THIRD AMENDMENT TO RIGHTS AGREEMENT
THIRD AMENDMENT TO RIGHTS AGREEMENT made as of August 21,
1997 between Imo Industries Inc., a Delaware corporation, (the
"Company") and First Chicago Trust Company of New York, a New
York corporation, (the "Rights Agent").
Recitals:
WHEREAS, on April 30, 1997, the Board of Directors of the
Company authorized and declared a dividend distribution of one
Right for each share of Common Stock, par value $1.00 per share,
of the Company outstanding at the close of business on the Record
Date, May 4, 1997, and has authorized the issuance of one Right
for each share of Common Stock of the Company issued between the
Record Date and the Distribution Date, each Right initially
representing the right to purchase one one-hundredth of a share
of Series B Junior Participating Preferred Stock of the Company
(the "Rights"); and
WHEREAS, on April 30, 1997, the Company and the Rights Agent
entered into a Rights Agreement to set forth certain terms and
conditions with respect to the grant of the Rights; on June 25,
1997, the Company and the Rights Agent entered into an Amendment
to Rights Agreement to amend Section 3(a) and Section
11(a)(ii)(B) thereof; and on July 25, 1997, the Company and the
Rights Agent entered into a Second Amendment to Rights Agreement
to further amend Section 3(a) thereof (such Rights Agreement, as
so amended, is hereinafter referred to as the "Agreement"); and
WHEREAS, pursuant to Section 26 of the Agreement, the
Company has the right to amend the Agreement, and the Board of
Directors of the Company has approved certain amendments to the
Agreement, to provide as set forth in this Third Amendment.
NOW, THEREFORE, in consideration of the premises and
covenants set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Defined Terms. Each capitalized term used in this Third
Amendment and not otherwise defined shall have the meaning
assigned to it in the Agreement, unless the context clearly
indicates to the contrary.
2. Amendment to Section 1(a). Section 1(a) of the Agreement
is amended to add the following sentence to the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
neither II Acquisition Corp. ("II Acquisition"), any
subsidiary of II Acquisition that is established to effect
the Merger (as defined in this Section 1(a) (any such
subsidiary being referred to herein as "Merger Sub"), nor
any Affiliate or Associate of II Acquisition or Merger Sub
shall be deemed to be an Acquiring Person as a result of the
execution, delivery and performance under, or consummation
of any one or more transactions (each, a "Permitted Event"
and collectively, the "Permitted Events") contemplated by,
the Share Purchase Agreement, dated as of July 25, 1997, as
the same may be amended from time to time, by and among II
Acquisition and the Company (the "Acquisition Agreement"),
pursuant to which II Acquisition is offering to acquire all
outstanding shares of Common Stock of the Company.
"Permitted Events" shall include, without limitation,
consummation of the Offer (as defined in the Acquisition
Agreement) and consummation of any merger (a "Merger") that
is contemplated by Section 1.03 of the Acquisition
Agreement."
3. Amendment to Section 3(a). Section 3(a) of the Agreement
is amended and restated so as to provide in its entirety as
follows:
"(a)Until the Distribution Date (as hereinafter
defined): (x) the Rights will be attached to and, where
applicable, evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be
deemed also to be certificates for the Rights) and not by
separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to
the Company). As used in this Agreement, the "Distribution
Date" shall mean the earlier of (i) the close of business on
the tenth day after the Stock Acquisition Date (or, if the
tenth day after the Stock Acquisition Date occurs before the
Record Date, the close of business on the tenth day
following the Record Date), unless the shares of Common
Stock are acquired by the Acquiring Person pursuant to a
tender offer or exchange offer that does not trigger the
occurrence of a Distribution Date by reason of the exception
set forth in clause (ii) below, or (ii) the close of
business on the tenth business day after the date that a
tender or exchange offer by any Person (other than the Com
pany, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan)
is first published or sent or given within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding, unless such tender offer
or exchange offer is for all outstanding shares of Common
Stock at a price and on terms determined by at least a
majority of the members of the Board of Directors who are
not officers of the Company and who are not representatives,
nominees, Affiliates or Associates of an Acquiring Person,
after receiving advice from one or more investment banking
firms, to be (x) at a price which is fair to stockholders
(taking into account all factors which such members of the
Board deem relevant including, without limitation, prices
which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize
maximum value) and (y) otherwise in the best interests of
the Company and its stockholders, or (iii) if a tender or
exchange offer had been determined by at least a majority of
the members of the Board of Directors who are not officers
of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person to be at a
price which is fair to stockholders or otherwise in the best
interests of the Company and its stockholders as
contemplated by the immediately preceding clause (ii) of
this Section 3(a) but (A) such determination is subsequently
withdrawn and (B) at least a majority of the members of the
Board of Directors who are not officers of the Company and
who are not representatives, nominees, Affiliates or
Associates of an Acquiring Person explicitly determines that
such withdrawal shall be deemed to trigger a Distribution
Date under this Section 3(a), the close of business on the
tenth day after such determination is withdrawn. As soon as
practicable after the Distribution Date, the Rights Agent
will send by first class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the close of
business on the Distribution Date, at the address of such
holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit B
hereto (the "Rights Certificates"), evidencing one Right for
each share of Common Stock so held, subject to adjustment as
provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made
pursuant to Section 11(p) hereof, at the time of
distribution of the Rights Certificates, the Company shall
make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Rights Certificates.
Notwithstanding anything in this Agreement to the contrary,
the commencement of the Offer, the acquisition of beneficial
ownership of Common Stock of the Company pursuant to the
Offer, the acquisition of beneficial ownership of Common
Stock of the Company pursuant to the Merger and the
consummation of any one or more of the Permitted Events
shall not constitute or result in the occurrence of a
Distribution Date."
4. Amendment to Section 7(a). Section 7(a) of the Agreement
is amended and restated so as to provide in its entirety as
follows:
"(a)Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii)
and Section 23(a) hereof) in whole or in part at any time
after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, to
the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the
total number of one one-hundredths of a share (or other
securities, cash or other assets, as the case may be) as to
which such surrendered Rights are then exercisable, at or
prior to the earliest of (i) the close of business on May 4,
2007 (the "Final Expiration Date"), (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof or
(iii) the time immediately prior to the effective time of
the Merger, provided, however, that if the Merger does not
occur, the Rights shall remain exercisable until the earlier
of (i) or (ii) above and the Rights shall not be deemed to
be non-exercisable as the result of this clause (iii) (the
earliest of (i), (ii) and (iii) being herein referred to as
the "Expiration Date").
5. Amendment to Section 13. Section 13 of the Agreement is
amended to add the following at the beginning thereof: "Except in
the case of a Merger,".
6. Effect of Amendment. The parties acknowledge and agree
that all of the terms, provisions, covenants and conditions of
the Agreement shall hereafter continue in full force and effect
in accordance with the terms thereof except to the extent amend
ed, modified, deleted or revised herein.
7. Counterparts. This Amendment may be executed on separate
counterparts, each of which is deemed to be an original and all
of which taken together shall constitute one and the same
agreement.
1 IN WITNESS WHEREOF, the parties have caused this Amendment
to be executed as of the date first above written.
Attest: IMO INDUSTRIES INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President, Chairman, President
General Counsel and Secretary and Chief Executive Officer
Attest: FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By:/s/▇▇▇▇ Daltz By:/s/▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ Daltz ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President Title: Assistant Vice President
