separation Time and will deliver Rights Certificates executed by
the Company to the Rights Agent for countersignature, and, subject to Section
3.1(b), the Rights Agent shall manually countersign and deliver such Rights
Certificates to the holders of the Rights pursuant to Section 2.3(c) hereof. No
Rights Certificate shall be valid for any purpose unless manually countersigned
by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of countersignature
thereof.
2.7 Registration, Registration of Transfer and Exchange. (a) After the
Separation Time, the Company will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company will provide for the registration and transfer of Rights. The Rights
Agent is hereby appointed "Rights Registrar" for the purpose of maintaining the
Rights Register for the Company and registering Rights and transfers of Rights
after the Separation Time as herein provided. In the event that the Rights Agent
shall cease to be the Rights Registrar, the Rights Agent will have the right to
examine the Rights Register at all reasonable times after the Separation Time.
After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or
-22-
exchange of any Rights Certificate, and subject to the provisions of Section
2.7(c) and (d), the Company will execute, and the Rights Agent will countersign
and deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions, one or more new
Rights Certificates evidencing the same aggregate number of Rights as did the
Rights Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b), all Rights issued
upon any registration of transfer or exchange of Rights Certificates shall be
the valid obligations of the Company, and such Rights shall be entitled to the
same benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company or the Rights Agent, as the case
may be, duly executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
-23-
(d) The Company shall not be required to register the transfer or
exchange of any Rights after such Rights have become void under Section 3.1(b),
been exchanged under Section 3.1(c) or been terminated under Section 5.1.
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates. (a) If
any mutilated Rights Certificate is surrendered to the Rights Agent prior to the
Expiration Time, then, subject to Sections 3.1(b), 3.1(c) and 5.1, the Company
shall execute and the Rights Agent shall countersign and deliver in exchange
therefor a new Rights Certificate evidencing the same number of Rights as did
the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights Agent
prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security or
indemnity as may be required by them to save each of them and any of their
agents harmless, then, subject to Sections 3.1(b), 3.1(c) and 5.1 and in the
absence of notice to the Company or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and upon its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights
Certificate evidencing the same number of Rights as did the Rights Certificate
so destroyed, lost or stolen.
-24-
(c) As a condition to the issuance of any new Rights Certificate under
this Section 2.8, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Rights
Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.8 in
lieu of any destroyed, lost or stolen Rights Certificate shall evidence an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and, subject to Section 3.1(b) shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Rights duly
issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a Rights
Certificate (or, prior to the Separation Time, the associated Common Stock
certificate) for registration of transfer, the Company, the Rights Agent and
any agent of the Company or the Rights Agent may deem and treat the person in
whose name such Rights Certificate (or, prior to the Separation Time, such
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby for all purposes whatsoever and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary. As used in
this Agreement, unless
-25-
the context otherwise requires, the term "holder" of any Rights shall mean the
registered holder of such Rights (or, prior to the Separation Time, the
associated shares of Common Stock).
2.10 Delivery and Cancellation of Certificates. All Rights Certificates
surrendered upon exercise or for registration of transfer or exchange shall, if
surrendered to any person other than the Rights Agent, be delivered to the
Rights Agent and, in any case, shall be promptly cancelled by the Rights Agent.
The Company may at any time deliver to the Rights Agent for cancellation any
Rights Certificates previously countersigned and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Rights Certificates
so delivered shall be promptly cancelled by the Rights Agent. No Rights
Certificates shall be countersigned in lieu of or in exchange for any Rights
Certificates cancelled as provided in this Section 2.10, except as expressly
permitted by this Agreement. The Rights Agent shall destroy all cancelled Rights
Certificates and deliver a certificate of destruction to the Company.
2.11 Agreement of Rights Holders. Every holder of Rights by accepting
the same consents and agrees with the Company and the Rights Agent and with
every other holder of Rights that:
-26-
(a) prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated share of
Common Stock;
(b) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Stock certificate) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.1(b), become void; and
(e) this Agreement may be supplemented or amended from time to time
pursuant to Section 2.4(b) or 5.4 hereof.
-27-
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in. (a) In the event that prior to the Expiration Time a
Flip-in Date shall occur, except as provided in this Section 3.1, each Right
shall constitute the right to purchase from the Company, upon exercise thereof
in accordance with the terms hereof (but subject to Section 5.10), that number
of shares of Common Stock having an aggregate Market Price on the Stock
Acquisition Date equal to twice the Exercise Price for an amount in cash equal
to the Exercise Price (such right to be appropriately adjusted in order to
protect the interests of the holders of Rights generally in the event that on or
after such Stock Acquisition Date an event of a type analogous to any of the
events described in Section 2.4(a) or (b) shall have occurred with respect to
the Common Stock).
(b) Notwithstanding the foregoing, any Rights that are or were
Beneficially Owned on or after the Stock Acquisition Date by an Acquiring Person
or an Affiliate or Associate thereof or by any transferee, direct or indirect,
of any of the foregoing shall become void and any holder of such Rights
(including transferees) shall thereafter have no right to exercise or transfer
such Rights under any provision of this Agreement. If any Rights Certificate is
presented for assignment or exercise and the Person presenting
-28-
the same will not complete the certification set forth at the end of the form
of assignment or notice of election to exercise and provide such additional
evidence of the identity of the Beneficial Owner and its Affiliates and
Associates (or former Beneficial Owners and their Affiliates and Associates)
as the Company shall reasonably request, then the Company shall be entitled
conclusively to deem the Beneficial Owner thereof to be an Acquiring Person or
an Affiliate or Associate thereof or a transferee of any of the foregoing and
accordingly will deem the Rights evidenced thereby to be void and not
transferable or exercisable.
(c) The Board of Directors of the Company may, at its option, at any
time after a Flip-in Date and prior to the time that an Acquiring Person becomes
the Beneficial Owner of more than 50% of the outstanding shares of Common Stock
elect to exchange all (but not less than all) the then outstanding Rights (which
shall not include Rights that have become void pursuant to the provisions of
Section 3.1(b)) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted in order to protect the interests
of holders of Rights generally in the event that after the Separation Time an
event of a type analogous to any of the events described in Section 2.4(a) or
(b) shall have occurred with respect to the Common Stock (such exchange ratio,
as adjusted from time to time, being hereinafter referred to as the "Exchange
Ratio").
-29-
Immediately upon the action of the Board of Directors of the Company
electing to exchange the Rights, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right (other
than Rights that have become void pursuant to Section 3.1(b)) will thereafter
represent only the right to receive a number of shares of Common Stock equal to
the Exchange Ratio. Promptly after the action of the Board of Directors electing
to exchange the Rights, the Company shall give notice thereof (specifying the
steps to be taken to receive shares of Common Stock in exchange for Rights) to
the Rights Agent and the holders of the Rights (other than Rights that have
become void pursuant to Section 3.1(b)) outstanding immediately prior thereto by
mailing such notice in accordance with Section 5.9.
Each Person in whose name any certificate for shares is issued upon the
exchange of Rights pursuant to this Section 3.1(c) or Section 3.1(d) shall for
all purposes be deemed to have become the holder of record of the shares
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 any applicable taxes and other governmental charges payable by the holder was
made; provided, however, that if the date of such surrender and payment is a
date upon which the stock transfer books of the Company are closed, such Person
shall
-30-
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 stock
transfer books of the Company are open.
(d) Whenever the Company shall become obligated under Section 3.1(a) or
(c) to issue shares of Common Stock upon exercise of or in exchange for Rights,
the Company, at its option, may substitute therefor shares of Preferred Stock,
at a ratio of one one-hundredth of a share of Preferred Stock for each share of
Common Stock so issuable.
(e) In the event that there shall not be sufficient treasury shares or
authorized but unissued shares of Common Stock or Preferred Stock of the Company
to permit the exercise or exchange in full of the Rights in accordance with
Section 3.1(a) or (c), and the Company elects not to, or is otherwise unable to,
make the exchange referred to in Section 3.1(c), the Company shall either (i)
call a meeting of stockholders seeking approval to cause sufficient additional
shares to be authorized (provided that if such approval is not obtained the
Company will take the action specified in clause (ii) of this sentence) or (ii)
take such action as shall be necessary to ensure and provide, to the extent
permitted by applicable law and any agreements or instruments in effect on the
Stock Acquisition Date to which it is a party, that each Right shall thereafter
constitute the right to receive, (x) at the Company's option, either
-31-
(A) in return for the Exercise Price, debt or equity securities or other assets
(or a combination thereof) having a fair value equal to twice the Exercise
Price, or (B) without payment of consideration (except as otherwise required by
applicable law), debt or equity securities or other assets (or a combination
thereof) having a fair value equal to the Exercise Price, or (y) if the Board of
Directors of the Company elects to exchange the Rights in accordance with
Section 3.1(c), debt or equity securities or other assets (or a combination
thereof) having a fair value equal to the product of the Market Price of a share
of Common Stock on the Flip-in Date times the Exchange Ratio in effect on the
Flip-in Date, where in any case set forth in (x) or (y) above the fair value of
such debt or equity securities or other assets shall be as determined in good
faith by the Board of Directors of the Company, after consultation with a
nationally recognized investment banking firm.
3.2 Flip-over. (a) Prior to the Expiration Time, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-over Transaction or Event unless and until it shall have entered into a
supplemental agreement with the Flip-over Entity, for the benefit of the holders
of the Rights, providing that, upon consummation or occurrence of the Flip-over
Transaction or Event (i) each Right shall thereafter constitute the
-32-
right to purchase from the Flip-over Entity, upon exercise thereof in accordance
with the terms hereof, that number of shares of Flip-over Stock of the Flip-over
Entity having an aggregate Market Price on the date of consummation or
occurrence of such Flip-over Transaction or Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such right to be
appropriately adjusted in order to protect the interests of the holders of
Rights generally in the event that after such date of consummation or occurrence
an event of a type analogous to any of the events described in Section 2.4(a) or
(b) shall have occurred with respect to the Flip-over Stock) and (ii) the
Flip-over Entity shall thereafter be liable for, and shall assume, by virtue of
such Flip-over Transaction or Event and such supplemental agreement, all the
obligations and duties of the Company pursuant to this Agreement. The provisions
of this Section 3.2 shall apply to successive Flip-over Transactions or Events.
(b) Prior to the Expiration Time, unless the Rights will be terminated
pursuant to Section 5.1 hereof in connection therewith, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-over Transaction or Event if at the time thereof there are any rights,
warrants or securities outstanding or any other arrangements, agreements or
instruments that would eliminate or otherwise diminish in any material respect
the
-33-
benefits intended to be afforded by this Rights Agreement to the holders of
Rights upon consummation of such transaction.
ARTICLE IV
THE RIGHTS AGENT
4.1 General. (a) The Company hereby appoints the Rights Agent to act as
agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company 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 other disbursements incurred in the admin-
istration 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 negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted to be done 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 no event shall the
Rights Agent be liable for special, indirect, incidental or consequential loss
or damage of any kind whatsoever, even if the Rights Agent has been advised of
the possibility of such loss or damage.
-34-
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any certificate for
securities purchasable upon exercise of Rights, Rights Certificate, certificate
for other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons.
4.2 Merger or Consolidation or Change of Name of Rights Agent. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.4 hereof. In case at the time
such successor Rights Agent succeeds to the
-35-
agency created by this Agreement any of the Rights Certificates have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights Certifi
▇▇▇▇▇ so countersigned; and in case at that time any of the Rights Certificates
have not been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases such Rights
Certificates will have the full force provided in the Rights Certificates and in
this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
4.3 Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of
-36-
which the Company and the holders of Rights Certificates, by their acceptance
thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by a person believed by the Rights Agent to be the
Chairman of the Board, the President or any Vice President and by the Treasurer
or any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own
negligence, bad faith or willful misconduct.
-37-
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for securities purchasable upon exercise of Rights or the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any certificate for securities
purchasable upon exercise of Rights or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 3.1(b) hereof) or any adjustment required under the provisions of
Section 2.4, 3.1 or 3.2 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights after
receipt of the certificate contemplated by Section 2.4 describing
-38-
any such adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
securities purchasable upon exercise of Rights or any Rights or as to whether
any securities purchasable upon exercise of Rights will, when issued, be duly
and validly authorized, executed, issued and delivered and fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
persons for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with instructions of any such person.
-39-
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common Stock, Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
4.4 Change of Rights Agent. The Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice (or such
lesser notice as is acceptable to the Company) in writing mailed to the Company
and to each transfer agent of Common Stock by registered or certified mail, and
to the holders of the Rights in accordance with Section 5.9. The Company may
remove the Rights
-40-
Agent upon 30 days' notice in writing, mailed to the Rights Agent and to each
transfer agent of the Common Stock by registered or certified mail, and to the
holders of the Rights in accordance with Section 5.9. If the Rights Agent should
resign or be removed or otherwise become incapable of acting, the Company will
appoint a successor to the Rights Agent. If the Company fails to make such
appointment within a period of 30 days after 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 any Rights (which holder shall,
with such notice, submit such holder's Rights Certificate for inspection by the
Company), then the holder of any Rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation (or an affiliate of such a corporation) organized and doing business
under the laws of the United States or of the State of Delaware or any other
state of the United States, in good standing, which is authorized under such
laws to exercise the powers of the Rights Agent contemplated by this Agreement
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000. After appointment, the successor Rights Agent
will be vested with the same powers, rights,
-41-
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 will file notice thereof in writing with the prede-
cessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the holders of the Rights. Failure to give any
notice provided for in this Section 4.4, 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.
ARTICLE V
MISCELLANEOUS
5.1 Termination. (a) The right to exercise the Rights shall terminate,
without any payment to any holder thereof and without any further action by the
Company or its Board of Directors, immediately prior to the purchase of any
shares of Common Stock pursuant to the Approved Offer. In addition, the Board of
Directors of the Company may, at its option, at any time prior to the Flip-in
Date, elect to terminate the Rights without any payment to any holder thereof.
-42-
(b) Immediately upon (i) the action of the Board of Directors
of the Company electing to terminate the Rights (or, if the resolution of the
Board of Directors electing to terminate the Rights states that the termination
will not be effective until the occurrence of a specified future time or event,
upon the occurrence of such future time or event), or (ii) immediately prior to
the purchase of any shares pursuant to the Approved Offer, without any further
action and without any notice, the right to exercise the Rights will terminate
and each Right will thereafter be null and void.
5.2 Expiration. The Rights and this Agreement shall expire at the
Expiration Time and no Person shall have any rights pursuant to this Agreement
or any Right after the Expiration Time, except, if the Rights are exchanged or
redeemed, as provided in Section 3.1 or 5.1 hereof.
5.3 Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the number or kind or class of shares of stock purchasable upon exercise of
Rights made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock by the Company
following the Separation Time
-43-
and prior to the Expiration Time pursuant to the terms of securities convertible
or redeemable into shares of Common Stock or to options, in each case issued or
granted prior to, and outstanding at, the Separation Time, the Company shall
issue to the holders of such shares of Common Stock, Rights Certificates
representing the appropriate number of Rights in connection with the issuance or
sale of such shares of Common Stock; provided, however, in each case, (i) no
such Rights Certificate shall be issued, if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or to the Person to whom
such Rights Certificates would be issued, (ii) no such Rights Certificates shall
be issued if, and to the extent that, appropriate adjustment shall have
otherwise been made in lieu of the issuance thereof, and (iii) the Company shall
have no obligation to distribute Rights Certificates to any Acquiring Person or
Affiliate or Associate of an Acquiring Person or any transferee of any of the
foregoing.
5.4 Supplements and Amendments. The Company and the Rights Agent may
from time to time supplement or amend this Agreement without the approval of any
holders of Rights (i) prior to the Flip-in Date, in any respect and (ii) on or
after the Flip-in Date, to make any changes that the Company may deem necessary
or desirable and which shall not materially adversely affect the interests of
the holders of
-44-
Rights generally or in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be inconsistent with any other
provisions herein or otherwise defective. The Rights Agent will duly execute and
deliver any supplement or amendment hereto requested by the Company which
satisfies the terms of the preceding sentence.
5.5 Fractional Shares. If the Company elects not to issue certificates
representing fractional shares upon exercise or redemption of Rights, the
Company shall, in lieu thereof, in the sole discretion of the Board of
Directors, either (a) evidence such fractional shares by depositary receipts
issued pursuant to an appropriate agreement between the Company and a depositary
selected by it, providing that each holder of a depositary receipt shall have
all of the rights, privileges and preferences to which such holder would be
entitled as a beneficial owner of such fractional share, or (b) pay to the
registered holder of such Rights the appropriate fraction of the Market Price
per share in cash.
5.6 Rights of Action. Subject to the terms of this Agreement (including
Sections 3.1(b) and 5.14), rights of action in respect of this Agreement, other
than rights of action vested solely in the Rights Agent, are vested in the
respective holders of the Rights; and any holder of any Rights, without the
consent of the Rights Agent or of the holder of any other Rights, may, on such
holder's own behalf
-45-
and for such holder's own benefit and the benefit of other holders of Rights,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, such holder's right to
exercise such holder's Rights in the manner provided in such holder's Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
5.7 Holder of Rights Not Deemed a Stockholder. No holder, as such, of
any Rights shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of shares or any other securities which may at any time be
issuable on the exercise of such Rights, nor shall anything contained herein or
in any Rights Certificate be construed to confer upon the holder of any Rights,
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 Section 5.8 hereof), or to receive
-46-
dividends or subscription rights, or otherwise, until such Rights shall have
been exercised or exchanged in accordance with the provisions hereof.
5.8 Notice of Proposed Actions. In case the Company shall propose after
the Separation Time and prior to the Expiration Time (i) to effect or permit a
Flip-over Transaction or Event or (ii) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, in accordance with Section 5.9 hereof, a notice of such
proposed action, which shall specify the date on which such Flip-over
Transaction or Event, liquidation, dissolution, or winding up is to take place,
and such notice shall be so given at least 20 Business Days prior to the date of
the taking of such proposed action.
5.9 Notices. Notices or demands authorized or required by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
to or on the Company shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Goulds Pumps, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
-47-
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Administration
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, 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.
5.10 Suspension of Exercisability. To the extent that the Company
determines in good faith that some action will or need be taken pursuant to
Section 3.1 or to comply with federal or state securities laws, the Company may
suspend the exercisability of the Rights for a reasonable period in order to
take such action or comply with such
-48-
laws. In the event of any such suspension, the Company shall issue as promptly
as practicable a public announcement stating that the exercisability or
exchangeability of the Rights has been temporarily suspended. Notice thereof
pursuant to Section 5.9 shall not be required.
Failure to give a notice pursuant to the provisions of this Agreement
shall not affect the validity of any action taken hereunder.
5.11 Costs of Enforcement. The Company agrees that if the Company or
any other Person the securities of which are purchasable upon exercise of Rights
fails to fulfill any of its obligations pursuant to this Agreement, then the
Company or such Person will reimburse the holder of any Rights for the costs and
expenses (including legal fees) incurred by such holder in actions to enforce
such holder's rights pursuant to any Rights or this Agreement.
5.12 Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
5.13 Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
holders of the Rights any legal or equitable right, remedy or claim under this
Agreement and this Agreement shall be for the sole and
-49-
exclusive benefit of the Company, the Rights Agent and the holders of the
Rights.
5.14 Determination and Actions by the Board of Directors, etc. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board of Directors of
the Company to any liability to the holders of the Rights.
5.15 Descriptive Headings. Descriptive headings appear herein for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
5.16 Governing Law. THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER
SHALL BE DEEMED TO BE A CONTRACT MADE
-50-
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 TO BE MADE AND PERFORMED ENTIRELY WITHIN SUCH STATE.
5.17 Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
5.18 Severability. If any term or provision hereof or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or provision shall be ineffective as to
such jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
-51-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
GOULDS PUMPS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman, President
and Chief Executive Officer
The Bank of New York
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
-52-
EXHIBIT A
[Form of Rights Certificate]
Certificate No. r- _______ Rights
THE RIGHTS ARE SUBJECT TO TERMINATION OR MANDATORY EXCHANGE,
AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) OR TRANSFEREES OF ANY
OF THE FOREGOING WILL BE VOID.
Rights Certificate
GOULDS PUMPS, INC.
This certifies that _____________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Stockholder Protection Rights Agreement, dated as of April 21,
1997 (as amended from time to time, the "Rights Agreement"), between Goulds
Pumps, Inc., a Delaware corporation (the "Company"), and The Bank of New York,
as Rights Agent (the "Rights Agent", which term shall include any successor
Rights Agent under the Rights Agreement), to purchase from the Company at any
time after the Separation Time (as such term is defined in the Rights Agreement)
and prior to the close of business on April __, 2007, one one-hundredth of a
fully paid share of Participating Preferred Stock, par value $20.00 per share
(the "Preferred Stock"), of the Company (subject to adjustment as provided in
the Rights Agreement) at the
Exercise Price referred to below, upon presentation and surrender of this Rights
Certificate with the Form of Election to Exercise duly executed at the
principal office of the Rights Agent in the City of New York. The Exercise Price
shall initially be $[__].00 per Right and shall be subject to adjustment in
certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities or assets of the
Company other than Preferred Stock, all as provided in the Rights Agreement.
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. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available without cost upon written request.
-2-
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor evidencing an aggregate number of Rights equal to the
aggregate number of Rights evidenced by the Rights Certificate or Rights
Certificates surrendered. If this Rights Certificate shall be exercised in part,
the registered 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, each Right evidenced
by this Certificate may be (a) terminated without any payment to the holder
thereof or (b) exchanged by the Company under certain circumstances, at its
option, for one share of Common Stock or one one-hundredth of a share of
Preferred Stock per Right (or, in certain cases, other securities or assets of
the Company), subject in each case to adjustment in certain events as provided
in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of any
securities 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
-3-
the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Rights evidenced by this Rights Certificate shall have been
exercised or exchanged 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.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Date: ____________
ATTEST: GOULDS PUMPS, INC.
___________________________ By:______________________
Secretary Name:
Title:
Countersigned:
[_______________________]
By____________________________
Authorized Signature
-4-
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED ____________________________________________ hereby
sells, assigns and transfers unto _____________________________________________
(Please print name
_______________________________________________________________________________
and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________, ____
Signature Guaranteed: _________________________
Signature
(Signature must correspond to name
as written upon the face of this
Rights Certificate in every
particular, without alteration or
enlargement or any change
whatsoever)
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee Medallion program), pursuant to
SEC Rule 17Ad-15.
-------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
shares of Common Stock, that the Rights evidenced by this Rights Certificate are
not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
__________________________
Signature
-------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
-2-
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise the Rights Certificate.)
TO: GOULDS PUMPS, INC.
The undersigned hereby irrevocably elects to exercise
_______________________ whole Rights represented by the attached Rights
Certificate to purchase the shares of Participating Preferred Stock issuable
upon the exercise of such Rights and requests that certificates for such shares
be issued in the name of:
_____________________________________
Address:_____________________________
_____________________________________
Social Security or Other Taxpayer
Identification Number:_______________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
_____________________________________
Address:_____________________________
_____________________________________
Social Security or Other Taxpayer
Identification Number:_______________
Dated: _______________, ____
Signature Guaranteed: _________________________
Signature
(Signature must correspond to name
as written upon the face of the
attached Rights Certificate in
every particular, without
alteration or enlargement or any
change whatsoever)
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee Medallion program), pursuant to
SEC Rule 17Ad-15.
-------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of
Rights and shares of Common Stock, that the Rights evidenced by the attached
Rights Certificate are not, and, to the knowledge of the undersigned, have never
been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
_________________________
Signature
-------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed in
connection with a purported exercise, the Company will deem the Beneficial Owner
of the Rights evidenced by the attached Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
or a transferee of any of the foregoing and accordingly will deem the Rights
evidenced by such Rights Certificate to be void and not transferable or
exercisable.
-2-
EXHIBIT B
FORM OF CERTIFICATE OF DESIGNATION AND TERMS OF
PARTICIPATING Preferred STOCK OF GOULDS PUMPS, INC.
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
We, the undersigned, ____________________ and ____________________, the
____________________, and __________, respectively, of GOULDS PUMPS, INC., a
Delaware corporation (the "Corporation"), do hereby certify as follows:
Pursuant to authority granted by Article FOURTH of the Restated
Certificate of Incorporation of the Corporation, and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation has adopted the following
resolutions fixing the designation and certain terms, powers, preferences and
other rights of a new series of the Corporation's Preferred Stock, par value $20
per share, and certain qualifications, limitations and restrictions thereon:
RESOLVED, that there is hereby established a series of Preferred
Stock, par value $20 per share, of the Corporation, and the
designation and certain terms, powers, preferences and other rights of
the shares of such series, and certain qualifications, limitations and
restrictions thereon, are hereby fixed as follows:
(i) The distinctive serial designation of this series shall
be "Participating Preferred Stock" (hereinafter called "this
Series"). Each share of this Series shall be identical in all
respects with the other shares of this Series except as to
the dates from and after which dividends thereon shall be
cumulative.
(ii) The number of shares in this Series shall initially
be _______, which number may from time to time be increased or
decreased (but not below the number then outstanding) by the
Board of Directors. Shares of this Series purchased by the
Corporation shall be cancelled and shall revert to authorized but
unissued shares of Preferred Stock undesignated as to series.
Shares of this Series may be issued in fractional shares, which
fractional shares shall entitle the holder, in proportion to such
holder's fractional share, to all rights of a holder of a whole
share of this Series.
(iii) The holders of full or fractional shares of this
Series shall be entitled to receive, when and as declared by the
Board of Directors, but only out of funds legally available
therefor, dividends, (A) on each date that dividends or other
distributions (other than dividends or distributions payable in
Common Stock of the Corporation) are payable on or in respect of
Common Stock comprising part of the Reference Package (as defined
below), in an amount per whole share of this Series equal to the
aggregate amount of dividends or other distributions (other than
dividends or distributions payable in Common Stock of the
Corporation) that would be payable on such date to a holder of
the Reference Package and (B) on the last day of March, June,
September and December in each year, in an amount per whole share
of this Series equal to the excess (if any) of $____* over the
aggregate dividends paid per whole share of this Series during
the three month period ending on such last day. Each such
dividend shall be paid to the holders of record of shares of this
Series on the date, not exceeding sixty days preceding such
dividend or distribution payment date, fixed for the purpose by
the Board of Directors in advance of payment of each particular
dividend or distribution. Dividends on each full and each
fractional share of this Series shall be cumulative from the date
such full or fractional share is originally issued; provided
________________
* Insert an amount equal to 1/4 of 1% of the Exercise Price for a whole share
of Participating Preferred Stock.
-2-
that any such full or fractional share originally issued after a
dividend record date and on or prior to the dividend payment date
to which such record date relates shall not be entitled to
receive the dividend payable on such dividend payment date or any
amount in respect of the period from such original issuance to
such dividend payment date.
The term "Reference Package" shall initially mean 100
shares of Common Stock, par value $1.00 per share ("Common
Stock"), of the Corporation. In the event the Corporation shall
at any time after the close of business on ________, ____* (A)
declare or pay a dividend on any Common Stock payable in Common
Stock, (B) subdivide any Common Stock or (C) combine any Common
Stock into a smaller number of shares, then and in each such case
the Reference Package after such event shall be the Common Stock
that a holder of the Reference Package immediately prior to such
event would hold thereafter as a result thereof.
Holders of shares of this Series shall not be entitled to
any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided on this
Series.
So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any other
stock ranking junior to this Series as to dividends and upon
liquidation) shall be declared or paid or set aside for payment
or other distribution declared or made upon the Common Stock or
upon any other stock ranking junior to this Series as to
dividends or upon liquidation, nor shall any Common Stock nor any
other stock of the Corporation ranking junior to or on a parity
with this Series as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking
_______________
* For a certificate of designation relating to shares to be issued pursuant to
Section 2.3 of the Rights Agreement, insert the Separation Time. For a
certificate of designation relating to shares to be issued pursuant to
Section 3.1(d) of the Rights Agreement, insert the Flip-in Date.
-3-
fund for the redemption of any shares of any such stock) by the
Corporation (except by conversion into or exchange for stock of
the Corporation ranking junior to this Series as to dividends and
upon liquidation), unless, in each case, the full cumulative
dividends (including the dividend to be due upon payment of such
dividend, distribution, redemption, purchase or other
acquisition) on all outstanding shares of this Series shall have
been, or shall contemporaneously be, paid.
(iv) In the event of any merger, consolidation,
reclassification 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 this Series shall at the same time be similarly
exchanged or changed in an amount per whole share equal to the
aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, that a holder of
the Reference Package would be entitled to receive as a result of
such transaction.
(v) In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, whether voluntary or
involuntary, the holders of full and fractional shares of this
Series shall be entitled, before any distribution or payment is
made on any date to the holders of the Common Stock or any other
stock of the Corporation ranking junior to this Series upon
liquidation, to be paid in full an amount per whole share of this
Series equal to the greater of (A) $__________* or (B) the
aggregate amount distributed or to be distributed prior to such
date in connection with such liquidation, dissolution or winding
up to a holder of the Reference Package (such greater amount
being hereinafter referred to as the "Liquidation Preference"),
together with accrued dividends to such distribution or payment
date, whether or not earned or declared. If such payment shall
have been made in full to all holders of shares of this Series,
the holders of shares of this Series as such shall have no right
or claim to any of the remaining assets of the Corporation.
_______________
* Insert an amount equal to 100 times the Exercise Price in effect as of the
Separation Time.
-4-
In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in
full all amounts to which such holders are entitled pursuant to
the first paragraph of this Section (v), no such distribution
shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares of
this Series upon such liquidation, dissolution or winding up
unless proportionate distributive amounts shall be paid on
account of the shares of this Series, ratably in proportion to
the full distributable amounts for which holders of all such
parity shares are respectively entitled upon such liquidation,
dissolution or winding up.
Upon the liquidation, dissolution or winding up of the
Corporation, the holders of shares of this Series then
outstanding shall be entitled to be paid out of assets of the
Corporation available for distribution to its stockholders all
amounts to which such holders are entitled pursuant to the first
paragraph of this Section (v) before any payment shall be made to
the holders of Common Stock or any other stock of the Corporation
ranking junior upon liquidation to this Series.
For the purposes of this Section (v), the consolidation or
merger of, or binding share exchange by, the Corporation with any
other corporation shall not be deemed to constitute a
liquidation, dissolution or winding up of the Corporation.
(vi) The shares of this Series shall not be redeemable.
(vii) In addition to any other vote or consent of
stockholders required by law or by the Restated Certificate of
Incorporation, as amended, of the Corporation, each whole share
of this Series shall, on any matter, vote as a class with any
other capital stock comprising part of the Reference Package and
voting on such matter and shall have the number of votes thereon
that a holder of the Reference Package would have.
-5-
IN WITNESS WHEREOF, the undersigned have signed and attested this
certificate on the ____ day of _________, ____.
___________________________________
Attest:
_________________________
-6-
EXHIBIT C
GOULDS PUMPS, INC.:
SUMMARY OF RIGHTS TO PURCHASE PARTICIPATING PREFERRED STOCK
On April 20, 1997, the Board of Directors of Goulds Pumps, Inc., a
Delaware corporation (the "Company"), declared a dividend of one right (a
"Right") for each outstanding share of common stock, par value $1.00 per share
(the "Common Stock"), of the Company held of record at the close of business on
April 21, 1997 (the "Record Time"), or issued thereafter and prior to the
Separation Time (as hereinafter defined) and thereafter pursuant to options and
convertible securities outstanding at the Separation Time. The Rights were
issued pursuant to a Stockholder Protection Rights Agreement, dated as of April
21, 1997 (the "Rights Agreement"), between the Company and The Bank of New York
(the "Rights Agent"). Each Right entitles its registered holder to purchase from
the Company, after the Separation Time, one one-hundredth of a share of
Participating Preferred Stock, par value $20.00 per share (the "Participating
Preferred Stock"), for $80.00 (the "Exercise Price"), subject to adjustment or,
in certain circumstances, one share of common stock for each one one-hundredth
of a share of Participating Preferred Stock.
The Rights will be evidenced by the Common Stock certificates until the
close of business on the earlier of (either, the "Separation Time") (i) the
tenth business day (or such later date as the Board of Directors of the Company
may from time to time fix by resolution adopted prior to the Separation Time
that would otherwise have occurred) after the date on which any Person (as
defined in the Rights Agreement) commences a tender or exchange offer (other
than the Approved Offer) which, if consummated, would result in such Person
becoming an Acquiring Person (as defined below) and (ii) the first date (the
"Stock Acquisition Date") of public announcement by the Company (by any means)
that such Person has become an Acquiring Person; provided that if the foregoing
results in the Separation Time being prior to the Record Time, the Separation
Time shall be the Record Time; and provided further that if a tender or exchange
offer referred to in clause (i) is cancelled, terminated or otherwise withdrawn
prior to the Separation Time without the purchase of any shares of stock
pursuant thereto, such offer shall be deemed never to have been made. An
Acquiring Person is any Person having Beneficial Ownership (as defined
in the Rights Agreement) of 20% or more of the outstanding shares of Common
Stock, which term shall not include (i) the Company, any wholly-owned subsidiary
of the Company or any employee stock ownership or other employee benefit plan of
the Company or a wholly-owned subsidiary of the Company, (ii) any person who is
the Beneficial Owner of 20% or more of the outstanding Common Stock on the date
of the Rights Agreement or who shall become the Beneficial Owner of 20% or more
of the outstanding Common Stock solely as a result of an acquisition of Common
Stock by the Company, until such time as such Person acquires additional Common
Stock, other than through a dividend or stock split, (iii) any Person who
becomes an Acquiring Person without any plan or intent to seek or affect control
of the Company if such Person promptly divests sufficient securities such that
such 20% or greater Beneficial Ownership ceases or (iv) any Person who
Beneficially Owns shares of Common Stock consisting solely of (A) shares
acquired pursuant to the grant or exercise of an option granted by the Company
in connection with an agreement to merge with, or acquire, the Company at a time
at which there is no Acquiring Person, (B) shares owned by such Person and its
Affiliates and Associates (as such terms are defined in the Rights Agreement) at
the time of such grant and (C) shares, amounting to less than 1% of the
outstanding Common Stock, acquired by Affiliates and Associates of such Person
after the time of such grant. An "Approved Offer" means a tender offer pursuant
to and on the terms and conditions set forth in an Agreement and Plan of Merger
among ITT Industries, GPI Acquisition Corp. and the Company, dated as of April
20, 1997.
The Rights Agreement provides that, until the Separation Time, the
Rights will be transferred with and only with the Common Stock. Common Stock
certificates issued after the Record Time but prior to the Separation Time shall
evidence one Right for each share of Common Stock represented thereby and shall
contain a legend incorporating by reference the terms of the Rights Agreement
(as such may be amended from time to time). Notwithstanding the absence of the
aforementioned legend, certificates evidencing shares of Common Stock
outstanding at the Record Time shall also evidence one Right for each share of
Common Stock evidenced thereby. Promptly following the Separation Time, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of Common Stock at the Separation Time.
The Rights will not be exercisable until the Separation Time. The
Rights will expire on the earliest of (in any such case, the "Expiration Time")
(i) the Exchange Time (as defined below), (ii) the close of business on the
-2-
tenth anniversary of the Record Time, (iii) the date on which the Rights are
terminated as described below and (iv) immediately prior to the effective time
of a consolidation, merger or share exchange of the Company (A) into another
corporation or (B) with another corporation in which the Company is the
surviving corporation but Common Stock is converted into cash and/or securities
of another corporation, in either case pursuant to an agreement entered into by
the Company prior to a Stock Acquisition Date.
The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution in the event of a
Common Stock dividend on, or a subdivision or a combination into a smaller
number of shares of, Common Stock, or the issuance or distribution of any
securities or assets in respect of, in lieu of or in exchange for Common Stock.
In the event that prior to the Expiration Time a Flip-in Date (as
defined below) occurs, each Right (other than Rights Beneficially Owned by the
Acquiring Person or any Affiliate or Associate thereof, which Rights shall
become void) shall constitute the right to purchase from the Company, upon the
exercise thereof in accordance with the terms of the Rights Agreement, that
number of shares of Common Stock of the Company having an aggregate Market Price
(as defined in the Rights Agreement) equal to twice the Exercise Price for an
amount in cash equal to the then current Exercise Price. In addition, the Board
of Directors of the Company may, at its option, at any time after a Flip-in
Date and prior to the time that an Acquiring Person becomes the Beneficial Owner
of more than 50% of the outstanding shares of Common Stock, elect to exchange
all (but not less than all) the then outstanding Rights (other than Rights
Beneficially Owned by the Acquiring Person or any Affiliate or Associate
thereof, which Rights become void) for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
of the Separation Time (the "Exchange Ratio"). Immediately upon such action by
the Board of Directors (the "Exchange Time"), the right to exercise the Rights
will terminate and each Right will thereafter represent only the right to
receive a number of shares of Common Stock equal to the Exchange Ratio. A
"Flip-in Date" is defined in the Rights Agreement as any Stock Acquisition Date
or such later date as the Board of Directors of the Company may from time to
time fix by
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resolution adopted prior to the Flip-in Date that would otherwise have
occurred.
Whenever the Company shall become obligated under the Rights Agreement
to issue shares of Common Stock upon exercise of or in exchange for Rights, the
Company, at its option, may substitute therefor shares of Participating
Preferred Stock, at a ratio of one one-hundredth of a share of Participating
Preferred Stock for each share of Common Stock so issuable.
In the event that prior to the Expiration Time the Company enters into,
consummates or permits to occur a transaction or series of transactions after
the time an Acquiring Person has become such in which, directly or indirectly,
(i) the Company shall consolidate or merge or participate in a share exchange
with any other Person if, at the time of the consolidation, merger or share
exchange or at the time the Company enters into any agreement with respect to
any such consolidation, merger or share exchange, the Acquiring Person controls
the Board of Directors of the Company and either (A) any term of or arrangement
concerning the treatment of shares of capital stock in such consolidation,
merger or share exchange relating to the Acquiring Person is not identical to
the terms and arrangements relating to other holders of the Common Stock or (B)
the Person with whom the transaction or series of transactions occurs is the
Acquiring Person or an Affiliate or Associate of the Acquiring Person, or (ii)
the Company shall sell or otherwise transfer (or one or more of its subsidiaries
shall sell or otherwise transfer) assets (A) aggregating more than 50% of the
assets (measured by either book value or fair market value) or (B) generating
more than 50% of the operating income or cash flow, of the Company and its
subsidiaries (taken as a whole) to any other Person (other than the Company or
one or more of its wholly owned subsidiaries) or to two or more such Persons
which are affiliated or otherwise acting in concert, if, at the time of such
sale or transfer of assets or at the time the Company (or any such subsidiary)
enters into an agreement with respect to such sale or transfer, the Acquiring
Person controls the Board of Directors of the Company (a "Flip-over Transaction
or Event"), the Company shall take such action as shall be necessary to ensure,
and shall not enter into, consummate or permit to occur such Flip-over
Transaction or Event until it shall have entered into a supplemental agreement
with the Person engaging in such Flip-over Transaction or Event or the parent
corporation thereof (the "Flip-over Entity"), for the benefit of the holders of
the Rights, providing, that upon consummation or occurrence of the Flip-over
Transaction or Event (i) each Right shall thereafter
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constitute the right to purchase from the Flip-over Entity, upon exercise
thereof in accordance with the terms of the Rights Agreement, that number of
shares of common stock of the Flip-over Entity having an aggregate Market Price
on the date of consummation or occurrence of such Flip-over Transaction or
Event equal to twice the Exercise Price for an amount in cash equal to the then
current Exercise Price and (ii) the Flip-over Entity shall thereafter be liable
for, and shall assume, by virtue of such Flip-over Transaction or Event and such
supplemental agreement, all the obligations and duties of the Company pursuant
to the Rights Agreement.
The right to exercise the Rights shall terminate, without any payment
to any holder thereof and without any further action by the Company or its Board
of Directors immediately prior to the purchase of any shares of Common Stock
pursuant to the Approved Offer. In addition the Board of Directors of the
Company may, at its option, at any time prior to the Flip-in Date, elect to
terminate the Rights without any payment to any holder thereof. Immediately upon
(i) the action of the Board of Directors of the Company electing to terminate
the Rights (or, if the resolution of the Board of Directors electing to
terminate the Rights states that the termination will not be effective until the
occurrence of a specified future time or event, upon the occurrence of such
future time or event), or (ii) immediately prior to the purchase of any shares
pursuant to the Approved Offer, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right will
thereafter be null and void.
The holders of Rights will, solely by reason of their ownership of
Rights, have no rights as stockholders of the Company, including, without
limitation, the right to vote or to receive dividends.
The Company and the Rights Agent may from time to time supplement or
amend the Rights Agreement without the approval of any holders of Rights (i)
prior to the Flip-in Date, in any respect and (ii) on or after the Flip-in Date,
to make any changes that the Company may deem necessary or desirable and which
shall not materially adversely affect the interests of the holders of Rights
generally or in order to cure any ambiguity or to correct or supplement any
inconsistent or defective provision contained therein.
The Rights will not prevent a takeover of the Company. However, the
Rights may cause substantial dilution to a person or group that acquires 20% or
more of the Common Stock unless the Rights are first redeemed by the Board of
Directors of the Company. Nevertheless, the Rights should
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not interfere with a transaction that is in the best interests of the Company
and its stockholders because the Rights can be redeemed on or prior to the
Flip-in Date, before the consummation of such transaction.
As of April 16, 1997 there were 21,381,593 shares of Common Stock
issued and outstanding (no shares were held in treasury), and 1,749,829 shares
reserved for issuance pursuant to employee benefit plans and/or convertible
securities. As long as the Rights are attached to the Common Stock, the Company
will issue one Right with each new share of Common Stock so that all such shares
will have Rights attached.
The Rights Agreement (which includes as Exhibit A the forms of Rights
Certificate and Election to Exercise and as Exhibit B the form of Certificate of
Designation and Terms of the Participating Preferred Stock) is attached as an
exhibit to a Form 8-A, filed on or about April 21, 1997, and as an exhibit to a
Form 8-K, filed on or about April 21, 1997. The foregoing description of the
Rights is qualified in its entirety by reference to the Rights Agreement and the
exhibits thereto, which are incorporated herein by reference in their entirety.
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