SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): November 22, 1999
Chicago Rivet & Machine Co.
(Exact name of registrant as specified in its charter)
Illinois 0-1227 36-0904920
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
P.O. Box 3061
901 Frontenac Road
Naperville, Illinois 60566
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (630) 357-8500
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events.
Rights Agreement
On November 22, 1999, the Board of Directors of Chicago Rivet &
Machine Co. (the "Company") declared a dividend distribution of one Right
for each outstanding share of Company Common Stock to stockholders of
record at the close of business on December 3, 1999 (the "Record Date").
Each Right entitles the registered holder to purchase from the Company a
unit consisting of one one-hundredth of a share (a "Unit") of Series A
Junior Participating Preferred Stock, no par value per share (the "Series A
Preferred Stock"), at a Purchase Price of $90.00 per Unit, subject to
adjustment. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and First
Chicago Trust Company of New York, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified
in the Rights Agreement, the Rights will separate from the Common Stock and
a Distribution Date will occur upon the earlier of (i) 10 days following a
public announce ment that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired beneficial ownership of 10% or
more of the outstanding shares of Common Stock other than as a result of
repurchases of stock by the Company or certain inadvertent actions by
institutional or certain other stockholders or the date a Person has
entered into an agreement or arrangement with the Company or any Subsidiary
of the Company providing for an Acquisition Transaction (the "Stock
Acquisition Date") or (ii) 10 business days (or such later date as the
Board shall determine, provided, however, that no deferral of a
Distribution Date by the Board pursuant to the terms of the Rights
Agreement described in this clause (ii) may be made at any time during the
Special Period (as defined below)) following the commencement of a tender
offer or exchange offer that would result in a person or group becoming an
Acquiring Person. Certain existing stockholders of the Company are excluded
from the definition of "Acquiring Person" and the triggering provisions of
the Rights Agreement unless they acquire beneficial ownership of additional
shares of Common Stock in amounts and under certain circumstances described
in the Rights Agreement. An Acquisition Transaction is defined in the
Rights Agreement as (x) a merger, consolidation or similar transaction
involving the Company or any of its Subsidiaries as a result of which
stockholders of the Company will no longer own a majority of the
outstanding shares of Common Stock of the Company or a publicly traded
entity which controls the Company or, if appropriate, the entity into which
the Company may be merged, consolidated or otherwise combined (based solely
on the shares of Common Stock received or retained by such stockholders, in
their capacity as stockholders of the Company, pursuant to such
transaction), (y) a purchase or other acquisition of all or a substantial
portion of the assets of the Company and its Subsidiaries, or (z) a
purchase or other acquisition of securities representing 10% or more of the
shares of Common Stock then outstanding. Until the Distribution Date, (i)
the Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates issued after the Record Date will contain a
notation incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates for Common Stock outstanding
will also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate. Pursuant to the Rights Agreement,
the Company reserves the right to require prior to the occurrence of a
Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock
will be issued.
The Rights are not exercisable until the Distribution Date and
will expire at 5:00 P.M. New York City time on December 2, 2009, unless
such date is extended or the Rights are earlier redeemed or exchanged by
the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and, thereafter, the
separate Rights Certificates alone will represent the Rights. Except as
otherwise determined by the Board of Directors, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, except
pursuant to an offer for all outstanding shares of Common Stock which the
independent directors determine to be fair and not inadequate to and to
otherwise be in the best interests of the Company and its stockholders,
after receiving advice from one or more investment banking firms (a
"Qualified Offer"), each holder of a Right will thereafter have the right
to receive, upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to
two times the exercise price of the Right. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person
will be null and void. However, Rights are not exercisable following the
occurrence of the event set forth above until such time as the Rights are
no longer redeemable by the Company as set forth below.
For example, at an exercise price of $90.00 per Right, each
Right not owned by an Acquiring Person (or by certain related parties)
following an event set forth in the preceding paragraph would entitle its
holder to purchase $180.00 worth of Common Stock (or other consideration,
as noted above) for $90.00. Assuming that the Common Stock had a per share
value of $30.00 at such time, the holder of each valid Right would be
entitled to purchase 6 shares of Common Stock for $90.00.
In the event that, at any time following the Stock Acquisition
Date, (i) the Company engages in a merger or other business combination
transaction in which the Company is not the surviving corporation (other
than with an entity which acquired the shares pursuant to a Qualified
Offer), (ii) the Company engages in a merger or other business combination
transaction in which the Company is the surviving corporation and the
Common Stock of the Company is changed or exchanged, or (iii) 50% or more
of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which have previously been voided as set
forth above) shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a value equal to two times the
exercise price of the Right. The events set forth in this paragraph and in
the second preceding paragraph are referred to as the "Triggering Events."
Except during the Special Period (as defined below), at any
time after a person becomes an Acquiring Person and prior to the
acquisition by such person or group of fifty percent (50%) or more of the
outstanding Common Stock, the Board may exchange the Rights (other than
Rights owned by such person or group which have become void), in whole or
in part, at an exchange ratio of one share of Common Stock, or one
one-hundredth of a share of Preferred Stock (or of a share of a class or
series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
At any time until ten days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors). Immediately
upon the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $.01 redemption price.
For 180 days (the "Special Period") following a change in
control of the Board of Directors of the Company, that has not been
approved by the existing Board of Directors, occurring within 270 days of
announcement of an unsolicited third party acquisition or business
combination proposal or of a third party's intent or proposal otherwise to
become an Acquiring Person, the new directors are entitled to redeem the
Rights (assuming the Rights would have otherwise been redeemable),
including to facilitate an acquisition or business combination transaction
involving the Company, but only (1) if they have followed certain
prescribed procedures or (2) if such procedures are not followed, and if
their decision regarding redemption and any acquisition or business
combination is challenged as a breach of fiduciary duty of care or loyalty,
the directors (solely for purposes of the effectiveness of the redemption
decision) are able to establish the entire fairness of the redemption or
transaction.
Amended and Restated By-laws.
On November 22, 1999, the Board of Directors of the Company also
approved the Company's Amended and Restated By-laws, dated November 22,
1999 (the "Amended By-laws"). The Amended By-laws changed the advance notice
period required for shareholder proposals and nominations for election of
directors from not less than 90 days nor more than 120 days prior to an
annual meeting to not less than 90 days nor more than 120 days prior to the
mailing date of the proxy statement for the prior year's annual meeting.
Under the Amended ByLaws, to be properly brought before the next annual
meeting of shareholders of the Company, shareholder proposals and
nominations for election of directors must be received by the Secretary of
the Company no earlier than December 4, 1999 and no later than January 3,
2000.
The Amended By-laws also specify the procedures for the call of a
special meeting of shareholders by not less than one-fifth of the Company's
shareholders. The Amended By-laws provide for the setting of a record date
and establish certain other procedures for determining the sufficiency of a
shareholder call of a special meeting. The Amended By-laws outline the
procedures to be followed for the setting of the record date for
shareholder action at such special meeting, the timing of such meeting and
certain other procedures related to such special meeting.
The Amended By-laws also establish the procedures to be followed in
connection with a shareholder action by written consent in lieu of a
meeting. Upon receipt of a request for a record date for a shareholder
action by written consent which complies with the requirements of the
Amended By-laws, the Amended By-laws provide for the setting of a record
date and procedures for determining the sufficiency of such action by
written consent.
Certain other amendments were made to the provisions dealing with
notice of special meetings of the Board of Directors and adjournments,
postponements and cancellations of shareholder meetings.
The foregoing descriptions of the Rights Agreement and the
Amended and Restated By-laws do not purport to be complete and are
qualified in their entirety by reference to the Rights Agreement and the
Amended and Restated By-laws, respectively, which are attached as exhibits
hereto and incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
- ----------- -------
3.1 Amended and Restated By-laws of the Company, dated November
22, 1999.
4.1 Form of Rights Agreement, dated as of November 22, 1999,
between Chicago Rivet & Machine Co. and First Chicago Trust
Company of New York, as Rights Agent.
99.1 Press Release, dated November 23, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CHICAGO RIVET & MACHINE CO.
By: /s/ John Osterman
_____________________________
Name: John Osterman
Title: President, Chief Operating
Officer and Treasurer
Date: November 24, 1999
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
3.1 Amended and Restated By-laws, dated November 22, 1999.
4.1 Form of Rights Agreement, dated as of November 22,
1999, between Chicago Rivet & Machine Co. and First Chicago
Trust Company of New York, as Rights Agent.
99.1 Press Release, dated November 23, 1999.
EXHIBIT 3.1
AMENDED AND RESTATED BY-LAWS
(AS OF NOVEMBER 22, 1999)
OF
CHICAGO RIVET & MACHINE CO.,
an Illinois corporation
(the "Corporation")
ARTICLE I
OFFICES
The principal office of the Corporation shall be in the
City of Naperville, County of DuPage and State of Illinois. The Corporation
may also have offices at such other places, either within or without the
State of Illinois, as the Board of Directors may from time to time appoint
or as the business may require.
ARTICLE II
SHAREHOLDERS' MEETINGS
SECTION 1. THE ANNUAL MEETING. The annual meeting of the
shareholders shall be held at the principal office of the Corporation at
10:00 o'clock A. M. (Chicago time) on the second Tuesday in May of each
year, or if such day be a holiday, then upon the next succeeding secular
day. A written or printed notice stating the place, day and hour of the
meeting shall be mailed by the Secretary or an Assistant Secretary of the
Corporation at least ten days before such meeting to each shareholder to
his, her or its last known post-office address, as appears on the books of
the Corporation. A majority of the capital stock outstanding represented in
person or by proxy shall constitute a quorum at all shareholders' meetings.
SECTION 2. SPECIAL MEETINGS.
(a) Special meetings of the shareholders may be called by (i)
the President or (ii) the Board of Directors and shall be called by the
President or the Board of Directors upon the demand, in accordance with
this Section 2, of holders of not less than one-fifth of all the
outstanding shares of the Corporation entitled to vote on the any matter
proposed to be considered at the special meeting, for the purpose or
purposes stated in the call of the meeting.
(b) In order that the Corporation may determine the
shareholders entitled to demand a special meeting, the Board of Directors
may fix a record date to determine the shareholders entitled to make such a
demand (the "Demand Record Date"). The Demand Record Date shall not precede
the date upon which the resolution fixing the Demand Record Date is adopted
by the Board of Directors and shall not be more than 10 days after the date
upon which the resolution fixing the Demand Record Date is adopted by the
Board of Directors. Any shareholder of record seeking to have shareholders
demand a special meeting shall, by sending written notice to the Secretary
of the Corporation by hand or by certified or registered mail, return
receipt requested, request the Board of Directors to fix a Demand Record
Date. The Board of Directors shall promptly, but in all events within 10
days after the date on which a valid request to fix a Demand Record Date is
received, adopt a resolution fixing the Demand Record Date and shall make a
public announcement of such Demand Record Date. If no Demand Record Date
has been fixed by the Board of Directors within 10 days after the date on
which such request is received by the Secretary, the Demand Record Date
shall be the 10th day after the first date on which a valid written request
to set a Demand Record Date is received by the Secretary. To be valid, such
written request shall set forth the purpose or purposes for which the
special meeting is to be held, shall be signed by one or more shareholders
of record (or their duly authorized proxies or other representatives),
shall bear the date of signature of each such shareholder (or proxy or
other representative) and shall set forth all information about each such
shareholder and about the beneficial owner or owners, if any, on whose
behalf the request is made that would be required to be set forth in a
shareholder's notice described in paragraph (a) of Section 16 of Article II
of these by-laws.
(c) In order for a shareholder or shareholders to demand a
special meeting, a written demand or demands for a special meeting by the
holders of record as of the Demand Record Date of not less than one-fifth
of all the outstanding shares of the Corporation entitled to vote on the
matter proposed to be considered at the special meeting must be delivered
to the Corporation. To be valid, each written demand by a shareholder for a
special meeting shall set forth the specific purpose or purposes for which
the special meeting is to be held (which purpose or purposes shall be
limited to the purpose or purposes set forth in the written request to set
a Demand Record Date received by the Corporation pursuant to paragraph (b)
of this Section 2), shall be signed by one or more persons who as of the
Demand Record Date are shareholders of record (or their duly authorized
proxies or other representatives), shall bear the date of signature of each
such shareholder (or proxy or other representative), shall set forth the
name and address, as they appear in the Corporation's books, of each
shareholder signing such demand and the class and number of shares of the
Corporation which are owned of record and beneficially by each such
shareholder, shall be sent to the Secretary by hand or by certified or
registered mail, return receipt requested, and shall be received by the
Secretary within 60 days after the Demand Record Date.
(d) The Corporation shall not be required to call a special
meeting upon shareholder demand unless, in addition to the documents
required by paragraph (c) of this Section 2, the Secretary receives a
written agreement signed by each Soliciting Shareholder (as defined below),
pursuant to which each Soliciting Shareholder, jointly and severally,
agrees to pay the Corporation's costs of holding the special meeting,
including the costs of preparing and mailing proxy materials for the
Corporation's own solicitation, provided that if each of the resolutions
introduced by any Soliciting Shareholder at such meeting is adopted, and
each of the individuals nominated by or on behalf of any Soliciting
Shareholder for election as a director at such meeting is elected, then the
Soliciting Shareholders shall not be required to pay such costs. For
purposes of this paragraph (d), the following terms shall have the meanings
set forth below:
(i) "Affiliate" of any Person (as defined herein) shall
mean any Person controlling, controlled by or under common control with
such first Person.
(ii) "Participant" shall have the meaning assigned to such
term in Rule 14a-11 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")
(iii) "Person" shall mean any individual, firm,
corporation, partnership, joint venture, association, trust, unincorporated
organization or other entity.
(iv) "Proxy" shall have the meaning assigned to such term
in Rule 14a-1 promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such
term in Rule 14a-11 promulgated under the Exchange Act.
(vi) "Soliciting Shareholder" shall mean, with respect to
any special meeting demanded by a shareholder or shareholders, any of the
following Persons: (A) if the number of shareholders signing the demand or
demands of meeting delivered to the corporation pursuant to paragraph (c)
of this Section 2 is 10 or fewer, each shareholder signing any such demand;
(B) if the number of shareholders signing the demand or demands of meeting
delivered to the corporation pursuant to paragraph (c) of this Section 2 is
more than 10, each Person who either (x) was a Participant in any
Solicitation of such demand or demands or (y) at the time of the delivery
to the Corporation of the documents described in paragraph (c) of this
Section 2 had engaged or intended to engage in any Solicitation of Proxies
for use at such Special Meeting (other than a Solicitation of Proxies on
behalf of the Corporation); or (C) any Affiliate of a Soliciting
Shareholder, if a majority of the Directors then in office determine,
reasonably and in good faith, that such Affiliate should be required to
sign the written notice described in paragraph (c) of this Section 2 and/or
the written agreement described in this paragraph (d) in order to prevent
the purposes of this Section 2 from being evaded.
(e) Except as provided in the following sentence, any special
meeting shall be held at such hour and day as may be designated by
whichever of the President or the Board of Directors shall have called such
meeting. In the case of any special meeting called by the Board of
Directors or the President upon the demand of shareholders (a "Demand
Special Meeting"), such meeting shall be held at such hour and day as may
be designated by the Board of Directors or the President; provided,
however, that the date of any Demand Special Meeting shall be not more than
60 days after the Meeting Record Date (as defined in Section 6 of this
Article II); and provided further that in the event that the Directors then
in office fail to designate an hour and date for a Demand Special Meeting
within 10 days after the date that valid written demands for such meeting
by the holders of record as of the Demand Record Date of shares
representing not less than one-fifth of all the outstanding shares of the
Corporation entitled to vote on the any matter proposed to be considered at
the special meeting are delivered to the Corporation (the "Delivery Date"),
then such meeting shall be held at 2:00 P.M. local time on the 90th day
after the Delivery Date or, if such 90th day is not a Business Day (as
defined below), on the first preceding Business Day. In fixing a meeting
date for any special meeting, the President or the Board of Directors may
consider such factors as he or it deems relevant within the good faith
exercise of his or its business judgment, including, without limitation,
the nature of the action proposed to be taken, the facts and circumstances
surrounding any demand for such meeting, and any plan of the Board of
Directors to call an annual meeting or a special meeting for the conduct of
related business.
(f) The Corporation may engage independent inspectors of
elections to act as an agent of the Corporation for the purpose of promptly
performing a ministerial review of the validity of any purported written
demand or demands for a special meeting received by the Secretary. For the
purpose of permitting the inspectors to perform such review, no purported
demand shall be deemed to have been delivered to the Corporation until the
earlier of (i) 5 Business Days following receipt by the Secretary of such
purported demand and (ii) such date as the independent inspectors certify
to the Corporation that the valid demands received by the Secretary
represent not less than one-fifth of all the outstanding shares of the
Corporation entitled to vote on the matter proposed to be considered at the
special meeting. Nothing contained in this paragraph (f) shall in any way
be construed to suggest or imply that the Board of Directors or any
shareholder shall not be entitled to contest the validity of any demand,
whether during or after such 5 Business Day period, or to take any other
action (including, without limitation, the commencement, prosecution or
defense of any litigation with respect thereto).
(g) For purposes of these by-laws, "Business Day" shall mean
any day other than a Saturday, a Sunday or a day on which banking
institutions in the State of Illinois are authorized or obligated by law or
executive order to close.
SECTION 3. PLACE OF MEETING. The Board of Directors may
designate any place as the place of meeting for any annual meeting or for
any special meeting called by the Board of Directors. If no designation is
made or if a special meeting be otherwise called, the place of meeting
shall be at the principal office of the Company in Naperville, Illinois.
SECTION 4. TIME OF ELECTING DIRECTORS. Directors shall be
elected at the regular annual meeting of the shareholders. If the election
of directors is not held on the day of the annual meeting, the directors
shall cause the election to be held as soon thereafter as conveniently may
be. No failure to elect directors or to hold the annual meeting at the
designated time shall work any forfeiture or dissolution of the
Corporation.
SECTION 5. NOTICE OF MEETINGS. Written notice stating the
place, date, and hour of the meeting, and in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be delivered
not less than ten nor more than sixty days before the date of the meeting,
or in the case of a merger, consolidation, share exchange, dissolution or
sale, lease or exchange of assets, not less than twenty nor more than sixty
days before the meeting, either personally or by mail, by or at the
direction of the President, or the Secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notices shall be deemed to be delivered when
deposited in the United States mail, addressed to the shareholder at his
address as it appears on the records of the Corporation, with postage
thereon prepaid. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. Any
previously scheduled meeting of shareholders may be postponed, and any
special meeting of the shareholders may be cancelled upon public notice
given prior to the date previously scheduled for such meeting of
shareholders.
SECTION 6. FIXING OF RECORD DATE. The Board of Directors may
fix in advance a date not less than ten days and not more than sixty days,
or in the case of a merger, consolidation, share exchange, dissolution or
sale, lease or exchange of assets, not less than twenty and not more than
sixty days, prior to the date of any annual meeting or special meeting as
the record date for the determination of shareholders entitled to notice
of, or to vote at, such meeting (the "Meeting Record Date"). In the case of
any Demand Special Meeting, (i) the Meeting Record Date shall be not later
than the 30th day after the Delivery Date and (ii) if the Board of
Directors fails to fix the Meeting Record Date within 30 days after the
Delivery Date, then the close of business on such 30th day shall be the
Meeting Record Date. The Board of Directors may also fix in advance a date
as the record date for the purpose of determining shareholders entitled to
take any other action or determining shareholders for any other purpose.
Such record date shall be not more than sixty days prior to the date on
which the particular action, requiring such determination of shareholders,
is to be taken. Except in the case of a Demand Special Meeting, if no
record date is fixed, the record date for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders shall be the
date on which notice of the meeting is mailed, and the record date for the
determination of shareholders for any other purpose shall be the date on
which the Board of Directors adopts the resolution relating thereto. A
determination of shareholders of record entitled to notice of or to vote at
a meeting of shareholders shall apply to any adjournment of the meeting.
Nothing in this Section 6 shall in any way be construed to change the
procedure for setting the record date and for determining the effectiveness
of shareholder action by written consent as set forth in Section 7 of this
Article II.
SECTION 7. WRITTEN CONSENTS.
(a) In order that the Corporation may determine the
shareholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date (a "Consent Record
Date"). The Consent Record Date shall not precede the date upon which the
resolution fixing the Consent Record Date is adopted by the Board of
Directors and shall not be more than 10 days after the date upon which the
resolution fixing the Consent Record Date is adopted by the Board of
Directors. Any shareholder of record seeking to consent to corporate action
in writing without a meeting shall, by sending written notice to the
Secretary of the Corporation by hand or by certified or registered mail,
return receipt requested, request the Board of Directors to fix a Consent
Record Date. The Board of Directors shall promptly, but in all events
within 10 days after the date on which a valid request to fix a Consent
Record Date is received, adopt a resolution fixing the Consent Record Date
and shall make a public announcement of such Consent Record Date. If no
Consent Record Date has been fixed by the Board of Directors within 10 days
after the date on which such request is received by the Secretary, the
Consent Record Date shall be the 10th day after the first date on which a
valid written request to set a Consent Record Date is received by the
Secretary. To be valid, such written request shall set forth the purpose or
purposes for which the written consent is sought to be used, shall be
signed by one or more shareholders of record (or their duly authorized
proxies or other representatives), shall bear the date of signature of each
such shareholder (or proxy or other representative) and shall set forth all
information about each such shareholder and about the beneficial owner or
owners, if any, on whose behalf the request is made that would be required
to be set forth in a shareholder's notice described in paragraph (a) of
Section 16 of Article II of these by-laws.
(b) Every written consent shall be signed by one or more
persons who as of the Consent Record Date are shareholders of record on the
Consent Record Date (or their duly authorized proxies or other
representatives), shall bear the date of signature of each such shareholder
(or proxy or other representative), and shall set forth the name and
address, as they appear in the Corporation's books, of each shareholder
signing such consent and the class and number of shares of the Corporation
which are owned of record and beneficially by each such shareholder and
shall be sent to the Secretary by hand or by certified or registered mail,
return receipt requested. No written consent shall be effective to take the
corporate action referred to therein unless, within 60 days of the date the
earliest dated written consent was received in accordance with this
paragraph (b) of this Section 7, a written consent or consents signed by a
sufficient number of holders to take such action are delivered to the
Corporation.
(c) In the event of the delivery, in the manner provided by
paragraph (b) of this Section 7, to the Corporation of the requisite
written consent or consents to take corporate action and/or any related
revocation or revocations, the Corporation shall engage independent
inspectors of elections for the purpose of promptly performing a
ministerial review of the validity of the consents and revocations. For the
purpose of permitting the inspectors to perform such review, no action by
written consent without a meeting shall be effective until such date as the
independent inspectors certify to the Corporation that the consents
represent at least the minimum number of votes that would be necessary to
take the corporate action. Nothing contained in this paragraph (c) of
Section 7 shall in any way be construed to suggest or imply that the Board
of Directors or any shareholder shall not be entitled to contest the
validity of any consent or revocation thereof, whether before or after
certification by the independent inspectors, or to take any other action
(including, without limitation, the commencement, prosecution or defense of
any litigation with respect thereto, and the seeking of injunctive relief
in such litigation).
SECTION 8. VOTING LISTS. The officer or agent having charge of
the transfer books for shares of the Corporation shall make, at least ten
days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting, arranged in alphabetical
order, showing the address of and the number of shares registered in the
name of the shareholder, which list, for a period of ten days prior to such
meeting, shall be kept on file at the registered office of the Corporation
and shall be open to inspection by any shareholder for any purpose germane
to the meeting, at any time during usual business hours. Such list shall
also be produced and kept open at the time and place of the meeting and may
be inspected by any shareholder during the whole time of the meeting. The
original share ledger or transfer book, or a duplicate thereof kept in this
State, shall be prima facie evidence as to who are the shareholders
entitled to examine such list or share ledger or transfer book or to vote
at any meeting of shareholders.
SECTION 9. QUORUM. The holders of a majority of the outstanding
shares of the Corporation, present in person or represented by proxy, shall
constitute a quorum at any meeting of shareholders; provided that if less
than a majority of the outstanding shares are represented at said meeting,
a majority of the shares so represented may adjourn the meeting at any time
without further notice. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting shall be the act of the
shareholders, unless the vote of a greater number or voting by classes is
required by The Business Corporation Act, the articles of incorporation or
these by-laws. The Chairman of the meeting or the holders of record of a
majority of the shares represented at the meeting shall have the power to
adjourn the meeting from time to time, without notice other than an
announcement at the meeting. At any adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted at the original meeting. Withdrawal of shareholders from any
meeting shall not cause failure of a duly constituted quorum at that
meeting.
SECTION 10. VOTING BY BALLOT. Voting on any question or in any
election may be by voice unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
SECTION 11. PROXIES. Each shareholder shall have one vote for
each share of stock having voting power and entitled to vote, registered in
his name on the books of the Corporation, and at all meetings of the
shareholders, shareholders may vote either in person or by proxy executed
in writing by the shareholders, or by a duly authorized attorney. No proxy
shall be valid after eleven months from the date of its execution, except
where the stock is pledged as security for a debt to the person holding the
proxy.
SECTION 12. VOTING OF SHARES. Each outstanding share,
regardless of class, shall be entitled to one vote upon each matter
submitted to vote at a meeting of shareholders.
SECTION 13. VOTING OF SHARES BY CERTAIN HOLDERS. Shares
standing in the name of another corporation, domestic or foreign, may be
voted by such officer, agent, or proxy as the by-laws of such corporation
may prescribe, or, in the absence of such provision, as the Board of
Directors of such corporation may determine.
Shares standing in the name of a deceased person, a minor ward,
or an incompetent person, may be voted by his administrator, executor,
court appointed guardian, or conservator or custodian under a Gift to
Minors Act, either in person or by proxy without a transfer of such shares
into the name of such administrator, executor, court appointed guardian, or
conservator. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be
voted by such receiver without the transfer thereof into his name if
authority so to do be contained in an appropriate order of the court by
which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the name of
the pledgee, and thereafter the pledgee shall be entitled to vote the
shares so transferred.
Any number of shareholders may create a voting trust for the
purpose of conferring upon a trustee or trustees the right to vote or
otherwise represent their share, for a period not to exceed ten years, by
entering into a written voting trust agreement specifying the terms and
conditions of the voting trust, and by transferring their shares to such
trustee or trustees for the purpose of the agreement. Any such trust
agreement shall not become effective until a counterpart of the agreement
is deposited with the Corporation at its registered office. The counterpart
of the voting trust agreement so deposited with the Corporation shall be
subject to the same right of examination by a shareholder of the
Corporation, in person or by agent or attorney, as are the books and
records of the Corporation, and shall be subject to examination by any
holder of a beneficial interest in the voting trust, either in person or by
agent or attorney, at any reasonable time for any proper purpose.
Shares of its own stock belonging to this Corporation shall not
be voted, directly or indirectly, at any meeting and shall not be counted
in determining the total number of outstanding shares at any given time,
but shares of its own stock held by it in a fiduciary capacity may be voted
and shall be counted in determining the total number of outstanding shares
at any given time.
SECTION 14. CUMULATIVE VOTING. In all elections for directors,
every shareholder shall have the right to vote, in person or by proxy, the
number of shares owned by him, for as many persons as there are directors
to be elected, or to cumulate said shares, and give one candidate as many
votes as the number of directors multiplied by the number of his shares
shall equal, or to distribute them on the same principle among as many
candidates as he shall see fit.
SECTION 15. INSPECTORS. At any meeting of shareholders, the
presiding officer may, or upon the request of any shareholder shall appoint
one or more persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity
and effect of proxies; count all votes and report the results; and do such
other acts as are proper to conduct the election and voting with
impartiality and fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by
him or by a majority of them if there be more than one inspector acting at
such meeting. If there is more than one inspector, the report of a majority
shall be the report of the inspectors. The report of the inspector or
inspectors on the number of shares represented at the meeting and the
results of the voting shall be prima facie evidence thereof.
SECTION 16. NOTICE OF SHAREHOLDER NOMINATIONS AND BUSINESS
PROPOSALS. (a) Shareholder Nominations. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors of the Corporation, except as may be otherwise provided in the
Articles of Incorporation of the Corporation. Nominations of persons for
election to the Board of Directors may be made at any annual meeting of
shareholders (i) by or at the direction of the Board of Directors (or any
duly authorized committee thereof) or (ii) by any shareholder of the
Corporation (A) who is a shareholder of record on the date of the giving of
the notice provided for in this Section 16(a) and on the record date for
the determination of shareholders entitled to vote at such annual meeting
and (B) who complies with the notice procedures set forth in this Section
16(a).
In addition to any other applicable requirements, for a
nomination to be made by a shareholder, such shareholder must have given
timely notice thereof in proper written form to the Secretary of the
Corporation.
To be timely, a shareholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of
the Corporation not less than ninety (90) days nor more than one hundred
twenty (120) days in advance of the anniversary date of the mailing of the
Corporation's proxy statement in connection with the previous year's annual
meeting; provided, however, that in the event that the date of the
applicable annual meeting has been changed by more than 30 days from the
date contemplated at the time of the previous year's proxy statement,
notice by the shareholder in order to be timely must be so received not
later than the close of business on the tenth (10th) day following the day
on which notice of the date of the annual meeting was mailed or public
announcement of the date of the annual meeting was made, whichever first
occurs. In no event shall the public announcement of an adjournment of an
annual meeting commence a new time period for the giving of a shareholder's
notice as described above.
To be in proper written form, a shareholder's notice to the
Secretary must set forth (i) as to each person whom the shareholder
proposes to nominate for election as a director (A) the name, age, business
address and residence address of the person, (B) the principal occupation
or employment of the person, (C) the class or series and number of shares
of capital stock of the Corporation which are owned beneficially or of
record by the person and (D) any other information relating to the person
that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder; and (ii) as to the shareholder giving the notice
(A) the name and record address of such shareholder, (B) the class or
series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such shareholder, (C) a description of
all arrangements or understandings between such shareholder and each
proposed nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such shareholder, (D)
a representation that such shareholder intends to appear in person or by
proxy at the meeting to nominate the persons named in its notice and (E)
any other information relating to such shareholder that would be required
to be disclosed in a proxy statement or other filings required to be made
in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written
consent of each proposed nominee to being named as a nominee and to serve
as a director if elected.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in
this Section 16(a). If the Chairman of the meeting determines that a
nomination was not made in accordance with the foregoing procedures, the
Chairman shall declare to the meeting that the nomination was defective and
such defective nomination shall be disregarded.
Notwithstanding anything in the third paragraph of this Section
16(a) to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Corporation is increased and there
is no public announcement by the Corporation naming all of the nominees for
director or specifying the size of the increased board of directors at
least one hundred (100) days prior to the first anniversary of the
preceding year's annual meeting, a shareholder's notice required by this
Section 16(a) shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the tenth (10th) day
following the day on which such public announcement is first made by the
Corporation.
(b) Shareholder Business Proposals. No business may be
transacted at an annual meeting of shareholders, other than business that
is either (i) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors (or any
duly authorized committee thereof), (ii) otherwise properly brought before
the annual meeting by or at the direction of the Board of Directors (or any
duly authorized committee thereof) or (iii) otherwise properly brought
before the annual meeting by any shareholder of the Corporation (A) who is
a shareholder of record on the date of the giving of the notice provided
for in this Section 16(b) and on the record date for the determination of
shareholders entitled to vote at such annual meeting and (B) who complies
with the notice procedures set forth in this Section 16(b).
In addition to any other applicable requirements, for business
to be properly brought before an annual meeting by a shareholder, such
shareholder must have given timely notice thereof in proper written form to
the Secretary of the Corporation.
To be timely, a shareholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of
the Corporation not less than ninety (90) days nor more than one hundred
twenty (120) days in advance of the anniversary date of the mailing of the
Corporation's proxy statement in connection with the previous year's annual
meeting; provided, however, that in the event that the date of the
applicable annual meeting has been changed by more than 30 days from the
date contemplated at the time of the previous year's proxy statement,
notice by the shareholder in order to be timely must be so received not
later than the close of business on the tenth (10th) day following the day
on which notice of the date of the annual meeting was mailed or public
announcement of the date of the annual meeting was made, whichever first
occurs. In no event shall the public announcement of an adjournment of an
annual meeting commence a new time period for the giving of a shareholder's
notice as described above.
To be in proper written form, a shareholder's notice to the
Secretary must set forth as to each matter such shareholder proposes to
bring before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and record
address of such shareholder, (iii) the class or series and number of shares
of capital stock of the Corporation which are owned beneficially or of
record by such shareholder, (iv) a description of all arrangements or
understandings between such shareholder and any other person or persons
(including their names) in connection with the proposal of such business by
such shareholder and any material interest of such shareholder in such
business and (v) a representation that such shareholder intends to appear
in person or by proxy at the annual meeting to bring such business before
the meeting.
No business shall be conducted at the annual meeting of
shareholders except business brought before the annual meeting in
accordance with the procedures set forth in this Section 16(b); provided,
however, that, once business has been properly brought before the annual
meeting in accordance with such procedures, nothing in this Section 16(b)
shall be deemed to preclude discussion by any shareholder of any such
business. If the Chairman of an annual meeting determines that business was
not properly brought before the annual meeting in accordance with the
foregoing procedures, the Chairman shall declare to the meeting that the
business was not properly brought before the meeting and such business
shall not be transacted.
(c) For purposes of this Section 16, "public announcement"
shall mean an announcement in a press release reported by the Dow Jones
News Service, Associated Press or comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business of the Corporation
shall be managed by its Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of
directors of the Corporation shall be six (6). Each director shall hold
office until the next annual meeting of shareholders or until his successor
shall have been elected and qualified. Directors need not be residents of
Illinois or shareholders of the Corporation. The number of directors may be
increased or decreased from time to time by the amendment of this section;
but no decreases shall have the effect of shortening the term of any
incumbent director.
SECTION 3. REGULAR MEETINGS. Immediately after the adjournment
of the annual meeting of the shareholders of the Corporation, the newly
elected Directors shall meet for the purpose of organization, the election
of officers and the transaction of such other business as may properly come
before the meeting. Other regular meetings shall be held at such time as
shall from time to time be determined by the Board.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held whenever called by the President or by a majority
of the directors.
SECTION 5. NOTICE. Notice of any special meeting shall be
given, at least 24 hours previous thereto to each director personally by
telegraph, telephone, facsimile transmission or by written notice duly
served on each director, or sent or mailed to each director at his business
address. If notice of any special meeting is to be given less than five
days prior to such meeting, notice shall be by means of telegraph,
telephone, facsimile transmission or overnight courier. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail so addressed, with postage thereon prepaid. If notice be given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegram company. The attendance of a director at any
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in
the notice or waiver of notice of such meeting.
SECTION 6. PLACE OF MEETINGS. Regular and Special Meetings of
the Board of Directors shall be held at the Registered Office of the
Corporation, or any such other place, either within or without the State of
Illinois, as may from time to time be determined by the Board of Directors.
SECTION 7. QUORUM OF DIRECTORS - MANNER OF ACTING. A majority
of the number of directors fixed by the by-laws, or in the absence of a
by-law fixing the number of directors, then of the number stated in the
articles of incorporation, shall constitute a quorum for the transaction of
business unless the greater number is required by the articles of
incorporation or the by-laws. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors, unless the act of a greater number is required by
statute, these by-laws, or the articles or incorporation.
SECTION 8. VACANCIES. Any vacancy occurring in the Board of
Directors and any directorship to be filled by reason of an increase in the
number of directors, may be filled by election at an annual meeting or at a
special meeting of shareholders called for that purpose. A director elected
to fill a vacancy shall be elected for the unexpired term of his
predecessor in office.
SECTION 9. ACTION WITHOUT A MEETING. Unless specifically
prohibited by the articles of incorporation or by-laws, any action required
to be taken at a meeting of the Board of Directors, or any other action
which may be taken at a meeting of the Board of Directors, or of any
committee thereof may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all the directors
entitled to vote with respect to the subject matter thereof, or by all the
members of such committee, as the case may be. Any such consent signed by
all the directors or all the members of the committee shall have the same
effect as a unanimous vote, and may be stated as such in any document filed
with the Secretary of State or with anyone else.
SECTION 10. PRESUMPTION OF ASSENT. A director of the
Corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken shall be conclusively presumed to
have assented to the action taken unless his dissent shall be entered in
the minutes of the meeting or unless he shall file his written dissent to
such action with the person acting as the secretary of the meeting before
the adjournment thereof or shall forward such dissent by registered mail to
the secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
SECTION 11. EXECUTIVE COMMITTEE. The Board of Directors, by
resolution adopted by a majority of the number of directors fixed by the
by-laws or otherwise, may appoint an executive committee, which committee,
to the extent provided in such resolution, shall have and exercise all of
the authority of the Board of Directors in the management of the
Corporation, except as otherwise required by law. Vacancies in the
membership of the committee shall be filled by the Board of Directors at a
regular or special meeting of the Board of Directors. The executive
committee shall keep regular minutes of its proceedings and report the same
to the board when required.
SECTION 12. COMMITTEES. The Board of Directors may from its
membership appoint other committees as it may from time to time by
resolution determine and fix the number of members thereof, and the board
may delegate to such committees such of the powers vested in it as it may
by the resolution of appointment determine. Such committees so appointed
shall observe such rules and regulations for their conduct and keep such
records as the board may from time to time by resolution determine.
SECTION 13. COMPENSATION. The Board of Directors, by the
affirmative vote of a majority of the acting and qualified directors, and
notwithstanding any personal interest of any director, shall have authority
to establish reasonable compensation of all directors for services to the
Corporation as directors, officers or otherwise. By resolution of the Board
of Directors, the directors may be paid their expenses of attending each
meeting of the board.
SECTION 14. INDEMNIFICATION. (a) Generally. Each person who was
or is made a party or is threatened to be made a party to or is involved in
or called as a witness in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, and any appeal therefrom
(hereinafter, collectively a "proceeding"), by reason of the fact that he
or she, or a person of whom he or she is the legal representative, is, was
or had agreed to become a director of the Corporation or is, was or had
agreed to become an officer of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, shall
be indemnified and held harmless by the Corporation to the fullest extent
permitted under the Illinois Business Corporation Act of 1983 (the "IBCA"),
as the same now exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than the IBCA
permitted the Corporation to provide prior to such amendment), against all
expenses, liabilities and losses (including attorneys' fees, judgments,
fines, excise taxes or penalties pursuant to the Employee Retirement Income
Security Act of 1974, as amended, and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith; provided that, except as explicitly provided herein, prior to a
Change in Control of the Corporation, as defined herein, a person seeking
indemnity in connection with a proceeding (or part thereof) initiated by
such person against the Corporation or any director, officer, employee or
agent of the Corporation shall not be entitled thereto unless the
Corporation has joined in or consented to such proceeding (or part
thereof). For purposes of this Section 14, a "Change in Control of the
Corporation" shall be deemed to have occurred if the conditions set forth
in any one of the following clauses shall have been satisfied: (i) any
"person" (as such term is used in Section 13(d) and 14(d) of the Exchange
Act) other than (A) the Corporation, (B) a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation, (C)
an underwriter temporarily holding securities pursuant to an offering of
such securities, or (D) a corporation owned, directly or indirectly, by the
shareholders of the Corporation in substantially the same proportions as
their ownership of shares of the Corporation (any such person is
hereinafter referred to as a "Person"), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing more than 50% of
the combined voting power of the Corporation's then outstanding securities
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Corporation); (ii) there is
consummated a merger or consolidation of the Corporation with or into any
other corporation, other than a merger or consolidation which would result
in the holders of the voting securities of the Corporation outstanding
immediately prior thereto holding securities which represent, in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation, immediately
after such merger or consolidation, more than 70% of the combined voting
power of the voting securities of either the Corporation or the other
entity which survives such merger or consolidation or the parent of the
entity which survives such merger or consolidation; (iii) the shareholders
of the Corporation approve any plan or proposal for the liquidation or
dissolution of the Corporation or an agreement for the sale or disposition
by the Corporation of all or substantially all the Corporation's assets; or
(iv) during any period of two consecutive years (not including any period
prior to January 1, 1997), individuals who at the beginning of such period
constitute the Board of Directors and any new director (other than a
director designated by a Person who has entered into an agreement with the
Corporation to effect a transaction described in clause (i), (ii) or (iii)
of this paragraph) whose election by the board or nomination for election
by the Corporation's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
a majority thereof. For purposes of this Section 14, where a Change in
Control of the Corporation results from a series of related transactions,
the Change in Control of the Corporation shall be deemed to have occurred
on the date of the consummation of the first such transaction. For purposes
of clause (i) of this paragraph, the shareholders of another corporation
(other than this Corporation or a corporation described in clause (i)(D) of
this paragraph), in the aggregate, shall be deemed to constitute a Person.
Prior to a Change in Control of the Corporation, any
indemnification under this Section 14(a) (unless ordered by a court) shall
be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the IBCA. Such determination
shall be made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel (who may be the regular counsel of the
Corporation) in a written opinion or (iii) by the shareholders.
Following a Change in Control of the Corporation, any
indemnification under this Section 14(a) (unless ordered by a court) shall
be paid by the Corporation unless within 60 days of such request for
indemnification a determination is made, in a written opinion, by special
independent counsel selected by the person requesting indemnification and
approved by the Corporation (which approval shall not be unreasonably
withheld), which counsel has not otherwise performed services (other than
in connection with similar matters) within the five years preceding its
engagement to render such opinion for such person or for the Corporation or
any affiliates (as such term is defined in Rule 405 under the Securities
Act of 1933, as amended) of the Corporation (whether or not they were
affiliates when services were so performed) ("Independent Counsel"), that
indemnification of such person is not proper under the circumstances
because such person has not met the necessary standard of conduct under the
IBCA. Unless such person has theretofore selected Independent Counsel
pursuant to this Section 14(a) and such Independent Counsel has been
approved by the Corporation, legal counsel approved by a resolution or
resolutions of the Board of Directors prior to a Change in Control of the
Corporation shall be deemed to have been approved by the Corporation as
required. Such Independent Counsel shall determine as promptly as
practicable whether and to what extent such person would be permitted to be
indemnified under applicable law and shall render its written opinion to
the Corporation and such person to such effect. The Corporation agrees to
pay the reasonable fees of the Independent Counsel referred to above and to
fully indemnify such Independent Counsel against any and all expenses,
claims, liabilities and damages arising out of or relating to this Section
14 or its engagement pursuant hereto. In making a determination under this
Section 14(a), the Independent Counsel referred to above shall determine
that indemnification is permissible unless clearly precluded by this
Section 14 or the applicable provisions of the IBCA.
(b) Payment of Expenses in Advance. Expenses, including
attorneys' fees, incurred by a person referred to in Subsection (a) of this
Section 14 in defending a proceeding shall be paid by the Corporation in
advance of the final disposition of such proceeding, including any appeal
therefrom, upon receipt of an undertaking (the "Undertaking") by or on
behalf of such person to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the
Corporation.
(c) Right of Claimant to Bring Suit. If a claim under
Subsection (a) of this Section 14 is not paid in full by the Corporation
within 60 days after a written claim has been received by the Corporation
or if expenses pursuant to Subsection (b) of this Section 14 hereof have
not been advanced within 10 days after a written request for such
advancement, accompanied by the Undertaking, has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim or the advancement of
expenses. (If the claimant is successful, in whole or in part, in such suit
or any other suit to enforce a right for expenses or indemnification
against the Corporation or any other party under any other agreement, such
claimant shall also be entitled to be paid the reasonable expense of
prosecuting such claim.) It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the
required Undertaking has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible
under the IBCA for the Corporation to indemnify the claimant for the amount
claimed. After a Change in Control of the Corporation, the burden of
proving such defense shall be on the Corporation, and any determination by
the Corporation (including its Board of Directors, independent legal
counsel or its shareholders) that the claimant had not met the applicable
standard of conduct required under the IBCA shall not be a defense to the
action nor create a presumption that claimant had not met such applicable
standard of conduct.
(d) Indemnity Not Exclusive. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other
Subsections of this Section 14 shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses
may be entitled under any statute, by-law, agreement, vote of shareholders
or disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office. The Board of Directors shall have the authority, by resolution, to
provide for such other indemnification of directors, officers, employees or
agents as it shall deem appropriate.
(e) Insurance. The Corporation shall have power to purchase and
maintain insurance to protect itself and any director, officer, employee or
agent of this Corporation or another Corporation, partnership, joint
venture, trust or other enterprise, against any expenses, liabilities or
losses, whether or not the Corporation would have the power to indemnify
such person against such expenses, liabilities or losses under the
provisions of this Section 14 or the IBCA.
(f) Continuation of Indemnification; Enforceability. The
provisions of this Section 14 shall be applicable to all proceedings
commenced after its adoption, whether such proceedings arise out of events,
acts, omissions or circumstances which occurred or existed prior or
subsequent to such adoption, and shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person. This Section 14 shall
be deemed to grant each person who, at any time that this Section 14 is in
effect, serves or agrees to serve in any capacity which entitles him to
indemnification hereunder rights against the Corporation to enforce the
provisions of this Section 14, and any repeal or other modification of this
Section 14 or any repeal or modification of the IBCA or any other
applicable law shall not limit any rights of indemnification then existing
or arising out of events, acts, omissions or circumstances occurring or
existing prior to such repeal or modification, including, without
limitation, the right to indemnification for proceedings commenced after
such repeal or modification to enforce this Section 14 with regard to acts,
omissions, events or circumstances occurring or existing prior to such
repeal or modification.
(g) Severability. If this Section 14 or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction,
then the Corporation shall nevertheless indemnify each director and officer
of the Corporation as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Corporation, to the full
extent permitted by any applicable portion of this Section 14 that shall
not have been invalidated and to the full extent permitted by applicable
law.
ARTICLE IV
OFFICERS AND DEFINITION OF DUTIES
SECTION 1. OFFICERS - REMOVAL. The officers of this Corporation
shall consist of a Chairman of the Board, a President, one or more
Vice-Presidents, a Secretary and a Treasurer, and such other officers,
including one or more Assistant Secretaries and one or more Assistant
Treasurers, as the Board of Directors may from time to time determine. In
addition, the Board of Directors may from time to time elect a Vice
Chairman and an Executive Vice President if it so determines. Such
officers, when elected, shall hold office for the period of one year and
thereafter until their respective successors shall have been duly elected,
and shall have qualified; provided, however, that all officers, agents and
employees of the Corporation shall be subject to removal at any time by the
affirmative vote by a majority of the Board. Any one person may hold two
offices at the same time, except that the same person shall not hold at the
same time the office of Chairman of the Board and Secretary, President and
Vice President, President and Secretary, Treasurer and Assistant Treasurer,
or Secretary and Assistant Secretary.
SECTION 2. VACANCIES. If any vacancy shall occur among the
officers of the Corporation, by resignation or otherwise, such vacancy may
be filled by the Board of Directors.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board
shall supervise and control the officers, policies and programs of the
Corporation. The Chairman shall preside at all meetings of the Board of
Directors and shareholders. The Chairman shall initiate acquisition, merger
and investment banking activities. The Chairman shall recommend to the
Board of Directors the nominees for the position of Director. The Chairman,
from time to time, may delegate powers and duties to the Vice-Chairman,
President and other officers. The Chairman shall possess the power to sign
all certificates, contracts and other instruments of the Corporation as
authorized by the Board of Directors. In the event of the absence,
inability to act or disability of the President, the Chairman shall
exercise all powers and discharge all duties of the President. The Chairman
shall possess such other duties and powers as may be prescribed from time
to time by the Board of Directors and the by-laws.
SECTION 4. VICE-CHAIRMAN OF THE BOARD. The Vice Chairman of the
Board, if elected, and in the event of the absence, inability to act or
disability of the Chairman, shall carry out the responsibilities of the
Chairman. The Vice- Chairman when so acting shall exercise the powers and
discharge the duties of the Chairman, including presiding at meetings of
shareholders and the Board of Directors. The Vice-Chairman shall possess
such other duties and powers as may be prescribed from time to time by the
Board of Directors, Chairman and By-Laws. In the event of the absence,
inability to act or disability of the Chairman and Vice-Chairman, the Board
of Directors shall elect an acting Chairman.
SECTION 5. PRESIDENT. The President shall be the chief
operating officer of the Corporation. The President shall conduct the daily
business and affairs of the Corporation as so authorized by the by-laws.
The President may delegate powers and duties to the Vice-Presidents or
other officers. The President shall have the power to sign all
certificates, contracts, and other instruments of the Corporation as
authorized by the Board of Directors. The President shall perform such
other duties as may be prescribed from time to time by the Board of
Directors, Chairman and by-laws. In the event of the absence, inability to
act or disability of the Chairman, Vice-Chairman and acting Chairman, the
President shall preside at meetings of shareholders and the Board of
Directors.
SECTION 6. THE EXECUTIVE VICE PRESIDENT. In the absence of, or
in the case of the inability of the Chairman of the Board of the Vice
Chairman (in the absence of the Chairman), and the President to act, the
Executive Vice President, if one be elected by the Board, shall perform all
duties and have the powers of the President. The Executive Vice President
shall, in addition, perform such other duties and have such other powers as
the Board of Directors may, from time to time, by resolution determine.
SECTION 7. OTHER VICE PRESIDENTS. Other Vice Presidents,
including one or more Senior Vice Presidents, if such officers shall have
been elected, shall perform such duties and have such duties and powers as
the Board of Directors may from time to time by resolution determine, or,
in the absence of such determination, as the President, with the consent of
the Chairman or Vice Chairman, shall determine.
SECTION 8. THE TREASURER. The Treasurer shall be the principal
accounting and financial officer of the Corporation. He shall: (a) have
charge of and be responsible for the maintenance of adequate books of
account for the Corporation; (b) have charge and custody of all funds and
securities of the Corporation; and be responsible therefor and for the
receipt and disbursement thereof; and (c) perform all the duties incident
to the office of treasurer and such other duties as from time to time may
be assigned to him by the President or by the Board of Directors. If
required by the Board of Directors, the Treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or
sureties as the Board of Directors may determine.
SECTION 9. THE SECRETARY. The Secretary shall: (a) record the
minutes of the shareholders' and of the Board of Directors' meetings in one
or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these by-laws or as required by
law; (c) be custodian of the corporate records and of the seal of the
Corporation; (d) keep a register of the post-office address of each
shareholder which shall be furnished to the secretary by such shareholder;
(e) sign with the President, or a Vice President, or any other officer
thereunto authorized by the Board of Directors, certificates for shares of
the Corporation, the issue of which shall have been authorized by the Board
of Directors, and any contracts, deeds, mortgages, bonds, or other
instruments which the Board of Directors has authorized to be executed,
according to the requirement of the form of the instrument, except when a
different mode of execution is expressly prescribed by the Board of
Directors or these by-laws; (f) have general charge of the stock transfer
books of the Corporation and (g) perform all duties incident to the office
of secretary and such other duties as from time to time may be assigned to
him by the President or by the Board of Directors.
SECTION 10. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
Assistant Treasurers and Assistant Secretaries shall perform such duties as
shall be assigned to them by the Treasurer or the Secretary, respectively,
or by the President or the Board of Directors. The Assistant Secretaries
may sign with the President, or a Vice President, or any other officer
thereunto authorized by the Board of Directors, certificates for shares of
the Corporation, the issue of which shall have been authorized by the Board
of Directors, and any contracts, deeds, mortgages, bonds or other
instruments which the Board of Directors has authorized to be executed,
according to the requirements of the form of the instrument, except when a
different mode of execution is expressly prescribed by the Board of
Directors or these by-laws. The assistant treasurers shall respectively, if
required by the Board of Directors, give bonds for the faithful discharge
of their duties in such sums and with sureties as the Board of Directors
shall determine.
SECTION 11. SALARIES. The salaries of the officers shall be
fixed from time to time by the Board of Directors and no officer shall be
prevented from receiving such salary by reason of the fact that he is also
a director of the Corporation.
ARTICLE V
SHARES OF CAPITAL STOCK AND THEIR TRANSFER
SECTION 1. STOCK ISSUE. Whenever stock, not previously reported
to the Secretary of State as issued, has been issued within the authorized
limit fixed by the statement of incorporation of a certificate of increase
in capital stock, a statement subscribed and sworn to by the President or
any Vice President, and attested by the Secretary or by an Assistant
Secretary shall be filed in the office of the Secretary of State within
ninety days after the issuance of such additional stock pursuant to
authorization thereof by the Board of Directors in the form prescribed by
the General Corporation Act of the State of Illinois. Promissory notes
shall not be accepted for payment or part payment of stock issued by this
Corporation.
SECTION 2. CERTIFICATES. Each shareholder shall be entitled to
a certificate of stock, executed by the President or Vice President and the
Secretary or Assistant Secretary, and under the corporate seal, certifying
the number of shares owned by him in such Corporation. When such
certificate is countersigned by a transfer agent other than the Corporation
itself, or an employee of the Corporation, or by a transfer clerk and
registered by a registrar, the signatures of the President or Vice
President and the Secretary or Assistant Secretary upon such certificates
may be facsimiles, engraved or printed.
SECTION 3. TRANSFERS. Transfers of shares of capital stock
shall be made only upon the books of the Corporation by the holder in
person or by power of attorney, duly executed, and filed with the
Secretary, and on surrender of a certificate or certificates for such
shares.
SECTION 4. ADDRESSES. Every shareholder shall furnish the
Secretary with his address, at which notice of meetings and all other
notices may be served upon, or mailed to him. In default thereof, notices
may be addressed to him at the principal office of the Corporation.
SECTION 5. LOST CERTIFICATES. The Chairman or President, as
officers of the Company, acting, singly, may direct new certificates of
stock to be issued in the place of certificates theretofore issued, alleged
to have been lost or destroyed, and may, in their discretion, require the
owner of such certificate or certificates, or his legal representative, to
give the Corporation a bond in such sum as they may direct, as indemnity
against any claim that may be made against the Corporation. Said officers
may issue instructions to the Transfer Agents and Registrars of the capital
stock of the Company, may enter into such agreements and may sign such
documents as may be necessary to effectuate the issuance of said
certificates. Said officers, however, may refuse to issue or direct the
issuance of any new certificates except upon institution of legal
proceedings as required by statute, in such case made and provided.
ARTICLE VI
DIVIDENDS
SECTION 1. DECLARATION. Dividends may be declared by the Board
of Directors from time to time out of the surplus or net profits of the
Corporation, and shall be payable at such times as the Board of Directors
may determine.
SECTION 2. RESERVES. Before payment of any dividend or making
any distribution of profits, there may be set aside out of the surplus or
net profits of the Corporation such sum or sums as the Directors from time
to time, in their absolute discretion, think proper as a reserve fund to
meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purposes as
the Directors shall think conducive to the interests of the Corporation.
ARTICLE VII
SEAL
The corporate seal is and until otherwise ordered by the Board
of Directors, shall be, an impression bearing the corporate name and the
words "corporate seal" and "Illinois."
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day
of January and end on the 31st day of December of each year.
ARTICLE IX
INSPECTION OF BOOKS
The books kept for transferring stock and the names and
addresses of the shareholders, during the usual business hours shall be
open to examination for all proper purposes by every shareholder, at its
principal office or place of business in the State of Illinois. Each
shareholder of the Corporation shall have the right, at all reasonable
times, by himself or by his attorney, to examine the records and books of
account.
ARTICLE X
WAIVER OF NOTICE
Whenever any action is to be taken after notice either to the
shareholders or directors, or after the lapse of a prescribed period of
time, such action may be taken without notice and without the lapse of such
prescribed period of time, if such action be taken while all persons
interested are present, and consenting thereto or be authorized or approved
or such requirement be waived in writing by each person interested and
entitled to notice, or by his attorney thereto authorized.
ARTICLE XI
AMENDMENTS
These By-Laws may be altered, amended or repealed by the
affirmative vote of a majority of the Board of Directors at any regular or
special meeting of the Board.
- ----------------------------------------------------------------------------
CHICAGO RIVET & MACHINE CO.
and
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
Rights Agent
-------------------
Rights Agreement
Dated as of November 22, 1999
- ---------------------------------------------------------------------------
Table of Contents
Section Page
------- ----
1. Certain Definitions ................................................ 1
2. Appointment of Rights Agent ........................................ 7
3. Issue of Rights Certificates ....................................... 7
4. Form of Rights Certificates ........................................ 9
5. Countersignature and Registration .................................. 10
6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates ................................................ 11
7. Exercise of Rights; Purchase Price; Expiration Date
of Rights .......................................................... 12
8. Cancellation and Destruction of Rights Certificates ................ 15
9. Reservation and Availability of Capital Stock ...................... 15
10. Preferred Stock Record Date ........................................ 17
11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights ......................................... 17
12. Certificate of Adjusted Purchase Price or Number of
Shares ............................................................. 28
13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power ................................................... 28
14. Fractional Rights and Fractional Shares ............................ 31
15. Rights of Action ................................................... 33
16. Agreement of Rights Holders ........................................ 33
17. Rights Certificate Holder Not Deemed a Stockholder ................ 34
18. Concerning the Rights Agent ....................................... 34
19. Merger or Consolidation or Change of Name of
Rights Agent ...................................................... 35
20. Duties of Rights Agent ............................................ 36
21. Change of Rights Agent ............................................ 38
22. Issuance of New Rights Certificates ............................... 39
23. Redemption and Termination ........................................ 40
24. Exchange .......................................................... 43
25. Notice of Certain Events........................................... 45
26. Notices ........................................................... 46
27. Supplements and Amendments ........................................ 47
28. Successors ........................................................ 48
29. Determinations and Actions by the Board of
Directors, etc. .................................................... 48
30. Benefits of This Agreement ........................................ 48
31. Severability ...................................................... 49
32. Governing Law ..................................................... 49
33. Counterparts ...................................................... 49
34. Descriptive Headings .............................................. 49
Exhibit A - Statement of Resolution Establishing Series of Shares
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights to Purchase Preferred Stock
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of November 22, 1999, (the
"Agreement") between CHICAGO RIVET & MACHINE CO., an Illinois corporation
(the "Company"), and FIRST CHICAGO TRUST COMPANY OF NEW YORK, a New York
banking corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on November 22, 1999 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a
dividend distribution of one Right for each share of common stock, par
value $1.00 per share, of the Company (the "Common Stock") outstanding at
the close of business on December 3, 1999 (the "Record Date"), and has
authorized the issuance of one Right (as such number may be hereinafter
adjusted pursuant to Section 11(i) or 11(p) hereof) for each share of
Common Stock of the Company issued between the Record Date (whether
originally issued or delivered from the Company's treasury) and the
Distribution Date and, in certain circumstances provided in Section 22
hereof, after the Distribution Date, each Right initially representing the
right to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock (the "Preferred Stock") of the Company having
the rights, powers and preferences set forth in the form of Statement of
Resolution Establishing Series of Shares attached hereto as Exhibit A, upon
the terms and subject to the conditions hereinafter set forth (the
"Rights");
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 (x) any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 10% or more of the shares of Common Stock then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the Company, or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan,
or (iv) any Person who becomes the Beneficial Owner of ten percent (10%) or
more of the shares of Common Stock then outstanding as a result of a
reduction in the number of shares of Common Stock outstanding due to the
repurchase of shares of Common Stock by the Company other than during the
Special Period (as defined in Section 23(c) hereof) or at a time when the
rights are not redeemable, unless and until such Person, after becoming
aware that such Person has become the Beneficial Owner of ten percent (10%)
or more of the then outstanding shares of Common Stock, acquires beneficial
ownership of additional shares of Common Stock representing one percent
(1%) or more of the shares of Common Stock then outstanding, or (v) any
such Person who has reported or is required to report such ownership (but
less than 15%) on Schedule 13G under the Securities and the Exchange Act
(or any comparable or successor report) or on Schedule 13D under the
Exchange Act (or any comparable or successor report) which Schedule 13D
does not state any intention to or reserve the right to control or
influence the management or policies of the Company or engage in any of the
actions specified in Item 4 of such schedule (other than the disposition of
the Common Stock) and, within 10 Business Days of being requested by the
Company to advise it regarding the same, certifies to the Company that such
Person acquired shares of Common Stock in excess of 9.9% inadvertently or
without knowledge of the terms of the Rights and who or which, together
with all Affiliates and Associates, thereafter does not acquire additional
shares of Common Stock while the Beneficial Owner of 10% or more of the
shares of Common Stock then outstanding; provided, however, that if the
Person requested to so certify fails to do so within 10 Business Days, then
such Person shall become an Acquiring Person immediately after such
10-Business-Day period, or (y) any Person who or which has entered into any
agreement or arrangement with the Company or any Subsidiary of the Company
providing for an Acquisition Transaction (as defined in Section 1(b)
hereof). Notwithstanding the foregoing, the term "Acquiring Person" shall not
include (i) John A. Morrissey, Walter W. Morrissey or any of their
siblings, (ii) any spouse of any Person identified in clause (i) above,
(iii) the lineal descendants (including Persons adopted prior to attaining
the age of 21 years) of any Person described in clause (i) or (ii) above or
the spouses of any such lineal descendants, (iv) any Affiliate or Associate
of any of the Persons described in clauses (i) through (iii) above or (v)
any successor in interest (as defined below) to any Person described in
clauses (i) through (iv) above (collectively, the "Morrissey Holders");
provided, however, that if any Person that is a Morrissey Holder becomes
the beneficial owner of additional shares of Common Stock (other than
shares of Common Stock that are beneficially owned, as of the date hereof,
by any other Morrissey Holder (the "Morrissey Shares")) such that, after
giving effect to such additional shares, the number of shares of Common
Stock beneficially owned by such Person (excluding any other Morrissey
Shares) exceeds the number of shares of Common Stock beneficially owned by
such Person on the date hereof (excluding any other Morrissey Shares) by
more than 2% of the then outstanding shares of Common Stock, then such
Person shall cease to be excluded from the definition of "Acquiring Person"
pursuant to this sentence. The forgoing sentence is not intended to
acknowledge or imply that any Morrissey Holder is the beneficial owner of
any other Morrissey Shares or that all or any portion of any Morrissey
Holders constitute a group with respect to the Common Stock for any
purpose. For purposes of this Section 1(a), a Morrissey Holder's "successor
in interest" shall be (i) the beneficiaries (whether by testate or
intestate succession) of any Morrissey Holder's estate and any trustee (in
his fiduciary capacity) or beneficiary of any trust who obtains (by reason
of the Morrissey Holder's death) beneficial ownership of any Morrissey
Shares (ii) any Morrissey Holder's estate, and (iii) the Affiliates and
Associates of the Persons described in clauses (i) and (ii) above.
(b) "Acquisition Transaction" shall mean (x) a merger,
consolidation or similar transaction involving the Company or any of its
Subsidiaries as a result of which stockholders of the Company will no
longer own a majority of the outstanding shares of Common Stock of the
Company or a publicly traded entity which controls the Company or, if
appropriate, the entity into which the Company may be merged, consolidated
or otherwise combined (based solely on the shares of Common Stock received
or retained by such stockholders, in their capacity as stockholders of the
Company, pursuant to such transaction), (y) a purchase or other acquisition
of all or a substantial portion of the assets of the Company and its
Subsidiaries, or (z) a purchase or other acquisition of securities
representing 10% or more of the shares of Common Stock then outstanding.
(c) "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, as amended and as in
effect on the date of this Agreement (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately 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, other rights, warrants
or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (B)
securities issuable upon exercise of Rights at any time prior
to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence
of a Triggering Event which Rights were acquired by such Person
or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) hereof or Section
22 hereof (the "Original Rights") or pursuant to Section 11(i)
or 11(p) hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act), including 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 subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (A) arises solely from
a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person (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 the proviso to subparagraph (ii) of this paragraph
(d)) or disposing of any voting securities of the Company;
provided, however, that nothing in this paragraph (d) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition, and
then only if such securities continue to be owned by such person.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00 P.M.,
New York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(g) "Common Stock" shall mean the common stock, par value $1.00
per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock
of such Person with the greatest voting power, or the equity securities or
other equity interest having power to control or direct the management, of
such Person.
(h) "Common Stock Equivalents" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(i) "Current Market Price" shall have the meaning ascribed to
such term in Section 11(d) hereof.
(j) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(l) "Exchange Ratio" shall have the meaning set forth in
Section 24 hereof.
(m) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(n) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(o) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(p) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, no par value per share, of the Company, and,
to the extent there are not a sufficient number of shares of Series A
Junior Participating Preferred Stock authorized to permit the full exercise
of the Rights, any other series of Preferred Stock, no par value per share,
of the Company designated for such purpose containing terms substantially
similar to the terms of the Series A Junior Participating Preferred Stock.
(q) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(r) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof.
(s) "Qualified Offer" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(t) "Record Date" shall have the meaning set forth in the
WHEREAS clause at the beginning of this Agreement.
(u) "Rights" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
v) "Rights Agent" shall have the meaning set forth in the
parties clause at the beginning of this Agreement.
(w) "Rights Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(x) "Rights Dividend Declaration Date" shall have the meaning
set forth in the WHEREAS clause at the beginning of this Agreement.
(y) "Section 11 Event" shall mean any event described in
Section 11(a)(ii) hereof.
(z) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(aa) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(bb) "Stock Acquisition Date" shall mean the earlier of (i) the
first date of public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such pursuant to clause (x) of the definition
of Acquiring Person and (ii) the date that an Acquiring Person has become
such pursuant to clause (y) of the definition of Acquiring Person.
(cc) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at
least a majority of the directors of such corporation is beneficially
owned, directly or indirectly, by such Person, or otherwise controlled by
such Person.
(dd) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ee) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(ff) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
(gg) "Triggering Event" shall mean any Section 11 Event or any
Section 13 Event.
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.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the tenth
day after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of business on
the Record Date) or (ii) the close of business on the tenth Business Day
(or such later date as the Board of Directors shall determine, provided,
however, that no deferral of a Distribution Date by the Board of Directors
of the Company pursuant to this clause (ii) may be made at any time during
the Special Period) after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any
Person organized, appointed or established by the Company for or pursuant
to the terms of any such plan) is first published or sent or given within
the meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person would become an
Acquiring Person (the earlier of (i) and (ii) being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock
(which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As
soon as practicable after the Distribution Date, the Rights Agent will send
by first-class, insured, postage prepaid mail, at the expense of the
Company, to each record holder of the Common Stock as of the close of
business on the Distribution Date, at the address of such holder shown on
the records of the Company, one or more right certificates, in
substantially the form of Exhibit B hereto (the "Rights Certificates"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to
Section 11(i) or 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) The Company will make available, as promptly as practicable
following the Record Date, a copy of a Summary of Rights, in substantially
the form attached hereto as Exhibit C (the "Summary of Rights") to any
holder Rights who may so request from time to time prior to the Expiration
Date. 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 and the registered holders of the
Common Stock shall also be the registered holders of the associated Rights.
Until the earlier of the Distribution Date or the Expiration Date (as such
term is defined in Section 7 hereof), the transfer of any certificates
representing shares of Common Stock in respect of which Rights have been
issued shall also constitute the transfer of the Rights associated with
such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued (whether originally issued or delivered from the
Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date or, in certain circumstances
provided in Section 22 hereof, after the Distribution Date. Certificates
representing such shares of Common Stock shall also be deemed to be
certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the
Rights Agreement between Chicago Rivet & Machine Co.
(the "Company") and First Chicago Trust Company of
New York, as Rights Agent, dated as of November 22,
1999, as from time to time amended (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which
is on file at the principal offices of the Company.
Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced
by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written
request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become
null and void.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by such certificates
shall be evidenced by such certificates alone and registered holders of
Common Stock shall also be the registered holders of the associated Rights,
and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each
be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange
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
Rights Certificates, whenever distributed, shall be dated as of the Record
Date and on their face shall entitle the holders thereof to purchase such
number of one one-hundredths of a share of Preferred Stock as shall be set
forth therein at the price set forth therein (such exercise price per one
one-hundredth of a share, the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a),
Section 11(i) or Section 22 hereof that represents Rights beneficially
owned by (i) an Acquiring Person or any Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has determined is part
of a plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of Section 7(e) hereof, and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in
this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly, this
Rights Certificate and the Rights represented hereby may become
null and void in the circumstances specified in Section 7(e) of
such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall 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 Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature, 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 Rights Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the
person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificate may be signed on behalf
of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign
such Rights Certificate, 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 its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 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 Rights Certificate or Certificates (other than Rights
Certificates representing Rights that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for
another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of one one-hundredths of a share of Preferred
Stock (or, following a Triggering Event, Common Stock, other securities,
cash or other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal office or
offices of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate or
Certificates until the registered holder shall have completed and signed
the certificate contained in the form of assignment set forth on the
reverse side of such Rights Certificate and shall have 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. Thereupon the Rights Agent shall, subject to Sections
4(b), 7(e), 14 and 24 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or 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 Rights 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 Rights 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 Rights Certificate if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions
on exercisability set forth in Section 9(c), Section 11(a)(iii) and Section
23(a) hereof) in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to
the Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate
Purchase Price with respect to the total number of one one-hundredths of a
share of Preferred Stock (or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercisable, at
or prior to the earlier of (i) 5:00 P.M. New York City time on December 2,
2009 or such later date as may be established by the Board of Directors
prior to the expiration of the Rights (such date, as may be extended by the
Board, the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, (iii) the time at which such
Rights are exchanged pursuant to Section 24 hereof and (iv) the time at
which all of the Rights expire pursuant to Section 13(d) hereof (the
earliest of (i), (ii), (iii) and (iv) being herein referred to as the
"Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be
$90.00, and shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in accordance with
paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per
one one-hundredth of a share of Preferred Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased as
set forth below and an amount equal to any applicable transfer tax, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)
(A) requisition from any transfer agent of the shares of Preferred Stock
(or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of one one-hundredths of a share
of Preferred Stock to be purchased, and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if
the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a share of Preferred
Stock as are to be purchased (in which case certificates for the shares of
Preferred 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) requisition from the
Company the amount of cash, if any, to be paid in lieu of fractional shares
in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder, and
(iv) after receipt thereof, deliver such cash, if any, to or upon the order
of the registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified bank check or bank
draft payable to the order of the Company. In the event that the Company is
obligated to issue other securities (including Common Stock) of the
Company, pay cash and/or distribute other property pursuant to Section
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. The Company reserves the
right to require prior to the occurrence of a Triggering Event that, upon
any exercise of Rights, a number of Rights be exercised so that only whole
shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon
the order of, the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11 Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or
(B) a transfer which the Board of Directors of the Company has determined
is part of a plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e), shall become null and
void without any further action, and no holder of such Rights shall have
any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any
holder of Rights Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or any of their
respective Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
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 Rights
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 Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or
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 Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Rights Certificates
to the Company, or shall, at the written request of the Company, destroy
such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out
of its authorized and unissued shares of Common Stock and/or other
securities or out of any authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, shares of Common Stock and/or other
securities) that, as provided in this Agreement including Section
11(a)(iii) hereof, will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, shares of Common Stock and/or other
securities) issuable and deliverable upon the exercise of the Rights may be
listed on any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable
(but only to the extent that it is reasonably likely that the Rights will
be exercised), all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the first occurrence of a
Section 11 Event on which the consideration to be delivered by the Company
upon exercise of the Rights has been determined pursuant to this Agreement
(including in accordance with Section 11(a)(iii) hereof), or as soon as is
required by law following the Distribution Date, as the case may be, a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities purchasable upon exercise
of the Rights on an appropriate 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 Securities Act)
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 exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained or the exercise thereof shall not
be permitted under applicable law or a registration statement shall not
have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all one one-hundredths of a share
of Preferred Stock (and, following the occurrence of a Triggering Event,
shares of Common Stock and/or other securities) 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.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Rights Certificates and of any certificates for a number of one
one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a number of one
one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in respect of a name other than that of,
the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a
number of one one-hundredths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in a name other than that of
the registered holder upon the exercise of any Rights until such tax shall
have been paid (any such tax being payable by the holder of such Rights
Certificates at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose
name any certificate for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of such fractional shares of Preferred
Stock (or Common Stock and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is
a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder
of a Rights 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 and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of
shares covered 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
Preferred Stock payable in shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of
the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of
Preferred Stock or capital stock, as the case may be, issuable on
such date, shall be proportionately adjusted so that the holder of
any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate
number and kind of shares of Preferred Stock or capital stock, as
the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, 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) hereof.
(ii) In the event any Person, at any time after the
Rights Dividend Declaration Date, shall become an Acquiring
Person, unless the event causing such Person to become an
Acquiring Person is a transaction set forth in Section 13(a)
hereof, or is an acquisition of shares of Common Stock pursuant to
a tender offer or exchange offer for all outstanding shares of
Common Stock at a price and on terms determined by at least a
majority of the members of the Board of Directors who are not
officers of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person, after receiving
advice from one or more investment banking firms, to be (a) at a
price which is fair to stockholders and not inadequate (taking
into account all factors which such members of the Board deem
relevant, including, without limitation, prices which could
reasonably be achieved if the Company or its assets were sold on
an orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
stockholders (provided, however, that no such determination shall
be made during the Special Period) (a "Qualifying Offer"), then,
promptly following the occurrence of any event described in
Section 11(a)(ii) hereof, proper provision shall be made so that
each holder of a Right (except as provided below and in Section
7(e) hereof) shall thereafter have the right to receive, upon
exercise thereof, at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of a number of one
one-hundredths of a share of Preferred Stock, such number of
shares of Common Stock as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of
one one-hundredths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a
Section 11 Event, and (y) dividing that product (which, following
such first occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price (determined pursuant
to Section 11(d) hereof) per share of Common Stock on the date of
such first occurrence (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number of shares of
Common Stock which are authorized by the Company's Articles of
Incorporation, but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights, are not
sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall: (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right, subject
to Section 7(e) hereof, make adequate provision to substitute for
the Adjustment Shares, upon the exercise of a Right and payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the
Company (including, without limitation, shares, or units of
shares, of preferred stock, such as the Preferred Stock, which the
Board of Directors of the Company has deemed to have essentially
the same value or economic rights as shares of Common Stock (such
shares or units of shares of preferred stock are referred to
herein as "Common Stock Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value
(less the amount of any reduction in the Purchase Price), 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; provided, however, that if the Company shall not have
made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the later of (x) the first
occurrence of a Section 11 Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires
(the later of (x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If
the Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in
full of the Rights, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of
such additional shares (such thirty (30) day period, as it may be
extended, the "Substitution Period"). To the extent that the
Company determines that some action should be taken pursuant to
the first and/or second sentences of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e) hereof, that
such action shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek stockholder
approval for such authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of each Adjustment Share
shall be the Current Market Price per share of the Common Stock on
the Section 11(a)(ii) Trigger Date and the per share or per unit
value of any Common Stock Equivalent shall be deemed to have the
Current Market Price per share of the Common Stock on such date.
(b) In case the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all
holders of Preferred Stock entitling them to subscribe for or purchase (for
a period expiring within forty-five (45) calendar days after such record
date) Preferred Stock (or shares having the same rights, privileges and
preferences as the shares of Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock)
less than the Current Market Price per share of Preferred 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, the numerator of which shall be
the number of shares of Preferred Stock outstanding on such record date,
plus the number of shares of Preferred Stock which the aggregate offering
price of the total number of shares of Preferred Stock and/or equivalent
preferred 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 the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the
number of additional shares of Preferred Stock and/or equivalent preferred
stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid by delivery of consideration part or
all of which may 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 and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred 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, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred 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 quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per share of Preferred
Stock on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights) of the portion
of the cash, assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to a share of Preferred
Stock and the denominator of which shall be such Current Market Price per
share of Preferred Stock. 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 be adjusted to be the
Purchase Price which would have been in effect if such record date had not
been fixed.
(d)(i) For the purpose of any computation
hereunder, other than computations made pursuant to Section
11(a)(iii) hereof, 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 such Common Stock for the thirty (30)
consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii)
hereof, 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 such Common Stock for the ten (10) consecutive
Trading Days immediately following 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 (A) any dividend
or distribution on such Common Stock, payable in shares of such
Common Stock or securities convertible into shares of such Common
Stock (other than the Rights), or (B) any subdivision, combination
or reclassification of such Common Stock, and the ex-dividend date
for such dividend or distribution, or the record date for such
subdivision, combination or reclassification shall not have
occurred prior to the commencement of the requisite thirty (30)
Trading Day period or ten (10) Trading Day period, as set forth
above, then, and in each such case, the "Current Market Price"
shall be properly adjusted to take into account ex-dividend
trading. 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 Automated Quotation 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 system,
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. 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 Directors 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 and shall be conclusive for all
purposes.
(ii) For the purpose of any computation
hereunder, the "Current Market Price" per share of Preferred Stock
shall be determined in the same manner as set forth above for the
Common Stock in clause (i) of this Section 11(d) (other than the
last sentence thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner provided above
or if the Preferred Stock is not publicly held or listed or traded
in a manner described in clause (i) of this Section 11(d), the
"Current Market Price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 1,000 (as such number
may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) multiplied by
the Current Market Price per share of the Common Stock. If neither
the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, "Current Market Price" per share of the
Preferred Stock 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 and shall be conclusive for all purposes. For all
purposes of this Agreement, the Current Market Price of a Unit
shall be equal to the Current Market Price of one share of
Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a share of Common Stock or other share or one millionth
of a share of Preferred Stock, 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 (3) 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)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
other than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i),
(j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a share of Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-hundredths of a share of Preferred Stock (calculated
to the nearest one-millionth) obtained by (i) multiplying (x) the number of
one one-hundredths of a share 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 Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of
any adjustment in the number of one one-hundredths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one one-hundredths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one 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. This
record date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Rights Certificates have been issued, shall be
at least ten (10) days later than the date of the public announcement. If
Rights 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 Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company,
new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights 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 Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a share of Preferred Stock
issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one one-hundredths of a share and the number of one
one-hundredths of a share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of the
number of one one-hundredths of a share of Preferred 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 such number of
one one-hundredths of a share of Preferred 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 issuance to the holder of any Right exercised after such
record date the number of one one-hundredths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon
such exercise over and above the number of one one-hundredths of a share of
Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in
the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that in their good faith judgment the
Board of Directors of the Company shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any shares of Preferred Stock at less than the
Current Market Price, (iii) issuance wholly for cash of shares of Preferred
Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not
be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary
to sell or transfer), in one transaction or a series of related
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 (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), if (x) at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the stockholders of the Person
who constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or
Section 27 hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or otherwise eliminate the benefits intended to
be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend
on the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of
shares, 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 by a fraction the numerator which shall be the total number of shares
of Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of such
event.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 and
Section 13 hereof, 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 Preferred Stock and the Common Stock, a copy of such
certificate, and (c) if a Distribution Date has occurred, mail a brief
summary thereof to each holder of a Rights Certificate in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained and shall not
be obligated or responsible for calculating any adjustment nor shall it be
deemed to have knowledge of such adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), and the Company
shall not be the continuing or surviving corporation of such consolidation
or merger, (y) any Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Person or Persons (other than
the Company or any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o) hereof), then, and in each such
case (except as may be contemplated by Section 13(d) hereof), proper
provision shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, 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 such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one
one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11 Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such one one-hundredths of a
share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11 Event by the Purchase Price in effect
immediately prior to such first occurrence) and dividing that product
(which, following the first occurrence of a Section 13 Event shall be
referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by (2) 50% of the Current Market Price per share of the
Common Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the obligations
and duties of the Company pursuant to this Agreement; (iii) 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 a
Section 13 Event; (iv) 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 connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to
its shares of Common Stock thereafter deliverable upon the exercise of the
Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities for or into which
shares of Common Stock of the Company are converted in such merger
or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of 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 Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered, "Principal Party"
shall refer to such other Person; and (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so registered, "Principal
Party" shall refer to whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized shares of its
Common Stock which have not been issued or reserved for issuance to permit
the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section
13 and further providing that, as soon as practicable after the date of any
such Section 13 Event, the Principal Party will
(i) prepare and file a registration statement under
the Securities 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 Securities Act) until the Expiration Date;
(ii) take such all such other action as may be
necessary to enable the Principal Party to issue the securities
purchasable upon exercise of the Rights, including but not limited
to the registration or qualification of such securities under all
requisite securities laws of jurisdictions of the various states
and the listing of such securities on such exchanges and trading
markets as may be necessary or appropriate; and
(iii) will deliver to holders of the Rights
historical financial statements for the Principal Party and each
of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the first occurrence of a
Section 11 Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section
13(a).
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons (or a wholly-owned Subsidiary of any
such Person or Persons) who acquired shares of Common Stock pursuant to a
Qualifying Offer, (ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common Stock paid to
all holders of shares of Common Stock whose shares were purchased pursuant
to such Qualifying Offer, and (iii) the form of consideration being offered
to the remaining holders of shares of Common Stock pursuant to such
transaction is the same as the form of consideration paid pursuant to such
Qualifying Offer. Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights 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
purposes of this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights 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 system,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights the fair value of the Rights on such date
as determined in good faith by the Board of Directors of the Company shall
be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock) upon exercise
of the Rights or to distribute certificates which evidence fractional
shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock). In lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-hundredth of a share of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction
of the current market value of one one-hundredth of a share of Preferred
Stock. For purposes of this Section 14(b), the current market value of one
one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date
of such exercise.
(c) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one (1) share of
Common Stock. For purposes of this Section 14(c), the current market value
of one share of Common Stock shall be the closing price per share of Common
Stock (determined pursuant to Section 11(d)(i) hereof) on the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in respect
of this Agreement are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
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
Rights Certificate (or, prior to the Distribution 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 Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy
at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transfer able only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent and only if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Com pany and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated
Common Stock certifi cate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates 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,
subject to the last sentence of Section 7(e) hereof, shall be required to
be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the con
trary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmen tal, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of
one one-hundredths of a share of Preferred 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 Rights
Certificate be construed to confer upon the holder of any Rights
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 hereof),
or to receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and disburse ments 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 miscon duct
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 may conclusively rely upon and 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 Rights 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
neces sary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust or shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto; provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and deliver
such Rights Certificates so countersigned; and in case at that time any of
the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of
the predecessor or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided in
the Rights Certifi cates 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 Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "Current Market Price") be proved
or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer, 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 suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder 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 Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), 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 execu tion of any Rights 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 Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11, Section 13 or Section 24
hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights
evidenced by Rights 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 or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Common
Stock or Preferred Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, ac
knowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as
may reason ably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the President, any Vice President, the
Secretary, any Assis tant Secretary, the Treasurer or any Assistant
Treasurer of the Company or any designee of any of the foregoing, and to
apply to such officers for advice or instruc tions in connection with its
duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Com pany or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company
or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct; provided, however, reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the
form of assign ment or the 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 or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the
Company, and to each transfer agent of the Common Stock and Preferred
Stock, by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty (30) days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and to the holders of the Rights Certificates
by first-class mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by any
registered holder of a Rights Certificate (who shall, with such notice,
submit his Rights Certificate for inspection by the Company), then any
registered holder of a Rights Certificate may apply to any court of
competent jurisdiction for the appoint ment 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 any state of the United States so long as such
corporation is authorized to do business as a banking institution in such
state, in good standing, which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Preferred Stock, and, if such
appointment occurs after the Distribution Date, mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to
give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the Rights, Rights
Agreement or the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Purchase Price and the number or
kind or class of shares or other securities or property purchasable under
the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of shares
of Common Stock following the Distribution Date and prior to the redemption
or expiration of the Rights, the Company (a) shall, with respect to shares
of Common Stock so issued or sold pursuant to the exercise of stock options
or under any em ployee plan or arrangement, granted or awarded as of the
Distribution Date, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that
(i) no such Rights Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(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
day following the Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the close of business on the
tenth day following the Record Date), or (ii) the Final Expiration Date,
redeem all but not less than all of the then outstanding Rights at a
redemption price of $0.01 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"). Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Section 11 Event until such time as the
Company's right of redemption set forth in the first sentence of this
Section 23(a) has expired. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the Current
Market Price of the Common Stock at the time of redemption) or any other
form of consider ation deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, evidence of which shall
have been filed with the Rights Agent and without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the
Board of Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
(c) Notwithstanding the provisions of Section 23(a) hereof, if,
within 270 days of a public announcement by a third party of an intent or
proposal to engage (without the current and continuing concurrence of the
Board of Directors of the Company) in a transaction involving an
acquisition of or business combination with the Company or otherwise to
become an Acquiring Person, there is an election of Directors (whether at
one or more stockholder meetings and/or pursuant to written stockholder
consent) resulting in a majority of the Board of Directors of the Com pany
being comprised of persons who were not nominated by the Board of Directors
of the Company in office immediately prior to such election, then following
the effectiveness of such election for a period of 180 days (the "Special
Period") the Rights, if otherwise then redeemable absent the provisions of
this paragraph (c), shall be redeemable upon either of the following
conditions being satisfied, but not otherwise:
(i) by a vote of a majority of the Directors then in office,
provided that
(A) before such vote, the Board of Directors of
the Company shall have implemented the Value Enhancement
Procedures (as defined below) and
(B) promptly after such vote, the Company
publicly announces such vote and
(1) the manner in which the Value Enhancement
Procedures were implemented,
(2) any material financial, business, personal or
other benefit or relationship (an "Interest") which
each Director and each Affiliate of such Director
(identifying each Director and Affiliate separately
in relation to each such Interest) has in
connection with any suggested, proposed or pending
transaction with or involving the Company (a
"Transaction"), or with any other party or
Affiliate of any other party to a Transaction,
where such Transaction would or might, or is
intended to, be per mitted or facilitated by
redemption of the Rights (an "Affected
Transaction"), other than treatment as a
stockholder on a pro rata basis with other
stockholders or pursuant to compensation
arrangements as a director or employee of the
Company or a subsidiary which have been previously
disclosed by the Company,
(3) the individual vote of each Director on the
motion to redeem the Rights, and
(4) the statement of any Director who voted
for or against the motion to redeem the Rights and
desires to have a statement included in such
announcement, or
(iv) if clause (i) is not applicable, by a vote of a majority
of the Directors then in office, provided that (A) if there is a
challenge to the Directors' action approving redemption and/or any
related Affected Transaction as a breach of the fiduciary duty of care
or loyalty, the Directors, solely for purposes of determining the
effec tiveness of such redemption pursuant to this clause (ii), are
able to establish the entire fairness of such redemption and, if
applicable, such related Affected Transaction, and (B) the Company
shall have publicly announced the vote of the Board of Directors of
the Company approv ing such redemption and, if applicable, such
related Affected Transac tion, which announcement shall set forth the
information prescribed by clauses (i) (B) (2), (3) and (4) above.
"Value Enhancement Procedures" shall mean:
(1) the selection by the Board of Directors of the Company of an
independent financial advisor (the "Independent Advisor") from among
financial advisors which have national standing, have established
expertise in advising on mergers, acquisitions and related matters
and have no Interest relating to an Affected Transaction, and have
not during the preceding year provided services to, been engaged by
or been a financing source for any other party to an Affected
Transaction or any Affiliate of any such party or of any Director
(other than the Company and its subsidiaries);
(2) whether or not there is a then-pending Affected Transaction,
the receipt by the Board of Directors of the Company from
its Independent Advisor of (a) such advisor's view (expressed in such
form and subject to such qualifications and limitations as the
Independent Advisor deems appropriate) regarding whether redemption of
the Rights will serve the best interests of the Company and its
stockholders or (b) such advisor's statement that it is unable to
express such a view, setting forth the reasons therefor;
(3) if there is a then-pending Affected Transaction,
(A) the establishment and implementation by the Board of
Directors of the Company, with the advice of its Independent
Advisor, of a process and procedures which the Board of
Directors of the Company and such advisor conclude would be
most likely to result in the best value reasonably available to
stockholders (regardless of whether such Affected Transaction
involves a "sale of control" or "break-up" of the Company for
Illinois law purposes),
(B) the Board of Directors of the Company (i) receiving the
opinion of its Independent Advisor, in customary form and
content for transac tions of the type involved, that the
Affected Transaction is fair to the Company's stockholders from
a financial point of view and (ii) deter mining, and the
Independent Advisor confirming, that it has no reason to
believe that a superior transaction is reasonably available for
the benefit of the Company's stockholders, and
(C) the execution of a definitive transaction agreement and
other definitive documentation necessary to effect the Affected
Transaction.
(d) Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23 and
other than in connection with the purchase or repurchase by any of them of
Common Stock prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option,
at any time after 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) hereof) for shares of Common Stock at an exchange ratio of one share
of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"); provided, however, that no such exchange of the Rights may be
authorized by the Board of Directors of the Company during the Special
Period or 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, or any entity holding Common Stock for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the 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 24 and without any further action and without any notice,
the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of
shares of Common Stock equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company 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 pro vided 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 Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute shares of Preferred Stock (or equivalent
preferred stock, as such term is defined in paragraph (b) of Section 11
hereof) for shares of Common Stock exchangeable for Rights, at the initial
rate of one one-hundredth of a share of Preferred Stock (or equivalent
preferred stock) for each share of Common Stock.
(d) 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 24, 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.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional share of Common Stock
would otherwise be issuable, an amount in cash equal to the same fraction
of the Current Market Value of a whole share of Common Stock. For the
purposes of this subsection (e), the "Current Market Value" of a whole
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)(i) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to
this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
the holders of Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular quarterly cash dividend
out of earnings or retained earnings of the Company), or (ii) to offer to
the holders of Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock),
or (iv) to effect any consolida tion or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), 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 transaction or a series of related 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 (other than
the Company and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(o) hereof), or (v) 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 Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of
such stock dividend, distribu tion of rights or warrants, 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 the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given
in the case of any action covered by clause (i) or (ii) above at least
twenty (20) days prior to the record date for determining holders of the
shares of Preferred Stock for purposes of such action, and in the case of
any such other action, at least twenty (20) days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the shares of Preferred Stock, whichever shall be the earlier.
(b) In case any Section 11 Event shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of the occurrence of such event, which
shall specify the event and the conse quences of the event to holders of
Rights under Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Preferred Stock shall be deemed thereafter to refer
to Common Stock and/or other securities.
Section 26. Notices. Notices or demands authorized by this
Agree ment to be given or made by the Rights Agent or by the holder of any
Rights Certifi cate 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:
Chicago Rivet & Machine Co.
P.O. Box 3061
901 Frontenac Road
Naperville, Illinois 60566
Attn: [Corporate Secretary]
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by registered or certified mail and shall be deemed given upon
receipt, addressed (until another address is filed in writing with the
Company) as follows:
First Chicago Trust Company of New York
------------------------
-----------------------
Attention:
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address
of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments.
(a) Prior to the Distribution Date and subject to the
provisions of Section 27(b), the Company may and, if so directed by the
Company, the Rights Agent shall supplement or amend any provision of this
Agreement without the approval of any holders of certificates representing
shares of Common Stock and associated Rights. From and after the
Distribution Date and subject to the provisions of Section 27(b), the
Company may and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order to: (i) cure any ambiguity, (ii) correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) shorten or lengthen
any time period hereunder, or (iv) change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable
and which shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); provided, however, that this Agreement may not be
supple mented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other time
period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights
(other than an Acquiring Person and its Associates and Affiliates). Upon
the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
(b) Notwithstanding anything herein to the contrary, no
supplement or amendment shall be made to this Agreement during the Special
Period or at a time when the Rights are not redeemable, except as
contemplated by clause (i) or (ii) of Section 27(a) hereof.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock or any other class of capital stock
outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of
which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the 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
to the Company, or as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or
to amend the Agreement). All such actions, calculations, interpretations
and determina tions (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made by the
Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties,
and (y) not subject the Board to any liability to the holders of the
Rights.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company,
the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of 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 Rights
Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock).
Section 31. Severability. If any term, provision, covenant or
restric tion of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right
of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the close of business on the tenth day following the date
of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Illinois and for all purposes shall be
governed by and construed in accordance with the laws of such state
applicable to contracts made and to be per formed entirely within such
state except as to the rights and duties of the Rights Agent which shall be
governed by and construed in accordance with the laws of the State of New
York.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.
Attest: CHICAGO RIVET & MACHINE CO.
By--------------------------- By ---------------------------------
Name: Name:
Title: Title:
Attest: FIRST CHICAGO TRUST COMPANY
OF NEW YORK, as Rights Agent
By --------------------------- By ---------------------------------
Name: Name:
Title: Title:
EXHIBIT A
STATEMENT OF RESOLUTION ESTABLISHING SERIES OF SHARES
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
CHICAGO RIVET & MACHINE CO.
(Pursuant to Section 6.10 of the
Illinois Business Corporation Act)
STATEMENT OF
RESOLUTION ESTABLISHING SERIES OF SHARES
Pursuant to the provisions of Section 6.10 of the Illinois
Business Corporation Act, the undersigned hereby submits the following
statement for the purpose of establishing and designating a series of
shares and fixing and determining the relative rights and preferences
thereof:
1. The name of the corporation is Chicago Rivet & Machine
Co. (the "Corporation").
2. The following resolution, establishing and designating a series
of shares and fixing and determining the relative rights and preferences
thereof, was duly adopted by the Board of Directors of the Corporation on
November 22, 1999:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of its
Articles of Incorporation, a series of Preferred Stock of the Corporation
be and it hereby is created, and that the designation and amount thereof
and the voting powers, prefer ences and relative, participating, optional
and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" and
the number of shares constituting such series shall be 20,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to
the shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the fifteenth day of February, May, August and
November in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 or
(b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value
$1.00 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Junior Participating Preferred
Stock. In the event the Corporation shall at any time after December 3,
1999 (the "Rights Declaration Date") (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of
shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in Paragraph
(A) above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $1.00 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series A Junior Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series A Junior Participating Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which
record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to one (1) vote on all matters submitted to a
vote of the stockholders of the Corporation. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the number of votes
per share to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Junior Participating Preferred Stock and the holders
of shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six
(6) quarterly dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a "default period") which
shall extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend
period on all shares of Series A Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Preferred Stock (including
holders of the Series A Junior Participating Preferred Stock) with
dividends in arrears in an amount equal to six (6) quarterly dividends
thereon, voting as a class, irrespective of series, shall have the right to
elect two (2) directors.
(ii) During any default period, such voting right of the
holders of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of
this Section 3(C) or at any annual meeting of stockholders, and thereafter
at annual meetings of stockholders, provided that neither such voting right
nor the right of the holders of any other series of Preferred Stock, if
any, to increase, in certain cases, the authorized number of directors
shall be exercised unless the holders of ten percent (10%) in number of
shares of Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Preferred Stock of such voting right.
At any meeting at which the holders of Preferred Stock shall exercise such
voting right initially during an existing default period, they shall have
the right, voting as a class, to elect directors to fill such vacancies, if
any, in the Board of Directors as may then exist up to two (2) directors
or, if such right is exercised at an annual meeting, to elect two (2)
directors. If the number which may be so elected at any special meeting
does not amount to the required number, the holders of the Preferred Stock
shall have the right to make such increase in the number of directors as
shall be necessary to permit the election by them of the required number.
After the holders of the Preferred Stock shall have exercised their right
to elect directors in any default period and during the continuance of such
period, the number of directors shall not be increased or decreased except
by vote of the holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or pari passu with
the Series A Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during
an existing default period, have previously exercised their right to elect
directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding, irrespective of
series, may request, the calling of a special meeting of the holders of
Preferred Stock, which meeting shall thereupon be called by the President,
a Vice President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this Paragraph (C)(iii) shall be given to each
holder of record of Preferred Stock by mailing a copy of such notice to him
at his last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 20 days and not
later than 60 days after such order or request or in default of the calling
of such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any stockholder or stockholders owning
in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding. Notwithstanding the provisions of
this Paragraph (C)(iii), no such special meeting shall be called during the
period within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock,
and other classes of stock of the Corporation if applicable, shall continue
to be entitled to elect the whole number of directors until the holders of
Preferred Stock shall have exercised their right to elect two (2) directors
voting as a class, after the exercise of which right (x) the directors so
elected by the holders of Preferred Stock shall continue in office until
their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in Paragraph (C)(ii) of this Section 3)
be filled by vote of a majority of the remaining directors theretofore
elected by the holders of the class of stock which elected the director
whose office shall have become vacant. References in this Paragraph (C) to
directors elected by the holders of a particular class of stock shall
include directors elected by such directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Preferred Stock as a class to elect
directors shall cease, (y) the term of any directors elected by the holders
of Preferred Stock as a class shall terminate, and (z) the number of
directors shall be such number as may be provided for in the articles of
incorporation or by-laws irrespective of any increase made pursuant to the
provisions of Paragraph (C)(ii) of this Section 3 (such number being
subject, however, to change thereafter in any manner provided by law or in
the articles of incorporation or by-laws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock
as provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares
of Series A Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to
the Series A Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior Participating Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under Paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participat ing Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A)
Upon any liquidation (voluntary or otherwise), dissolution or winding up of
the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received an amount equal to $100
per share of Series A Participating Preferred Stock, plus an amount equal
to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Common Stock shall have received an
amount per share (the "Common Adjustment") equal to the quotient obtained
by dividing (i) the Series A Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph (C) below to reflect
such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred Stock and
Common Stock, respectively, holders of Series A Junior Participat ing
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of preferred stock, if
any, which rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to
the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the Adjustment Number in effect immediately prior to
such event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property,
then in any such case the shares of Series A Junior Participating Preferred
Stock shall at the same time be similarly exchanged or changed in an amount
per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior
Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.
Section 10. Amendment. At any time when any shares of Series A
Junior Participating Preferred Stock are outstanding, neither the Articles
of Incorporation of the Corporation nor this Statement of Resolution
Establishing Series of Shares shall be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority or more
of the outstanding shares of Series A Junior Participating Preferred Stock,
voting separately as a class.
Section 11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Statement of Resolution Establishing Series of Shares and do affirm the
foregoing as true under penalties of perjury this ___ day of November,
1999.
------------------------
President
Attest:
- --------------------
Secretary
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER DECEMBER 2, 2009 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFI CIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREE MENT). ACCORDINGLY, THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRE SENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.](1)
Rights Certificate
______________
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
CHICAGO RIVET & MACHINE CO.
This certifies that _________________, or registered assigns,
is the registered holder 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 November 22, 1999, as from
time to time amended (the "Rights Agreement"), between Chicago Rivet &
Machine Co., an Illinois corporation (the "Company"), and First Chicago
Trust Company of New York, a New York bank (the "Rights Agent"), to
purchase from the Company at any time prior to 5:00 PM (New York City time)
on December 2, 2009, at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-hundredth of a fully-paid, nonassessable share of Series A Junior
Participating Preferred Stock (the "Preferred Stock") of the Company, at a
purchase price of $90.00 per one one-hundredth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase set forth on the reverse hereof and the
Certificate contained therein duly executed. The Purchase Price shall be
paid in cash. The number of Rights evidenced by this Rights Certificate
(and the number of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth above, are the
number of Rights, number and Purchase Price as of December 3, 1999, based
on the Preferred Stock as constituted at such date, and are subject to
adjustment upon the happening of certain events as provided in the Rights
Agreement. The Company reserves the right to require prior to the
occurrence of a Triggering Event (as such term is defined in the Rights
Agreement) that a number of Rights be exercised so that only whole shares
of Preferred Stock will be issued.
Upon the occurrence of a Section 11 Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a person who,
concurrently with or after such transfer, became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, such Rights shall become
null and void and no holder hereof shall have any rights whatsoever with
respect to such Rights from and after the occurrence of such Section 11
Event.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Rights Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and
are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the
Rights Agent designated for such purpose, may be exchanged for another
Rights Certificate or Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number of one
one-hundredths of a share of Preferred Stock as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender hereof another
Rights Certificate or Certificates representing the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option
at a redemption price of $0.01 per Right at any time prior to the earlier
of the close of business on (i) the tenth day following the Stock
Acquisition Date (as such time period may be extended or shortened pursuant
to the Rights Agreement) or (ii) the Final Expiration Date. For 180 days
following a change in control of the Board of Directors of the Company,
that has not been approved by the Board of Directors, occurring within 270
days of an unsolicited third party acquisition or business combination
proposal, the new directors are entitled to redeem the rights (assuming the
rights would have otherwise been redeemable), including to facilitate an
acquisition or business combination transaction involving the Company, but
only (1) if they have followed certain prescribed procedures or (2) if such
procedures are not followed, and if their decision regarding redemption
and/or any acquisition or business combination is challenged as a breach of
fiduciary duty of care or loyalty, the directors (solely for purposes of
determining the effectiveness of such redemption) are able to establish the
entire fairness of such redemption, and, if applicable, such transaction.
In addition, the Rights may be exchanged, in whole or in part, for shares
of Common Stock, or shares of preferred stock of the Company having
essentially the same value or economic rights as such shares. Immediately
upon the action of the Board of Directors of the Company authorizing any
such exchange, and without any further action or any notice, the Rights
(other than Rights which are not subject to such exchange) will terminate
and the Rights will only enable holders to receive the shares issuable upon
such exchange.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions
which are integral multiples of one one-hundredth of a share of Preferred
Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder, as such, of this Rights Certificate shall be
entitled to vote or receive dividends or be deemed for any purpose the
holder of the shares of Preferred Stock or of any other securities of the
Company which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this 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 ______________, ____
ATTEST: CHICAGO RIVET & MACHINE CO.
By________________________ By_____________________________
Secretary Title
Countersigned:
First Chicago Trust Company of New York,
as Rights Agent
By________________________
Authorized Signature
[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.)
Please print social security or other
identifying number of the transferor:________________________
FOR VALUE RECEIVED, _______________________ hereby sells, assigns and
transfers unto:
------------------------------------------
(Please print name and address of transferee)
------------------------------------------
(Please print social security or other
identifying number of the 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:__________________________
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) 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
(as such terms are defined in 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, was or subsequently became an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person.
Dated:_________________, 19__ _________________________
Signature
Signature Guaranteed:________________________
NOTICE
The signatures to the foregoing Assignment and Certificate 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.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Rights Certificate.)
To: CHICAGO RIVET & MACHINE CO.
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of the Rights (or such
other securities of the Company or of any other person which may be
issuable upon the exercise of the Rights) and requests that certificates
for such shares be issued in the name of and delivered to:
------------------------------------------
(Please print name and address)
------------------------------------------
(Please print social security or other
identifying number)
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of
such Rights shall be registered in the name of and delivered to:
------------------------------------------
(Please print name and address)
------------------------------------------
(Please print social security or other
identifying number)
Dated:_______________, 19__
-----------------------
Signature
Signature Guaranteed:__________________________
Certificate
The undersigned hereby certifies 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 in 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, was or subsequently became an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person.
Dated:_________________, 19__ _________________________
Signature
Signature Guaranteed:________________________
NOTICE
The signatures to the foregoing Assignment and Certificate 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.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On November 22, 1999, the Board of Directors of Chicago Rivet &
Machine Co. (the "Company") declared a dividend distribution of one Right
for each outstanding share of Company Common Stock to stockholders of
record at the close of business on December 3, 1999 (the "Record Date").
Each Right entitles the registered holder to purchase from the Company a
unit consisting of one one-hundredth of a share (a "Unit") of Series A
Junior Participating Preferred Stock, no par value per share (the "Series A
Preferred Stock"), at a Purchase Price of $90.00 per Unit, subject to
adjustment. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and First
Chicago Trust Company of New York, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified
in the Rights Agreement, the Rights will separate from the Common Stock and
a Distribution Date will occur upon the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired beneficial ownership of 10% or
more of the outstanding shares of Common Stock other than as a result of
repurchases of stock by the Company or certain inadvertent actions by
institutional or certain other stockholders or the date a Person has
entered into an agreement or arrangement with the Company or any Subsidiary
of the Company providing for an Acquisition Transaction (the "Stock
Acquisition Date") or (ii) 10 business days (or such later date as the
Board shall determine, provided, however, that no deferral of a
Distribution Date by the Board pursuant to the terms of the Rights
Agreement described in this clause (ii) may be made at any time during the
Special Period (as defined below)) following the commencement of a tender
offer or exchange offer that would result in a person or group becoming an
Acquiring Person. Certain existing stockholders of the Company are excluded
from the definition of "Acquiring Person" and the triggering provisions of
the Rights Agreement unless they acquire beneficial ownership of additional
shares of Common Stock in amounts and under certain circumstances described in
the Rights Agreement. An Acquisition Transaction is defined in the Rights
Agreement as (x) a merger, consolidation or similar transaction involving
the Company or any of its Subsidiaries as a result of which stockholders of
the Company will no longer own a majority of the outstanding shares of
Common Stock of the Company or a publicly traded entity which controls the
Company or, if appropriate, the entity into which the Company may be
merged, consolidated or otherwise combined (based solely on the shares of
Common Stock received or retained by such stockholders, in their capacity
as stockholders of the Company, pursuant to such transaction), (y) a
purchase or other acquisition of all or a substantial portion of the assets
of the Company and its Subsidiaries, or (z) a purchase or other acquisition
of securities representing 10% or more of the shares of Common Stock then
outstanding. Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and
only with such Common Stock certificates, (ii) new Common Stock
certificates issued after the Record Date will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. Pursuant to the Rights Agreement, the
Company reserves the right to require prior to the occurrence of a
Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock
will be issued.
The Rights are not exercisable until the Distribution Date and
will expire at 5:00 P.M. New York City time on December 2, 2009, unless
such date is extended or the Rights are earlier redeemed or exchanged by
the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and, thereafter, the
separate Rights Certificates alone will represent the Rights. Except as
otherwise determined by the Board of Directors, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, except
pursuant to an offer for all outstanding shares of Common Stock which the
independent directors determine to be fair and not inadequate to and to
otherwise be in the best interests of the Company and its stockholders,
after receiving advice from one or more investment banking firms (a
"Qualified Offer"), each holder of a Right will thereafter have the right
to receive, upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to
two times the exercise price of the Right. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person
will be null and void. However, Rights are not exercisable following the
occurrence of the event set forth above until such time as the Rights are
no longer redeemable by the Company as set forth below.
For example, at an exercise price of $90.00 per Right, each
Right not owned by an Acquiring Person (or by certain related parties)
following an event set forth in the preceding paragraph would entitle its
holder to purchase $180.00 worth of Common Stock (or other consideration,
as noted above) for $90.00. Assuming that the Common Stock had a per share
value of $30.00 at such time, the holder of each valid Right would be
entitled to purchase 6 shares of Common Stock for $90.00.
In the event that, at any time following the Stock Acquisition
Date, (i) the Company engages in a merger or other business combination
transaction in which the Company is not the surviving corporation (other
than with an entity which acquired the shares pursuant to a Qualified
Offer), (ii) the Company engages in a merger or other business combination
transaction in which the Company is the surviving corporation and the
Common Stock of the Company is changed or exchanged, or (iii) 50% or more
of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which have previously been voided as set
forth above) shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a value equal to two times the
exercise price of the Right. The events set forth in this paragraph and in
the second preceding paragraph are referred to as the "Triggering Events."
Except during the Special Period (as defined below), at any
time after a person becomes an Acquiring Person and prior to the
acquisition by such person or group of fifty percent (50%) or more of the
outstanding Common Stock, the Board may exchange the Rights (other than
Rights owned by such person or group which have become void), in whole or
in part, at an exchange ratio of one share of Common Stock, or one
one-hundredth of a share of Preferred Stock (or of a share of a class or
series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
At any time until ten days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors). Immediately
upon the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $.01 redemption price.
For 180 days (the "Special Period") following a change in
control of the Board of Directors of the Company, that has not been
approved by the Board of Directors, occurring within 270 days of
announcement of an unsolicited third party acquisition or business
combination proposal or of a third party's intent or proposal otherwise to
become an Acquiring Person, the new directors are entitled to redeem the
Rights (assuming the Rights would have otherwise been redeemable),
including to facilitate an acquisition or business combination transaction
involving the Company, but only (1) if they have followed certain
prescribed procedures or (2) if such procedures are not followed, and if
their decision regarding redemption and any acquisition or business
combination is challenged as a breach of fiduciary duty of care or loyalty,
the directors (solely for purposes of the effectiveness of the redemption
decision) are able to establish the entire fairness of the redemption or
transaction.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common
Stock (or other consideration) of the Company or for common stock of the
acquiring company or in the event of the redemption of the Rights as set
forth above.
Any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights, or to shorten
or lengthen any time period under the Rights Agreement. The foregoing
notwithstanding, no amendment may be made to the Rights Agreement during
the Special Period or at a time when the Rights are not redeemable, except
to cure any ambiguity or correct or supplement any provision contained in
the Rights Agreement which may be defective or inconsistent with any other
provision therein.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Current Report on Form 8-K dated
November 24, 1999. A copy of the Rights Agreement is available free of
charge from the Rights Agent. 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 incorporated herein by reference.
EXHIBIT 99.1
Chicago Rivet & Machine Co. Adopts Shareholder Rights Plan
NAPERVILLE, Ill., Nov. 23 -- Chicago Rivet & Machine Co. (the "Company")
(Amex: CVR), announced that its Board of Directors adopted a
Shareholder Rights Plan in which rights will be distributed as a dividend
at the rate of one Right for each share of common stock, par value $1.00
per share, of the Company held by shareholders of record as of the close of
business on December 3, 1999.
The Rights Plan is designed to deter coercive takeover tactics
including the accumulation of shares in the open market or through private
transactions and to prevent an acquiror from gaining control of the Company
without offering a fair and adequate price to all of the Company's
shareholders. The Rights will expire on December 2, 2009.
Each Right initially will entitle shareholders to buy a unit
representing one one-hundredth of a share of a new series of preferred stock
of the Company for $90.00. The Rights generally will be exercisable only if
a person or group acquires beneficial ownership of 10% or more of the
Company's common stock or commences a tender or exchange offer upon
consummation of which such person or group would beneficially own 10% or
more of the Company's common stock. If a person of group acquires beneficial
ownership of 10% or more of the Company's common stock, each Right (other
than Rights held by the acquiror) will, unless the Rights are redeemed by
the Company, become exercisable upon payment of the exercise price of $90.00
for common stock of the Company having a market value of twice the exercise
price of the Right.
A copy of the Shareholder Rights Plan will be filed shortly with
the Securities and Exchange Commission.
For further information please contact: John C. Osterman of
Chicago Rivet & Machine Co., 630-357-8500.
