UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 8-A/A
AMENDMENT #2
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
VARLEN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-2651100
(State of incorporation) (IRS Employer
Identification No.)
55 Shuman Boulevard
P.O. Box 3089
Naperville, Illinois 60566-7089
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(708) 420-0400
Securities to be registered pursuant to Section 12(b) of the
Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, par value $.10 per share
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the
Act: Preferred Stock Purchase Rights
(Title of Class)
Item 1. Description of Registrant's Securities to be Registered.
On June 17, 1996, the Board of Directors of Varlen
Corporation (the "Company") declared a dividend of one
preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $.10 per share,
of the Company (the "Common Stock"). The dividend is payable
at the close of business on July 15, 1996 to the stockholders
of record on July 1, 1996 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company
one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of
the Company (the "Preferred Stock") at a price of $75 per one
one-thousandth of a share of Preferred Stock (the "Purchase
Price"), subject to adjustment. The description and terms of
the Rights are set forth in a Rights Agreement dated as of
June 17, 1996, as the same may be amended from time to time
(the "Rights Agreement"), between the Company and Harris
Trust and Savings Bank, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following
a public announcement that a person or group of affiliated or
associated persons (with certain exceptions, an "Acquiring
Person") has acquired beneficial ownership of 15% or more of
the outstanding shares of Common Stock or (ii) 10 business
days (or such later date as may be determined by action of
the Board of Directors prior to such time as any person or
group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the
outstanding shares of Common Stock (the earlier of such dates
being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such
Common Stock certificate together with a copy of this Summary
of Rights.
The Rights Agreement provides that, until the
Distribution Date (or earlier expiration of the Rights), the
Rights will be transferred with and only with the Common
Stock. Until the Distribution Date (or earlier expiration of
the Rights), new Common Stock certificates issued after the
Record Date upon transfer or new issuances of Common Stock
will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier
expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the
Record Date, even without such notation or a copy of this
Summary of Rights, will also constitute the transfer of the
Rights associated with the shares of Common Stock represented
by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the
Distribution Date. The Rights will expire on June 16, 2006
(the "Final Expiration Date"), unless the Final Expiration
Date is advanced or extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as
described below.
The Purchase Price payable, and the number of
shares of Preferred Stock or other securities or property
issuable, upon exercise of the Rights is subject to
adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Stock, (ii) upon the
grant to holders of the Preferred Stock of certain rights or
warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a
conversion price, less than the then-current market price of
the Preferred Stock or (iii) upon the distribution to holders
of the Preferred Stock of evidences of indebtedness or assets
(excluding regular periodic cash dividends or dividends
payable in Preferred Stock) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights is subject to
adjustment in the event of a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon
exercise of the Rights will not be redeemable. Each share of
Preferred Stock will be entitled, when, as and if declared,
to a minimum preferential quarterly dividend payment of $100
per share but will be entitled to an aggregate dividend of
1000 times the dividend declared per share of Common Stock.
In the event of liquidation, dissolution or winding up of the
Company, the holders of the Preferred Stock will be entitled
to a minimum preferential payment of $100 per share (plus any
accrued but unpaid dividends) but will be entitled to an
aggregate payment of 1000 times the payment made per share of
Common Stock. Each share of Preferred Stock will have 1000
votes, voting together with the Common Stock. Finally, in
the event of any merger, consolidation or other transaction
in which outstanding shares of Common Stock are converted or
exchanged, each share of Preferred Stock will be entitled to
receive 1000 times the amount received per share of Common
Stock. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Stock's
dividend, liquidation and voting rights, the value of the one
one-thousandth interest in a share of Preferred Stock
purchasable upon exercise of each Right should approximate
the value of one share of Common Stock.
In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, each
holder of a Right, other than Rights beneficially owned by
the Acquiring Person (which will thereupon become void), will
thereafter have the right to receive upon exercise of a Right
that number of shares of Common Stock having a market value
of two times the exercise price of the Right.
In the event that, after a person or group has
become an Acquiring Person, the Company is acquired in a
merger or other business combination transaction or 50% or
more of its consolidated assets or earning power are sold,
proper provisions will be made so that each holder of a Right
(other than Rights beneficially owned by an Acquiring Person
which will have become void) will thereafter have the right
to receive upon the exercise of a Right that number of shares
of common stock of the person with whom the Company has
engaged in the foregoing transaction (or its parent) that at
the time of such transaction have a market value of two times
the exercise price of the Right.
At any time after any person or group becomes an
Acquiring Person and prior to the earlier of one of the
events described in the previous paragraph or the acquisition
by such Acquiring Person of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company
may exchange the Rights (other than Rights owned by such
Acquiring Person which will have become void), in whole or in
part, for shares of Common Stock or Preferred Stock (or a
series of the Company's preferred stock having equivalent
rights, preferences and privileges), at an exchange ratio of
one share of Common Stock, or a fractional share of Preferred
Stock (or other preferred stock) equivalent in value thereto,
per Right.
With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative adjustments
require an adjustment of at least 1% in such Purchase Price.
No fractional shares of Preferred Stock or Common Stock will
be issued (other than fractions of Preferred Stock which are
integral multiples of one one-thousandth of a share of
Preferred Stock, which may, at the election of the Company,
be evidenced by depositary receipts), and in lieu thereof an
adjustment in cash will be made based on the current market
price of the Preferred Stock or the Common Stock.
At any time prior to the time an Acquiring Person
becomes such, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its
sole discretion may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the
Company may, except with respect to the redemption price,
amend the Rights Agreement in any manner. After the Rights
are no longer redeemable, the Company may, except with
respect to the redemption price, amend the Rights Agreement
in any manner that does not adversely affect the interests of
holders of the Rights.
Until a Right is exercised or exchanged, the holder
thereof, as such, will have no rights as a stockholder of the
Company, including, without limitation, the right to vote or
to receive dividends.
The form of Rights Agreement between the Company
and the Rights Agent specifying the terms of the Rights,
which includes as Exhibit A the form of Right Certificate and
as Exhibit B the form of Summary of Rights to Purchase
Preferred and a press release issued by the Company on June
18, 1996 with respect to the Rights, are attached hereto as
exhibits and incorporated herein by reference. The foregoing
description of the Rights is qualified by reference to such
exhibits.
Item 2. Exhibits.
1. Rights Agreement, dated as of June 17, 1996,
between Varlen Corporation and Harris Trust and Savings Bank.
The Rights Agreement includes as Exhibit A the form of Right
Certificate and Exhibit B the form of Summary of Rights to
Purchase Preferred Stock.
2. Press Release, dated June 18, 1996.
SIGNATURES
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the Registrant has duly
caused this registration statement to be signed on its behalf
by the undersigned thereunto duly authorized.
VARLEN CORPORATION
By: /s/ Richard A. Nunemaker
Name: Richard A. Nunemaker
Title:Vice President, Finance and
Chief Financial Officer
July 22, 1996
CONTACT:
Richard L. Wellek, President &
CEO or
Richard A. Nunemaker, Vice
President & CFO
Varlen Corporation (708) 420-0400
VARLEN CORPORATION DECLARES DIVIDEND DISTRIBUTION
OF PREFERRED STOCK PURCHASE RIGHTS
NAPERVILLE, Ill., June 18, 1996 _ The Board of Directors
of Varlen Corporation today declared a dividend distribution
of one Preferred Share Purchase Right on each outstanding
share of Common Stock of the Company.
Each Right will entitle shareholders to buy one one-
thousandth of a share of newly created Series A Junior
Participating Preferred Stock of the Company at an exercise
price of $75. The Rights can be exercised if a person or
group hereafter acquires 15% or more of the Common Stock or
announces a tender offer for 15% or more of the Common Stock.
The Varlen Board will be entitled to redeem the Rights at one
cent per Right at any time before any such person hereafter
acquires 15% or more of the outstanding Common Stock.
The Rights are not being distributed in response to any
specific effort to acquire the Company. The Rights are
designed to assure that all Varlen shareholders receive fair
and equal treatment in the event of any proposed takeover of
the Company and to guard against partial
(More)
tender offers, open market accumulations and other tactics
designed to gain control of the Company without paying all
shareholders a control premium.
If a person hereafter acquires 15% or more of the
Company's outstanding Common Stock, each Right will entitle
its holder to purchase, at the Right's exercise price, a
number of shares of Varlen Common Stock having a market value
at that time of twice the Right's exercise price. Rights
held by the 15% holder will become void and cannot be
exercised to purchase shares at the bargain purchase price.
If the Company is acquired in a merger or other business
combination transaction after a person acquires 15% or more
of the Company's Common Stock, each Right will entitle its
holder to purchase, at the Right's then-current exercise
price, a number of the acquiring company's common shares
having a market value at that time of twice the Right's
exercise price.
"The Rights are intended to enable all Varlen
shareholders to realize the long-term value of their
investments. They do not prevent a takeover, but should
encourage anyone seeking to acquire the Company to negotiate
with the Board of Directors prior to attempting a takeover,"
said Richard L. Wellek, President and Chief Executive
Officer.
The dividend distribution will be payable on July 15,
1996 to shareholders of record on July 1, 1996. The Rights
will expire in ten years. The Rights distribution is not
taxable to shareholders.
(End)
VARLEN CORPORATION
and
HARRIS TRUST AND SAVINGS BANK, as Rights Agent
RIGHTS AGREEMENT
Dated as of June 17, 1996
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 5
Section 3. Issue of Right Certificates 5
Section 4. Form of Right Certificates 7
Section 5. Countersignature and Registration 7
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates 8
Section 7. Exercise of Rights, Purchase Price;
Expiration Date of Rights 8
Section 8. Cancellation and Destruction of
Right Certificates 10
Section 9. Availability of Shares of Preferred Stock 10
Section 10.Preferred Stock Record Date 11
Section 11. Adjustment of Purchase Price, Number of
Shares and Number of Rights 11
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares 19
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power 19
Section 14. Fractional Rights and Fractional Shares 22
Section 15. Rights of Action 23
Section 16. Agreement of Right Holders 24
Section 17. Right Certificate Holder Not Deemed
a Stockholder 24
Section 18. Concerning the Rights Agent 24
Section 19. Merger or Consolidation or Change of
Name of Rights Agent 25
Section 20. Duties of Rights Agent 25
Section 21. Change of Rights Agent 27
Section 22. Issuance of New Right Certificates 28
Section 23. Redemption 28
Section 24. Exchange 29
Section 25. Notice of Certain Events 30
Section 26. Notices 31
Section 27. Supplements and Amendments 31
Section 28. Successors 32
Section 29. Benefits of this Agreement 32
Section 30. Determinations and Actions by the
Board of Directors 32
Section 31. Severability 32
Section 32. Governing Law 32
Section 33. Counterparts 33
Section 34. Descriptive Headings 33
RIGHTS AGREEMENT
Rights Agreement, dated as of June 17, 1996
("Agreement"), between Varlen Corporation, a Delaware
corporation (the "Company"), and Harris Trust and Savings
Bank, as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized
and declared a dividend of one preferred share purchase
right (a "Right") for each share of Common Stock (as
hereinafter defined) of the Company outstanding as of the
Close of Business (as defined below) on July 1, 1996 (the
"Record Date"), each Right representing the right to purchase
one one-thousandth (subject to adjustment) of a share of
Preferred Stock (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right (subject to
adjustment as provided herein) with respect to each share of
Common Stock that shall become outstanding between the Record
Date and the earlier of the Distribution Date and the
Expiration Date (as such terms are hereinafter defined);
provided, however, that Rights may be issued with respect to
shares of Common Stock that shall become outstanding after
the Distribution Date and prior to the Expiration Date in
accordance with Section 22.
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of
this Agreement, the following terms have the meaning
indicated:
(a) "Acquiring Person" shall mean any Person (as
such term is hereinafter defined) who or which shall be the
Beneficial Owner (as such term is hereinafter defined) of 15%
or more of the shares of Common Stock then outstanding, but
shall not include an Exempt Person (as such term is
hereinafter defined); provided, however, that (i) if the
Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person"
became such inadvertently (including, without limitation,
because (A) such Person was unaware that it beneficially
owned a percentage of Common Stock that would otherwise cause
such Person to be an "Acquiring Person" or (B) such Person
was aware of the extent of its Beneficial Ownership of Common
Stock but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement) and without any
intention of changing or influencing control of the Company,
and if such Person as promptly as practicable divested or
divests itself of Beneficial Ownership of a sufficient number
of shares of Common Stock so that such Person would no longer
be an "Acquiring Person," then such Person shall not be
deemed to be or to have become an "Acquiring Person" for any
purposes of this Agreement; (ii) if, as of the date hereof,
any Person is the Beneficial Owner of 15% or more of the
shares of Common Stock outstanding, such Person shall not be
or become an "Acquiring Person" unless and until such time as
such Person shall become the Beneficial Owner of additional
shares of Common Stock (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding
Common Stock in shares of Common Stock or pursuant to a split
or subdivision of the outstanding Common Stock), unless, upon
becoming the Beneficial Owner of such additional shares of
Common Stock, such Person is not then the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding;
and (iii) no Person shall become an "Acquiring Person" as the
result of an acquisition of shares of Common Stock by the
Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares of Common Stock
beneficially owned by such Person to 15% or more of the
shares of Common Stock then outstanding, provided, however,
that if a Person shall become the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding by reason
of such share acquisitions by the Company and shall
thereafter become the Beneficial Owner of any additional
shares of Common Stock (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding
Common Stock in shares of Common Stock or pursuant to a split
or subdivision of the outstanding Common Stock), then such
Person shall be deemed to be an "Acquiring Person" unless
upon becoming the Beneficial Owner of such additional shares
of Common Stock such Person does not beneficially own 15% or
more of the shares of Common Stock then outstanding. For all
purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of
which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date hereof.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner"
of, shall be deemed to have "Beneficial Ownership" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates is deemed to beneficially own,
directly or indirectly, within the meaning of Rule l3d-3 of
the General Rules and Regulations under the Exchange Act as
in effect on the date hereof;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement
or understanding (other than customary agreements with and
between underwriters and selling group members with respect
to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (x) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase, (y) securities
which such Person has a right to acquire upon the exercise of
Rights at any time prior to the time that any Person becomes
an Acquiring Person or (z) securities issuable upon the
exercise of Rights from and after the time that any Person
becomes an Acquiring Person if such Rights were acquired by
such Person or any of such Person's Affiliates or Associates
prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 hereof ("Original Rights") or pursuant to Section
11(i) or Section 11(n) with respect to an adjustment to
Original Rights; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, any security by reason of such
agreement, arrangement or understanding if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person
in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) which are beneficially owned, directly
or indirectly, by any other Person and with respect to which
such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the
proviso to Section 1(c)(ii)(B)) or disposing of such
securities of the Company;
provided, however, that no Person who is an officer, director
or employee of an Exempt Person shall be deemed, solely by
reason of such Person's status or authority as such, to be
the "Beneficial Owner" of, to have "Beneficial Ownership" of
or to "beneficially own" any securities that are
"beneficially owned" (as defined in this Section l(c)),
including, without limitation, in a fiduciary capacity, by an
Exempt Person or by any other such officer, director or
employee of an Exempt Person.
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday or a day on which banking institutions in
the State of Illinois or the city in which the principal
office of the Rights Agent is located are authorized or
obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean
5:00 P.M., Chicago, Illinois time, on such date; provided,
however, that if such date is not a Business Day it shall
mean 5:00 P.M., Chicago, Illinois time, on the next
succeeding Business Day.
(f) "Common Stock" when used with reference to the
Company shall mean the Common Stock, presently par value $.10
per share, of the Company. "Common Stock" when used with
reference to any Person other than the Company shall mean the
common stock (or, in the case of an unincorporated entity,
the equivalent equity interest) with the greatest voting
power of such other Person or, if such other Person is a
subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(g) "Common Stock Equivalents" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(h) "Current Value" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(i) "Distribution Date" shall have the meaning set
forth in Section 3 hereof.
(j) "Equivalent Preferred Shares" shall have the
meaning set forth in Section 11(b) hereof.
(k) "Exempt Person" shall mean the Company or any
Subsidiary (as such term is hereinafter defined) of the
Company, in each case including, without limitation, in its
fiduciary capacity, or any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity or
trustee holding Common Stock for or pursuant to the terms of
any such plan or for the purpose of funding any such plan or
funding other employee benefits for employees of the Company
or of any Subsidiary of the Company.
(l) "Exchange Ratio" shall have the meaning set
forth in Section 24 hereof.
(m) "Expiration Date" shall have the meaning set
forth in Section 7 hereof.
(n) "Flip-In Event" shall have the meaning set forth
in Section 11(a)(ii) hereof.
(o) "Final Expiration Date" shall have the meaning
set forth in Section 7 hereof.
(p) "NASDAQ" shall mean The NASDAQ Stock Market.
(q) "New York Stock Exchange" shall mean the New
York Stock Exchange, Inc.
(r) "Person" shall mean any individual, firm,
corporation, partnership, limited liability company, trust or
other entity, and shall include any successor (by merger or
otherwise) to such entity.
(s) "Preferred Stock" shall mean the Series A Junior
Participating Preferred Stock, par value $1.00 per share, of
the Company having the rights and preferences set forth in
the Form of Certificate of Designation attached to this
Agreement as Exhibit A.
(t) "Principal Party" shall have the meaning set
forth in Section 13(b) hereof.
(u) "Redemption Date" shall have the meaning set
forth in Section 7 hereof.
(v) "Redemption Price" shall have the meaning set
forth in Section 23 hereof.
(w) "Right Certificate" shall have the meaning set
forth in Section 3 hereof.
(x) "Securities Act" shall mean the Securities Act
of 1933, as amended.
(y) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(z) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(aa) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by the Company
or an Acquiring Person that an Acquiring Person has become
such, or such earlier date as a majority of the Board of
Directors shall become aware of the existence of an Acquiring
Person.
(bb) "Subsidiary" of any Person shall mean any
corporation or other entity of which securities or other
ownership interests having ordinary voting power sufficient
to elect a majority of the board of directors or other
persons performing similar functions are beneficially owned,
directly or indirectly, by such Person, and any corporation
or other entity that is otherwise controlled by such Person.
(cc) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(dd) "Summary of Rights" shall have the meaning set
forth in Section 3 hereof.
(ee) "Trading Day" shall have the meaning set forth
in Section 11(d)(i) hereof.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance
with Section 3 hereof, shall prior to the Distribution Date
be the holders of Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the Close of Business on the earlier of
(i) the tenth day after the Stock Acquisition Date or (ii)
the tenth Business Day (or such later date as may be
determined by action of the Board of Directors prior to such
time as any Person becomes an Acquiring Person) after the
date of the commencement by any Person (other than an Exempt
Person) of, or of the first public announcement of the
intention of such Person (other than an Exempt Person) to
commence, a tender or exchange offer the consummation of
which would result in any Person (other than an Exempt
Person) becoming the Beneficial Owner of shares of Common
Stock aggregating 15% or more of the Common Stock then
outstanding (the earlier of such dates being herein referred
to as the "Distribution Date", provided, however, that if
either of such dates occurs after the date of this Agreement
and on or prior to the Record Date, then the Distribution
Date shall be the Record Date), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Stock registered in the names
of the holders thereof and not by separate Right
Certificates, and (y) the Rights will be transferable only in
connection with the transfer of Common Stock. As soon as
practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign and
the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Stock
as of the close of business on the Distribution Date (other
than any Acquiring Person or any Associate or Affiliate of an
Acquiring Person), at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially
the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right (subject to adjustment as provided
herein) for each share of Common Stock so held. As of the
Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of
Rights to Purchase Shares of Preferred Stock, in
substantially the form of Exhibit C hereto (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each
record holder of Common Stock as of the Close of Business on
the Record Date (other than any Acquiring Person or any
Associate or Affiliate of any Acquiring Person), at the
address of such holder shown on the records of the Company.
With respect to certificates for Common Stock outstanding as
of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates registered in the
names of the holders thereof together with the Summary of
Rights. Until the Distribution Date (or, if earlier, the
Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the
Common Stock represented thereby.
(c) Certificates issued for Common Stock (including,
without limitation, upon transfer of outstanding Common
Stock, disposition of Common Stock out of treasury stock or
issuance or reissuance of Common Stock out of authorized but
unissued shares) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date
shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a Rights
Agreement between Varlen Corporation (the "Company") and
Harris Trust and Savings Bank, as Rights Agent, dated as of
June 17, 1996 as the same may be amended from time to time
(the "Rights Agreement"), 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 will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights
owned by or transferred to any Person who is or becomes an
Acquiring Person (as defined in the Rights Agreement) and
certain transferees thereof will become null and void and
will no longer be transferable.
With respect to such certificates containing the foregoing
legend, until the Distribution Date the Rights associated
with the Common Stock represented by such certificates shall
be evidenced by such certificates alone, and the surrender
for transfer of any such certificate, except as otherwise
provided herein, shall also constitute the transfer of the
Rights associated with the Common Stock represented thereby.
In the event that the Company purchases or otherwise acquires
any Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common
Stock shall be deemed canceled and retired so that the
Company shall not be entitled to exercise any Rights
associated with the Common Stock which are no longer
outstanding.
Notwithstanding this paragraph (c), the omission of a
legend shall not affect the enforceability of any part of
this Agreement or the rights of any holder of the Rights.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall
be substantially in the form set forth in Exhibit B hereto
and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or
regulation of any stock exchange or interdealer quotation
system on which the Rights may from time to time be listed or
quoted, or to conform to usage. Subject to the provisions of
Sections 11, 13 and 22 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of one
one-thousandths of a share of Preferred Stock as shall be set
forth therein at the price per one one-thousandth of a share
of Preferred Stock set forth therein (the "Purchase Price"),
but the number of such one one-thousandths of a share of
Preferred Stock and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on
behalf of the Company by the President of the Company, either
manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof and shall
be attested by the Secretary of the Company, either manually
or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be
valid for any purpose unless countersigned. In case any
officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and
effect as though the Person who signed such Right
Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of
the Company by any Person who, at the actual date of the
execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate,
although at the date of the execution of this Agreement any
such Person was not such an officer.
(b) Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at an office or agency
designated for such purpose, books for registration and
transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and
the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e),
11(a)(ii), 13 and 14 hereof, at any time after the
Distribution Date and prior to the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split
up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to
purchase a like number of one one-thousandths of a share of
Preferred Stock as the Right Certificate or Right
Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to
the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined
or exchanged at the office or agency of the Rights Agent
designated for such purpose. Thereupon the Rights Agent
shall countersign and deliver to the Person entitled thereto
a Right Certificate or Right Certificates, as the case may
be, as so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
(b) Subject to the provisions of Section 11(a)(ii)
hereof, at any time after the Distribution Date and prior to
the Expiration Date, upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to them of
the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and,
at the Company's request, reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered
holder in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights, Purchase Price;
Expiration Date of Rights.
(a) Except as otherwise provided herein, the Rights
shall become exercisable on the Distribution Date, and
thereafter the registered holder of any Right Certificate
may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced
thereby in whole or in part upon surrender of the Right
Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at
the office or agency 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-thousandths
of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which the Rights are
exercised, at any time which is both after the Distribution
Date and prior to the time (the "Expiration Date") that is
the earliest of (i) the Close of Business on June 16, 2006
(the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date") or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price shall be initially $75 for
each one one-thousandth of a share of Preferred Stock
purchasable upon the exercise of a Right. The Purchase Price
and the number of one one-thousandths of a share of Preferred
Stock or other securities or property to be acquired upon
exercise of a Right shall be subject to adjustment from time
to time as provided in Sections 11 and 13 hereof and shall be
payable in lawful money of the United States of America in
accordance with paragraph (c) of this Section 7.
(c) Except as otherwise provided herein, upon
receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed,
accompanied by payment of the aggregate Purchase Price for
the shares of Preferred Stock to be purchased and an amount
equal to any applicable transfer tax required to be paid by
the holder of such Right Certificate in accordance with
Section 9 hereof, in cash or by certified check, cashier's
check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Stock certificates
for the number of shares of Preferred Stock to be purchased
and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) requisition
from the depositary agent depositary receipts representing
interests in such number of one one-thousandths of a share of
Preferred Stock as are to be purchased (in which case
certificates for the Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) promptly after
receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and
(iv) when appropriate, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such
Right Certificate.
(d) Except as otherwise provided herein, in case the
registered holder of any Right Certificate shall exercise
less than all of the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the exercisable
Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall
be obligated to undertake any action with respect to a
registered holder of Rights upon the occurrence of any
purported transfer or exercise of Rights pursuant to Section
6 hereof or this Section 7 unless such registered holder
shall have (i) completed and signed the certificate contained
in the form of assignment or form of election to purchase set
forth on the reverse side of the Rights Certificate
surrendered for such transfer or exercise and (ii) provided
such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the
purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation
or in canceled form, or, if surrendered to the Rights Agent,
shall be canceled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by any
of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other
Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent
shall deliver all canceled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Availability of Shares of Preferred
Stock.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized
and unissued shares of Preferred Stock or any shares of
Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock
issuable upon the exercise of Rights may be listed or
admitted to trading on any national securities exchange, or
quoted on NASDAQ, the Company shall use its best efforts to
cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be
listed or admitted to trading on such exchange, or quoted on
NASDAQ, upon official notice of issuance upon such exercise.
(c) From and after such time as the Rights become
exercisable, the Company shall use its best efforts, if then
necessary to permit the issuance of shares of Preferred Stock
upon the exercise of Rights, to register and qualify such
shares of Preferred Stock under the Securities Act and any
applicable state securities or "Blue Sky" laws (to the extent
exemptions therefrom are not available), cause such
registration statement and qualifications to become effective
as soon as possible after such filing and keep such
registration and qualifications effective until the earlier
of the date as of which the Rights are no longer exercisable
for such securities and the Expiration Date. The Company may
temporarily suspend, for a period of time not to exceed 90
days, the exercisability of the Rights in order to prepare
and file a registration statement under the Securities Act
and permit it to become effective. Upon any such suspension,
the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall
not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained
and until a registration statement under the Securities Act
(if required) shall have been declared effective.
(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all
shares of Preferred Stock delivered upon exercise of Rights
shall, at the time of delivery of the certificates therefor
(subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and
nonassessable shares.
(e) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of
the issuance or delivery of the Right Certificates or of any
shares of Preferred Stock upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer
tax which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts
for the Preferred Stock in a name other than that of, the
registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or deliver any
certificates or depositary receipts for Preferred Stock upon
the exercise of any Rights until any such tax shall have been
paid (any such tax being payable by that holder of such Right
Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no
such tax is due.
Section 10. Preferred Stock Record Date. Each
Person in whose name any certificate for Preferred Stock is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares of
Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was
made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred 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 Preferred Stock transfer books of the Company
are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Stock for
which the Rights shall be exercisable, including, without
limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares and Number of Rights. The Purchase Price, the
number of shares of Preferred Stock or other securities or
property purchasable upon exercise of each Right and the
number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time
after the date of this Agreement (A) declare and pay a
dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares of Preferred Stock or (D) issue any
shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of
the Company were open, the holder would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the
event any Person becomes an Acquiring Person (the first
occurrence of such event being referred to hereinafter as the
"Flip-In Event"), then (A) the Purchase Price shall be
adjusted to be the Purchase Price in effect immediately prior
to the Flip-In Event multiplied by the number of one one-
thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to such Flip-In Event,
whether or not such Right was then exercisable, and (B) each
holder of a Right, except as otherwise provided in this
Section 11(a)(ii) and Section 11(a)(iii) hereof, shall
thereafter have the right to receive, upon exercise thereof
at a price equal to the Purchase Price (as so adjusted), in
accordance with the terms of this Agreement and in lieu of
shares of Preferred Stock, such number of shares of Common
Stock as shall equal the result obtained by dividing the
Purchase Price (as so adjusted) by 50% of the current per
share market price of the Common Stock (determined pursuant
to Section 11(d) hereof) on the date of such Flip-In Event;
provided, however, that the Purchase Price (as so adjusted)
and the number of shares of Common Stock so receivable upon
exercise of a Right shall, following the Flip-In Event, be
subject to further adjustment as appropriate in accordance
with Section 11(f) hereof. Notwithstanding anything in this
Agreement to the contrary, however, from and after the Flip-
In Event, any Rights that are beneficially owned by (x) any
Acquiring Person (or any Affiliate or Associate of any
Acquiring Person), (y) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who becomes a transferee
after the Flip-In Event or (z) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who became a
transferee prior to or concurrently with the Flip-In Event
pursuant to either (I) a transfer from the Acquiring Person
to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (II) a
transfer which the Board of Directors has determined is part
of a plan, arrangement or understanding which has the purpose
or effect of avoiding the provisions of this paragraph, and
subsequent transferees of such Persons, shall be void without
any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such
Rights under any provision of this Agreement. The Company
shall use all reasonable efforts to ensure that the
provisions of this Section 11(a)(ii) are complied with, but
shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder. From and
after the Flip-In Event, no Right Certificate shall be issued
pursuant to Section 3 or Section 6 hereof that represents
Rights that are or have become void pursuant to the
provisions of this paragraph, and any Right Certificate
delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of this
paragraph shall be canceled. From and after the occurrence
of an event specified in Section 13(a) hereof, any Rights
that theretofore have not been exercised pursuant to this
Section 11(a)(ii) shall thereafter be exercisable only in
accordance with Section 13 and not pursuant to this Section
11(a)(ii).
(iii) The Company may at its option substitute
for a share of Common Stock issuable upon the exercise of
Rights in accordance with the foregoing subparagraph (ii) a
number of shares of Preferred Stock or fraction thereof such
that the current per share market price of one share of
Preferred Stock multiplied by such number or fraction is
equal to the current per share market price of one share of
Common Stock. In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding
or authorized but unissued to permit the exercise in full of
the Rights in accordance with the foregoing subparagraph
(ii), the Board of Directors shall, to the extent permitted
by applicable law and any material agreements then in effect
to which the Company is a party (A) determine the excess
(such excess, the "Spread") of (1) the value of the shares of
Common Stock issuable upon the exercise of a Right in
accordance with the foregoing subparagraph (ii) (the "Current
Value") over (2) the Purchase Price (as adjusted in
accordance with the foregoing subparagraph (ii)), and (B)
with respect to each Right (other than Rights which have
become void pursuant to the foregoing subparagraph (ii)),
make adequate provision to substitute for the shares of
Common Stock issuable in accordance with the foregoing
subparagraph (ii) upon exercise of the Right and payment of
the Purchase Price (as adjusted in accordance therewith), (1)
cash, (2) a reduction in such Purchase Price, (3) shares of
Preferred Stock or other equity securities of the Company
(including, without limitation, shares or fractions of shares
of preferred stock which, by virtue of having dividend,
voting and liquidation rights substantially comparable to
those of the shares of Common Stock, are deemed in good faith
by the Board of Directors to have substantially the same
value as the shares of Common Stock (such shares of Preferred
Stock and shares or fractions of shares of preferred stock
are hereinafter referred to as "Common Stock Equivalents")),
(4) debt securities of the Company, (5) other assets, or (6)
any combination of the foregoing, having a value which, when
added to the value of the shares of Common Stock issued upon
exercise of such Right, shall have an aggregate value equal
to the Current Value (less the amount of any reduction in
such Purchase Price), where such aggregate value has been
determined by the Board of Directors upon the advice of a
nationally recognized investment banking firm selected in
good faith by the Board of Directors; provided, however, that
if the Company shall not make adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days
following the Flip-In Event (the "Section 11(a) (ii) Trigger
Date"), then the Company shall be obligated to deliver, to
the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party,
upon the surrender for exercise of a Right and without
requiring payment of such Purchase Price, shares of Common
Stock (to the extent available), and then, if necessary, such
number or fractions of shares of Preferred Stock (to the
extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If,
upon the occurrence of the Flip-In Event, the Board of
Directors shall determine in good faith that it is likely
that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights,
then, if the Board of Directors so elects, the thirty (30)
day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the
Section 11(a) (ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be
extended, is herein called the "Substitution Period"). To
the extent that the Company determines that some action need
be taken pursuant to the second and/or third sentence of this
Section 11(a)(iii), the Company (x) shall provide, subject to
Section 11(a)(ii) hereof and the last sentence of this
Section 11(a)(iii) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such second sentence and
to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the shares
of Common Stock shall be the current per share market price
(as determined pursuant to Section 11(d)(i)) on the Section
11(a)(ii) Trigger Date and the per share or fractional value
of any "Common Stock Equivalent" shall be deemed to equal the
current per share market price of the Common Stock. The
Board of Directors of the Company may, but shall not be
required to, establish procedures to allocate the right to
receive shares of Common Stock upon the exercise of the
Rights among holders of Rights pursuant to this Section
11(a)(iii).
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Preferred Stock entitling them (for a period expiring within
45 calendar days after such record date) to subscribe for or
purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock
("equivalent preferred shares")) or securities convertible
into Preferred Stock or equivalent preferred shares at a
price per share of Preferred Stock or equivalent preferred
shares (or having a conversion price per share, if a security
convertible into shares of Preferred Stock or equivalent
preferred shares) less than the then current per share market
price of the Preferred Stock (determined pursuant to Section
11(d) hereof) on such record date, the Purchase Price to be
in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall
be the number of shares of Preferred Stock and equivalent pre
ferred shares outstanding on such record date plus the number
of shares of Preferred Stock and equivalent preferred shares
which the aggregate offering price of the total number of
shares of Preferred Stock and/or equivalent preferred shares
so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of
which shall be the number of shares of Preferred Stock and
equivalent preferred shares outstanding on such record date
plus the number of additional shares of Preferred Stock
and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all
of which shall be in a form other than cash, the value of
such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights
Agent. Shares of Preferred Stock and equivalent preferred
shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of the Preferred
Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Stock) or
subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the then
current per share market price of the Preferred Stock
(determined pursuant to Section 11(d) hereof) on such record
date, less the fair market value (as determined in good faith
by the Board of Directors of the Company whose determination
shall be described in a statement filed with the Rights
Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription
rights or warrants applicable to one share of Preferred
Stock, and the denominator of which shall be such current per
share market price (determined pursuant to Section 11(d)
hereof) of the Preferred Stock; provided, however, that in no
event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares
of capital stock of the Company to be issued upon exercise of
one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d)(i) Except as otherwise provided herein, for
the purpose of any computation hereunder, the "current per
share market price " of any security (a "Security " for the
purpose of this Section 11(d)(i)) on any date shall be deemed
to be the average of the daily closing prices per share of
such Security for the 30 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per
share market price of the Security is determined during a
period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible
into such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the
expiration of 30 Trading Days after the ex-dividend date for
such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price
per share equivalent of such Security. The closing price for
each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as
reported by the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is
not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on which
the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by NASDAQ or such
other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security
selected by the Board of Directors of the Company. The term
"Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, if
the Preferred Stock is publicly traded, the "current per
share market price" of the Preferred Stock shall be
determined in accordance with the method set forth in Section
11(d)(i). If the Preferred Stock is not publicly traded but
the Common Stock is publicly traded, the "current per share
market price" of the Preferred Stock shall be conclusively
deemed to be the current per share market price of the Common
Stock as determined pursuant to Section 11(d)(i) multiplied
by the then applicable Adjustment Number (as defined in and
determined in accordance with the Certificate of Designation
for the Preferred Stock). If neither the Common Stock nor
the Preferred Stock is publicly traded, "current per share
market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a
statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the
nearest cent or to the nearest one millionth of a share of
Preferred Stock or one thousandth of a share of Common Stock
or other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of
capital stock of the Company other than the Preferred Stock,
thereafter the Purchase Price and the number of such other
shares so receivable upon exercise of a Right shall be
subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions
with respect to the Preferred Stock contained in Sections
11(a), 11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) hereof, as
applicable, and the provisions of Sections 7, 9, 10, 13 and
14 hereof with respect to the Preferred Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-thousandths of
a share of Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment
of the Purchase Price as a result of the calculations made in
Sections 11(b) and 11(c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase
Price, that number of one one-thousandth of a share of
Preferred Stock (calculated to the nearest one hundred-
thousandth of a share of Preferred Stock) obtained by (i)
multiplying (x) the number of one one-thousandths of a share
purchasable upon the exercise of a Right immediately prior to
such adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price
and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price pursuant to Sections
11(b) or 11(c) hereof to adjust the number of Rights, in
substitution for any adjustment in the number of one one-
thousandths of a share of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a share
of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one-
thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement
of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. Such record
date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant
to this Section 11(i), the Company may, as promptly as
practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held
by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-thousandths of a
share of Preferred Stock issuable upon the exercise of a
Right, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the
number of one one-thousandths of a share of Preferred Stock
which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par
value, if any, of the fraction of Preferred Stock or other
shares of capital stock issuable upon exercise of a Right,
the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and
nonassessable shares of Preferred Stock or other such shares
at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event
issuing to the holder of any Right exercised after such
record date the Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such
exercise over and above the Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
adjustments in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision
of the Preferred Stock, issuance wholly for cash of any
shares of Preferred Stock at less than the current market
price, issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or
exchangeable for Preferred Stock, dividends on Preferred
Stock payable in shares of Preferred Stock or issuance of
rights, options or warrants referred to hereinabove in
Section 11(b), hereafter made by the Company to holders of
its Preferred Stock shall not be taxable to such
stockholders.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date
of this Agreement and prior to the Distribution Date, the
Company shall (i) declare and pay any dividend on the Common
Stock payable in Common Stock (other than the 10% stock
dividend declared May 29, 1996, payable on July 15, 1996 to
stockholders of record on July 15, 1996) or (ii) effect a
subdivision, combination or consolidation of the Common Stock
(by reclassification or otherwise than by payment of a
dividend payable in Common Stock) into a greater or lesser
number of shares of Common Stock, then, in each such case,
the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter,
shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction
the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately
following the occurrence of such event.
(o) The Company agrees that, after the earlier of
the Distribution Date or the Stock Acquisition Date, it will
not, except as permitted by Sections 23, 24 or 27 hereof,
take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that
such action will diminish substantially or eliminate the
benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares. Whenever an adjustment is made as
provided in Section 11 or 13 hereof, the Company shall
promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for
such adjustment, (b) file with the Rights Agent and with each
transfer agent for the Common Stock and the Preferred Stock a
copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with
Section 25 hereof (if so required under Section 25 hereof).
The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.
(a) In the event, directly or indirectly, at any
time after the Flip-In Event (i) the Company shall
consolidate with or shall merge into any other Person, (ii)
any Person shall merge with and into the Company and the
Company shall be the continuing or surviving corporation of
such merger and, in connection with such merger, all or part
of the Common Stock shall be changed into or exchanged for
stock or other securities of any other Person (or of the
Company) or cash or any other property, or (iii) the Company
shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or
more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other
than the Company or one or more wholly-owned Subsidiaries of
the Company), then upon the first occurrence of such event,
proper provision shall be made so that: (A) each holder of a
Right (other than Rights which have become void pursuant to
Section 11(a)(ii) hereof) shall thereafter have the right to
receive, upon the exercise thereof at the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii)
hereof), in accordance with the terms of this Agreement and
in lieu of shares of Preferred Stock or Common Stock of the
Company, such number of validly authorized and issued, fully
paid, non-assessable and freely tradeable shares of Common
Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall equal the
result obtained by dividing the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii)
hereof) by 50% of the current per share market price of the
Common Stock of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; provided, however,
that the Purchase Price (as theretofore adjusted in
accordance with Section 11(a)(ii) hereof) and the number of
shares of Common Stock of such Principal Party so receivable
upon exercise of a Right shall be subject to further
adjustment as appropriate in accordance with Section 11(f)
hereof to reflect any events occurring in respect of the
Common Stock of such Principal Party after the occurrence of
such consolidation, merger, sale or transfer; (B) such
Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company
pursuant to this Rights Agreement; (C) the term "Company"
shall thereafter be deemed to refer to such Principal Party;
and (D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of its shares of Common Stock in accordance
with Section 9 hereof) in connection with such consummation
of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the
Rights; provided that, upon the subsequent occurrence of any
consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party,
each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Purchase
Price as provided in this Section 13(a), such cash, shares,
rights, warrants and other property which such holder would
have been entitled to receive had such holder, at the time of
such transaction, owned the Common Stock of the Principal
Party receivable upon the exercise of a Right pursuant to
this Section 13(a), and such Principal Party shall take such
steps (including, but not limited to, reservation of shares
of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof
for such cash, shares, rights, warrants and other property.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
(i) or (ii) of the first sentence of Section 13(a) hereof:
(A) the Person that is the issuer of the securities into
which the shares of Common Stock are converted in such merger
or consolidation, or, if there is more than one such issuer,
the issuer the shares of Common Stock of which have the
greatest aggregate market value of shares outstanding, or (B)
if no securities are so issued, (x) the Person that is the
other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person
the shares of Common Stock of which have the greatest
aggregate market value of shares outstanding or (y) if the
Person that is the other party to the merger does not survive
the merger, the Person that does survive the merger
(including the Company if it survives) or (z) the Person
resulting from the consolidation; and
(ii) in the case of any transaction described in
(iii) of the first sentence in Section 13(a) hereof, the
Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same
portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons
is the issuer of Common Stock having the greatest aggregate
market value of shares outstanding;
provided, however, that in any such case described in the
foregoing clause (b)(i) or (b)(ii), if the Common Stock of
such Person is not at such time or has not been continuously
over the preceding 12-month period registered under Section
12 of the Exchange Act, then (1) if such Person is a direct
or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, the term "Principal
Party" shall refer to such other Person, or (2) if such
Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stock of all of which is and has been
so registered, the term "Principal Party" shall refer to
whichever of such Persons is the issuer of Common Stock
having the greatest aggregate market value of shares
outstanding, or (3) if such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same
Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the
venture as if the Person owned by the joint venture was a
Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its
interest in such Person bears to the total of such interests.
(c) The Company shall not consummate any
consolidation, merger, sale or transfer referred to in
Section 13(a) hereof unless prior thereto the Company and the
Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that
the requirements of Sections 13(a) and (b) hereof shall
promptly be performed in accordance with their terms and that
such consolidation, merger, sale or transfer of assets shall
not result in a default by the Principal Party under this
Agreement as the same shall have been assumed by the
Principal Party pursuant to Sections 13(a) and (b) hereof and
providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party
will:
(i) prepare and file a registration statement
under the Securities Act, if necessary, with respect to the
Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause
such registration statement to become effective as soon as
practicable after such filing and use its best efforts to
cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date and similarly
comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock
of the Principal Party shall be listed or admitted to trading
on the New York Stock Exchange or on another national
securities exchange, to list or admit to trading (or continue
the listing of) the Rights and the securities purchasable
upon exercise of the Rights on the New York Stock Exchange or
such securities exchange, or, if the Common Stock of the
Principal Party shall not be listed or admitted to trading on
the New York Stock Exchange or a national securities
exchange, to cause the Rights and the securities receivable
upon exercise of the Rights to be authorized for quotation on
NASDAQ or on such other system then in use;
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party which
comply in all respects with the requirements for registration
on Form 10 (or any successor form) under the Exchange Act;
and
(iv) obtain waivers of any rights of first
refusal or preemptive rights in respect of the Common Stock
of the Principal Party subject to purchase upon exercise of
outstanding Rights.
(d) In case the Principal Party has provision in any
of its authorized securities or in its certificate of
incorporation or by-laws or other instrument governing its
corporate affairs, which provision would have the effect of
(i) causing such Principal Party to issue (other than to
holders of Rights pursuant to this Section 13), in connection
with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, shares of Common
Stock or Common Stock Equivalents of such Principal Party at
less than the then current market price per share thereof
(determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock or Common
Stock Equivalents of such Principal Party at less than such
then current market price, or (ii) providing for any special
payment, tax or similar provision in connection with the
issuance of the Common Stock of such Principal Party pursuant
to the provisions of Section 13, then, in such event, the
Company hereby agrees with each holder of Rights that it
shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended,
or that the authorized securities shall be redeemed, so that
the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the
proposed transaction.
(e) The Company covenants and agrees that it shall
not, at any time after the Flip-In Event, enter into any
transaction of the type described in clauses (i) through
(iii) of Section 13(a) hereof if (i) at the time of or
immediately after such consolidation, merger, sale, transfer
or other transaction there are any rights, warrants or other
instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights, (ii) prior
to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction,
the stockholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13(b)
hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or
Associates or (iii) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of
the Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights (except prior to the Distribution
Date in accordance with Section 11(n) hereof). In lieu of
such fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value
of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price for any day shall
be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed
or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if
on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the
Company. If on any such date no such market maker is making
a market in the Rights, the fair value of the Rights on such
date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share of
Preferred Stock) or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions
which are integral multiples of one one-thousandth of a share
of Preferred Stock) upon the exercise or exchange of Rights.
Interests in fractions of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock
may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders
of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as
beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-
thousandth of a share of Preferred Stock, the Company shall
pay to the registered holders of Right Certificates at the
time such Rights are exercised or exchanged as herein
provided an amount in cash equal to the same fraction of the
current market value of a whole share of Preferred Stock (as
determined in accordance with Section 14(a) hereof) for the
Trading Day immediately prior to the date of such exercise or
exchange.
(c) The Company shall not be required to issue
fractions of shares of Common Stock or to distribute
certificates which evidence fractional shares of Common Stock
upon the exercise or exchange of Rights. In lieu of such
fractional shares of Common Stock, the Company shall pay to
the registered holders of the Right Certificates with regard
to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole share of
Common Stock (as determined in accordance with Section 14(a)
hereof) for the Trading Day immediately prior to the date of
such exercise or exchange.
(d) The holder of a Right by the acceptance of the
Right expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise or exchange of
a Right (except as provided above).
Section 15. Rights of Action. All rights of action
in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested
in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered
holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the
Common Stock), on his own behalf and for his own benefit, may
enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by
such Right Certificate (or, prior to the Distribution Date,
such Common Stock) in the manner provided therein 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.
Section 16. Agreement of Right Holders. Every
holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of the
Common Stock;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the office or agency of
the Rights Agent designated for such purpose, duly endorsed
or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and
treat the Person in whose name the Right Certificate (or,
prior to the Distribution Date, the Common Stock certificate)
is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the Common Stock
certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice
to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the Preferred Stock or any other
securities of the Company which may at any time be issuable
on the exercise or exchange of the Rights represented
thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced
by such Right Certificate shall have been exercised or
exchanged in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without negligence, bad faith
or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any
claim of liability arising therefrom, directly or indirectly.
(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 adminis
tration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Stock or Common
Stock or 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, or
otherwise upon the advice of counsel as set forth in Section
20 hereof.
Section 19. 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 shall be a party, or any corporation succeeding
to the stock transfer or corporate trust powers of the Rights
Agent or any successor Rights Agent, shall 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 21 hereof. In
case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign
such Right 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 Right Certificates shall have the
full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right
Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its
changed name and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates
and in this Agreement.
Section 20. 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
which the Company and the holders of Right 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 shall 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 shall deem 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 the President and the Secretary of the
Company and delivered to the Rights Agent; and such
certificate shall 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 shall be liable hereunder to
the Company and any other Person only for its own negligence,
bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained
in this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due execu
tion hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor
shall it be responsible for any change in the exercisability
of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of
the Rights provided for in Sections 3, 11, 13, 23 and 24, or
the ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after
receipt of a certificate furnished pursuant to Section 12,
describing such change or adjustment); nor shall it by any
act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares
of Preferred Stock or other securities to be issued pursuant
to this Agreement or any Right Certificate or as to whether
any shares of Preferred Stock or other securities will, when
issued, be validly authorized and issued, 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
reasonably believed by the Rights Agent to be one of the
President or the Secretary of the Company, and to apply to
such officers 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 officer or for any delay in acting
while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Company may,
at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent
under this Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective.
The Rights Agent shall not be liable for any action taken by,
or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the
date specified in such application (which date shall not be
less than five Business Days after the date any officer of
the Company actually receives such application unless any
such officer shall have consented in writing to an earlier
date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal
in any of the 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 shall 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.
(j) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate contained in the form of assignment or the form
of election to purchase set forth on the reverse thereof, as
the case may be, has not been completed to certify the holder
is not an Acquiring Person (or an Affiliate or Associate
thereof), the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without
first consulting with the Company.
Section 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days'
notice in writing mailed to the Company and to each transfer
agent of the Common Stock or Preferred Stock by registered or
certified mail, and, following the Distribution Date, to the
holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock or Preferred Stock by
registered or certified mail, and, following the Distribution
Date, to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company
shall fail to make such appointment within a period of 30
days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United
States or the laws of any state of the United States or the
District of Columbia, in good standing, having an office in
the State of Illinois, which is authorized under such laws to
exercise corporate trust or stock transfer powers 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
million. After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock or Preferred Stock, and,
following the Distribution Date, mail a notice thereof in
writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent
or the appointment of the successor Rights Agent, as the case
may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option,
issue new Right Certificates evidencing Rights in such forms
as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or
kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance
with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the Expiration
Date, the Company may with respect to shares of Common Stock
so issued or sold pursuant to (i) the exercise of stock
options, (ii) under any employee plan or arrangement, (iii)
upon the exercise, conversion or exchange of securities,
notes or debentures issued by the Company or (iv) a
contractual obligation of the Company, in each case existing
prior to the Distribution Date, issue Rights Certificates
representing the appropriate number of Rights in connection
with such issuance or sale.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at
any time prior to the Flip-In Event, redeem all but not less
than all the then outstanding Rights at a redemption price of
$.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after
the date hereof (the redemption price being hereinafter
referred to as the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its
sole discretion may establish. The Redemption Price shall be
payable, at the option of the Company, in cash, shares of
Common Stock, or such other form of consideration as the
Board of Directors shall determine.
(b) Immediately upon the action of the Board of
Directors ordering the redemption of the Rights pursuant to
paragraph (a) of this Section 23 (or at such later time as
the Board of Directors may establish for the effectiveness of
such redemption), and without any further action and without
any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights (or such later time as
the Board of Directors may establish for the effectiveness of
such redemption), the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights
at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption shall
state the method by which the payment of the Redemption Price
will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at
its option, at any time after the Flip-In Event, exchange all
or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to
the provisions of Section 11(a)(ii) hereof) for 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
hereof (such amount per Right being hereinafter referred to
as the "Exchange Ratio"). Notwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such
exchange at any time after an Acquiring Person shall have
become the Beneficial Owner of shares of Common Stock
aggregating 50% or more of the shares of Common Stock then
outstanding. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that
theretofore have not been exchanged pursuant to this Section
24(a) shall thereafter be exercisable only in accordance with
Section 13 and may not be exchanged pursuant to this Section
24(a). The exchange of the Rights by the Board of Directors
may be made effective at such time, on such basis and with
such conditions as the Board of Directors in its sole
discretion may establish.
(b) Immediately upon the effectiveness of the action
of the Board of Directors of the Company ordering the
exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and
the only right thereafter of a holder of such Rights shall be
to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the
holders of the Rights so exchanged at their last addresses as
they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which
the exchange of the shares of Common Stock for Rights will be
effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of
Rights (other than Rights which have become void pursuant to
the provisions of Section 11(a)(ii) hereof) held by each
holder of Rights.
(c) The Company may at its option substitute, and,
in the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but
unissued to permit an exchange of Rights for Common Stock as
contemplated in accordance with this Section 24, the Company
shall substitute to the extent of such insufficiency, for
each share of Common Stock that would otherwise be issuable
upon exchange of a Right, a number of shares of Preferred
Stock or fraction thereof (or equivalent preferred shares, as
such term is defined in Section 11(b)) such that the current
per share market price (determined pursuant to Section 11(d)
hereof) of one share of Preferred Stock (or equivalent
preferred share) multiplied by such number or fraction is
equal to the current per share market price of one share of
Common Stock (determined pursuant to Section 11(d) hereof) as
of the date of such exchange.
Section 25. Notice of Certain Events.
(a) In case the Company shall at any time after the
earlier of the Distribution Date or the Stock Acquisition
Date propose (i) to pay any dividend payable in stock of any
class to the holders of its Preferred Stock or to make any
other distribution to the holders of its Preferred Stock
(other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other
securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision or
combination of outstanding Preferred Stock), (iv) to effect
the liquidation, dissolution or winding up of the Company, or
(v) to pay any dividend on the Common Stock payable in Common
Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or
otherwise than by payment of dividends in Common Stock),
then, in each such case, the Company shall give to each
holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such
liquidation, dissolution or winding up is to take place and
the date of participation therein by the holders of the
Common Stock and/or Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 10
days prior to the record date for determining holders of the
Preferred Stock for purposes of such action, and in the case
of any such other action, at least 10 days prior to the date
of the taking of such proposed action or the date of
participation therein by the holders of the Common Stock
and/or Preferred Stock, whichever shall be the earlier.
(b) In case any event described in Section 11(a)(ii)
or Section 13 shall occur then the Company shall as soon as
practicable thereafter give to each holder of a Right
Certificate (or if occurring prior to the Distribution Date,
the holders of the Common Stock) in accordance with Section
26 hereof, a notice of the occurrence of such event, which
notice shall describe such event and the consequences of such
event to holders of Rights under Section 11(a)(ii) and
Section 13 hereof.
Section 26. Notices. Notices or demands authorized
by this Agreement to be given or made by the Rights Agent or
by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Varlen Corporation
55 Shuman Boulevard
P.O. Box 3089
Naperville, Illinois 60566-7089
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by
the Company or by the holder of any Right Certificate to or
on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as
follows:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Stock Transfer Department
Notices or demands authorized by this Agreement to be given
or made by the Company or the Rights Agent to the holder of
any Right Certificate shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Except as
provided in the penultimate sentence of this Section 27, for
so long as the Rights are then redeemable, the Company may in
its sole and absolute discretion, and the Rights Agent shall
if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any
holders of the Rights. At any time when the Rights are no
longer redeemable, except as provided in the penultimate
sentence of this Section 27, the Company may, and the Rights
Agent shall, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Rights
in order to (i) cure any ambiguity, (ii) correct or
supplement any provision contained herein which may be
defective or inconsistent with any other provision herein,
(iii) shorten or lengthen any time period hereunder, or (iv)
change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable; provided
that no such supplement or amendment shall adversely affect
the interests of the holders of Rights as such (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person), and no such amendment may cause the Rights again to
become redeemable or cause the Agreement again to become
amendable other than in accordance with this sentence.
Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which
changes the Redemption Price. Upon the delivery of a
certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights
Agent shall execute such supplement or amendment.
Section 28. 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.
Section 29. 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 registered holders
of the Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be
for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
Section 30. Determinations and Actions by the Board
of Directors. The Board of Directors of the Company shall
have the exclusive power and authority to administer this
Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company 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 (including, without limitation, a determination to
redeem or not redeem the Rights or to amend this Agreement).
All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) that are done or
made by the Board of Directors of the Company in good faith,
shall (x) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights, as such, and all
other parties, and (y) not subject the Board of Directors to
any liability to the holders of the Rights.
Section 31. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court
of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for
all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be
made and performed entirely within such State.
Section 33. 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.
Section 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed, all as of the day and
year first above written.
VARLEN CORPORATION
By: /s/ Richard L. Wellek
Name: Richard L. Wellek
Title: President & Chief Executive Officer
HARRIS TRUST AND SAVINGS BANK,
as Rights Agent
By: Julie A. Power
Name: Julie A. Power
Title: Trust Officer & Assistant Secretary
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
VARLEN CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Varlen Corporation, a corporation organized and
existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103
thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the
Certificate of Incorporation of the said Corporation, the
said Board of Directors on June17, 1996 adopted the following
resolution creating a series of 50,000 shares of Preferred
Stock designated as "Series A Junior Participating Preferred
Stock":
RESOLVED, that pursuant to the authority vested
in the Board of Directors of this Corporation in accordance
with the provisions of the Certificate of Incorporation, a
series of Preferred Stock, par value $1.00 per share, of the
Corporation be and hereby is created, and that the
designation and number of shares thereof and the voting and
other powers, preferences and relative, participating,
optional or other rights of the shares of such series and the
qualifications, limitations and restrictions thereof are as
follows:
Series A Junior Participating Preferred Stock
1. Designation and Amount. There shall be a series
of Preferred Stock that shall be designated as "Series A
Junior Participating Preferred Stock," and the number of
shares constituting such series shall be 50,000. Such number
of shares may be increased or decreased by resolution of the
Board of Directors; provided, however, that no decrease shall
reduce the number of shares of Series A Junior Participating
Preferred Stock to less than the number of shares then issued
and outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the
Corporation.
2. Dividends and Distribution.
(A) Subject to the prior and superior rights of
the holders of any shares of any class or series of stock of
the Corporation ranking prior and superior to the shares of
Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior
Participating Preferred Stock, in preference to the holders
of shares of any class or series of stock of the Corporation
ranking junior to the Series A Junior Participating Preferred
Stock in respect thereof, shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends
payable in cash on the last business day of March, June,
September and December, in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater
of (a) $100 or (b) the Adjustment Number (as defined below)
times the aggregate per share amount of all cash dividends,
and the Adjustment Number times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on
the Common Stock, par value $.10 per share, of the
Corporation (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A
Junior Participating Preferred Stock. The "Adjustment
Number" shall initially be 1000. In the event the
Corporation shall at any time after July 1, 1996 (the "Rights
Declaration Date") (i) declare and pay any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each
such case the Adjustment Number in effect immediately prior
to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred
Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of
holders of shares of Series A Junior Participating Preferred
Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no
more than 60 days prior to the date fixed for the payment
thereof.
3. Voting Rights. The holders of shares of Series
A Junior Participating Preferred Stock shall have the
following voting rights:
(A) Each share of Series A Junior Participating
Preferred Stock shall entitle the holder thereof to a number
of votes equal to the Adjustment Number on all matters
submitted to a vote of the stockholders of the Corporation.
(B) Except as required by law and by Section 10
hereof, holders of Series A Junior Participating Preferred
Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Junior
Participating Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on
shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends on, make any
other distributions on, or redeem or purchase or otherwise
acquire for consideration any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred
Stock;
(ii) declare or pay dividends on or make
any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are
then entitled; or
(iii) purchase or otherwise acquire for
consideration any shares of Series A Junior Participating
Preferred Stock, or any shares of stock ranking on a parity
with the Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to
all holders of Series A Junior Participating Preferred Stock,
or to such holders and holders of any such shares ranking on
a parity therewith, upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A)
of this Section 4, purchase or otherwise acquire such shares
at such time and in such manner.
5. Reacquired Shares. Any shares of Series A
Junior Participating Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be
retired promptly after the acquisition thereof. All such
shares shall upon their retirement become authorized but
unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject
to any conditions and restrictions on issuance set forth
herein.
6. Liquidation, Dissolution or Winding Up. (A) Upon
any liquidation, dissolution or winding up of the
Corporation, voluntary or otherwise, no distribution shall be
made to the holders of shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A
Junior Participating Preferred Stock shall have received an
amount per share (the "Series A Liquidation Preference")
equal to the greater of (i) $100 plus an amount equal to
accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, or (ii)
the Adjustment Number times the per share amount of all cash
and other property to be distributed in respect of the Common
Stock upon such liquidation, dissolution or winding up of the
Corporation.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of the
Series A Liquidation Preference and the liquidation
preferences of all other classes and series of stock of the
Corporation, if any, that rank on a parity with the Series A
Junior Participating Preferred Stock in respect thereof, then
the assets available for such distribution shall be
distributed ratably to the holders of the Series A Junior
Participating Preferred Stock and the holders of such parity
shares in proportion to their respective liquidation
preferences.
(C) Neither the merger or consolidation of the
Corporation into or with another corporation nor the merger
or consolidation of any other corporation into or with the
Corporation shall be deemed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this
Section 6.
7. Consolidation, Merger, Etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the outstanding
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 each share of Series A Junior
Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal
to the Adjustment Number times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of
Common Stock is changed or exchanged.
8. No Redemption. Shares of Series A Junior
Participating Preferred Stock shall not be subject to
redemption by the Company.
9. Ranking. The Series A Junior Participating
Preferred Stock shall rank junior to all other series of the
Preferred Stock as to the payment of dividends and as to the
distribution of assets upon liquidation, dissolution or
winding up, unless the terms of any such series shall provide
otherwise, and shall rank senior to the Common Stock as to
such matters.
10. Amendment. At any time that any shares of
Series A Junior Participating Preferred Stock are
outstanding, the Restated Certificate of Incorporation of the
Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series A Junior Participating Preferred Stock
so as to affect them adversely without the affirmative vote
of the holders of two-thirds of the outstanding shares of
Series A Junior Participating Preferred Stock, voting
separately as a class.
11. Fractional Shares. Series A Junior
Participating Preferred Stock may be issued in fractions of a
share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series A Junior
Participating Preferred Stock.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this __ day of June, 1996.
VARLEN CORPORATION
By:
Name:
Title:
Exhibit B
Form of Right Certificate
Certificate No. R-______
NOT EXERCISABLE AFTER JUNE 16, 2006 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
RIGHT CERTIFICATE
VARLEN CORPORATION
This certifies that ____________________________ or
registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of June 17, 1996, as the same
may be amended from time to time (the "Rights Agreement"),
between Varlen Corporation, a Delaware corporation (the
"Company"), and Harris Trust and Savings Bank, as Rights
Agent (the "Rights Agent"), to purchase from the Company at
any time after the Distribution Date (as such term is defined
in the Rights Agreement) and prior to 5:00 P.M., Chicago,
Illinois time, on June 16, 2006, at the office or agency of
the Rights Agent designated for such purpose, or of its
successor as Rights Agent, one one-thousandth of a fully paid
non-assessable share of Series A Junior Participating
Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), of the Company at a purchase price of $75 per one
one-thousandth of a share of Preferred Stock (the "Purchase
Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Rights
Certificate (and the number of one one-thousandths of a share
of Preferred Stock which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth
above, are the number and Purchase Price as of July 1, 1996,
based on the Preferred Stock as constituted at such date. As
provided in the Rights Agreement, the Purchase Price, the
number of one one-thousandths of a share of Preferred Stock
(or other securities or property) which may be purchased upon
the exercise of the Rights and the number of Rights evidenced
by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right 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 Right Certificates.
Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned
office or agency of the Rights Agent. The Company will mail
to the holder of this Right Certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor.
This Right Certificate, with or without other Right
Certificates, upon surrender at the office or agency of the
Rights Agent designated for such purpose, may be exchanged
for another Right Certificate or Right Certificates of like
tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Preferred Stock
as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for
the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement,
the Rights evidenced by this Certificate (i) may be redeemed
by the Company at a redemption price of $.01 per Right or
(ii) may be exchanged in whole or in part for shares of the
Company's Common Stock, par value $.10 per share, or shares
of Preferred Stock.
No fractional shares of Preferred Stock or Common
Stock will be issued upon the exercise or exchange of any
Right or Rights evidenced hereby (other than fractions of
Preferred Stock which are integral multiples of one one-
thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depository
receipts), but in lieu thereof a cash payment will be made,
as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall
be entitled to vote or receive dividends or be deemed for any
purpose the holder of the Preferred Stock or of any other
securities of the Company which may at any time be issuable
on the exercise or exchange hereof, nor shall anything
contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of
a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give 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 Right or Rights
evidenced by this Right Certificate shall have been exercised
or exchanged as provided in the Rights Agreement.
This Right 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. Dated as of
_________ __, 199_.
VARLEN CORPORATION
By:__________________________________
[Title]
ATTEST:
____________________________________
[Title]
Countersigned:
HARRIS TRUST AND SAVINGS BANK., as Rights Agent
By__________________________________
[Title]
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED __________________________ hereby
sells, assigns and transfers unto
______________________________________________________
_____________________________________________________________
____________
(Please print name and address of transferee)
_____________________________________________________________
____________
Rights represented by this Right Certificate, together with
all right, title and interest therein, and does hereby
irrevocably constitute and appoint _________________
Attorney, to transfer said Rights on the books of the within-
named Company, with full power of substitution.
Dated: ____________________________
____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust
company, broker, dealer or other eligible institution
participating in a recognized signature guarantee medallion
program.
.............................................................
.................................................
(To be completed)
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially
owned by, were not acquired by the undersigned from, and are
not being assigned to an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
____________________________________
Signature
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
To VARLEN CORPORATION:
The undersigned hereby irrevocably elects to exercise
________ Rights represented by this Right Certificate to
purchase the shares of Preferred Stock (or other securities
or property) issuable upon the exercise of such Rights and
requests that certificates for such shares of Preferred Stock
(or such other securities) be issued in the name of:
_____________________________________________________________
____________
(Please print name and address)
_____________________________________________________________
____________
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate
for the balance remaining of such Rights shall be registered
in the name of and delivered to:
Please insert social security
or other identifying number
_____________________________________________________________
____________
(Please print name and address)
_____________________________________________________________
____________
Dated:________________________
____________________________________
Signature
(Signature must conform to holder specified on Right Certifi
cate)
Signature Guaranteed:
Signature must be guaranteed by a bank, trust
company, broker, dealer or other eligible institution
participating in a recognized signature guarantee medallion
program.
Form of Reverse Side of Right Certificate - continued
_____________________________________________________________
____________
(To be completed)
The undersigned certifies that the Rights evidenced
by this Right Certificate are not beneficially owned by, and
were not acquired by the undersigned from, an Acquiring
Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
____________________________________
Signature
_____________________________________________________________
____________
NOTICE
The signature in the Form of Assignment or Form of
Election to Purchase, as the case may be, must conform to the
name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as
the case may be, is not completed, such Assignment or
Election to Purchase will not be honored.
Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT)
AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND
WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF PREFERRED STOCK OF
VARLEN CORPORATION
On June 17, 1996, the Board of Directors of Varlen
Corporation (the "Company") declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of
common stock, par value $.10 per share, of the Company (the
"Common Stock"). The dividend is payable at the close of
business on July 15, 1996 (the "Record Date") to the stockholders
of record on July 1, 1996. Each Right entitles the registered
holder to purchase from the Company one one-thousandth of a share
of Series A Junior Participating Preferred Stock, par value $1.00
per share, of the Company (the "Preferred Stock") at a price of
$75 per one one-thousandth of a share of Preferred Stock (the
"Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement dated as
of June 17, 1996, as the same may be amended from time to time
(the "Rights Agreement"), between the Company and Harris Trust
and Savings Bank, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or
associated persons (with certain exceptions, an "Acquiring
Person") has acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock or (ii) 10 business days (or
such later date as may be determined by action of the Board of
Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement
of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the
outstanding shares of Common Stock (the earlier of such dates
being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Stock certificates
outstanding as of the Record Date, by such Common Stock
certificate together with a copy of this Summary of Rights.
The Rights Agreement provides that, until the
Distribution Date (or earlier expiration of the Rights), the
Rights will be transferred with and only with the Common Stock.
Until the Distribution Date (or earlier expiration of the
Rights), new Common Stock certificates issued after the Record
Date upon transfer or new issuances of Common Stock will contain
a notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier expiration of the
Rights), the surrender for transfer of any certificates for
shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights, will
also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate. As soon
as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Stock as of the close
of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on June 16, 2006 (the "Final
Expiration Date"), unless the Final Expiration Date is advanced
or extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of
Preferred Stock or other securities or property issuable, upon
exercise of the Rights is subject to adjustment from time to time
to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred
Stock at a price, or securities convertible into Preferred Stock
with a conversion price, less than the then-current market price
of the Preferred Stock or (iii) upon the distribution to holders
of the Preferred Stock of evidences of indebtedness or assets
(excluding regular periodic cash dividends or dividends payable
in Preferred Stock) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights is subject to adjustment
in the event of a stock dividend on the Common Stock payable in
shares of Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of
the Rights will not be redeemable. Each share of Preferred Stock
will be entitled, when, as and if declared, to a minimum
preferential quarterly dividend payment of $100 per share but
will be entitled to an aggregate dividend of 1000 times the
dividend declared per share of Common Stock. In the event of
liquidation, dissolution or winding up of the Company, the
holders of the Preferred Stock will be entitled to a minimum
preferential payment of $100 per share (plus any accrued but
unpaid dividends) but will be entitled to an aggregate payment of
1000 times the payment made per share of Common Stock. Each
share of Preferred Stock will have 1000 votes, voting together
with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which outstanding shares of
Common Stock are converted or exchanged, each share of Preferred
Stock will be entitled to receive 1000 times the amount received
per share of Common Stock. These rights are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-
thousandth interest in a share of Preferred Stock purchasable
upon exercise of each Right should approximate the value of one
share of Common Stock.
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, each holder of a
Right, other than Rights beneficially owned by the Acquiring
Person (which will thereupon become void), will thereafter have
the right to receive upon exercise of a Right that number of
shares of Common Stock having a market value of two times the
exercise price of the Right.
In the event that, after a person or group has become an
Acquiring Person, the Company is acquired in a merger or other
business combination transaction or 50% or more of its
consolidated assets or earning power are sold, proper provisions
will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become
void) will thereafter have the right to receive upon the exercise
of a Right that number of shares of common stock of the person
with whom the Company has engaged in the foregoing transaction
(or its parent) that at the time of such transaction have a
market value of two times the exercise price of the Right.
At any time after any person or group becomes an
Acquiring Person and prior to the earlier of one of the events
described in the previous paragraph or the acquisition by such
Acquiring Person of 50% or more of the outstanding shares of
Common Stock, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such Acquiring Person
which will have become void), in whole or in part, for shares of
Common Stock or Preferred Stock (or a series of the Company's
preferred stock having equivalent rights, preferences and
privileges), at an exchange ratio of one share of Common Stock,
or a fractional share of Preferred Stock (or other preferred
stock) equivalent in value thereto, per Right.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
shares of Preferred Stock or Common Stock will be issued (other
than fractions of Preferred Stock which are integral multiples of
one one-thousandth of a share of Preferred Stock, which may, at
the election of the Company, be evidenced by depositary
receipts), and in lieu thereof an adjustment in cash will be made
based on the current market price of the Preferred Stock or the
Common Stock.
At any time prior to the time an Acquiring Person becomes
such, the Board of Directors of the Company may redeem the Rights
in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the
Company may, except with respect to the redemption price, amend
the Rights Agreement in any manner. After the Rights are no
longer redeemable, the Company may, except with respect to the
redemption price, amend the Rights Agreement in any manner that
does not adversely affect the interests of holders of the Rights.
Until a Right is exercised or exchanged, the holder
thereof, as such, will have no rights as a stockholder of the
Company, including, without limitation, the right to vote or to
receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated July __, 1996. A copy
of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to
the Rights Agreement, as the same may be amended from time to
time, which is hereby incorporated herein by reference.
