Business Context and Reporting Period
Company: Chicago Rivet & Machine Co.
Filing Type: Form 8-K (Current Report)
Date of Report: November 16, 2009
Event: Material Modification to Rights of Security Holders (Item 3.03). The Board of Directors approved a new Rights Agreement to replace an expiring agreement dated November 22, 1999.
Key Financial Metrics
This filing is a corporate governance report regarding a poison pill mechanism and does not contain financial performance data. The filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes Versus Prior Period
- Expiration of Prior Agreement: The previous Rights Agreement was set to expire on December 2, 2009.
- Adoption of New Agreement: A new Rights Agreement was adopted on November 16, 2009, with Continental Stock Transfer & Trust Company as the rights agent.
- Dividend Declaration: The Board declared a dividend of one Right for each outstanding share of Common Stock to shareholders of record as of December 2, 2009.
Guidance, Outlook, and Material Terms
Terms of the New Rights Agreement:
- Exercise Price: $75.00 per Unit (one one-hundredth of a share of Series A Junior Participating Preferred Stock).
- Expiration Date: December 1, 2019, unless extended, redeemed, or terminated earlier.
- Triggering Event: Rights separate from Common Stock and become exercisable if an "Acquiring Person" acquires 10% or more of outstanding shares (excluding certain exceptions) or upon the commencement of a tender offer resulting in such acquisition.
- Flip-In Provision: Upon a Triggering Event, holders (excluding the Acquiring Person) may exercise Rights to receive Common Stock (or cash/property) with a value equal to two times the exercise price ($150.00 value for a $75.00 payment).
- Flip-Over Provision: If the Company merges or sells 50% or more of its assets following a Stock Acquisition Date, Rights may be exercised for stock of the surviving entity with a value equal to two times the exercise price.
- Redemption: The Company may redeem Rights at $0.01 per Right at any time until ten days following the Stock Acquisition Date.
- Exchange: Prior to an Acquiring Person owning 50% of the stock, the Board may exchange Rights for Common Stock at a ratio of one share per Right.
Risks and Contingencies: The Rights are designed to deter hostile takeovers. Shareholders may recognize taxable income if Rights become exercisable for stock or are redeemed, though the initial distribution is not taxable.
Important Facts for Investor Verification
- Verify the record date for the Rights dividend is December 2, 2009.
- Confirm the new Rights Agreement is attached as Exhibit 4.1 to this filing.
- Note that Rights are not exercisable until a Distribution Date occurs (triggered by a 10% acquisition or tender offer).
- Understand that the Company retains the right to redeem the Rights for $0.01 prior to a triggering event.
- Review the definition of "Acquiring Person" and specific exclusions for existing stockholders within the full Rights Agreement.