UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
AAR CORP.
(Exact name of registrant as specified in its charter)
Delaware 36-2334820
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
1100 North Wood Dale Road 60191
Wood Dale, Illinois
(Address of principal executive (Zip Code)
offices)
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
Common Stock Purchase New York Stock Exchange
Rights
Securities to be registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
<PAGE> 2
ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On July 8, 1997, the Board of Directors of AAR CORP. (the
"Company") declared a dividend distribution of one Right for each
outstanding share of Common Stock, $1.00 par value (the "Common
Stock"), of the Company to the stockholders of record on August 6,
1997 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company one share of Common Stock at a price of $125
per share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The First
National Bank of Chicago, as Rights Agent (the "Rights Agent"). The
Rights replace the common stock purchase rights which were initially
distributed to the Company's stockholders in 1987 and which expired by
their own terms on August 6, 1997.
Until the earlier to occur of (i) the tenth business day after a
public announcement that a person or group of affiliated or associated
persons acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common Stock of
the Company (such person or group being called an "Acquiring Person"
and such date of first public announcement being called the "Stock
Acquisition Date"), or (ii) the tenth business day after the
commencement or announcement of an intention to make a tender offer or
exchange offer which would result in any person or group of affiliated
or associated persons becoming an Acquiring Person (the earlier of
such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Company's Common Stock
certificates outstanding as of the Record Date, by such Common Stock
certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Company's Common
Stock. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after
the Record Date upon transfer or new issuance of the Company's Common
Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any of the
Company's Common Stock certificates outstanding as of the Record Date
will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the
Rights ("Rights Certificates") will be mailed to holders of record of
the Company's Common Stock as of the close of business on the
Distribution Date and, thereafter, such separate Rights Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on August 6, 2007, unless earlier redeemed by the
Company as described below.
The Purchase Price payable, and the number of shares of Common
Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution
<PAGE> 3
(i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of the Common Stock, (ii) upon the grant to
holders of Common Stock of certain rights, options or warrants to
subscribe for shares of Common Stock or convertible securities at less
than the current market price of the Common Stock or (iii) upon the
distribution to holders of Common Stock of evidences of indebtedness
or assets (excluding (a) a regular periodic cash dividend or (b) a
dividend payable in Common Stock) or of subscription rights, options
or warrants (other than those referred to above).
In the event that a person becomes the beneficial owner of 15% or
more of the outstanding shares of Common Stock (i.e., becomes an
Acquiring Person), each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will be void), will
have the right to receive upon exercise thereof, that number of shares
of Common Stock having a market value of two times the exercise price
of the Right (such right being called the "Flip-In" right).
In the event that, on or after the Stock Acquisition Date, the
Company were acquired in a merger or other business combination, or
50% or more of its assets or earning power were sold, proper provision
shall be made so that each holder of a Right shall thereafter have the
right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have
a market value of two times the exercise price of the Right. In the
event that the Company were the surviving corporation in a merger
involving the Acquiring Person and the Common Stock were not changed
or exchanged, proper provision shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring Person
(which will be void), will thereafter have the right to receive upon
exercise that number of shares of the Common Stock having a market
value of two times the exercise price of the Right (such right being
called the "Flip-Over" right). The holder of a right will no longer
have a Flip-Over right if, and to the extent that, he has exercised
his Flip-In 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 will be issued
and, in lieu thereof, a cash payment will be made based on the market
price of the Common Stock on the last trading date prior to the date
of exercise.
At any time prior to the tenth day after the time that there is
an Acquiring Person, the Company may, at its option, redeem the Rights
in whole but not in part, at a price of $0.01 per Right (the
"Redemption Price"). Immediately upon the authorization of the
redemption of the Rights by the Board of Directors of the Company, the
Rights will terminate and the only right of the holders of Rights will
be to receive the Redemption Price.
<PAGE> 4
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
The Board of Directors of the Company may amend the Rights
Agreement from time to time, provided that any such changes do not
adversely affect the interest of the holders of the Rights, and
provided further that the Rights Agreement may not be supplemented or
amended in any way after an Acquiring Person has become such.
One Right will be distributed to shareholders of the Company for
each share of Common Stock owned of record by them as of the close of
business on August 6, 1997. Until the Distribution Date, the Company
will issue one Right with each share of Common Stock that shall become
outstanding so that all shares of Common Stock will have attached
Rights. As of July 31, 1997, there were 18,341,213 shares of Common
Stock issued.
The Rights have certain anti-takeover effects. The Rights may
cause substantial dilution to a person or group that attempts to
acquire the Company on terms not approved in advance by the Board of
Directors of the Company. The Rights should not interfere with any
merger or other business combination approved by the Board of
Directors prior to the time that a person or group has acquired
beneficial ownership of 15% or more of the Common Stock, since until
such time the Rights may be redeemed by the Company at $.01 per Right.
The present dividend distribution of the Rights is not taxable to
the Company or its shareholders. The Rights are not dilutive and will
not affect reported earnings per share. The Company will receive no
proceeds from the issuance of the Rights as a dividend.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
The Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, including the form of Rights
Certificate and the Summary of Rights is attached hereto as an exhibit
and incorporated herein by reference. A copy of the Rights Agreement
is available free of charge from the Company. The foregoing
description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
ITEM 2. EXHIBITS.
I. Rights Agreement dated as of July 8, 1997 between AAR CORP.
and First Chicago Trust Company of New York as Rights Agent.
<PAGE> 5
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities and
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized.
(Registrant) AAR CORP.
Date August 4, 1997
---------------------------------
By: /s/ Howard A. Pulsifer
---------------------------------
Howard A. Pulsifer
Vice President, Secretary
and General Counsel
<PAGE> 6
EXHIBIT INDEX
EXHIBIT PAGE
4 Rights Agreement dated as of July 8, 1997
between AAR CORP. and First Chicago Trust Company
of New York, as Rights Agent
8
_____________________________________________________________________
AAR CORP.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
Rights Agent
-----------------------
Rights Agreement
Dated as of July 8, 1997
_____________________________________________________________________<PAGE>
<PAGE> 8
TABLE OF CONTENTS
-----------------
Page
----
Section 1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . 10
Section 2. APPOINTMENT OF RIGHTS AGENT . . . . . . . . . . . 13
Section 3. ISSUE OF RIGHT CERTIFICATES . . . . . . . . . . . 13
Section 4. FORM OF RIGHT CERTIFICATES . . . . . . . . . . . . 14
Section 5. COUNTERSIGNATURE AND REGISTRATION . . . . . . . . 15
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR
STOLEN RIGHT CERTIFICATES . . . . . . . . . . . . 16
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT
CERTIFICATES . . . . . . . . . . . . . . . . . . . 19
Section 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON
STOCK . . . . . . . . . . . . . . . . . . . . . . 19
Section 10. COMMON STOCK RECORD DATE . . . . . . . . . . . . . 20
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS . . . . . . . . . . . . . . . . . 20
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES . . . . . . . . . . . . . . . . . . . . 27
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER . . . . . . . . . . . . . 28
Section 14. ADDITIONAL COVENANTS . . . . . . . . . . . . . . . 30
Section 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES . . . . . 31
Section 16. RIGHTS OF ACTION . . . . . . . . . . . . . . . . . 32
Section 17. AGREEMENT OF RIGHT HOLDERS . . . . . . . . . . . . 32
Section 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER 33
Section 19. CONCERNING THE RIGHTS AGENT . . . . . . . . . . . 33
Section 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT . . . . . . . . . . . . . . . . . . . 33
<PAGE> 9
Section 21. TERMS AND CONDITIONS TO DUTIES OF RIGHTS AGENT . . 34
Section 22. CHANGE OF RIGHTS AGENT . . . . . . . . . . . . . . 36
Section 23. ISSUANCE OF NEW RIGHT CERTIFICATES . . . . . . . . 37
Section 24. REDEMPTION . . . . . . . . . . . . . . . . . . . . 37
Section 25. EXCHANGE . . . . . . . . . . . . . . . . . . . . . 38
Section 26. NOTICE OF CERTAIN EVENTS . . . . . . . . . . . . . 39
Section 27. NOTICES . . . . . . . . . . . . . . . . . . . . . 40
Section 28. SUPPLEMENTS AND AMENDMENTS . . . . . . . . . . . . 40
Section 29. DETERMINATION AND ACTIONS BY THE BOARD OF
DIRECTORS, ETC. . . . . . . . . . . . . . . . . . 41
Section 30. SUCCESSORS . . . . . . . . . . . . . . . . . . . . 41
Section 31. BENEFITS OF THIS AGREEMENT . . . . . . . . . . . . 41
Section 32. GOVERNING LAW . . . . . . . . . . . . . . . . . . 41
Section 33. COUNTERPARTS . . . . . . . . . . . . . . . . . . . 42
Section 34. DESCRIPTIVE HEADINGS . . . . . . . . . . . . . . . 42
Section 35. SEVERABILITY . . . . . . . . . . . . . . . . . . . 42
Exhibit A - Form of Rights Certificate 43
Exhibit B - Form of Summary of Rights 49
<PAGE> 10
RIGHTS AGREEMENT
This Agreement, dated as of July 8, 1997, between AAR CORP.,
a Delaware corporation (the "Company"), and First Chicago Trust
Company of New York, a national banking association (the "Rights
Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company has
authorized and declared a dividend distribution (the "Distribution")
of one Right (as hereinafter defined) for each share of Common Stock,
$1.00 par value, of the Company outstanding at the close of business
on August 6, 1997 (the "Record Date") and has further authorized the
issuance of one Right in respect of each share of Common Stock of the
Company issued between such date and the earlier of the Distribution
Date or the Expiration Date (as such terms are hereinafter defined),
each Right initially representing the right to purchase one share of
Common Stock of the Company (the "Rights"), all upon the terms, with
the adjustments and subject to the conditions hereinafter set forth;
NOW, THEREFORE, 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 meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, without
prior approval of the Company shall be the Beneficial Owner of a
Substantial Block or who was such a Beneficial Owner at any time after
the date hereof, whether or not such Person continues to be the
Beneficial Owner of a Substantial Block, but shall not include the
Company, any Subsidiary of or other Person controlled by the Company,
any employee benefit plan of the Company or of any Subsidiary of the
Company or any Person appointed as trustee by the Company or such Sub-
sidiary pursuant to the terms of any such plan in that Person's
capacity as trustee. Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" (i) as a result of the acquisition of
shares of Common Stock by the Company which, by reducing the number of
shares of Common Stock outstanding, increases the proportional number
of shares beneficially owned by such Person together with all
Affiliates and Associates of such Person; provided however, that if
(1) a Person would become an Acquiring Person (but for the operation
of this subclause (i)) as a result of the acquisition of shares of
Common Stock by the Company, and (2) after such share acquisition by
the Company, such Person, or an Affiliate or Associate of such Person,
<PAGE> 11
becomes the Beneficial Owner of any additional shares of Common Stock,
then such Person shall be deemed an Acquiring Person; or (ii) if the
Board of Directors determines that such Person became an Acquiring
Person inadvertently, and such Person promptly divests itself of a
sufficient number of shares of Common Stock so that such Person is the
Beneficial Owner of such number of shares of Common Stock so that such
Person no longer would be an Acquiring Person.
(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 Securities Exchange Act of 1934 (the "Exchange
Act"), as in effect on the date of this Agreement, but shall not
include the Company, any Subsidiary of or other Person controlled by
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any Person appointed as trustee by the
Company or such Subsidiary pursuant to the terms of any such plan in
that Person's capacity as trustee.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) of which such Person or any of such Person's
Affiliates or Associates directly or indirectly has
"beneficial ownership," as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act,
as in effect on the date of this Agreement;
(ii) which such Person or any of such Person's
Affiliates or Associates directly or indirectly has (A) the
right to acquire (whether such right is exercisable immedi-
ately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to "bene-
ficially own," 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; or (B) the right
(whether sole or shared) to vote or dispose of pursuant to
any agreement, arrangement or understanding (whether or not
in writing); provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to "beneficially own,"
any security under this clause (B) pursuant to an agreement,
arrangement or understanding to vote such security that (1)
arises solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and
the rules and regulations thereunder and (2) is not also
then required to be reported as beneficially owned on a
<PAGE> 12
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 (or any Affiliate or
Associate thereof) with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except pursuant
to a revocable proxy as described in clause (B) of sub-
paragraph (ii) of this paragraph (c)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used
with reference to a Person's Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to
own beneficially hereunder.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday or a legal holiday for banking institutions in the
State of Illinois.
(e) "Close of business" on any given date shall mean
5:00 P.M., Chicago time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Chicago time, on
the next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company
shall mean the Common Stock, $1.00 par value, of the Company. "Common
Stock" when used with reference to any Person other than the Company
shall mean the capital stock with the greatest aggregate voting power
or the equity securities or other equity interests having power to
control or direct the management of such Person or, if such Person is
a subsidiary of or controlled by another Person, the Person which
ultimately controls such first-mentioned Person and which has issued
and outstanding such capital stock, equity securities or equity
interests.
(g) "Person" shall mean any individual, firm, corporation,
partnership, trust, association, joint venture, syndicate or other
entity, and shall include any successor (by merger or otherwise) of
such entity.
(h) "Stock Acquisition Date" shall mean the first date of
public announcement (which shall include, without limitation, a report
filed pursuant to the Exchange Act) by the Company or an Acquiring
Person of facts that show that an Acquiring Person has become such.
<PAGE> 13
(i) "Subsidiary" of any Person shall mean any corporation
or other Person of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly,
by such Person, or which is otherwise controlled by such Person.
(j) "Substantial Block" shall mean a number of shares of
Common Stock of the Company which equals or exceeds 15% of the number
of shares of Common Stock of the Company then outstanding.
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 also be the holders of the Common
Stock) in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from
time to time appoint such Co-Rights Agents as it may deem necessary or
desirable. In the event the Company appoints one or more Co-Rights
Agents, the respective duties of the Rights Agent and the Co-Rights
Agents shall be as the Company determines.
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of the close of business on (i) the
tenth business day after the Stock Acquisition Date (or, the Record
Date, if the tenth business day after the Stock Acquisition Date
occurs before the Record Date), or (ii) the tenth business day after
the commencement of, or first public announcement of, the intent of
any Person (other than the Company or any of its subsidiaries or any
employee benefit plan of the Company or of any subsidiary of the
Company or any Person appointed as trustee by the Company or such
subsidiary pursuant to the terms of any such plan in such Person's
capacity as trustee) to commence (which intention to commence remains
in effect for five business days after such announcement) a tender or
exchange offer which would result in such Person becoming an Acquiring
Person (including any such day which is after the date of this Agree-
ment and prior to the issuance of the Rights, the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced by the certificates for the Common Stock of
the Company registered in the names of the holders of the Common Stock
(which certificates for Common Stock shall be deemed also to be Right
Certificates) and not by separate Right Certificates, and (y) the
right to receive Right Certificates will be transferable only in con-
nection with the transfer of Common Stock. As soon as practicable
after the Distribution Date, the Rights Agent will send, by first-
class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the close of business on the Distribution Date, at
the address of such holder shown on the records of the Company, a
certificate for Rights, in substantially the form of Exhibit A hereto
(the "Rights Certificates"), evidencing one Right for each share of
Common Stock so held. As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
<PAGE> 14
(b) As soon as practicable after the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Common
Stock, in substantially the form attached hereto as Exhibit B (the
"Summary of Rights"), by first-class, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on the
Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates for the Common Stock
registered in the names of the holders of the Common Stock. Until the
Distribution Date (or earlier Expiration Date), the surrender for
transfer of any of the certificates for the Common Stock outstanding
on the Record Date shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
(c) Rights shall be issued in respect of all shares of
Common Stock which become outstanding after the Record Date but prior
to the earlier of the Distribution Date or the Expiration Date.
Certificates representing such shares 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 AAR CORP. and First Chicago Trust
Company of New York dated as of July 8, 1997 (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 AAR CORP.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may expire or
may be evidenced by separate certificates and will no
longer be evidenced by this certificate. AAR CORP.
will mail to the holder of this certificate a copy of
the Rights Agreement without charge promptly upon
receipt of a written request therefor. Under certain
circumstances, Rights issued to, or held by, an
Acquiring Person or Associates or Affiliates of an
Acquiring Person (as defined in the Rights Agreement)
and any subsequent holder of such Rights may become
null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common
Stock represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
Section 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse
<PAGE> 15
thereof) shall be substantially the same as Exhibit A hereto and may
have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
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 on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Right Certificates, whenever
issued, shall be dated as of the Record Date, and on their face shall
entitle the holders thereof to purchase such number of shares of
Common Stock as shall be set forth therein at the price per share set
forth therein (the "Purchase Price"), but the number of such shares
and the Purchase Price shall be subject to adjustments as provided
herein.
(b) Any Right Certificate that represents Rights
beneficially owned by an Acquiring Person or any Associate or
Affiliate of an Acquiring Person and any Rights Certificate issued at
any time upon the transfer of any Rights to such an Acquiring Person
or any Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate, and any Rights Certificate
issued pursuant to Section 6 or Section 11 upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain the following legend:
The Rights represented by this Rights Certificate were
issued to a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement, dated as of July
8, 1997). This Rights Certificate and the Rights
represented hereby may become void to the extent provided
by, and under certain circumstances as specified in, Section
7(e) of the Rights Agreement.
The provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any such
Rights Certificate.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of
the Company by its Chairman of the Board or its President or any
Executive or Senior Vice President, either manually or by facsimile
signature, and have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be countersigned by the Rights Agent
manually or by facsimile and shall not be valid for any purpose unless
so 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
<PAGE> 16
and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent, issued and delivered 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 Certifi-
cate, although at the date of the execution of this Rights 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 one of its offices in Chicago, Illinois,
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 Section 15 hereof, at any
time after the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any Right
Certificate or 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 shares of
Common Stock as the Right Certificate or Right Certificates surren-
dered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right
Certificate 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 principal
office of the Rights Agent. Thereupon the Rights Agent shall counter-
sign 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) 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 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 owner in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
<PAGE> 17
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION
DATE OF RIGHTS.
(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date,
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 principal office of the Rights Agent in Chicago,
Illinois, together with payment of the Purchase Price for each share
of Common Stock of the Company as to which the Rights are exercised,
at or prior to the close of business on the earlier of the close of
business on (i) August 6, 2007 (the "Final Expiration Date"), or (ii)
the date on which the Rights are redeemed pursuant to Section 24 (such
earlier date being herein referred to as the "Expiration Date").
(b) The Purchase Price for each share of Common Stock
pursuant to the exercise of a Right shall initially be $125.00, shall
be subject to adjustment from time to time as provided in Sections 11
and 13 and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares
to be purchased, and an amount equal to any applicable transfer tax in
cash, or by certified check or bank draft payable to the order of the
Company, the Rights specified in the election shall be exercised, and
the Rights Agent shall, subject to Section 21(k), thereupon promptly
(i) (A) requisition from any transfer agent of the Common Stock of the
Company (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Common Stock to be purchased
(and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests), or (B) if the Company, in its sole
discretion, shall have elected to deposit the shares of Common Stock
issuable upon exercise of the Rights hereunder into a depositary,
requisition from the depositary agent depositary receipts representing
such number of shares of Common Stock as are to be purchased (in which
case certificates for the shares of Common Stock represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with
such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 15, (iii) promptly after receipt of such
certificates, 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. The payment
of the Purchase Price may be made (x) in cash or by certified bank
check or bank draft payable to the order of the Company, or (y) by
delivery of a certificate or certificates (with appropriate stock
powers executed in blank attached thereto) evidencing a number of
<PAGE> 18
shares of Common Stock equal to the then Purchase Price divided by the
closing price (as determined pursuant to Section 11(d) hereof) per
share of Common Stock on the Trading Day immediately preceding the
date of such exercise. In the event that the Company is obligated to
issue other securities (including shares of Common Stock) of the
Company, pay cash and/or distribute other property pursuant to Sec-
tion 11(a) hereof, the Company will make all arrangements necessary so
that such other securities, cash and/or other property are available
for distribution by the Rights Agent, if and when appropriate. In
addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii), the Rights Agent shall return such
Rights Certificate to the registered holder thereof after imprinting,
stamping or otherwise indicating thereon that the rights represented
by such Rights Certificate no longer include the rights provided by
Section 11(a)(ii) of the Rights Agreement and if less than all the
Rights represented by such Rights Certificate were so exercised, the
Rights Agent shall indicate on the Rights Certificate the number of
Rights represented thereby which continue to include the rights
provided by Section 11(a)(ii).
(d) In case the registered holder of any Right Certificate
shall exercise (except pursuant to Section 11(a)(ii)) less than all
the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the 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 Sec-
tion 15.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of an event described in
Section 11(a)(ii), any Rights beneficially owned (including beneficial
ownership that can be deemed to exist because of the transfer of
voting rights pursuant to a voting trust or similar arrangement) by an
Acquiring Person or an Associate or Affiliate of an Acquiring Person
shall be void and any holder of such Rights shall thereafter have no
right to exercise such Rights under any provision of this Agreement.
No Rights Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person whose
Rights are void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Rights Certificate shall be issued at any time
upon the transfer of any Rights to an Acquiring Person whose Rights
are void pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate; and any Rights Certificate delivered to the
Rights Agent for transfer to an Acquiring Person (or Associate or
Affiliate thereof) whose Rights are void pursuant to the preceding
sentence shall be cancelled.
(f) Notwithstanding anything in this Agreement to the
contrary, the Rights shall not be effectively exercised and neither
the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
<PAGE> 19
purported exercise as set forth in this Section 7, unless such
registered holder shall have (i) completed and signed the certificate
contained in the form of election to purchase set forth on the reverse
side of the Right Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates 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 cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and re-
tirement, 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
cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON
STOCK.
(a) The Company covenants and agrees that after the
occurrence of an event described in Section 11 it will cause to be
reserved and kept available, and not reserved for other purposes, out
of its authorized and unissued shares of Common Stock or its autho-
rized and issued shares of Common Stock held in its treasury, the
number of shares of Common Stock that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the Common Stock issuable upon the exercise
of Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after the
Distribution Date, all shares reserved for such issuance to be listed
on such exchange upon official notice of issuance upon such exercise.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all shares of Common
Stock delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully
paid and nonassessable shares.
(d) 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
<PAGE> 20
delivery of the Right Certificates or of any shares of Common 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 involved in the transfer or delivery of Right
Certificates or the issuance or delivery of certificates for Common
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 for shares of Common Stock upon the exercise
of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
(e) The Company shall use its best efforts to (i) file, as
soon as practicable following the Distribution Date, a registration
statement under the Securities Act of 1933 (the "Act"), with respect
to the securities purchasable upon exercise of the Rights on an appro-
priate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Act and the rules and
regulations thereunder) until the earlier of (A) the date as of which
the Rights are no longer exercisable for such securities, and (B) the
Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the exer-
cisability of the Rights.
Section 10. COMMON STOCK RECORD DATE. Each person in whose
name any certificate for shares of Common Stock is issued upon the
exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Common 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 in
accordance with Section 7; provided, however, that if the date of such
surrender and payment is a date upon which the Common 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 Common 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 stockholder of the Company with respect
to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, 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 OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number of shares covered
<PAGE> 21
by 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 a dividend on the Common Stock
payable in shares of Common Stock, (B) subdivide the outstanding
shares of Common Stock, (C) combine the outstanding shares of Common
Stock into a smaller number of shares or (D) issue any shares of its
capital stock in a reclassification or recapitalization of the Common
Stock (including any such reclassification or recapitalization in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided
this Section 11(a) and in Section 7(e), the Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination, reclassification or
recapitalization, 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,
other securities and/or property which, if such Right had been
exercised immediately prior to such date and at a time when the Common
Stock transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination, reclassification or
recapitalization; 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 the exercise of one Right. If an event occurs which
would require an adjustment under both Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall
be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event that at any time after the date
hereof, any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person then proper provision
shall be made so that each holder of a Right, except as provided in
Section 7(e) hereof, shall have a right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the
terms of this Agreement, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of shares of Common Stock
for which a Right is then exercisable and dividing that product by (y)
50% of the current market price for one share of Common Stock
(determined pursuant to Section 11(d)) on the date of the occurrence
of the event set forth above in this subparagraph (ii) (such number of
shares being referred to as the "number of Adjustment Shares");
provided, however, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the provisions of
Section 13 hereof, then only the provisions of Section 13 hereof shall
apply and no adjustment shall be made pursuant to this Section
11(a)(ii).
<PAGE> 22
(iii) In the event that there shall not be sufficient
treasury shares or authorized but unissued shares of Common Stock to
permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) or, if any regulatory approvals for the
issuance of such Common Stock has not been obtained by the Company,
and the Rights become so exercisable, notwithstanding any other
provision of this Agreement, to the extent necessary and permitted by
applicable law and any agreements in effect on the date hereof to
which it is a party, the Company shall, with respect to each Right,
make adequate provision to substitute upon exercise of such Right to
the extent necessary and on a pro rata or such other basis as the
Company deems appropriate, (1) cash, (2) a reduction in the Purchase
Price, (3) other equity securities of the Company (including without
limitation shares or units of shares of preferred stock or other
securities), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal
to the current per share market price (as determined pursuant to
Section 11(d) hereof) of the Common Stock for which such Right is
otherwise exercisable, where such aggregate value has been determined
by the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of
Directors of the Company.
(b) In case a record date is fixed by the Company or
otherwise established for the issuance of rights, options or warrants
to all holders of Common Stock entitling them (for a period expiring
within 45 calendar days after such record date) to subscribe for or
purchase Common Stock (or securities convertible into Common Stock) at
a price per share of Common Stock (or having a conversion price per
share of Common Stock, if a security convertible into Common Stock)
less than the current market price (as defined in Section 11(d)) per
share of Common Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of shares
of Common Stock which the aggregate offering price of the total number
of shares of Common Stock 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 of which the
denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common
Stock 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 con-
sideration 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
<PAGE> 23
Common Stock owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is
fixed or established; 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 or established.
(c) If the Company shall fix a record date for the making
of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend),
assets (other than a dividend payable in Common Stock, but including
any dividend payable in stock other than Common Stock) or subscription
rights or warrants (excluding those referred to in Section 11(b)), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the current market price (as defined in Section 11(d)) per share of
Common Stock on such record date, less the fair market value (as
determined reasonably and with good faith to the holders of Rights by
the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants distributable in respect of one share of Common
Stock and the denominator of which shall be the current market price
per share of the Common 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 issuable 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 be in
effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the
"current market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of
Common Stock 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 market price per share of
Common Stock is determined during a period following the announcement
by the issuer of the Common Stock of (i) a dividend or distribution on
the Common Stock payable in shares of Common Stock or securities
convertible into shares of Common Stock or (ii) any subdivision,
combination or reclassification of the Common Stock, and prior to the
expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, as the case may be, then, and in each
such case, the "current market price" shall be appropriately adjusted
<PAGE> 24
to reflect the current market price per common share equivalent. The
closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock 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 shares of Common Stock are listed or admitted to trading or,
if the shares of Common Stock are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-
the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or
such other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by the Board of
Directors of the Company, except that, if on any such date no market
maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board of Direc-
tors of the Company shall be used. The term "Trading Day" shall mean
a day on which the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading is open for
the transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current market price" per share shall mean the fair
value per share 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 such 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 ten-thousandth of a share 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
mandates such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
of the Company other than shares of Common Stock, thereafter the
number of such other shares so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner and on
<PAGE> 25
terms as nearly equivalent as practicable to the provisions with
respect to the shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 15 with
respect to the shares of Common 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
shares of Common 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 Section 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of shares (calculated to the nearest ten-
thousandth) obtained by (i) multiplying (x) the number of shares
covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Pur-
chase 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 to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Common
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 shares of Common 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 ten-
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, the record date 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 shall, 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 15, 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
<PAGE> 26
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 may bear, at the
option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of 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 shares of Common Stock issuable upon
the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per share
and the number of shares which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the per share Purchase Price below the then par value per
share, if any, of the shares of Common Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such
Common Stock 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 the issuing to the holder of any Right
exercised after such record date the shares of Common Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the shares of Common 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 not-
withstanding, the Company shall be entitled to make such reductions 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 Common Stock, issuance wholly for
cash of any shares of Common Stock at less than the current market
price, issuance wholly for cash of shares of Common Stock or
securities which by their terms are convertible into or exchangeable
for shares of Common Stock, stock dividends or issuance of rights,
options or warrants referred to hereinabove in this Section 11, here-
after made by the Company to holders of its Common Stock shall not be
taxable to such stockholders.
<PAGE> 27
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the date of this Agreement (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, (iii) combine the outstanding
Common Stock into a smaller number of shares or (iv) issue any shares
of its capital stock in a reclassification of the outstanding Common
Stock, the number of Rights associated with each share of Common Stock
then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, 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 (or, in the event that any
adjustment is made in connection with such event by reason of Section
11(i), after such adjustment) 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 after the occurrence of the event.
(o) Notwithstanding any other provision of this Agreement,
no adjustment to the Purchase Price, the number of shares of Common
Stock (or fractions of a share) for which a Right is exercisable or
the number of Rights outstanding (except as permitted by Section 23
hereof) or any similar adjustment shall be made or be effective if
such adjustment would have the effect of reducing or limiting the
benefits the holders of the Rights would have had absent such adjust-
ment, including, without limitation, the benefits under Sec-
tion 11(a)(ii) and Section 13, unless the terms of this Agreement are
amended so as to preserve such benefits.
(p) The Company covenants and agrees that, following the
Distribution Date, except as permitted by Section 24 or Section 26
hereof, it will not, directly or indirectly, take any action the
purpose or effect of which is to eliminate or otherwise diminish 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, the Company shall (a) promptly prepare a certificate
setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights
Agent and with each transfer agent for the Common Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 26. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment contained therein.
<PAGE> 28
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
(a) In the event that, on or after the Stock Acquisition
Date, directly or indirectly, (i) the Company shall consolidate with,
or merge with and into, any other Person, and the Company shall not be
the continuing or surviving corporation, (ii) any Person shall
consolidate with the Company, or merge with and into the Company, and
the Company shall be the continuing or surviving corporation and, in
connection therewith, all or part of the Common Stock of the Company
shall be changed into or exchanged for stock or other securities of
any other Person 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 more than 50% of the assets or earning
power of the Company and its subsidiaries (taken as a whole) to any
other Person or Persons, then, and in each such case, proper provision
shall be made so that (A) each holder of a Right, subject to
Section 7(e), shall thereafter have the right to receive, upon the
exercise thereof at the then-current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and
issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as hereinafter defined), free and
clear of any liens, encumbrances and adverse claims and not subject to
any rights of call, purchase or first refusal, as shall be equal to
the result obtained by (x) multiplying the then current Purchase Price
by the number of shares of Common Stock for which a Right is then
exercisable (without taking into account any adjustment previously
made pursuant to Section 11(a)(ii) hereof) and dividing that product
by (y) 50% of the current market price (determined pursuant to Section
11(d)) per share of the Common Stock of the Principal Party on the
date of consummation 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 Agreement;
(C) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following
the first occurrence of an event set forth in Section 13(a) hereof;
and (D) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its
Common Stock in accordance with Section 9) in connection with such
consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to the shares of its Common Stock or cash, property or other
securities thereafter deliverable upon the exercise of the Rights.
(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), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such
merger or consolidation, and if no securities are so issued, the
<PAGE> 29
Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in (iii) of the first
sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant
to such transaction or transactions; provided, however, that in any
such case, (1) if the shares of Common Stock of such Person are not at
such time and have not been continuously over the preceding twelve
month period registered under Section 12 of the Exchange Act ("Regis-
tered Common Shares") or such Person is not a corporation, and such
Person is directly or indirectly controlled by another Person which
has Registered Common Shares outstanding, "Principal Party" shall
refer to such other Person; (2) if the shares of Common Stock of such
Person are not Registered Common Shares or such Person is not a
corporation, and such Person is directly or indirectly controlled by
another Person which does not have Registered Common Shares
outstanding, "Principal Party" shall refer to the controlling Person
of such first-mentioned Person; (3) if the shares of Common Stock of
such Person are not Registered Common Shares or such Person is not a
corporation, and such Person is directly or indirectly controlled by
more than one Person, and one or more of such controlling Persons have
Registered Common Shares outstanding, "Principal Party" shall refer to
whichever of such controlling Persons is the issuer of the Registered
Common Shares having the greatest aggregate market value; and (4) if
the shares of Common Stock of such Person are not Registered Common
Shares or such Person is not a corporation, and such Person is direc-
tly or indirectly controlled by more than one Person, and none of such
controlling Persons have Registered Common Shares outstanding,
"Principal Party" shall refer to whichever controlling Person is the
corporation having the greatest stockholders equity or, if no such
controlling Person is a corporation, shall refer to whichever
controlling Person has the greatest net assets.
(c) The Company shall not consummate any such con-
solidation, merger, sale or transfer unless prior thereto the Company
and such Principal Party shall have executed and delivered to the
Rights Agent a legally valid, binding and enforceable supplemental
agreement in compliance with the provisions set forth in Section 13(a)
and (b), and if applicable Section 13(d), and further providing that,
as soon as practicable after the date of any consolidation, merger or
sale of assets mentioned in this Section 13, such issuer will (i)
prepare and file a registration statement under the Act, with respect
to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause
such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date; and (ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the Rights
under the blue sky laws of such jurisdictions as may be necessary or
appropriate; and (iii) deliver to holders of the Rights historical
financial statements for such issuer and each of its Affiliates which
<PAGE> 30
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
(d) Notwithstanding anything in Section 13(b) and (c) to
the contrary, if the Principal Party as determined pursuant to
paragraph (b) above is not a corporation or does not have shares of
Common Stock, proper provision shall be made so that such Principal
Party shall create or otherwise make available for purposes of the
exercise of the Rights in accordance with the terms of this Agreement,
cash or a type or types of securities having a fair market value (as
determined by a nationally recognized investment banking firm selected
by the Board of Directors of the Company) equal to at least the value
of the shares of Common Stock which each holder of a Right would have
been entitled to receive if such Principal Party had been a corpora-
tion or had shares of Common Stock.
(e) The Company covenants and agrees that, following the
Distribution Date, it shall not consummate any of the transactions
described in clauses (i), (ii) and (iii) of the first sentence of
Section 13(a) if at the time of or after such consummation there would
be any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect or any
other action taken which would diminish or eliminate the benefits
intended to be afforded by the Rights, unless prior thereto the
Principal Party shall have amended or repealed such charter or by-law
provisions, instruments or securities, agreements or actions or
otherwise protected the holders of the Rights from such diminution or
elimination of benefits, and the Company and the Principal Party shall
have executed and delivered to the Rights Agent a legally valid,
binding and enforceable supplemental agreement providing for such
amendment, repeal or other protection.
(f) The provisions of this Section 13 shall similarly apply
to successive mergers, consolidations, sales or other transfers.
Notwithstanding the occurrence of any transaction set forth in Section
11(a)(ii), in the event that any transaction set forth in Section 13
subsequently occurs, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described
in this Section 13.
Section 14. ADDITIONAL COVENANTS.
(a) After the Stock Acquisition Date, the Company covenants
and agrees that it shall not (i) consolidate with, (ii) merge with or
into, or (iii) sell or transfer to, in one or more transactions,
assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its subsidiaries taken as a whole,
any other Person if at the time of or after such consolidation, merger
or sale there are any charter or by-law provisions or any rights,
warrants or other instruments outstanding or any other action taken
which would diminish or otherwise eliminate the benefits intended to
<PAGE> 31
be afforded by the Rights. The Company shall not consummate any such
consolidation, merger or sale unless prior thereto the Company and
such other Person shall have executed and delivered to the Rights
Agent a supplemental agreement evidencing compliance with this
subsection.
Section 15. 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. 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 15(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, except
that, 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
shares upon exercise of the Rights or to distribute certificates which
evidence fractional shares. In lieu of fractional shares, the Company
may pay to the registered holders of Right Certificates at the time
such Right Certificates are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of a share
of Common Stock. For purposes of this Section 15(b), the current
market value of a share of Common Stock shall be the closing price of
a share of Common Stock (as determined pursuant to the second sentence
of Section 11(d)) for the Trading Day immediately prior to the date of
such exercise.
<PAGE> 32
(c) Each holder of a Right or Rights by the acceptance of
the Rights expressly waives his right to receive any fractional Rights
or any fractional shares upon exercise of a Right or Rights.
Section 16. RIGHTS OF ACTION. All rights of action in
respect of this Agreement 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 Dis-
tribution Date, of the Common Stock), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and
in this Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against
actual or threatened violations of, the obligations of any Person
subject to this Agreement. Holders of Rights shall be entitled to
recover the reasonable costs and expenses, including attorneys' fees,
incurred by them in any action to enforce the provisions of this
Agreement.
Section 17. 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 close of business on the Distribution
Date, the Rights will be transferable only in connection with the
transfer of Common Stock;
(b) after the close of business on the Distribution Date,
the Rights will be transferable only by transfer of the Right Certifi-
cates, which are transferable only on the registry books of the Rights
Agent if surrendered at the principal office of the Rights Agent, 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 each Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated 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.
<PAGE> 33
Section 18. 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 Common Stock or any other securities of the Company which
may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any 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 Section 25), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the
provisions hereof.
Section 19. 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 in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted
by it in connection with its administration of this Agreement in
reliance upon any Right Certificate or certificate for 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.
Section 20. 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 corporate trust
business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the
<PAGE> 34
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 22. 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 21. TERMS AND CONDITIONS TO 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 authorization to the Rights Agent for 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 omitting 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 certi-
ficate signed by the Chairman of the Board, the Vice Chairman of the
Board, the President or any Executive or Senior Vice President and by
the Treasurer or any Assistant Treasurer or the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent
for any action taken or omitted by it in good faith under the pro-
visions of this Agreement in reliance upon such certificate.
<PAGE> 35
(c) The Rights Agent shall be liable hereunder 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 execution 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 re-
sponsible for any adjustment required under the provisions of
Sections 11 or 13 or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise
of Rights evidenced by Right Certificates after actual notice of any
such 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 Common Stock to be issued pursuant to this Agreement
or any Right Certificate or as to whether any shares of Common Stock
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 determinations, interpretations and instructions with respect
to the performance of its duties hereunder from the Chairman of the
Board, the Vice Chairman of the Board, the President or any Executive
or Senior Vice President or the Secretary or any Assistant Secretary
or the Treasurer or any Assistant Treasurer 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 omitted
to be taken by it in good faith in accordance with determinations,
interpretations and instructions of any such officer.
(h) The Rights Agent and any shareholder, 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
<PAGE> 36
fully and freely as though it were not Rights Agent under this Agree-
ment. 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 attached
to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take
any further action with respect to such requested exercise of transfer
without first consulting with the Company.
Section 22. 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 by
registered or certified mail, and 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 by registered or
certified mail, and 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 or shall repeatedly fail or
refuse to act, 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 or repeated
failure or refusal to act by the 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 of the State of Illinois (or of any other state
of the United States so long as such corporation is authorized to do
business as a banking institution in the State of Illinois), in good
standing, having a principal 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
<PAGE> 37
$50,000,000. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or
deed, and the predecessor Rights Agent shall deliver and transfer to
the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 22, however, or any defect there-
in, 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 23. ISSUANCE OF NEW RIGHT CERTIFICATES. Not-
withstanding 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 form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase
Price per share and the number or kind or class of shares of stock or
other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement.
Section 24. REDEMPTION.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (i) the close of business
on the tenth business day after the Stock Acquisition Date or (ii) the
Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price").
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, and without any
further action and without any notice, the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive
the Redemption Price. As soon as practicable after the action of the
Board of Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the 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. Such notice of redemption shall state the
method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may
<PAGE> 38
redeem, acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in this Section 24, and
other than in connection with the repurchase of Common Stock prior to
the Distribution Date.
(c) The Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights and (ii) mailing
payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry
books of the Transfer Agent of the Common Stock, and upon such action,
all outstanding Rights Certificates shall be null and void without any
further action by the Company.
Section 25. EXCHANGE.
(a) Subject to Section 25(d), the Board of Directors of the
Company may, at its option, at any time after the time that any Person
becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) and
Section 11(a)(ii) hereof) for shares of Common Stock of the Company 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 exchange
ratio 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 any Person (other
than the Company, any subsidiary of the Company, any employee benefit
plan of the Company or any such subsidiary, any entity holding shares
of Common Stock for or pursuant to the terms of any such plan or any
trustee, administrator or fiduciary of such a plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to
subsection (a) of this Section 25 and without any further action and
without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to
receive that number of shares of Common Stock equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the 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
<PAGE> 39
Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall
be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) and
Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with
this Section 25, the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights; and, consistent with the provisions of
Section 9(e) and Section 11(a)(iii) hereof, in the event the Company
is unable to cause shares of Common Stock to be delivered in exchange
for Rights for any reason within 90 days after the announcement of the
decision to exchange Rights pursuant to Section (a) of this
Section 25, the Company shall substitute for each share of Common
Stock otherwise issuable upon the exchange of Rights, cash, other
assets or other securities of the Company (or any combination of the
foregoing) having an aggregate value equal to the "current per share
market price" (as determined pursuant to Section 11(d)(ii) hereof), as
determined by the Board of Directors of the Company.
Section 26. NOTICE OF CERTAIN EVENTS. In case the Company
shall propose (a) to pay any dividend payable in stock of any class to
the holders of its Common Stock or to make any other distribution to
the holders of its Common Stock (other than a regular periodic cash
dividend out of earnings or retained earnings or other than a special
cash dividend declared at a time when there is no Acquiring Person out
of earnings or retained earnings, or (b) to offer to the holders of
its Common Stock rights or warrants to subscribe for or to purchase
any additional shares of Common Stock or shares of stock of any class
or any other securities, rights or options, or (c) to effect any
reclassification of its Common Stock (other than a reclassification
involving only the subdivision of outstanding shares of Common Stock),
or (d) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its
subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the
Company and its subsidiaries (taken as a whole) to, any other Person
or Persons, or (e) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to
each holder of a Right, in accordance with Section 26, a notice of
such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of Common 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 (a) or (b) above at least twenty days
prior to the record date for determining holders of the Common Stock
for purposes of such action, and in the case of any such other action,
<PAGE> 40
at least twenty days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of Common
Stock, whichever shall be the earlier.
In case any of the transactions set forth in Section
11(a)(ii) of this Agreement shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to each holder of
a Right, in accordance with Section 26, a notice of the occurrence of
such event, which shall specify the event and the consequences of the
event to holders of Rights under Section 11(a)(ii).
Section 27. 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:
AAR CORP.
1100 North Wood Dale Road
Wood Dale, Illinois 60191
Attention: Secretary
with copy to the General Counsel at the same address. Subject to the
provisions of Section 22, 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:
First Chicago Trust Company of New York
525 Washington Boulevard, Suite 4660
Jersey City, NJ 07310
Attention: Tenders; Exchanges Administration
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 28. SUPPLEMENTS AND AMENDMENTS. The Company and
the Rights Agent may from time to time supplement or amend this
Agreement without approval of any holders of Right Certificates in
order to cure any ambiguity, to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, to extend the period of redemption provided for in
Section 24 hereof, or to make any other provisions in regard to
matters or questions arising hereunder which the Company and the
Rights Agent may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates;
provided, however, that this Agreement may not be supplemented or
<PAGE> 41
amended in any way after an Acquiring Person has become such. 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 28, the Rights Agent shall
execute such supplement or amendment unless the Rights Agent shall
have determined in good faith that such supplement or amendment would
adversely affect its interest under this Agreement. Prior to the
Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
Section 29. DETERMINATION AND ACTIONS BY THE BOARD OF
DIRECTORS, ETC. 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 or any other securities 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 Exchange Act. The Board of Directors of the
Company shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically
granted to the Board, or 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 a
determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made by the
Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights Certificates and
all other parties, and (y) not subject the Board to any liability to
the holders of the Rights Certificates.
Section 30. 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 31. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation
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.
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
<PAGE> 42
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.
Section 35. SEVERABILITY. If any term, provision, covenant
or restriction of this Agreement shall be held by a court of competent
jurisdiction or other authority to be invalid, void, illegal or unen-
forceable, the validity or enforceability of the remainder of the
terms, provisions, covenants and restrictions shall not be affected
thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to
be hereunto affixed and attested, all as of the day and year first
above written.
Attest: AAR CORP.
By /s/ Howard A. Pulsifer By /s/ David P. Storch
---------------------------- --------------------------
Name: Howard A. Pulsifer Name: David P. Storch
Title: Vice President, Secretary Title: President and
and General Counsel Chief Executive
Officer
Attest: FIRST CHICAGO TRUST COMPANY OF
NEW YORK
By /s/ Michael Kane By /s/ James R. Kuzmich
---------------------------- --------------------------
Name: Michael Kane Name: James R. Kuzmich
Title: Assistant Vice President Title: Assistant Vice
President
<PAGE> 43
EXHIBIT A
FORM OF RIGHTS CERTIFICATE
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER AUGUST 6, 2007, OR EARLIER
IF NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT BETWEEN AAR CORP.
AND FIRST CHICAGO TRUST COMPANY OF NEW YORK (THE
"RIGHTS AGREEMENT"). [THE RIGHTS REPRESENTED BY
THIS RIGHTS CERTIFICATE WERE ISSUED TO A PERSON
WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE OR AN
ASSOCIATE OF AN ACQUIRING PERSON. THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY HAVE
BECAME VOID TO THE EXTENT PROVIDED BY SECTION
7(e) OF THE RIGHTS AGREEMENT.]*
RIGHTS CERTIFICATE
AAR CORP.
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 July 8, 1997 (the
"Rights Agreement"), between AAR CORP., a Delaware corporation (the
"Company"), and First Chicago Trust Company of New York, a national
banking association (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. (Central time)
on August 6, 2007, at the principal office of the Rights Agent in
Cranford, New Jersey, one fully paid, non-assessable share of the
Common Stock, $1.00 par value (the "Common Stock"), of the Company, at
a purchase price of $125.00 per share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the
appropriate Form of Election to Purchase duly executed. The number of
Rights evidenced by this Rights Certificate (and the number of shares
which may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as
of August 6, 1997 based on the Common Stock of the Company as
constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the
number of shares of Common Stock or other securities which may be
* The portion of the legend in brackets shall be inserted only if
applicable.
<PAGE> 44
purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the
happening of certain events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference
and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Rights Certificates. Copies
of the Rights Agreement are on file at the principal office of the
Company, and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent
designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number of
shares of Common Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate shall be
exercised (other than pursuant to Section 11(a)(ii) of the Rights
Agreement) in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for
the number of whole Rights not exercised. If this Rights Certificate
shall be exercised in whole or in part pursuant to Section 11(a)(ii)
of the Rights Agreement, the holder shall be entitled to receive this
Rights Certificate duly marked to indicate such exercise has occurred
as set forth in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its
option at a redemption price of $.01 per Right. Subject to the
provisions of the Rights Agreement, the Company, at its option, may
elect to mail payment of the redemption price to the registered holder
of the Right at the time of redemption, in which event this
Certificate may become void without any further action by the Company.
No fractional shares of Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, but in lieu thereof
a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled
to vote or receive dividends or be deemed for any purpose the holder
of shares of Common Stock or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or,
<PAGE> 45
to receive notice of meetings or other actions affecting shareholders
(except as provided in the Rights Agreement), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of August 6, 1997.
[SEAL] ATTEST: AAR CORP.
By:__________________________ By:__________________________
Name:_____________________ Name:________________________
Title:____________________ Title:_______________________
Countersigned:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By:__________________________
Authorized Signatory
Name:_____________________
Title:____________________
<PAGE> 46
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _______________________________________ hereby
sells, assigns and transfers unto ___________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
____________________ Attorney, to transfer the within Rights
Certificate on the books of the within-named Company, with full power
of substitution.
Dated: __________ __, 19___
_____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank, savings association,
credit union or trust company having an office or correspondent in the
United States or other eligible guarantor institution which is a
participant in a signature guarantee medallion program.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being sold, assigned or transferred by or on behalf
of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is or was or
subsequently became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person.
Dated:__________ ___, _____ _____________________________
Signature
<PAGE> 47
[Form of Reverse Side of Rights Certificate -- continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate
pursuant to Section 11(a)(ii) of the Rights Agreement.)
To: AAR CORP.
The undersigned hereby irrevocably elects to exercise ------
Rights represented by this Rights Certificate to purchase the shares
of Common Stock (or other securities of the Company) issuable upon the
exercise of such Rights and requests that certificates for such shares
be issued in the name of:
_____________________________________________________________________
(Please insert social security or other identifying number)
______________________________________________________________________
(Please print name and address)
The Rights Certificate indicating the balance, if any, of such
Rights that may still be exercised pursuant to Section 11(a)(ii) of
the Rights Agreement shall be returned to the undersigned unless such
person requests that the Rights Certificate be registered in the name
of and delivered to:
_____________________________________________________________________
(Please insert social security or other identifying number.)
(Complete only if the Rights Certificate is to be registered in
a name other than the undersigned's.)
_____________________________________________________________________
(Please print name and address)
Dated: __________ ___, _____ _____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank, savings association,
credit union or trust company having an office or correspondent in the
United States or other eligible guarantor institution which is a
participant in a signature guarantee medallion program.
<PAGE> 48
CERTIFICATE
The undersigned hereby certifies that by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the Rights
Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring
Person;
(3) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: __________ ___, _____ _____________________________
Signature
NOTICE
The signature on the foregoing Forms of Assignment and Election
to Purchase and Certificates must correspond to the name as written
upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
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, the Company and the Rights Agent will deem the
Beneficial Owner of the Rights evidenced by this Rights Certificate to
be an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
<PAGE> 49
EXHIBIT B
AAR CORP.
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On July 8, 1997, the Board of Directors of AAR CORP. (the
"Company") declared a dividend distribution of one Right for each
outstanding share of Common Stock, $1.00 par value (the "Common
Stock"), of the Company to the stockholders of record on August 6,
1997 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company one share of Common Stock at a price of $125
per share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The First
National Bank of Chicago, as Rights Agent (the "Rights Agent"). The
Rights replace the common stock purchase rights which were initially
distributed to the Company's stockholders in 1987 and which expired by
their own terms on August 6, 1997.
Until the earlier to occur of (i) the tenth business day after a
public announcement that a person or group of affiliated or associated
persons acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common Stock of
the Company (such person or group being called an "Acquiring Person"
and such date of first public announcement being called the "Stock
Acquisition Date"), or (ii) the tenth business day after the
commencement or announcement of an intention to make a tender offer or
exchange offer which would result in any person or group of affiliated
or associated persons becoming an Acquiring Person (the earlier of
such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Company's Common Stock
certificates outstanding as of the Record Date, by such Common Stock
certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Company's Common
Stock. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after
the Record Date upon transfer or new issuance of the Company's Common
Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any of the
Company's Common Stock certificates outstanding as of the Record Date
will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the
Rights ("Rights Certificates") will be mailed to holders of record of
the Company's Common Stock as of the close of business on the
Distribution Date and, thereafter, such separate Rights Certificates
alone will evidence the Rights.
<PAGE> 50
The Rights are not exercisable until the Distribution Date. The
Rights will expire on August 6, 2007, unless earlier redeemed by the
Company as described below.
The Purchase Price payable, and the number of shares of Common
Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of the Common Stock, (ii) upon the grant to
holders of Common Stock of certain rights, options or warrants to
subscribe for shares of Common Stock or convertible securities at less
than the current market price of the Common Stock or (iii) upon the
distribution to holders of Common Stock of evidences of indebtedness
or assets (excluding (a) a regular periodic cash dividend or (b) a
dividend payable in Common Stock) or of subscription rights, options
or warrants (other than those referred to above).
In the event that a person becomes the beneficial owner of 15% or
more of the outstanding shares of Common Stock (i.e., becomes an
Acquiring Person), each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will be void), will
have the right to receive upon exercise thereof, that number of shares
of Common Stock having a market value of two times the exercise price
of the Right (such right being called the "Flip-In" right).
In the event that, on or after the Stock Acquisition Date, the
Company were acquired in a merger or other business combination, or
50% or more of its assets or earning power were sold, proper provision
shall be made so that each holder of a Right shall thereafter have the
right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have
a market value of two times the exercise price of the Right. In the
event that the Company were the surviving corporation in a merger
involving the Acquiring Person and the Common Stock were not changed
or exchanged, proper provision shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring Person
(which will be void), will thereafter have the right to receive upon
exercise that number of shares of the Common Stock having a market
value of two times the exercise price of the Right (such right being
called the "Flip-Over" right). The holder of a right will no longer
have a Flip-Over right if, and to the extent that, he has exercised
his Flip-In 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 will be issued
and, in lieu thereof, a cash payment will be made based on the market
price of the Common Stock on the last trading date prior to the date
of exercise.
<PAGE> 51
At any time prior to the tenth day after the time that there is
an Acquiring Person, the Company may, at its option, redeem the Rights
in whole but not in part, at a price of $0.01 per Right (the
"Redemption Price"). Immediately upon the authorization of the
redemption of the Rights by the Board of Directors of the Company, the
Rights will terminate and the only right of the holders of Rights will
be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
The Board of Directors of the Company may amend the Rights
Agreement from time to time, provided that any such changes do not
adversely affect the interest of the holders of the Rights, and
provided further that the Rights Agreement may not be supplemented or
amended in any way after an Acquiring Person has become such.
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. A copy of the Rights Agreement is available to all Right
holders 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, which is hereby
incorporated herein by reference.
* * * * * * * * *
