SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF
SECURITIES PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
TALLEY INDUSTRIES, INC.
(Exact name of registrant specified in its charter)
Delaware 86-0180396
(State of Incorporation or Organization) (IRS Tax Number)
2702 North 44th Street, Phoenix, Arizona 85008
(Address of principal executive offices) (Zip Code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Rights to Purchase New York Stock Exchange
Series C Junior
Participating Pre-
ferred Stock
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of Class)
<PAGE>
Item 1. Description of Securities to be Registered.
On February 2, 1996 the Registrant's Board of Directors
amended the Preferred Share Purchase Rights (as amended, the
"Rights") originally issued in 1986 under the Rights Agreement
dated as of April 30, 1986, amended as of July 21, 1986, and
further amended and restated as of February 2, 1996 (the "Amended
Rights Agreement"). The February 2, 1996 amendment extended the
expiration date of the Rights (scheduled to expire on April 1,
1996) until February 1, 2006, and modified certain other terms
and conditions of the Rights, all as set forth in the Amended
Rights Agreement.
Each Right will entitle its holder to buy one one-hundredth
(1/100) of a share of Talley Series C Junior Participating
Preferred Stock having the principal terms described below (the
"Preferred Stock") at an exercise price of $32.00 per 1/100
share. The Rights are subject to the Amended Rights Agreement, a
copy of which is attached to this Report as an Exhibit. All
descriptions herein of the Amended Rights Agreement, the Rights
and the Preferred Stock are qualified in their entirety by
reference to the Amended Rights Agreement, including the exhibits
thereto. Such descriptions are general in nature, and a careful
review of the Amended Rights Agreement and exhibits thereto is
necessary to understand the exact terms and conditions of the
Amended Rights Agreement, the Rights, the Preferred Stock and
related matters.
The Rights trade with the Common Stock and are not
exercisable, or transferable apart from the Common Stock, until
the earlier to occur 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 15% or more of the outstanding Common Stock (with certain
exceptions for inadvertent acquisitions), or (ii) 10 business
days (unless extended by the Board) following the commencement
of, or announcement of an intention to make, a tender offer or
exchange offer (other than a prior Board-approved offer for all
of the Common Stock), the consummation of which would result in
the beneficial ownership by a person or group of 15% or more of
the outstanding Common Stock. At that time, separate
certificates for the Rights will be mailed to holders of Common
Stock, and the Rights would then be expected to trade
independently. Certain exceptions are set forth in the Amended
Rights Agreement s definition of Acquiring Person to ensure
that the Rights are not triggered by the holding or accumulation
of a large block of Common Stock by a stock plan for the benefit
of Talley's employees or by the continued holdings of John J.
McMullen (and his affiliates) as Grandfathered Stockholders.
In the event that any person becomes an Acquiring Person,
each Right, other than Rights beneficially owned by the Acquiring
<PAGE>
Person and its affiliates and associates (which will thereafter
be void), will entitle its holder to receive upon exercise that
number of shares of Common Stock having a market value of two
times the exercise price of the Right. In such event, and should
Talley thereafter be acquired in a merger or other business
combination transaction, or should 50% or more of its
consolidated assets or earning power thereafter be acquired by
another company, each Right not previously exercised will entitle
its holder to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of
common stock of the acquiring company (or equivalent equity
interests) which at the time of such transaction have a market
value of two times the exercise price of the Right. The Board
may satisfy an exercise of Rights by delivering Common Stock or
equivalent value in the form of cash or certain other securities.
If an Acquiring Person holds less than a majority of the Common
Stock, the Board can elect to exchange any or all of the Rights
(except those held by the Acquiring Person, which would have
become void) for shares of Common Stock or equivalent value, at
an exchange ratio of one share of Common Stock per Right.
Unless already exercised, the Rights are redeemable by
Talley on 10 days' notice at $.05 per Right prior to any person
becoming an Acquiring Person. The Rights will expire on February
1, 2006. Until the Rights are exercised, their holders will have
no rights as shareholders of the Company, including, without
limitation, the right to vote or to receive dividends. The
purchase price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise or
exchange of the Rights are subject to adjustment from time to
time to prevent dilution. Chemical Mellon Shareholder Services,
L.L.C., as successor to Manufacturers Hanover Trust Company, is
acting as the Rights Agent.
On May 16, 1986 each share of Common Stock issued and
outstanding received one Right, and Talley has issued one Right
with each share of Common Stock issued since that date. As of
December 31, 1995, there were approximately 10,053,000 shares of
Common Stock issued and outstanding, along with an identical
number of attached Rights issued and outstanding. As of December
31, 1995, approximately 5,900,000 additional shares of Common
Stock were reserved for issuance pursuant to the exercise of
conversion privileges and employee benefit plans. So long as the
Rights are attached to the Common Stock, Talley will continue to
issue one Right with each newly issued share of Common Stock, so
that all such shares will have attached Rights. This will
include Common Stock issued upon conversion of Talley's
convertible preferred stock and Common Stock issued under its
stock option and incentive stock plans. Two hundred thousand
(200,000) shares of Preferred Stock have been reserved for
issuance upon exercise of the Rights.
<PAGE>
The Preferred Stock purchasable upon exercise of the Rights
will be nonredeemable and junior to other series of the Company's
preferred stock. Each full share of Preferred Stock will be
entitled to a minimum quarterly dividend equal to the greater of
$25.00 per share or 100 times the quarterly dividend paid on the
Common Stock. In the event of liquidation, holders of the
Preferred Stock will receive a preferred liquidation payment of
$100.00 per share, but will be entitled to receive (if greater
than $100.00 per share) an aggregate liquidation payment equal to
100 times the payment made per share of Common Stock. Each share
of Preferred Stock will have 100 votes, and will vote together
with the Common Stock except as to certain matters affecting the
rights of preferred stockholders. In the event of any merger,
consolidation or other transaction in which shares of Common
Stock are exchanged for or changed into stock, securities, cash,
or other property, each share of Preferred Stock will be entitled
to receive 100 times the amount received per share of Common
Stock. The foregoing rights of the Preferred Stock are protected
against dilution in the event additional shares of capital stock
are issued.
Except as set forth in the Amended Rights Agreement, the
terms and conditions of the Rights, and the provisions of the
Amended Rights Agreement, are subject to further amendment
without the necessity of any consent or vote of the holders of
the Rights.
Item 2. Exhibits.
1.1 Form of Right Certificate (Exhibit B to the Amended
Rights Agreement). Pursuant to the Amended Rights Agreement,
printed Rights Certificates will not be mailed until any person,
entity or group acquires beneficial ownership or announces its
intention to commence a tender or exchange offer for beneficial
ownership of 15% or more of the Common Stock.
2.1 Restated Certificate of Incorporation of the
Registrant, a copy of which was attached as Exhibit 2 to the
Registrant's current report on Form 8-K for the month of July,
1976, incorporated herein by this reference.
2.2 Certificate of Amendment of Certificate of
Incorporation of the Registrant dated May 22, 1987, attached as
Exhibit 3 to the Registrant's Form 10-Q for the quarter ended
March 31, 1988, incorporated herein by this reference.
2.3 By-Laws of the Registrant as presently in effect,
attached as Exhibit 3.3 to the Registrant's Form 10-K for the
year ended December 31, 1992, incorporated herein by this
reference.
<PAGE>
2.4 Amended and Restated Rights Agreement between the
Registrant and Chemical Mellon Shareholder Services, L.L.C.,
successor to Manufacturers Hanover Trust Company of California,
as Rights Agent, dated as of April 30, 1986, and amended as of
July 21, 1986, and further amended and restated as of February 2,
1996, specifying the terms of the Rights (the "Amended Rights
Agreement").
2.5 Certificate of Designations, Preferences and Rights for
the Registrant's Series C Junior Participating Preferred Stock
(Exhibit A to the Amended Rights Agreement).
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
TALLEY INDUSTRIES, INC.
Dated: As of February 2, 1996 By Mark S. Dickerson
Mark S. Dickerson,
Secretary
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. EXHIBIT
1.1 Form of Right Certificate
(Exhibit B to the Amended Rights
Agreement).
2.1 Restated Certificate of
Incorporation of the Registrant, a
copy of which was attached as
Exhibit 2 to Registrant's current
report on Form 8-K for the month of
July, 1976, incorporated herein by
this reference.
2.2 Certificate of Amendment of
Certificate of Incorporation of the
Registrant dated May 22, 1987,
attached as Exhibit 3 to the
Registrant's Form 10-Q for the
quarter ended March 31, 1988,
incorporated herein by this
reference.
2.3 By-Laws of the Registrant as
presently in effect, attached as
Exhibit 3.3 to the Registrant's
Form 10-K for the year ended
December 31, 1992, incorporated
herein by this reference.
2.4 Amended and Restated Rights
Agreement between the Registrant
and Chemical Mellon Shareholder
Services, L.L.C., successor to
Manufacturers Hanover Trust Company
of California, as Rights Agent,
dated as of April 30, 1986, and
amended as of July 21, 1986, and
further amended and restated as of
February 2, 1996.
2.5 Certificate of Designations,
Preferences and Rights for the
Registrant's Series C Junior
Participating Preferred Stock
(Exhibit A to the Amended Rights
Agreement).
EXHIBIT 1.1
Form of Right Certificate
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER FEBRUARY 1, 2006 OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $0.05 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR ANY ASSOCIATES OR
AFFILIATES THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID.
Right Certificate
TALLEY INDUSTRIES, INC.
This certifies that _______________________, or registered assigns,
is the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Amended and Restated Rights Agree-
ment, dated as of April 30, 1986 and amended as of July 21, 1986,
and amended and restated as of February 2, 1996 (the "Rights
Agreement"), between Talley Industries, Inc., a Delaware
corporation (the "Company"), and Chemical Mellon Shareholder
Services, L.L.C. (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., New York City time
(2:00 P.M. California time), on February 1, 2006, at the principal
office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series C Junior Participating Preferred Stock, par value
$1.00 per share (the "Preferred Shares"), of the Company, at a
purchase price of $32.00 per one one-hundredth of a Preferred Share
(the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the certification and the Form of Election
to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-hundredths of a
Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of February 2, 1996, based on the Preferred
Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths
of a Preferred Share which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
<PAGE>
From and after the occurrence of any event described in
Section 11(a)(ii) of the Rights Agreement, if the Rights evidenced
by this Right Certificate are or were at any time on or after the
earlier of (x) the Shares Acquisition Date (as such term is defined
in the Rights Agreement) and (y) the Distribution Date (as such
term is defined in the Rights Agreement) acquired or beneficially
owned by an Acquiring Person or an Associate or Affiliate of an
Acquiring Person (as such terms are defined in the Rights
Agreement), such Rights shall become void, and any holder of such
Rights shall thereafter have no right to exercise such Rights.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned
offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights
Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of Preferred Shares as
the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate
or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may be redeemed by the
Company at a redemption price of $0.05 per Right or (ii) may be
exchanged in whole or in part for Preferred Shares or shares of the
Company's Common Stock, par value $1.00 per share.
No fractional Preferred Shares 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
Preferred Share, 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 of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of the Preferred Shares 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
<PAGE>
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of _______________
__, 19__.
Attest: TALLEY INDUSTRIES, INC.
_____________________________ By: _____________________________
Countersigned:
CHEMICAL MELLON SHAREHOLDER
SERVICES, L.L.C.
Rights Agent
By: _________________________
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________________
hereby sells, assigns and transfers unto _____________________
______________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
____________________________, Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with
full power of substitution.
Dated: _____________ ___, _____
_________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
- -----------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by
an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
_________________________________
Signature
- -----------------------------------------------------------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To TALLEY INDUSTRIES, INC.:
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Right Certificate to
purchase the Preferred Shares issuable upon the exercise of such
Rights and requests that certificates for such Preferred Shares be
issued in the name of:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
_________________________________________________________________
Dated: _____________ ___, _____
_________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
<PAGE>
Form of Reverse Side of Right Certificate -- continued
- -----------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by
an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
_________________________________
Signature
- -----------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as the case
may be, is not completed, the Company and the Rights Agent will
deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
EXHIBIT 2.4
________________________________________________________
TALLEY INDUSTRIES, INC.
and
CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
Amended and Restated Rights Agreement
Dated as of April 30, 1986,
and amended as of July 21, 1986,
and amended and restated as of February 2, 1996.
________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . .1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . .8
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . .8
Section 4. Form of Right Certificates. . . . . . . . . . . . . . . . 12
Section 5. Countersignature and Registration . . . . . . . . . . . . 12
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates . . . . . . . . . . . . . . . . 13
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . . . . . . . 15
Section 8. Cancellation and Destruction of
Right Certificates. . . . . . . . . . . . . . . . . . . . 17
Section 9. Status and Availability of
Preferred Shares. . . . . . . . . . . . . . . . . . . . . 18
Section 10. Preferred Shares Record Date. . . . . . . . . . . . . . . 19
Section 11. Adjustment of Purchase Price,
Number of Shares or Number of
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 12. Certificate of Adjustment . . . . . . . . . . . . . . . . 34
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning
Power . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . 38
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . 40
Section 16. Agreement of Right Holders. . . . . . . . . . . . . . . . 41
Section 17. Right Certificate Holder Not Deemed
a Stockholder . . . . . . . . . . . . . . . . . . . . . . 42
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . 42
Section 19. Merger or Consolidation or Change
of Name of Rights Agent . . . . . . . . . . . . . . . . . 43
<PAGE>
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . 44
Section 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . 47
Section 22. Issuance of New Right Certificates. . . . . . . . . . . . 49
Section 23. Redemption. . . . . . . . . . . . . . . . . . . . . . . . 49
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 25. Notice of Certain Events. . . . . . . . . . . . . . . . . 53
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 27. Supplements and Amendments. . . . . . . . . . . . . . . . 56
Section 28. Successors. . . . . . . . . . . . . . . . . . . . . . . . 57
Section 29. Benefits of this Agreement. . . . . . . . . . . . . . . . 57
Section 30. Severability. . . . . . . . . . . . . . . . . . . . . . . 57
Section 31. Governing Law . . . . . . . . . . . . . . . . . . . . . . 58
Section 32. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 58
Section 33. Descriptive Headings. . . . . . . . . . . . . . . . . . . 58
Section 34. Administration. . . . . . . . . . . . . . . . . . . . . . 58
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Exhibit A Certificate of Designations,
Preferences and Rights of Series C
Junior Participating Preferred
Stock . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Exhibit B Form of Right Certificate . . . . . . . . . . . . . . . .B-1
Form of Reverse Side of Right
Certificate . . . . . . . . . . . . . . . . . . . . . . .B-4
Exhibit C Summary of Rights to Purchase
Preferred SharesC-1
<PAGE>
AMENDED AND RESTATED RIGHTS AGREEMENT
Agreement, dated as of April 30, 1986, and amended as of
July 21, 1986, and amended and restated as of February 2, 1996,
between Talley Industries, Inc., a Delaware corporation (the "Com-
pany"), and Chemical Mellon Shareholder Services, L.L.C. (the
"Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one Right for each share of Common Stock,
par value $1.00 per share, of the Company (a "Common Share," as
hereinafter defined) outstanding on May 16, 1986 and has authorized
the issuance of one Right with respect to each additional Common
Share that shall become outstanding between May 16, 1986 and the
earlier of the Distribution Date, the Expiration Date or the Final
Expiration Date (as such terms are defined in Sections 3 and 7
hereof), each Right representing the right to purchase one one-
hundredth of a share (a "Preferred Share," as hereinafter defined)
of Series C Junior Participating Preferred Stock of the Company
having the rights and preferences set forth in the form of
Certificate of Designations, Preferences and Rights attached hereto
as Exhibit A, or such different amount and/or kind of securities as
shall be hereinafter provided.
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
<PAGE>
"Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall
be the Beneficial Owner of 15% or more of the Common Shares of the
Company then outstanding, but shall not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit plan
of the Company or any Subsidiary of the Company, (iv) any entity
holding Common Shares for or pursuant to the terms of any such
employee benefit plan, or (v) the following Persons (each, a
"Grandfathered Stockholder"): namely, (a) that certain Voting Trust
(as amended from time to time) for the benefit of John J. McMullen
and/or members of his immediate family (collectively, "JJM"), which
trust has held a substantial block of Company securities since
1988; (b) the Voting Trustee thereof from time to time as such (but
not in any other capacity); (c) JJM's Successors and/or any trust
or other entity for the exclusive benefit of JJM and/or such
Successors; and (d) any private foundation established by JJM
exclusively for charitable purposes, together with any trust or
other entity for the exclusive benefit of JJM, JJM's Successors,
any such private foundation and/or other bona fide charitable
organizations, provided that all Company securities held by any
such Grandfathered Stockholder have been acquired either directly
from the Company (including the Common Shares recently issued, or
shortly to be issued, by the Company pursuant to the Company's
previously announced agreement whereby the Series D Preferred Stock
of the Company held by said Voting Trust was committed to be
converted) or directly or indirectly from said Voting Trust or
another Grandfathered Stockholder. Notwithstanding the foregoing,
<PAGE>
(1) no Person shall become an "Acquiring Person" as the result of
an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more
of the Common Shares of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15%
or more of the Common Shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person"; (2) if the Board of Directors
of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph, has become such
inadvertently, and such Person divests as promptly as practicable
a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph, then such Person shall not
be deemed to have become an "Acquiring Person" for any purposes of
this Agreement; and (3) no Person shall become an "Acquiring
Person" as a result of a Permitted Offer (as hereinafter defined).
"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 (the "Exchange Act"), as in effect on the date of this
Agreement.
<PAGE>
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 beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities), written or otherwise, or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed to be the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or
exchange offer made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act
by or on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revoc-
able proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations promulgated under the
<PAGE>
Exchange Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to
a bona fide public offering of securities), written or otherwise,
for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to section (B) of the immediately
preceding paragraph (ii)) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used
with reference to a Person's Beneficial Ownership of securities of
the Company, shall mean the number of such securities then issued
and outstanding together with the number of such securities not
then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
"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.
"Close of Business" on any given date shall mean 5:00
P.M., New York City time (2:00 P.M. California time), on such date;
provided, however, that if such date is not a Business Day it shall
<PAGE>
mean 5:00 P.M., New York City time (2:00 P.M. California time), on
the next succeeding Business Day.
"Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $1.00 per share,
of the Company. "Common Shares" when used with reference to any
Person other than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned
Person.
"common stock equivalents" shall have the meaning set
forth in section 11(a)(iii)(B)(3).
"Current Value" shall have the meaning set forth in
Section 11(a)(iii)(A)(1) hereof.
"Distribution Date" shall have the meaning set forth in
Section 3 hereof.
"equivalent preferred shares" shall have the meaning set
forth in Section 11(b).
"Exchange Ratio" shall have the meaning set forth in
Section 24(a).
"Final Expiration Date" shall mean February 1, 2006.
"Permitted Offer" shall mean a tender or exchange offer
for all outstanding Common Shares that the Board of Directors of
the Company has determined to be fair to and otherwise in the best
interests of the Company and its stockholders and has approved
prior to the purchase of shares under such tender or exchange
offer.
<PAGE>
"Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability partnership,
business trust, limited liability company, unincorporated
association or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Purchase Price" shall have the meaning set forth in
Section 7(b).
"Preferred Shares" shall mean shares of Series C Junior
Participating Preferred Stock, par value $1.00 per share, of the
Company.
"Redemption Date" shall mean the date on which the Rights
are redeemed as provided in Section 23 hereof.
"Right Certificate" shall mean a certificate evidencing
a Right in substantially the form of Exhibit B hereto.
"Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
"Shares Acquisition Date" shall mean the earlier of the
date of (i) the public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such or (ii) the public
disclosure of facts by the Company or an Acquiring Person
indicating that an Acquiring Person has become such.
"Spread" shall have the meaning set forth in Section
11(a)(iii)(A)(2) hereof.
"Subsidiary" of any Person shall mean any Person of which
a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
<PAGE>
"Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Successor" shall mean the estate or legal representative
of a deceased individual, the beneficiary of a deceased
individual's estate, a trust created by a deceased individual as
grantor, or the beneficiary of a trust created by a deceased
individual as grantor.
"Summary of Rights" shall mean the Summary of Rights to
Purchase Preferred Shares in substantially the form of Exhibit C
hereto.
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 Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it
may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the tenth day after
the Shares Acquisition Date or (ii) the tenth Business Day (or such
later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan) of, or
<PAGE>
of the first public announcement of the intention of any Person
(other than any of the Persons referred to in the preceding
parenthetical) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares aggregating 15% or more of the
then outstanding Common Shares (such date being herein referred to
as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Right Certificates will be transferable only
in connection with the transfer of Common Shares. As soon as prac-
ticable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate evidencing one Right
for each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates. For
purposes hereof, a tender or exchange offer shall not be deemed to
have commenced, nor shall any Person be deemed to have publicly
announced an intent to commence a tender or exchange offer,until
such time as (i) one or more of the events specified by Rule 14d-
2(a)(1), (2), (3) or (4) under the Exchange Act shall have occurred
<PAGE>
or any Person shall have filed a Schedule 14D-1 with the Securities
and Exchange Commission under the Exchange Act with respect to the
commencement of a tender or exchange offer (the first to occur of
any such events or filing being deemed an "Event") or (ii) an Event
shall have occurred following a public announcement 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 entity holding Common Shares for or pursuant to the
terms of any such plan) of the intention to commence a tender or
exchange offer.
(b) As soon as practicable following the amendment
and restatement of this Rights Agreement effective as of February
2, 1996 (the "Amendment Date"), the Company will send a copy of the
Summary of Rights by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on the
Amendment Date, at the address of such holder shown on the records
of the Company. With respect to certificates for Common Shares
outstanding as of the Amendment Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the
names of the holders thereof together with a copy of the Summary of
Rights attached thereto. Until the Distribution Date (or the
earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares
outstanding on the Amendment Date, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Shares evidenced
thereby.
<PAGE>
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c))
after the Amendment Date but prior to the earliest of the Distri-
bution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to
them the following legend:
This certificate also evidences and entitles
the holder hereof to certain Rights as set
forth in an Amended and Restated Rights
Agreement between Talley Industries, Inc. and
Chemical Mellon Shareholder Services, L.L.C.,
as Rights Agent, dated as of April 30, 1986,
and amended as of July 21, 1986, and amended
and restated as of February 2, 1996 (the
"Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a
copy of which is on file at the principal exe-
cutive offices of Talley Industries, Inc.
Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evi-
denced by separate certificates and will no
longer be evidenced by this certificate.
Talley Industries, Inc. will mail to the
holder of this certificate a copy of the
Rights Agreement without charge after receipt
of a written request therefor. Under certain
circumstances, Rights issued to Acquiring
Persons (as defined in the Rights Agreement)
may become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common
Shares represented by certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby. In the
event that the Company purchases or acquires any Common Shares
after the Amendment Date but prior to the Distribution Date, any
<PAGE>
Rights associated with such Common Shares shall be deemed canceled
and retired so that the Company shall not be entitled to exercise
any Rights associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof)
shall be substantially the same as 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 other provisions of this Agreement, the Right Certificates
shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein
at the Purchase Price, but the number of one one-hundredths of a
Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer, either
manually or by facsimile signature, shall have affixed thereto the
Company's seal or a facsimile thereof, and shall be attested by the
<PAGE>
Secretary or any Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall
be countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by
the Rights Agent and issuance and delivery by the Company, such
Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same
force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office, books for
registration of the transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates. Subject to the provisions of Section 14
hereof, at any time after the Close of Business on the Distribution
<PAGE>
Date, and at or prior to the Close of Business on the earlier of
the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section
11(a)(ii) hereof or that have been exchanged pursuant to Section 24
hereof) may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of one one-hundredths
of a Preferred Share as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights
Agent. Thereupon the Rights Agent shall countersign and deliver to
the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient for any tax or governmental
charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement
to the Company and the Rights Agent of all reasonable expenses
<PAGE>
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) The registered holder of any Right Certificate
(other than a holder whose Rights have become void pursuant to
Section 11(a)(ii) hereof or have been exchanged pursuant to Section
24 hereof) may exercise the Rights evidenced thereby in whole or in
part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at its
principal office, together with payment of the Purchase Price for
each one one-hundredth of a Preferred Share as to which the Rights
are exercised, at or prior to the earliest of (i) the Close of
Business on the Final Expiration Date, (ii) the Redemption Date, or
(iii) the time at which such Rights are exchanged as provided in
Section 24 hereof.
(b) The purchase price for each one one-hundredth
of a Preferred Share to be purchased upon the exercise of a Right
shall initially be $32.00 (the "Purchase Price"), shall be subject
to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.
<PAGE>
(c) Upon receipt of a Right Certificate repre-
senting exercisable Rights, with the form of election to purchase
and certificate duly executed, accompanied by payment of the
Purchase Price for the number of one one-hundredths of a Preferred
Share to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by cash, certified
check, cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares
certificates for the number of one one-hundredths of a Preferred
Share to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B)
requisition from any depositary agent for the Preferred Shares
depositary receipts representing such number of one one-hundredths
of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent)
and the Company hereby directs the depositary agent to comply with
such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional
Preferred 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 Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt,
<PAGE>
deliver such cash to or upon the order of the registered holder of
such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder 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 following the form of election
to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as
<PAGE>
expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Status and Availability of Preferred
Shares.
(a) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all Pre-
ferred Shares delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such Preferred Shares (subject
to payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and non-assessable shares.
(b) The Company further covenants and agrees that
it will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Preferred
Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or
depositary receipts for the Preferred Shares in a name other than
that of, the registered holder of the Right Certificate evidencing
<PAGE>
Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to the
Company's reasonable satisfaction that no such tax is due.
(c) The Company covenants and agrees that it will
cause to be reserved and kept available, out of its authorized and
unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to
permit the exercise in full of all outstanding Rights in accordance
with Section 7 hereof.
Section 10. Preferred Shares Record Date. Each person
in whose name any certificate for Preferred Shares is issued upon
the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made. Prior to the exercise of the Rights evi-
denced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred 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.
<PAGE>
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number of
Preferred 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 Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred
Shares into a smaller number of Preferred Shares or (D) issue any
shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number
and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date, he would have owned upon
such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of
<PAGE>
the shares of capital stock of the Company issuable upon exercise
of one Right.
(ii) Subject to the following paragraph of this
subparagraph (ii) and to Section 24 of this Agreement, in the event
any Person shall become an Acquiring Person, each holder of a Right
shall thereafter have a right to receive, upon exercise thereof at
a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right
is then exercisable, in accordance with the terms of this Agreement
and in lieu of Preferred Shares, such number of Common Shares of
the Company as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share
market price of the Company's Common Shares (determined pursuant to
Section 11(d) hereof) on the date such Person became an Acquiring
Person. In the event that any Person shall become an Acquiring
Person and the Rights shall then be outstanding, the Company shall
not take any action that would eliminate or diminish the benefits
intended to be afforded by the Rights.
From and after the occurrence of such an event, any
Rights that are or were acquired or beneficially owned by such
Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) on or after the earlier of (x) the Shares Acquisition Date
or (y) the Distribution Date shall be void and any holder of such
Rights shall thereafter have no right to exercise such Rights under
any provision of this Agreement. No Right Certificate shall be
<PAGE>
issued pursuant to Section 3 that represents Rights beneficially
owned by an Acquiring Person whose Rights would be void pursuant to
the preceding sentence or any Associate or Affiliate thereof; no
Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent
for transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate
thereof shall be canceled.
(iii) In the event that the number of Common Shares
which are authorized by the Company's certificate of incorporation
and not outstanding or subscribed for, or reserved or otherwise
committed for issuance for purposes other than upon exercise of the
Rights, are not sufficient to permit the holder of each Right to
purchase the number of Common Shares to which he would be entitled
upon the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of paragraph (a) of this Section 11, or
should the Board of Directors so elect, the Company shall: (A)
determine the excess of (1) the value of the Common Shares issuable
upon the exercise of a Right (calculated as provided in the last
sentence of this subparagraph (iii)) pursuant to Section 11(a)(ii)
hereof (the "Current Value") over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right, make
adequate provision to substitute for such Common Shares, upon
payment of the applicable Purchase Price, any one or more of the
<PAGE>
following having an aggregate value determined by the Board of
Directors to be equal to the Current Value: (1) cash, (2) a
reduction in the Purchase Price, (3) Common Shares or other equity
securities of the Company (including, without limitation, shares,
or units of shares, of preferred stock which the Board of Directors
of the Company has determined to have the same value as shares of
Common Stock (such shares of preferred stock, "common stock
equivalents")), (4) debt securities of the Company, or (5) other
assets; provided, however, 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 an event triggering the rights to purchase Common
Shares described in Section 11(a)(ii) 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 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 Common Shares 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
<PAGE>
shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some
action need 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 and the last paragraph of Section 11(a)(ii)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspen-
sion, the Company shall make a public announcement, and shall
deliver to the Rights Agent a statement, stating that the
exercisability of the Rights has been temporarily suspended. At
such time as the suspension is no longer in effect, the Company
shall make another public announcement, and deliver to the Rights
Agent a statement, so stating. For purposes of this Section
11(a)(iii), the value of the Common Shares shall be the current per
share market price (as determined pursuant to Section 11(d)(i)
hereof) of the Common Shares on the Section 11(a)(ii) Trigger Date
and the value of any common stock equivalent shall be deemed to
have the same value as the Common Shares on such date.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase
Preferred Shares (or shares having the same rights, privileges and
<PAGE>
preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion price per share,
if a security convertible into Preferred Shares or equivalent
preferred shares) less than the then current per share market price
of the Preferred Shares (as defined in Section 11(d)) on such
record date, the Purchase Price to be in effect after such record
date shall be adjusted 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 Preferred Shares outstanding on
such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares
and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the
denominator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered
for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise
of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in
<PAGE>
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent. Preferred Shares owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable
in Preferred Shares) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then
current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable
to one Preferred Share and the denominator of which shall be such
<PAGE>
current per share market price of the Preferred Shares; provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon
exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
(d)(i) For the purpose of any computation here-
under, the "current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any date
shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share
market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares of such
Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and
prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day
<PAGE>
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 Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of Securi-
ties Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the Security is
not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making
a market in the Security selected by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares shall
be determined in accordance with the method set forth in Section
<PAGE>
11(d)(i). If the Preferred Shares are not publicly traded, the
"current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to Section 11(d)(i) (appropri-
ately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by
100. If neither the Common Shares nor the Preferred Shares are
publicly held or so listed or traded, "current per share market
price" shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one one-
millionth of a Preferred Share or one ten-thousandth of any other
share or security as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than three years from the date of
the transaction which requires such adjustment.
(f) If as a result of an adjustment made pursuant
to Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital
stock of the Company other than Preferred Shares, the number of
<PAGE>
such other shares so receivable upon exercise of any Right shall
thereafter 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 Shares contained in Section 11(a)
through (c), inclusive, and the provisions of Sections 7, 9, 10 and
13 with respect to the Preferred Shares 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 Preferred Share
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 Preferred Share (calculated to the nearest one one-
millionth of a Preferred Share) 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.
<PAGE>
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of Rights
in substitution for any adjustment in the number of one one-
hundredths of a Preferred Share purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-
hundredths of a Preferred Share 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 Right Certificates have
been distributed, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been
distributed, upon each adjustment of the number of Rights pursuant
to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing,
subject to Section 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
<PAGE>
holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates to be so
distributed shall be issued, executed and countersigned in the
manner provided for herein and shall be registered in the names of
the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a Preferred
Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of one one-hundredths of
a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of
the then par value of the Preferred Shares 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 non-assessable
Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effective
as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the holder
<PAGE>
of any Right exercised after such record date of the Preferred
Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred
Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive
such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that it
in its sole discretion shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred Shares,
(ii) issuance wholly for cash of any Preferred Shares at less than
the current market price, (iii) issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible
into or exchangeable for Preferred Shares, (iv) dividends on
Preferred Shares payable in Preferred Shares or (v) issuance of any
rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of
this Agreement and prior to the Distribution Date, the Company
shall (i) declare or pay any dividend on the Common Shares payable
<PAGE>
in Common Shares or (ii) effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or
otherwise other than by payment of dividends in Common Shares) into
a greater or lesser number of Common Shares, then in any such case
(i) the number of one one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one one-hundredths
of a Preferred Share so purchasable immediately prior to such event
by a fraction, the numerator of which is the number of Common
Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding
immediately after such event, and (ii) each Common Share
outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with respect
to it. The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjustment. Whenever an
adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer
agent for the Common Shares or the Preferred Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder of
a Right Certificate in accordance with Section 25 hereof. The
<PAGE>
Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power.
(a) In the event that, directly or indirectly, (i)
the Company shall consolidate with, or merge with and into, any
other Person, (ii) any Person shall consolidate with the Company,
or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares shall
be changed into or exchanged for stock or other securities of any
other Person (or the Company) or cash or any other property, or
(iii) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or more
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person other than the Company or
one or more of its wholly-owned Subsidiaries, then, and in each
such case, proper provision shall be made so that (A) each holder
of a Right (except as otherwise provided herein) shall thereafter
have the right to receive, upon the exercise thereof at a price
equal to the then current Purchase Price multiplied by the number
of one one-hundredths of a Preferred Share for which a Right is
then exercisable, in accordance with the terms of this Agreement
and in lieu of Preferred Shares, such number of Common Shares of
such other Person (including the Company as successor thereto or as
the surviving corporation) as shall equal the result obtained by
<PAGE>
(x) multiplying the then current Purchase Price by the number of
one one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (y) 50% of the then
current per share market price of the Common Shares of such other
Person (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (B)
the issuer of such Common Shares shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to
this Agreement; (C) the term "Company" shall thereafter be deemed
to refer to such issuer; and (D) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights. The
Company covenants and agrees that it shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the
Company and such issuer shall have executed and delivered to the
Rights Agent a supplemental agreement so providing. The Company
shall not enter into any transaction of the kind referred to in
this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the consummation
of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. The provisions of
<PAGE>
this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. For purposes hereof,
the "earning power" of the Company and its Subsidiaries shall be
determined in good faith by the Company's Board of Directors on the
basis of the operating earnings of each business operated by the
Company and its Subsidiaries during the three fiscal years
preceding the date of such determination (or, in the case of any
business not operated by the Company or any Subsidiary during three
full fiscal years preceding such date, during the period such
business was operated by the Company or any Subsidiary).
(b) Notwithstanding anything in this Rights
Agreement to the contrary, the foregoing provisions of this Section
13 shall not be applicable to a transaction described in clauses
(i) and (ii) of Section 13(a) if either: (i) (A) such transaction
is consummated with a Person or Persons who acquired Common Shares
pursuant to a Permitted Offer (or a wholly-owned subsidiary of any
such Person or Persons), (B) the price per Common Share offered in
such transaction is not less than the price per Common Share paid
to all holders of Common Shares whose shares were purchased
pursuant to such Permitted Offer, and (C) the form of consideration
offered in such transaction is the same as the form of
consideration paid pursuant to such Permitted Offer; or (ii) such
transaction is approved by the Board of Directors of the Company
prior to the time that any Person becomes an Acquiring Person or
would have become an Acquiring Person but for the exception for
Permitted Offers in Section 1 hereof. Upon consummation of any
<PAGE>
such transaction contemplated by this Section 13(b), all Rights
hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction
of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal con-
solidated 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
<PAGE>
NASDAQ or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker
is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share) upon
exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-
hundredth of a Preferred Share may, at the election of the Company,
be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the
Preferred Shares represented by such depositary receipts. In lieu
of fractional Preferred Shares that are not integral multiples of
one one-hundredth of a Preferred Share, the Company shall pay to
each registered holder of Right 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 Preferred
<PAGE>
Share as the fraction of one Preferred Share that such holder would
otherwise receive upon the exercise of the aggregate number of
rights exercised by such holder. For the purposes of this Section
14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the
Right expressly waives any right to receive fractional Rights or
fractional shares upon exercise of a Right (except as provided
above).
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given to
the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior
to the Distribution Date, the registered holders of the Common
Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares) may, without
the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), in his own behalf and for his own benefit, enforce, and
may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right
to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders
<PAGE>
of Rights would not have an adequate remedy at law for any breach
of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to,
this Agreement.
Section 16. Agreement of Right Holders. Every holder
of a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books maintained
by the Rights Agent if surrendered at the principal office of the
Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer with a completed form of certification; and
(c) the Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate (or, prior to
the Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary.
<PAGE>
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose
the holder of the Preferred Shares or any other securities of the
Company which may at any time be issuable on the exercise of the
Rights represented thereby nor shall anything contained herein or
in any Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stock-
holders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand
of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
<PAGE>
administration of this Agreement, including the costs and expenses
of defending against any claim or liability in the premises.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate for
Preferred Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent. Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at
the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights
<PAGE>
Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations expressly set forth in this
Agreement and no implied duties or obligations shall be read into
this Agreement against the Rights Agent. The Rights Agent shall
perform those duties and obligations upon the following terms and
conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such
<PAGE>
counsel shall be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by any one of the Chairman
of the Board, the President, a Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent
for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Right Certificates (except as to its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by
the Rights Agent) or in respect of the validity or execution of any
<PAGE>
Right Certificate (except its countersignature thereof); nor shall
it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the
provisions of Sections 11 or 13 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 Right
Certificates after actual notice of any such adjustment); nor shall
it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of
Preferred Stock to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares of Preferred Stock
will, when so issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged end delivered all such further and other
acts, instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of
its duties hereunder from any one of the Chairman of the Board, the
President, a Vice President, the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any
<PAGE>
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 Company or
otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for any
act, default, neglect or misconduct of any such attorneys or agents
or for any loss to the Company resulting from any such act,
default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days' notice in writing mailed
to the Company and to each transfer agent of the Common Shares and
the Preferred Stock by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor
<PAGE>
Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and the Preferred Stock by registered or certified
mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of
a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the
State of New York or of any other state of the United States, in
good standing, having an office in the State of New York 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 $25 million.
After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it
<PAGE>
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 Shares and the Preferred Stock,
and mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such 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 Right
Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at
its option, at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.05 per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
<PAGE>
redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by the Board of Directors
may be made effective at such time, on such basis and subject to
such conditions as the Board of Directors in its sole discretion
may establish.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights
pursuant to paragraph (a) of this Section 23, and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within 10
days after such action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (a), the Company
shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common
Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the
notice. If the payment of the Redemption Price is not included
with such notice, each such notice shall state the method by which
the payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other
<PAGE>
than that specifically set forth in this Section 23 or in Section
24 hereof, and other than in connection with the purchase of Common
Shares 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 11(a)(ii) hereof) for
Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or
any entity holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of a majority of the Common
Shares 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 Common Shares equal
<PAGE>
to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of
any such exchange; provided, however, that the failure to give, or
any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such
exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by
which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24,
the Company, at its option, may substitute Preferred Shares or
common stock equivalents for Common Shares exchangeable for Rights,
at the initial rate of one one-hundredth of a Preferred Share (or
an appropriate number of common stock equivalents) for each Common
Share, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Shares pursuant to the terms
thereof, so that the fraction of a Preferred Share delivered in
lieu of each Common Share shall have the same voting rights as one
Common Share.
<PAGE>
(d) In the event that there shall not be sufficient
Common Shares, Preferred Shares or common stock equivalents
authorized by the Company's certificate of incorporation and not
outstanding or subscribed for, or reserved or otherwise committed
for issuance for purposes other than upon exercise of Rights, 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 Common Shares, Preferred Shares
or common stock equivalents for issuance upon exchange of the
Rights.
(e) The Company shall not be required to issue
fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares. In lieu of such fractional
Common Shares, the Company shall pay to the registered holders of
the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the
same fraction of the current per share market value of a whole
Common Share. For the purposes of this paragraph (e), the current
per share market value of a whole Common Share shall be the closing
price of a Common Share (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 after the
Distribution Date propose (i) to pay any dividend payable in stock
of any class to the holders of its Preferred Shares or to make any
<PAGE>
other distribution to the holders of its Preferred Shares (other
than a regular quarterly cash dividend), (ii) to offer to the
holders of its Preferred Shares rights or warrants to subscribe for
or to purchase any additional Preferred Shares or shares of stock
of any class or any other securities, rights or options, (iii) to
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer),
in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation,
dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise than by payment of
dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance
with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on
which such 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 Common Shares
and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by
<PAGE>
clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of
such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares
and/or Preferred Shares, whichever shall be the earlier.
(b) In case any event set forth in Section
11(a)(ii) hereof shall occur, then the Company shall as soon as
practicable thereafter give to each holder of a Right Certificate,
in accordance with Section 26 hereof, a notice of the occurrence of
such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section
11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Talley Industries, Inc.
2702 North 44th Street
Phoenix, Arizona 85008
Attention: Secretary
Copy to:
Meyer, Hendricks, Victor, Ruffner & Bivens, P.L.C.
Suite 1800
2929 North Central Avenue
Phoenix, Arizona 85012-2762
Attention: David Victor
<PAGE>
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Chemical Mellon Shareholder
Services, L.L.C.
P.O. Box 590
Ridgefield Park, NJ 07660
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right
Certificate shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments. The Company
may from time to time, and the Rights Agent shall, if the Company
directs, supplement or amend this Agreement without the approval of
any holders of Right Certificates in order to cure any ambiguity,
to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, or
to make any other provisions with respect to the Rights which the
Company may deem necessary or desirable. Any such supplement or
amendment will be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time
as any Person becomes an Acquiring Person, this Agreement shall not
be amended in any manner which would adversely affect the interests
of the holders of Rights (other than an Acquiring Person and its
<PAGE>
Affiliates and Associates). Notwithstanding anything contained in
this Rights Agreement to the contrary, no supplement or amendment
to this Rights Agreement shall be made which reduces the Redemption
Price, provides for an earlier Expiration Date, alters the
procedure required to redeem or exchange the Rights or which
extends the time during which the Rights may be redeemed if at the
time of such supplement or amendment the Rights are not redeemable.
Section 28. Successors. All the covenants and provi-
sions of this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be
for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
To the extent that any term, provision, covenant or restriction of
<PAGE>
this Agreement that was adopted by the amendment of this Agreement
effective as of February 2, 1996 (the "Amendment") is invalid, void
or unenforceable by reason of Section 26 of the Agreement as such
section provided prior to the adoption of the Amendment, the
Amendment shall, prior to April 1, 1996, not be effective with
respect to such term, provision, covenant or restriction and the
Agreement shall, prior to April 1, 1996, with respect to such term,
provision, covenant or restriction, provide as it provided prior to
the Amendment and after April 1, 1996 shall provide as provided for
in the Amendment.
Section 31. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed
entirely within such State.
Section 32. Counterparts. This Agreement may be
executed in any number of counterparts and each of such coun-
terparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the
same instrument.
Section 33. Descriptive Headings. Descriptive head-
ings of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
Section 34. Administration. The Board of Directors of
the Company shall have the exclusive power and authority to
<PAGE>
administer and interpret the provisions of this Agreement and to
exercise all rights and powers specifically granted to the Board of
Directors or the Company or as may be necessary or advisable in the
administration of this Agreement. All such actions, calculations,
determinations and interpretations which are done or made by the
Board of Directors in good faith shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights
and all other parties and shall not subject the Board of Directors
to any liability to the holders of the Rights.
IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Rights Agreement to be duly executed and
attested as of February 2, 1996.
Attest: TALLEY INDUSTRIES, INC.
By Mark S. Dickerson By William H. Mallender
Secretary Chairman of the Board
Attest: CHEMICAL MELLON SHARE-
HOLDER SERVICES, L.L.C.
By Martha O. Mijango, By Sharon Magidson,
Assistant Vice President Vice President
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RIGHTS OF SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
of
TALLEY INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Richard H. Allen, Vice President, and Mark S. Dickerson,
Secretary, of Talley Industries, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the said
Corporation, the said Board of Directors on April 29, 1986 adopted
the following resolution creating a series of two hundred thousand
(200,000) shares of Preferred Stock (par value $1.00 per share)
designated as Series C Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions
of its Certificate of Incorporation, a series of Preferred Stock of
the Corporation be and it hereby is created, and the designation
and amount thereof and the voting powers, preferences 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 C Junior Participating Preferred
Stock" (the "Series C Preferred Stock") and the number of shares
constituting such series shall be 200,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series C Pre
ferred 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 fif-
<PAGE>
teenth day of March, June, September and December
in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or
fraction of a share of Series C Preferred Stock,
in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $25.00 or (b)
subject to the provision for adjustment hereinaf
ter 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 other
wise), 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 C Preferred Stock. In the event the
Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or com-
bination or consolidation of the outstanding
shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case
the amount to which holders of shares of Series C
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 that were out-
standing 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.
<PAGE>
The Corporation shall declare a dividend or
distribution on the Series C Preferred Stock as
provided in this paragraph (A) 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 $25.00 per share on the Series
C Preferred stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
Dividends shall begin to accrue and be
cumulative on outstanding shares of Series C
Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of
such shares of Series C 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 C 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 divi
dends shall not bear interest. Dividends paid on
the shares of Series C Preferred Stock in an
amount less than the total amount of such divi-
dends 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 C Preferred Stock entitled to
receive payment of a dividend or distribution
declared thereon, which record date shall be no
more than 50 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series
C Preferred Stock shall have the following voting rights:
<PAGE>
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series C
Preferred stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event
the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combina
tion or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the
number of votes per share to which holders of
shares of Series C 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 C Pre
ferred Stock and the holders of shares of Common
Stock shall vote together as one class, together
with the holders of any other series of Preferred
Stock heretofore or hereafter issued which shall
be accorded such voting rights by the Board of
Directors as permitted in the Corporation's
Certificate of Incorporation, on all matters
submitted to a vote of stockholders of the Corpo
ration. Each holder of record of shares of Series
C Preferred Stock shall be entitled to notice of
any meeting of stockholders of the Corporation and
to participate in any such meeting in the manner
provided for holders of shares of Common Stock of
the Corporation under any applicable law, provi
sion of the Certificate of Incorporation or by-
law.
(C) In the event that any six quarterly
cumulative dividends, whether consecutive or not,
upon the Series C Preferred Stock shall be in
arrears, the authorized number of directors
constituting the Board of Directors shall be
<PAGE>
increased by two. In such event, the holders of
share of the Series C and any other series of
Preferred Stock heretofore or hereafter issued
which shall be accorded such class voting right by
the Board of Directors as permitted in the Corpo
ration's Certificate of Incorporation and which
shall have the right to elect two directors as a
result of a default in the payment of dividends on
such series (such other series being hereinafter
called "Other Series of Preferred Stock") shall
have the exclusive and special right, voting
separately as a class without regard to series, to
elect two persons to fill such directorships in
which case the remaining members of the board
shall be elected exclusively by the holders of all
other classes or series of stock entitled to vote
for directors, voting separately as a class.
Whenever such right to elect two directors shall
have been vested, it shall be exercised initially
either at a special meeting of the Preferred
Stockholders so entitled to vote or at the next
annual stockholders' meeting, but thereafter it
shall be exercised only at annual stockholders'
meetings. Such right of the Series C Preferred
Stock to elect two directors shall continue until
the dividends in default on the Series C Preferred
Stock shall have been paid in full and the full
dividends on the Series C Preferred Stock for the
then current quarterly dividend period shall have
been declared and paid or set aside for payment.
When such dividends are so paid or provided for,
such right to elect two directors shall terminate,
subject to revesting in the event of each and
every subsequent similar default. A special
meeting for the exercise of such right shall be
called by the Secretary of the Corporation as
promptly as possible, and in any event within ten
days, after receipt of a written request signed by
the holders of record of at least 10 percent of
the outstanding shares of Preferred Stock entitled
to exercise such right; provided, however, that no
such special meeting need be called during the 90-
day period preceding the date fixed for the annual
meeting of stockholders. At any meeting held for
the election of directors at which the holders of
shares of Series C Preferred Stock (or such
holders and holders of Other Series of Preferred
Stock voting together as a class) shall have the
<PAGE>
right to elect two directors as hereinabove
provided, the presence, in person or by proxy, of
the holders of a majority of the number of out
standing shares of Series C Preferred Stock (or
the holders of a majority of the number of out
standing shares of Series C Preferred Stock and
Other Series of Preferred Stock taken together, as
the case may be) shall be required to constitute
a quorum of such class for the election of any
director by the holders of shares of such Series
C Preferred Stock or by such holders and holders
of Other Series of Preferred Stock. At any such
meeting or adjournment thereof the absence of a
quorum of the holders of shares of Series C
Preferred Stock or of such holders and holders of
Other Series of Preferred Stock shall not prevent
the election of directors other than those to be
elected by such holders of shares of Series C
Preferred Stock or by such holders and holders of
Other Series of Preferred Stock voting together as
a class. The directors elected by such holders of
shares of Series C Preferred Stock or by such
holders and holders of Other Series of Preferred
Stock shall serve until the next annual meeting or
until their respective successors shall be elected
and shall qualify, provided, however, that when
the right of the holders of shares of Series C
Preferred Stock and Other Series of Preferred
Stock to elect directors as provided herein shall
terminate, the terms of office of all persons so
elected by such holders shall terminate, and the
number of directors of the Corporation shall
thereupon be such number as may be provided for in
accordance with the by-laws of the Corporation
without regard to an increase made pursuant
hereto. During any period in which the holders of
shares of Series C Preferred Stock or such holders
and the holders of Other Series of Preferred Stock
have the right to elect two directors as provided
for herein, any vacancy in the directorships
filled by such holders shall be filled by the vote
of the remaining director theretofore elected by
such holders. If not so filled within 40 days
after the creation thereof, the Secretary of the
Corporation shall call a special meeting of the
holders of shares of the Series C Preferred Stock
or such holders and the holders of Other Series of
<PAGE>
Preferred Stock and such vacancy or vacancies
shall be filled at such special meeting.
(D) So long as any shares of the Series C
Preferred Stock are outstanding, the Corporation
shall not, without the affirmative vote or written
consent of the holders of at least two-thirds of
the aggregate number of shares at the time out
standing of the Series C Preferred Stock and any
other series of Preferred Stock heretofore or
hereafter issued which shall be accorded such
class voting right by the Board of Directors as
permitted in the Certificate of Incorporation,
voting or consenting, as the case may be, sepa
rately as a class without regard to series:
(i) authorize, create or increase any
class of capital stock ranking prior to any
of the Preferred Stock as to dividends or
upon liquidation, dissolution or winding up;
or
(ii) alter or change any of the powers,
preferences or special rights given to any of
the Preferred Stock by the Certificate of
Incorporation so as to affect the Preferred
Stock adversely.
(E) So long as any shares of the Series C
Preferred Stock are outstanding, the Corporation
shall not, without the affirmative vote or written
consent of the holders of at least a majority of
the aggregate number of shares at the time out
standing of the Series C Preferred Stock and any
other series of Preferred Stock heretofore or
hereafter issued which shall be accorded such
class voting right by the Board of Directors as
permitted in the Certificate of Incorporation,
voting or consenting, as the case my be, sepa
rately as a class without regard to series:
(i) increase to more than 5,000,000
shares the number of shares of Preferred
Stock at the time authorized by the Certifi
cate of Incorporation of the Corporation; or
(ii) authorize, create or increase any
class of capital stock ranking on a parity
<PAGE>
with the Preferred Stock as to dividends or
upon liquidation, dissolution, or winding up
of the Corporation.
Section 4. Certain Restrictions
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series
C 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 C 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 C 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 C Preferred
Stock, except dividends paid ratably on the
Series C 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 C Preferred Stock, pro
vided 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 rank
ing junior (either as to dividends or upon
dissolution, liquidation or winding up) to
the Series C Preferred Stock; or
<PAGE>
(iv) purchase or otherwise acquire for
consideration any shares of Series C Pre
ferred Stock, or any shares of stock ranking
on a parity with the Series C 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 deter
mine in good faith will result in fair and
equitable treatment among the respective
series of 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 C
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. Upon any
voluntary liquidation, dissolution or winding up of the Corpora
tion, no distribution shall be made (1) to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Preferred Stock unless,
prior thereto, the holders of shares of Series C Preferred Stock
shall have received $100.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided that the
holders of shares of Series C Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to holders of Common Stock, or
(2) to the holders of stock ranking on a parity (either as to
<PAGE>
dividends or upon liquidation, dissolution or winding up) with the
Series C Preferred Stock, except distributions made ratably on the
Series C Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding
up. In the event the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
each such case the aggregate amount to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such
event under the provision in clause (1) 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.
Section 7. Consolidation, Merger, etc. In case the Corpora
tion 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 C
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 declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination on consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or
change of shares of Series C 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 C Preferred
Stock shall not be redeemable.
<PAGE>
Section 9. Ranking. The Series C Preferred Stock shall rank
junior to all other series of the Corporation's preferred stock
outstanding as of April 29, 1986, as to the payment of dividends
and the distribution of assets.
Section 10. Amendment. The Certificate of Incorporation of
the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series C Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-thirds
or more of the outstanding shares of Series C Preferred Stock,
voting together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate this 29th day of April, 1986.
Richard H. Allen
Richard H. Allen, Vice President
ATTEST:
Mark S. Dickerson
Mark S. Dickerson, Secretary
<PAGE>
EXHIBIT B
Form of Right Certificate
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER FEBRUARY 1, 2006 OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $0.05 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR ANY ASSOCIATES OR
AFFILIATES THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID.
Right Certificate
TALLEY INDUSTRIES, INC.
This certifies that _______________________, or registered assigns,
is the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Amended and Restated Rights Agree-
ment, dated as of April 30, 1986 and amended as of July 21, 1986,
and amended and restated as of February 2, 1996 (the "Rights
Agreement"), between Talley Industries, Inc., a Delaware
corporation (the "Company"), and Chemical Mellon Shareholder
Services, L.L.C. (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., New York City time
(2:00 P.M. California time), on February 1, 2006, at the principal
office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series C Junior Participating Preferred Stock, par value
$1.00 per share (the "Preferred Shares"), of the Company, at a
purchase price of $32.00 per one one-hundredth of a Preferred Share
(the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the certification and the Form of Election
to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-hundredths of a
Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of February 2, 1996, based on the Preferred
Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths
of a Preferred Share which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
<PAGE>
From and after the occurrence of any event described in
Section 11(a)(ii) of the Rights Agreement, if the Rights evidenced
by this Right Certificate are or were at any time on or after the
earlier of (x) the Shares Acquisition Date (as such term is defined
in the Rights Agreement) and (y) the Distribution Date (as such
term is defined in the Rights Agreement) acquired or beneficially
owned by an Acquiring Person or an Associate or Affiliate of an
Acquiring Person (as such terms are defined in the Rights
Agreement), such Rights shall become void, and any holder of such
Rights shall thereafter have no right to exercise such Rights.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned
offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights
Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of Preferred Shares as
the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate
or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may be redeemed by the
Company at a redemption price of $0.05 per Right or (ii) may be
exchanged in whole or in part for Preferred Shares or shares of the
Company's Common Stock, par value $1.00 per share.
No fractional Preferred Shares 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
Preferred Share, 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 of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of the Preferred Shares 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
<PAGE>
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of _______________
__, 19__.
Attest: TALLEY INDUSTRIES, INC.
_____________________________ By: _____________________________
Countersigned:
CHEMICAL MELLON SHAREHOLDER
SERVICES, L.L.C.
Rights Agent
By: _________________________
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________________
hereby sells, assigns and transfers unto _____________________
______________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
____________________________, Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with
full power of substitution.
Dated: _____________ ___, _____
_________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
- -----------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by
an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
_________________________________
Signature
- -----------------------------------------------------------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To TALLEY INDUSTRIES, INC.:
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Right Certificate to
purchase the Preferred Shares issuable upon the exercise of such
Rights and requests that certificates for such Preferred Shares be
issued in the name of:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
_________________________________________________________________
Dated: _____________ ___, _____
_________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
<PAGE>
Form of Reverse Side of Right Certificate -- continued
- -----------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by
an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
_________________________________
Signature
- -----------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as the case
may be, is not completed, the Company and the Rights Agent will
deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
The Amended and Restated Rights Agreement (the
"Agreement") dated as of April 30, 1986 and amended as of July 21,
1986 and amended and restated as of February 2, 1996 (the
"Amendment Date") between Talley Industries, Inc. (the "Company")
and Chemical Mellon Shareholder Services, L.L.C. entitles each
registered holder of a Preferred Share Purchase Right (a "Right")
outstanding as of the Amendment Date, and each Right that
subsequently becomes outstanding, to purchase from the Company one
one-hundredth of a share of Series C Junior Participating Preferred
Stock, par value $1.00 per share (the "Preferred Shares"), of the
Company, at a price of $32.00 per one one-hundredth of a Preferred
Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in the Agreement.
Until the earlier to occur 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 15% or more of the outstanding Common Stock of the
Company, par value $1.00 per share (the "Common Shares"), or (ii)
10 business days (or such later date as may be determined by action
of the Board of Directors prior to such time as any Person becomes
an Acquiring Person) following the commencement of, or announcement
of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by
a person or group of 15% or more of such outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced, with respect to any of the Common
Share certificates outstanding as of the Amendment Date, by such
Common Share certificate with a copy of this Summary of Rights
attached thereto.
The Agreement provides that, until the Distribution Date,
the Rights will be transferred with and only with the Common
Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Share certificates issued
after the Amendment Date or upon transfer or new issuance of Common
Shares will contain a notation incorporating the Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Amendment
Date, even without such notation or a copy of this Summary of
Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common
Shares as of the Close of Business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
<PAGE>
The Rights are not exercisable until the Distribution
Date. The Rights will expire on February 1, 2006 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed by the Company, in each
case, as described below.
The Purchase Price payable, and the number of Preferred
Shares or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Shares, (ii) upon
the grant to holders of the Preferred Shares of certain rights or
warrants to subscribe for or purchase Preferred Shares at a price,
or securities convertible into Preferred Shares with a conversion
price, less than the then current market price of the Preferred
Shares or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings
or dividends payable in Preferred Shares) or of subscription rights
or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split
of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or
combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights
will not be redeemable. Each Preferred Share will be entitled to
a quarterly dividend payment of 100 times the dividend declared per
Common Share. In the event of liquidation, the holders of the
Preferred Shares will be entitled to an aggregate payment of 100
times the aggregate payment made per Common Share. Each Preferred
Share will have 100 votes, voting together with the Common Shares.
In the event of any merger, consolidation or other transaction in
which Common Shares are exchanged, each Preferred Share will be
entitled to receive 100 times the amount received per Common Share.
These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth
interest in a Preferred Share purchasable upon exercise of each
Right should approximate the value of one Common Share.
In the event that the Company is acquired in a merger or
other business combination transaction or 50% or more of its
consolidated assets or earning power are sold, proper provision
will be made so that each holder of a Right will thereafter have
the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the Right.
<PAGE>
In the event that any person becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than
Rights beneficially owned by the Acquiring Person and its
Affiliates and Associates (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the exercise price
of the Right. If the Company does not have sufficient Common
Shares to satisfy such obligation to issue Common Shares, or if the
Board of Directors so elects, the Company shall deliver upon
payment of the exercise price of a Right an amount of cash or
securities equivalent in value to the Common Shares issuable upon
exercise of a Right; provided that, if the Company fails to meet
such obligation within 30 days following the later of (x) the first
occurrence of an event triggering the right to purchase Common
Shares and (y) the date on which the Company's right to redeem the
Rights expires, the Company must deliver, upon exercise of a Right
but without requiring payment of the exercise price then in effect,
Common Shares (to the extent available) and cash equal in value to
the difference between the value of the Common Shares otherwise
issuable upon the exercise of a Right and the exercise price then
in effect. The Board of Directors may extend the 30-day period
described above for up to an additional 60 days to permit the
taking of action that may be necessary to authorize sufficient
additional Common Shares to permit the issuance of Common Shares
upon the exercise in full of the Rights.
The ability to exercise the Rights for Common Shares as
discussed above will not apply under certain conditions if the
Board of Directors of the Company has approved a tender or exchange
offer by or a merger with a person or group that is not an
Acquiring Person.
At any time after the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or
more of the outstanding Common Shares and prior to the acquisition
by such person or group of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company 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
Common Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share, which
may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made
based on the market price of the Preferred Shares on the last
trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group
of affiliated or associated persons of beneficial ownership of 15%
or more of the outstanding Common Shares, the Board of Directors of
<PAGE>
the Company may redeem the Rights in whole, but not in part, at a
price of $0.05 per Right (the "Redemption Price"). The redemption
of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the
only right of the holders of Rights will be to receive the
Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the
Rights, except that from and after such time as any person becomes
an Acquiring Person no such amendment may adversely affect the
interests of the holders of the Rights (other than the Acquiring
Person and its Affiliates and Associates).
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.
A copy of the Agreement is attached as an Exhibit to the
Company's Form 8-A to be filed with the Securities and Exchange
Commission in connection with the approval of the Agreement. A
copy of the Agreement is available free of charge from the Company.
This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the
Agreement, which is hereby incorporated herein by reference.
EXHIBIT 2.5
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RIGHTS OF SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
of
TALLEY INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Richard H. Allen, Vice President, and Mark S. Dickerson,
Secretary, of Talley Industries, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the said
Corporation, the said Board of Directors on April 29, 1986 adopted
the following resolution creating a series of two hundred thousand
(200,000) shares of Preferred Stock (par value $1.00 per share)
designated as Series C Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions
of its Certificate of Incorporation, a series of Preferred Stock of
the Corporation be and it hereby is created, and the designation
and amount thereof and the voting powers, preferences 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 C Junior Participating Preferred
Stock" (the "Series C Preferred Stock") and the number of shares
constituting such series shall be 200,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series C Pre-
ferred 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 fif-
<PAGE>
teenth day of March, June, September and December
in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or
fraction of a share of Series C Preferred Stock,
in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $25.00 or (b)
subject to the provision for adjustment hereinaf
ter 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 other
wise), 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 C Preferred Stock. In the event the
Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or com-
bination or consolidation of the outstanding
shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case
the amount to which holders of shares of Series C
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 that were out-
standing 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.
<PAGE>
The Corporation shall declare a dividend or
distribution on the Series C Preferred Stock as
provided in this paragraph (A) 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 $25.00 per share on the Series
C Preferred stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
Dividends shall begin to accrue and be
cumulative on outstanding shares of Series C
Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of
such shares of Series C 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 C 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 divi-
dends shall not bear interest. Dividends paid on
the shares of Series C Preferred Stock in an
amount less than the total amount of such divi-
dends 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 C Preferred Stock entitled to
receive payment of a dividend or distribution
declared thereon, which record date shall be no
more than 50 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series
C Preferred Stock shall have the following voting rights:
<PAGE>
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series C
Preferred stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event
the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combina-
tion or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the
number of votes per share to which holders of
shares of Series C 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 C Pre-
ferred Stock and the holders of shares of Common
Stock shall vote together as one class, together
with the holders of any other series of Preferred
Stock heretofore or hereafter issued which shall
be accorded such voting rights by the Board of
Directors as permitted in the Corporation's
Certificate of Incorporation, on all matters
submitted to a vote of stockholders of the Corpo-
ration. Each holder of record of shares of Series
C Preferred Stock shall be entitled to notice of
any meeting of stockholders of the Corporation and
to participate in any such meeting in the manner
provided for holders of shares of Common Stock of
the Corporation under any applicable law, provi-
sion of the Certificate of Incorporation or by-
law.
(C) In the event that any six quarterly
cumulative dividends, whether consecutive or not,
upon the Series C Preferred Stock shall be in
arrears, the authorized number of directors
constituting the Board of Directors shall be
<PAGE>
increased by two. In such event, the holders of
share of the Series C and any other series of
Preferred Stock heretofore or hereafter issued
which shall be accorded such class voting right by
the Board of Directors as permitted in the Corpo-
ration's Certificate of Incorporation and which
shall have the right to elect two directors as a
result of a default in the payment of dividends on
such series (such other series being hereinafter
called "Other Series of Preferred Stock") shall
have the exclusive and special right, voting
separately as a class without regard to series, to
elect two persons to fill such directorships in
which case the remaining members of the board
shall be elected exclusively by the holders of all
other classes or series of stock entitled to vote
for directors, voting separately as a class.
Whenever such right to elect two directors shall
have been vested, it shall be exercised initially
either at a special meeting of the Preferred
Stockholders so entitled to vote or at the next
annual stockholders' meeting, but thereafter it
shall be exercised only at annual stockholders'
meetings. Such right of the Series C Preferred
Stock to elect two directors shall continue until
the dividends in default on the Series C Preferred
Stock shall have been paid in full and the full
dividends on the Series C Preferred Stock for the
then current quarterly dividend period shall have
been declared and paid or set aside for payment.
When such dividends are so paid or provided for,
such right to elect two directors shall terminate,
subject to revesting in the event of each and
every subsequent similar default. A special
meeting for the exercise of such right shall be
called by the Secretary of the Corporation as
promptly as possible, and in any event within ten
days, after receipt of a written request signed by
the holders of record of at least 10 percent of
the outstanding shares of Preferred Stock entitled
to exercise such right; provided, however, that no
such special meeting need be called during the 90-
day period preceding the date fixed for the annual
meeting of stockholders. At any meeting held for
the election of directors at which the holders of
shares of Series C Preferred Stock (or such
holders and holders of Other Series of Preferred
Stock voting together as a class) shall have the
<PAGE>
right to elect two directors as hereinabove
provided, the presence, in person or by proxy, of
the holders of a majority of the number of out-
standing shares of Series C Preferred Stock (or
the holders of a majority of the number of out
standing shares of Series C Preferred Stock and
Other Series of Preferred Stock taken together, as
the case may be) shall be required to constitute
a quorum of such class for the election of any
director by the holders of shares of such Series
C Preferred Stock or by such holders and holders
of Other Series of Preferred Stock. At any such
meeting or adjournment thereof the absence of a
quorum of the holders of shares of Series C
Preferred Stock or of such holders and holders of
Other Series of Preferred Stock shall not prevent
the election of directors other than those to be
elected by such holders of shares of Series C
Preferred Stock or by such holders and holders of
Other Series of Preferred Stock voting together as
a class. The directors elected by such holders of
shares of Series C Preferred Stock or by such
holders and holders of Other Series of Preferred
Stock shall serve until the next annual meeting or
until their respective successors shall be elected
and shall qualify, provided, however, that when
the right of the holders of shares of Series C
Preferred Stock and Other Series of Preferred
Stock to elect directors as provided herein shall
terminate, the terms of office of all persons so
elected by such holders shall terminate, and the
number of directors of the Corporation shall
thereupon be such number as may be provided for in
accordance with the by-laws of the Corporation
without regard to an increase made pursuant
hereto. During any period in which the holders of
shares of Series C Preferred Stock or such holders
and the holders of Other Series of Preferred Stock
have the right to elect two directors as provided
for herein, any vacancy in the directorships
filled by such holders shall be filled by the vote
of the remaining director theretofore elected by
such holders. If not so filled within 40 days
after the creation thereof, the Secretary of the
Corporation shall call a special meeting of the
holders of shares of the Series C Preferred Stock
or such holders and the holders of Other Series of
<PAGE>
Preferred Stock and such vacancy or vacancies
shall be filled at such special meeting.
(D) So long as any shares of the Series C
Preferred Stock are outstanding, the Corporation
shall not, without the affirmative vote or written
consent of the holders of at least two-thirds of
the aggregate number of shares at the time out-
standing of the Series C Preferred Stock and any
other series of Preferred Stock heretofore or
hereafter issued which shall be accorded such
class voting right by the Board of Directors as
permitted in the Certificate of Incorporation,
voting or consenting, as the case may be, sepa-
rately as a class without regard to series:
(i) authorize, create or increase any
class of capital stock ranking prior to any
of the Preferred Stock as to dividends or
upon liquidation, dissolution or winding up;
or
(ii) alter or change any of the powers,
preferences or special rights given to any of
the Preferred Stock by the Certificate of
Incorporation so as to affect the Preferred
Stock adversely.
(E) So long as any shares of the Series C
Preferred Stock are outstanding, the Corporation
shall not, without the affirmative vote or written
consent of the holders of at least a majority of
the aggregate number of shares at the time out-
standing of the Series C Preferred Stock and any
other series of Preferred Stock heretofore or
hereafter issued which shall be accorded such
class voting right by the Board of Directors as
permitted in the Certificate of Incorporation,
voting or consenting, as the case my be, sepa-
rately as a class without regard to series:
(i) increase to more than 5,000,000
shares the number of shares of Preferred
Stock at the time authorized by the Certifi-
cate of Incorporation of the Corporation; or
(ii) authorize, create or increase any
class of capital stock ranking on a parity
<PAGE>
with the Preferred Stock as to dividends or
upon liquidation, dissolution, or winding up
of the Corporation.
Section 4. Certain Restrictions
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series
C 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 C 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 C 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 C Preferred
Stock, except dividends paid ratably on the
Series C 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 C Preferred Stock, pro-
vided 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 rank
ing junior (either as to dividends or upon
dissolution, liquidation or winding up) to
the Series C Preferred Stock; or
<PAGE>
(iv) purchase or otherwise acquire for
consideration any shares of Series C Pre
ferred Stock, or any shares of stock ranking
on a parity with the Series C 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 deter-
mine in good faith will result in fair and
equitable treatment among the respective
series of 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 C
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. Upon any
voluntary liquidation, dissolution or winding up of the Corpora-
tion, no distribution shall be made (1) to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Preferred Stock unless,
prior thereto, the holders of shares of Series C Preferred Stock
shall have received $100.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided that the
holders of shares of Series C Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to holders of Common Stock, or
(2) to the holders of stock ranking on a parity (either as to
<PAGE>
dividends or upon liquidation, dissolution or winding up) with the
Series C Preferred Stock, except distributions made ratably on the
Series C Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding
up. In the event the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
each such case the aggregate amount to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such
event under the provision in clause (1) 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.
Section 7. Consolidation, Merger, etc. In case the Corpora-
tion 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 C
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 declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination on consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or
change of shares of Series C 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 C Preferred
Stock shall not be redeemable.
<PAGE>
Section 9. Ranking. The Series C Preferred Stock shall rank
junior to all other series of the Corporation's preferred stock
outstanding as of April 29, 1986, as to the payment of dividends
and the distribution of assets.
Section 10. Amendment. The Certificate of Incorporation of
the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series C Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-thirds
or more of the outstanding shares of Series C Preferred Stock,
voting together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate this 29th day of April, 1986.
Richard H. Allen
Richard H. Allen, Vice President
ATTEST:
Mark S. Dickerson
Mark S. Dickerson, Secretary
