1
RIGHTS AGREEMENT
between
NCI BUILDING SYSTEMS, INC.
and
XXXXXX TRUST AND SAVINGS BANK,
Rights Agent
Dated as of June 24, 1998
2
TABLE OF CONTENTS
Section Page
------- ----
Section 1. Certain Definitions.............................................................................1
Section 2. Appointment of Rights Agent.....................................................................4
Section 3. Issue of Right Certificates.....................................................................5
Section 4. Form of Right Certificates......................................................................6
Section 5. Countersignature and Registration...............................................................7
Section 6. Transfer, Split Up, Combination, and Exchange of Right Certificates;
Mutilated, Destroyed, Lost, or Stolen Right Certificates........................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...................................9
Section 8. Cancellation and Destruction of Right Certificates.............................................10
Section 9. Reservation and Availability of Preferred Stock................................................11
Section 10. Preferred Stock Record Date....................................................................12
Section 11. Adjustment of Purchase Price, Number, and Kind of Shares, or Number
of Rights......................................................................................12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....................................20
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or Earning Power..........................20
Section 14. Fractional Rights and Fractional Shares........................................................22
Section 15. Rights of Action...............................................................................23
Section 16. Agreement of Rights Holders....................................................................23
Section 17. Right Certificate Holder Not Deemed a Stockholder..............................................24
Section 18. Concerning the Rights Agent....................................................................24
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................25
-i-
3
Section 20. Duties of Rights Agent.........................................................................25
Section 21. Change of Rights Agent.........................................................................28
Section 22. Issuance of New Right Certificates.............................................................28
Section 23. Redemption and Termination; Exchange...........................................................29
Section 24. Notice of Certain Events.......................................................................31
Section 25. Notices........................................................................................32
Section 26. Supplements and Amendments.....................................................................33
Section 27. Successors.....................................................................................33
Section 28. Determinations and Actions by the Board of Directors, etc......................................33
Section 29. Benefits of this Agreement.....................................................................34
Section 30. Severability...................................................................................34
Section 31. Governing Law..................................................................................34
Section 32. Counterparts...................................................................................34
Section 33. Descriptive Headings...........................................................................34
Exhibit A Certificate of Designation of Series A Junior Participating Preferred Stock
Exhibit B Form of Right Certificate
-ii-
4
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (this "Agreement"), dated as of June 24, 1998, is
by and between NCI Building Systems, Inc., a Delaware corporation (the
"Company"), and Xxxxxx Trust and Savings Bank, an Illinois banking corporation
(the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
distribution of one Right (as defined below) for each share of Common Stock, par
value $0.01, of the Company (the "Common Stock") outstanding at the close of
business on the Record Date (as defined below) and, in connection with that
declaration, has authorized the issuance of one Right for each share of Common
Stock of the Company issued between the Record Date and the Distribution Date
(as defined below).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person that, together
with all Affiliates and Associates of such Person, is the Beneficial
Owner of 20% or more of the voting power of the capital stock of the
Company then outstanding, but shall not include the Company, any
Subsidiary, any employee benefit plan of the Company or of any
Subsidiary, or any Person organized, appointed or established by the
Company or any Subsidiary for or pursuant to the terms of any such
plan.
Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of (a) an acquisition of shares of
capital stock of the Company by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 20% or more of the voting
power of the capital stock of the Company then outstanding or (b) the
acquisition by such Person of newly issued shares of capital stock
directly from the Company (it being understood that a purchase from an
underwriter or other intermediary is not directly from the Company);
provided, however, that if a Person shall become the Beneficial Owner
of 20% or more of the voting power of the capital stock of the Company
then outstanding by reason of share purchases by the Company or the
receipt of newly issued shares of capital stock directly from the
Company and shall, after such share purchases or direct issuance by the
Company, become the Beneficial Owner of any additional shares of
capital stock of the Company, then such Person shall be deemed to be an
"Acquiring Person"; provided further, however, that any transferee from
such Person who becomes the Beneficial Owner of 20% or more of the
voting power of the capital stock of the Company then outstanding shall
nevertheless be deemed to be an "Acquiring Person." Notwithstanding the
foregoing, if the Board of Directors of the
5
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 (and in any event within ten
business days after notification by the Company) a sufficient number of
shares of capital stock 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 be an
"Acquiring Person" for any purposes of this Agreement. The word
"outstanding," when used with reference to a Person's Beneficial
Ownership of shares of capital stock of the Company, shall mean the
number of such shares then issued and outstanding together with the
number of such shares not then issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(b) "Affiliate" and "Associate" shall have the 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.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities or equity
interests:
(i) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the
right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights at any time before the
occurrence of a Triggering Event but thereafter including
Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," securities tendered pursuant to a
tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or (B) the
right to vote or dispose of or "beneficial ownership" (as
determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act) of (including pursuant to
any agreement, arrangement or understanding, whether or not in
writing); provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any
security under this clause (B) as a result of an agreement,
arrangement or understanding to vote such security if such
agreement, arrangement or understanding (1) arises solely from
a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (2) does not result in ownership
required to be reported by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
2
6
(ii) that are beneficially owned, by any other
Person (or any Affiliate or Associate thereof) with which such
Person or any of such Person's Affiliates or Associates has
any agreement, arrangement, or understanding (whether or not
in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the
proviso to Section 1(c)(i)(B)), or disposing of any securities
or equity interests;
provided, however, that nothing in this paragraph (c) shall cause a
Person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities
acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of 40 days after the date
of such acquisition.
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in the
States of Texas or Illinois are authorized or obligated by law or
executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
p.m., Texas time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 p.m., Texas or Illinois time, on
the next succeeding Business Day.
(f) "Common Stock" shall mean the Common Stock, $0.01 par
value, of the Company, except that "common stock" when used with
reference to any Person other than the Company shall mean the class of
capital stock of such Person with the greatest voting power, or the
equity securities or other equity interests having power to control or
direct the management, of such Person.
(g) "Continuing Director" shall mean any member of the
Board of Directors of the Company who (i) (A) is not an Acquiring
Person or a Person who is at the time engaged in a tender or exchange
offer that could result in that Person's becoming the Beneficial Owner
of 20% or more of the outstanding Common Stock, or an Affiliate or an
Associate of either of the foregoing, and (B) who was a member of the
Board of Directors of the Company before the time the Acquiring Person
became an Acquiring Person or the tender or exchange offer began or
(ii)(A) is not an Acquiring Person or a Person who is at the time
engaged in a tender or exchange offer that could result in that
Person's becoming the Beneficial Owner of 20% or more of the
outstanding Common Stock, or an Affiliate or an Associate of either of
the foregoing, and (B) was recommended to serve on the Board of
Directors of the Company by a majority of Continuing Directors.
(h) "Distribution Date" shall have the meaning given it in
Section 3(a) hereof.
(i) "Expiration Date" shall have the meaning given it in
Section 7 hereof.
3
7
(j) "Person" shall mean any individual, firm, corporation,
partnership, or other entity.
(k) "Preferred Stock" shall mean the Series A Junior
Participating Preferred Stock, $1.00 par value, of the Company having
the designations, preferences, rights, qualifications, limitations, and
restrictions set forth in Exhibit A hereto.
(l) "Record Date" shall mean July 8, 1998.
(m) "Right" shall mean the right to purchase one
one-hundredth of a share of Series A Junior Participating Preferred
Stock, par value $1.00, of the Company, or other securities or
property, upon the terms and subject to the conditions hereinafter set
forth.
(n) "Right Certificates" shall mean certificates
substantially in the form of Exhibit B hereto, evidencing the rights or
any other form of certificate evidencing the Rights, which form is
adopted pursuant to this Agreement.
(o) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall
include a report filed pursuant to Section 13(d) of the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has
become such.
(p) "Subsidiary" shall mean any corporation or other entity
of which a majority of any class of equity securities or of any equity
interests is beneficially owned by the Company or a Subsidiary of the
Company, or that is otherwise controlled by the Company or a Subsidiary
of the Company, and "subsidiary," with reference to any other Person,
shall mean any corporation or other entity of which a majority of any
class of equity securities or of any equity interests is beneficially
owned by such other Person, or which is otherwise controlled by such
other Person.
(q) "Triggering Event" shall mean any event described in
Section 11(a)(ii) or Section 13(a) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall before the Distribution Date also be
the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
4
8
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the close of business on the
fifteenth day (subject to extension by the Board of Directors as
provided below) after the Stock Acquisition Date, or (ii) the close of
business on the fifteenth day (subject to extension by the Board of
Directors as provided below) after the commencement of, or first public
announcement of the intent to commence, a tender or exchange offer by
any Person (other than the Company, any Subsidiary, any employee
benefit plan of the Company or of any Subsidiary, or any Person
organized, appointed, or established by the Company or any Subsidiary
for or pursuant to the terms of any such plan), if upon consummation
thereof, such Person would be the Beneficial Owner of 20% or more of
the shares of Common Stock then outstanding (the earlier of such dates,
after any extensions, being herein referred to as the "Distribution
Date"), (A) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the Common
Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates
for Rights) and not by separate certificates, and (B) the Rights will
be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). The
fifteen-day periods referred to in clauses (i) and (ii) of the
preceding sentence may be extended by the Board of Directors, provided
that no such extension may be made when a majority of the directors in
office are not Continuing Directors, and any such extension shall
expire immediately when a majority of the directors in office are not
Continuing Directors. As soon as practicable after the Distribution
Date, the Rights Agent will send, at the expense of the Company, by
first-class, postage-prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more
Right Certificates evidencing one Right for each share of Common Stock
so held, subject to adjustment as provided herein. As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) As promptly as practicable following the Record Date,
the Company will send a copy of a summary of the Rights to each record
holder of the Common Stock as of the close of business on the Record
Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding
as of the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares
of Common Stock in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with such shares of
Common Stock.
(c) Rights shall be issued in respect of all shares of
Common Stock issued on or after the Record Date but before the earlier
of the Distribution Date or the Expiration Date. Common Stock
certificates issued on or after the Record Date but before the earlier
of the
5
9
Distribution Date or the Expiration Date upon the transfer or new
issuance of shares of Common Stock shall also be deemed to be
certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between
the Corporation and Xxxxxx Trust and Savings Bank, dated as of
June 24, 1998 (the "Rights Agreement"), the terms of which are
incorporated herein and a copy of which is on file at the
principal offices of the Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. Promptly after receipt of a
written request therefor, the Corporation will mail or cause to
be mailed to the holder of this certificate a copy of the Rights
Agreement without charge. Under certain circumstances, Rights
issued to, or held by, Acquiring Persons or Affiliates or
Associates thereof (as such terms are defined in the Rights
Agreement) and any subsequent holder of such Rights may become
null and void.
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii) the
Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall also be
the registered holders of the associated Rights, and the transfer of
any of such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such
certificates.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares of Common Stock and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set forth in
Exhibit B hereto and may have marks of identification or designation
and such legends, summaries, or endorsements printed thereon that the
Company may deem appropriate and that are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Right Certificates,
whenever distributed, shall be dated as of the Distribution Date and on
their face shall entitle the holders thereof to purchase the number of
shares of Preferred Stock set forth therein at the Purchase Price (as
such term is defined in Section 7), but the number of shares
purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
6
10
(b) Any Right Certificate that represents Rights
beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or such Associate or Affiliate) who becomes a
transferee before or at the same time the Acquiring Person becomes such
and receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person to holders of equity
interest in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement, or
understanding regarding the transferred Rights or (B) a transfer that
is part of a plan, arrangement, or understanding that has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any Right
Certificate issued upon transfer, exchange, replacement, or adjustment
of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Right Certificate
and the Rights represented hereby may become void in the circumstances
specified in Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President, or any Vice
President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof, which shall
be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall
be manually countersigned by the Rights Agent and shall not be valid
for any purpose unless so countersigned. In case any officer of the
Company who has signed any of the Right Certificates ceases 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.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at the office designated by the Rights Agent
as the appropriate place for surrender of Right Certificates upon
exercise or transfer, books for registration and transfer of the Right
7
11
Certificates issued hereunder. Such books shall show the names and
addresses of the holders of the Right Certificates, the number of
Rights evidenced on the face of each of the Right Certificates, and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination, and Exchange of Right
Certificates; Mutilated, Destroyed, Lost, or Stolen Right Certificates.
(a) Subject to the provisions of Section 4(b), Section
7(e), and Section 14 hereof, at any time after the close of business on
the Distribution Date and until the close of business on the Expiration
Date, any Right Certificate may be transferred, split up, combined, or
exchanged for another Right Certificate or Certificates, entitling the
registered holder to purchase a like number of shares of Preferred
Stock (or, following a Triggering Event, other securities or property,
as the case may be) as the Right Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of
a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine, or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate to be transferred, split up, combined, or
exchanged at the office of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of
assignment set forth on the reverse side of each such Right Certificate
and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon
the Rights Agent shall, subject to Section 4(b) and Section 7(e)
hereof, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination, or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction, or mutilation of a Right Certificate, and, in case of
loss, theft, or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate
of like tenor (except for the issuance date thereof) to the Rights
Agent for countersignature and delivery to the registered owner in lieu
of the Right Certificate so lost, stolen, destroyed, or mutilated.
8
12
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, the registered holder
of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii), and
Section 23(a) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase set forth on the reverse side thereof and
the certificate contained therein duly executed, to the Rights Agent at
the office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price with respect to each surrendered
Right for the total number of shares (or other securities or property,
as the case may be) as to which such surrendered Rights are
exercisable, at or before the earlier of (i) the close of business on
June 24, 2008 (the "Final Expiration Date"), or (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof (such earlier
time being herein referred to as the "Expiration Date").
(b) The purchase price for each one one-hundredth of a
share of Preferred Stock pursuant to the exercise of a Right (the
"Purchase Price") shall initially be $125, and shall be subject to
adjustment from time to time as provided in Section 11 hereof and shall
be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase set forth on
the reverse side thereof and the certificate contained therein duly
executed, accompanied by payment, with respect to each Right so
exercised (by certified bank check or bank draft payable to the order
of the Rights Agent), of the Purchase Price for the shares of Preferred
Stock (or other securities or property, as the case may be) to be
purchased and an amount equal to any applicable transfer tax, the
Rights Agent shall, subject to Section 20(k) hereof, promptly (i) (A)
requisition from any transfer agent of the shares of Preferred Stock
(or make available, if the Rights Agent is the transfer agent for the
Preferred Stock) certificates for the number of shares of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests or (B) requisition from
the depositary agent depositary receipts representing the number of one
one-hundredths of a share of Preferred Stock being purchased (in which
case certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of fractional shares of Preferred
Stock in accordance with Section 14 hereof, (iii) after receipt of such
certificates for shares of Preferred Stock, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in the name or names designated by such holder,
and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Right Certificate. All funds
received by the Rights Agent pursuant to the exercise of Rights shall
be held in trust for the benefit of the Company and paid over to the
Company on demand. If the Company is obligated to issue other
securities of the Company, pay cash, or distribute
9
13
other property pursuant to Section 11(a) hereof, the Company will make
all arrangements necessary so that such other securities, cash, or
other property is available for distribution by the Rights Agent, if
and when appropriate.
(d) If the registered holder of any Right Certificate
exercises less than all the Rights evidenced thereby, a new Right
Certificate evidencing the Rights remaining unexercised shall be issued
by the Rights Agent and 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, subject to the provisions of
Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the occurrence of a Triggering Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or such Associate or Affiliate) who becomes a
transferee before or at the same time the Acquiring Person becomes such
and receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement, or
understanding regarding the transferred Rights or (B) a transfer that
is part of a plan, arrangement, or understanding that has as a primary
purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action, and any holder of such Rights
shall thereupon have no rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to insure that the provisions of this
Section 7(e) are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of its failure
to make any determination with respect to an Acquiring Person or its
Affiliates, Associates, or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless the registered holder shall have completed and signed the
certificate contained in the form of election to purchase set forth on
the reverse side of the Right Certificate surrendered for such exercise
and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
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 any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of
10
14
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right Certificates
to the Company, or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, other securities)
or any authorized and issued shares of Preferred Stock (and, following
the occurrence of a Triggering Event, other securities) held in its
treasury, the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, other securities) that, except as
provided in Section 11(a)(iii) hereof, will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) If shares of Preferred Stock (and, following the
occurrence of a Triggering Event, other securities issuable and
deliverable upon the exercise of the Rights) are listed on any national
securities exchange, the Company shall use its best efforts to cause,
from and after the time the Rights become exercisable (but only to the
extent that it is reasonably likely that the Rights will be exercised),
all shares reserved for issuance upon the exercise of the Rights to be
listed on such exchange upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the first occurrence of a Triggering
Event, a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Preferred Stock or
other securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
Expiration Date. The Company will also take such action as may be
appropriate under the securities or "blue sky laws" of the various
states. The Company may temporarily suspend, for a period of time not
to exceed ninety (90) days, the exercisability of the Rights in order
to prepare and file such registration statement. Upon any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended.
(d) The Company will take all such action as may be
necessary to ensure that all shares of Preferred Stock (and, following
the occurrence of a Triggering Event, other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable.
11
15
(e) The Company will pay when due and payable any and all
federal and state transfer taxes and charges payable in respect of the
issuance or delivery of the Right Certificates and of any certificates
for shares of Preferred Stock (or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the issuance
or delivery of the shares of Preferred Stock or depositary receipts (or
other securities, as the case may be) to someone other than, the
registered holder of the Right Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for
shares of Preferred Stock (or other securities, as the case may be) in
a name other than that of the registered holder upon the exercise of
any Rights until such tax shall have been paid (any such tax being
payable by the holder of such Right Certificates at the time of
surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for shares of Preferred Stock (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Preferred Stock (or other
securities, as the case may be) 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 all applicable
transfer taxes) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Stock (or other securities, as
the case may be) transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Stock
(or other securities, as the case may be) transfer books of the Company are
open. Before the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a stockholder of the Company
with respect to shares for which the Rights shall be exercisable, including the
right to vote, to receive dividends or other distributions, or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number, and Kind of Shares,
or Number of Rights. The Purchase Price, the number and kind of shares covered
by each Right, and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) If the Company at any time after the date of this
Agreement (A) declares a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivides the
outstanding Preferred Stock, (C) combines the outstanding
Preferred Stock into a smaller number of shares, or (D) issues
or authorizes the issuance of any shares of its capital stock
in a reclassification of the Preferred Stock (including any
such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof, the Purchase Price in effect at
the time of the record date for such dividend or of the
effective date of such
12
16
subdivision, combination, or reclassification, and the number
and kind of shares of Preferred Stock or capital stock, as the
case may be, issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and
kind of shares of Preferred Stock or capital stock, as the
case may be, which, if such Right had been exercised
immediately before such date and at a time when the Preferred
Stock (or other capital stock, as the case may be) transfer
books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination, or reclassification. If an
event occurs that would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to,
and shall be made before, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) If, at any time after the date of this
Agreement, any Person, alone or together with its Affiliates
or Associates, shall become an Acquiring Person, then proper
provision shall be made so that each holder of a Right (except
as provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the
Purchase Price then current in accordance with the terms of
this Agreement, in lieu of the number of shares of Preferred
Stock for which a Right would otherwise be exercisable, a
number of shares of Common Stock of the Company equal to the
result obtained by (1) multiplying the Purchase Price then
current by the number of hundredths of a share of Preferred
Stock for which a Right was exercisable immediately before the
first occurrence of an event set forth in this Section
11(a)(ii), and dividing that product by (2) 50% of the current
market price (determined pursuant to Section 11(d) hereof) per
share of Common Stock on the date of such first occurrence
(the "Adjustment Shares").
(iii) If there are not sufficient authorized but
unissued and treasury shares of Common Stock to permit the
exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Company shall take all such
action as may be necessary to authorize additional shares of
Common Stock for issuance upon exercise of the Rights;
provided, however, if the Company is unable to cause the
authorization of a sufficient number of additional shares of
Common Stock, then, if the Rights become so exercisable, the
Company, with respect to each Right and to the extent
necessary and permitted by applicable law and any agreements
or instruments in effect on the Stock Acquisition Date to
which it is a party, shall, upon the exercise of any such
Right, make adequate provision to: (A) pay an amount in cash
equal to the excess of (1) the product of (a) the number of
Adjustment Shares, multiplied by (b) the current market price
(determined pursuant to Section 11(d) hereof) per share of the
Common Stock on the date of the first occurrence of an event
set forth in Section 11(a)(ii) above (such product is herein
called the "Current Value"), over (2) the Purchase Price, in
lieu of issuing shares of Common Stock and requiring payment
therefor; (B) issue debt or equity securities (other than
Common
13
17
Stock) having a value equal to the Current Value, where the
value of such securities shall be determined by an investment
banking firm selected by the Board of Directors of the
Company, and requiring the payment of the Purchase Price
therefor; (C) issue a number of shares, or units of shares, of
preference stock equal to the number of Adjustment Shares
where the Board of Directors of the Company shall have deemed
such shares or units to have the same value as the Common
Stock (a "Common Stock Equivalent"), and requiring the payment
of the Purchase Price; or (D) deliver any combination of cash,
property, preference stock, Common Stock Equivalents, or other
securities having the requisite value as determined by the
Board of Directors and requiring the payment of all or any
requisite portion of the Purchase Price; provided further,
however, if the Company shall not have made adequate provision
to deliver value pursuant to clause (A), (B), (C), or (D)
above within sixty (60) days following the date of the first
occurrence of the event listed in Section 11(a)(ii), then the
Company shall be obligated to deliver cash in accordance with
clause (A) above. To the extent that the Company determines
that some action need be taken pursuant to clause (A), (B),
(C), or (D) of the first proviso to the first sentence of this
Section 11(a)(iii), the Company may suspend the exercisability
of the Rights for a period of up to sixty (60) days (or ninety
(90) days if a registration statement pursuant to Section 9(c)
hereof is being filed and pursued) following the date on which
the event listed in Section 11(a)(ii) shall have occurred, in
order to decide the appropriate form of distribution to be
made pursuant to such first proviso and to determine the value
thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
(b) If the Company fixes a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Preferred Stock
or securities convertible into Preferred Stock at a price per share of
Preferred Stock (or having a conversion price per share, if a security
convertible into Preferred Stock) less than the current market price
(as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price
in effect immediately before such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares
of Preferred Stock so to be offered (or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). If the
subscription price may be paid by delivery of consideration part or all
of which may be in a form other than cash, the value of such non-cash
consideration shall be as determined in good faith by the Board
14
18
of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the
Rights Agent. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and if such rights or warrants
are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price that would then be in effect if such record date had not
been fixed.
(c) If the Company fixes a record date for a distribution
to all holders of Preferred Stock (including any such distribution made
in connection with a consolidation or merger in which the Company is
the continuing corporation) of evidences of indebtedness, cash (other
than a regular cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in stock other than Preferred
Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in
effect immediately before such record date by a fraction, the numerator
of which shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent) of the portion of the cash, assets, or evidences of
indebtedness so to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and the denominator
of which shall be such current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock. Such adjustments
shall be made successively whenever such a record date is fixed; and if
such distribution is not so made, the Purchase Price shall be adjusted
to be the Purchase Price that would have been in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
other than in Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices per share of
such Common Stock for the thirty (30) consecutive Trading Days
(as such term is hereinafter defined) immediately before such
date (or, if the Common Stock has been traded on fewer than
thirty (30) Trading Days, then the number of Trading Days on
which the Common Stock has been traded,) and for the purpose
of any computation in Section 11(a)(iii) hereof, the "current
market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share
of such Common Stock for the ten (10) consecutive Trading Days
immediately following such date; provided, however, that if
the current market price per share of the Common Stock is
determined during a period following the announcement by the
issuer of such Common Stock of (i) a dividend or distribution
on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other
than the Rights), or (ii) any subdivision, combination,
15
19
or reclassification of such Common Stock, and before the
expiration of the requisite thirty (30) Trading Day or ten
(10) Trading Day period, as set forth above, the ex-dividend
date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification occurs,
then, and in each such case, the "current market price" shall
be properly adjusted to take into account ex-dividend trading.
The closing price for each day shall be the last sale price,
regular way, or, if no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated
transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if
the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of Common
Stock are not listed or admitted to trading on any national
securities exchange, the last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation
System ("Nasdaq") or such other system then in use, or, if on
any such date the shares of Common Stock are not quoted by any
such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the Common Stock selected by the Board of Directors
of the Company. If on any such date no market maker is making
a market in the Common Stock, the fair value of such shares on
such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day"
shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, a Business
Day.
(ii) For the purpose of any computation hereunder,
the "current market price" of the Preferred Stock shall be
determined in the same manner as set forth above for Common
Stock in Section 11(d)(i). If the current market price of the
Preferred Stock cannot be determined in the manner provided
above, the "current market price" of the Preferred Stock shall
be conclusively deemed to be the current market price of the
Common Stock (appropriately adjusted to reflect any stock
split, stock dividend, or similar transaction occurring after
the date hereof), multiplied by one hundred. If neither the
Common Stock nor the Preferred Stock is publicly held or so
listed or traded, "current 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 and shall
be conclusive for all purposes.
16
20
(e) Anything herein to the contrary notwithstanding (except
the last sentence of this Section 11(e)), no adjustment in the Purchase
Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase
Price; provided, however, that any adjustments that by reason of this
Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a share, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made not later than the earlier of (i) three (3)
years from the date of the transaction that requires such adjustment,
or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock other than Preferred Stock, thereafter the number of such
other shares so receivable upon exercise of any Right and the Purchase
Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Preferred Stock contained in
this Section 11, and the provisions of Sections 7, 9, 10, 13, and 14
hereof with respect to the Preferred Stock shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the Company after any
adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of shares
of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company has 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 before the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of shares of Preferred Stock (calculated to
the nearest ten-thousandth) obtained by (i) multiplying (A) the number
of shares covered by a Right immediately before this adjustment, by (B)
the Purchase Price in effect immediately before such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of shares of Preferred Stock for which a
Right was exercisable immediately before such adjustment. Each Right
held of record before such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest ten-thousandth)
obtained by dividing the Purchase Price in effect immediately before
adjustment of the Purchase Price by the
17
21
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 issued, shall be at least ten (10) days later than the date of the
public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Right Certificates held by such holders before the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Preferred Stock issuable upon
the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per share
and the number of shares that were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the par value of the shares of
Preferred Stock issuable upon exercise of the Rights, the Company shall
take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully
paid and nonassessable shares of Preferred Stock at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the shares of Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon
such exercise over and above the shares of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect before such
adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares of Preferred Stock and
other capital stock or securities upon the occurrence of the event
requiring such adjustment.
18
22
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in the good
faith judgment of the Board of Directors of the Company is advisable in
order that any (i) consolidation or subdivision of the Preferred Stock,
(ii) issuance for cash of any shares of Preferred Stock at less than
the current market price, (iii) issuance for cash of shares of
Preferred Stock or securities that by their terms are convertible into
or exchangeable for shares of Preferred Stock, (iv) stock dividends, or
(v) issuance of rights, options or warrants referred to in this Section
11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) If at any time after the Record Date and before the
Distribution Date, the Company (i) declares or pays any dividend on the
Common Stock payable in Common Stock or (ii) effects a subdivision,
combination, or consolidation of the Common Stock (by reclassification
or otherwise than by payment of dividends in Common Stock) into a
greater or lesser number of shares of Common Stock, then in any such
case (A) the number of hundredths of a share of Preferred Stock
purchasable after such event upon proper exercise of each Right shall
be determined by multiplying the number of hundredths of a share of
Preferred Stock so purchasable immediately before such event by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately before such event and the denominator of
which is the number of shares of Common Stock outstanding immediately
after such event, and (B) each share of Common Stock outstanding
immediately after such event shall have issued with respect to it that
number of Rights which each share of Common Stock outstanding
immediately before 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. If an event
occurs that would require an adjustment under Section 11(a)(ii) and
this Section 11(n), the adjustments provided for in this Section 11(n)
shall be in addition and prior to any adjustment required pursuant to
Section 11(a)(ii).
(o) If at the time of or immediately after such
consolidation, merger, or sale there are any rights, warrants, or other
instruments or securities outstanding or agreements in effect that
would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, the Company shall not, at any
time after the Distribution Date, (i) consolidate with, (ii) merge with
or into, or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person.
(p) The Company shall not, after the Distribution Date,
except as permitted by Section 23 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially
or eliminate the benefits intended to be afforded by the Rights.
19
23
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock, 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 Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained, and shall not be obligated
or responsible for calculating and adjustment. The Rights Agent may rely on such
certificate and shall not be deemed to have knowledge of any adjustment unless
and until it has received such certificate.
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or
Earning Power.
(a) If, following the Distribution Date, directly or
indirectly, (i) the Company consolidates with, or merges with and into,
any other Person, and the Company is not the continuing or surviving
corporation of such consolidation or merger, (ii) any Person
consolidates with, or merges with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or
part of the outstanding shares of Common Stock, shall be changed into
or exchanged for stock or other securities of any other Person or cash
or any other property, or (iii) the Company sells or otherwise
transfers (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any Subsidiary), then, and in each such case,
proper provision shall be made so that: (A) each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the Purchase Price then
current in accordance with the terms of this Agreement, the number of
validly authorized and issued, fully paid, nonassessable and freely
tradable shares of common stock of the Principal Party (as such term is
hereinafter defined), not subject to any rights of first refusal, equal
to the result obtained by (1) multiplying the Purchase Price then
current by the number of hundredths of a share of Preferred Stock for
which a Right was exercisable immediately before the consummation of
such consolidation, merger, sale, or transfer (without taking into
account any adjustment previously made pursuant to Section 11(a)(ii)
hereof) and dividing that product by (2) 50% of the current market
price (determined pursuant to Section 11(d) hereof) per share of the
common stock of such Principal Party on the date of consummation of
such consolidation, merger, sale, or transfer; (B) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale, or transfer, all of the obligations and
duties of the Company pursuant to this Agreement; (C) the term
"Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first occurrence
of an event set forth in this Section 13(a); and (D) such Principal
Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares
20
24
of its common stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of common stock thereafter deliverable upon the
exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (i) or (ii) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which shares
of Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in
clause (iii) of the first sentence of Section 13(a), the
Person that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the common stock of
such Person is not at such time and has not been continuously over the
preceding twelve-month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect subsidiary of
another Person the common stock of which is and has been so registered,
"Principal Party" shall refer to such other Person; and (2) in case
such Person is a subsidiary, directly or indirectly, of more than one
Person, the common stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the common stock having the greatest aggregate market
value.
(c) The Company shall not consummate any such
consolidation, merger, sale, or transfer unless the Company and such
Principal Party have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, or sale of
assets mentioned in paragraph (a) of this Section 13, the Principal
Party will
(i) prepare and file a registration statement under
the Securities Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date; and
21
25
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. If one of the
transactions described in Section 13(a) hereof occurs at any time after
the occurrence of a transaction described in Section 11(a)(ii) hereof,
the Rights that have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates that 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
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 before the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day
shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted
to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system
then in use or, if on any such date the Rights are not quoted by any
such 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
shares of Preferred Stock (other than integral multiples of a hundredth
of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates that evidence fractional shares of Preferred
Stock (other than integral multiples of a hundredth of a share of
Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of a hundredth of a 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
22
26
agreement shall provide that the holders of such depositary receipts
shall have all of the rights, privileges, and preferences to which they
are entitled as beneficial owners of the shares of Preferred Stock
represented by such depositary receipts. In lieu of fractional shares
of Preferred Stock other than integral multiples of a hundredth of a
share, the Company may pay to the registered holders 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 share of Preferred Stock. Any holder of more than one
Right Certificate may exercise and aggregate all or part of the Rights
evidenced by two or more Right Certificates so as to obtain a whole
number of shares of Preferred Stock and to avoid receiving cash in lieu
of a fractional share of Preferred Stock to which such holder would
otherwise be entitled upon exercise of the Rights evidenced by a single
Right Certificate. For purposes of this Section 14(b), the current
market value of one share of Preferred Stock shall be the closing price
of a share of Preferred Stock (as determined pursuant to Section 11(d)
hereof) for the Trading Day immediately before the date of such
exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the registered holders of the Right Certificates (and,
before the Distribution Date, the registered holders of the Common Stock); and
any registered holder of any Right Certificate (or, before the Distribution
Date, of the Common Stock), without the consent of the Rights Agent or of the
holder of any other Right Certificate (or, before the Distribution Date, of the
Common Stock), may, on his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action, or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) before the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of
transfer; and
23
27
(c) the Company and the Rights Agent may deem and treat the
person in whose name a Right Certificate (or, before the Distribution
Date, the associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be
required to be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the shares of Preferred
Stock or any other securities of the Company that may at any time be issuable on
the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 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.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements
incurred in the administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without negligence,
bad faith, or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the
premises. The indemnification provided for hereunder shall survive the
expiration of the Rights, the termination of this Agreement and the
resignation or removal of the Rights Agent. The costs and expenses of
enforcing this right of indemnification also shall be paid by the
Company,
(b) The Rights Agent may conclusively rely upon and shall
be protected and shall incur no liability for or in respect of any
action taken, suffered, or omitted by it in connection with its
administration of this Agreement in reliance upon any 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.
24
28
(c) Notwithstanding anything in this Agreement to the
contrary, in no event shall the Rights Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage and
regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the shareholder
services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. If at the time such successor Rights
Agent succeeds to the agency created by this Agreement any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Right Certificates so countersigned; and
if at that time any of the Right Certificates have not been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor or in the name of
the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent is changed
and at such time any of the Right Certificates have been countersigned
but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned;
and if at that time any of the Right Certificates have not been
countersigned, the Rights Agent may countersign such Right Certificates
either in its prior name or in its changed name; and in all such cases
such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Right Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting,
the Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent for any
action taken or omitted by it in good faith and in accordance with such
opinion.
25
29
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "current market price") be
proved or established by the Company before 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 a person
believed by the Rights Agent to be the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer,
the Secretary, or any Assistant Secretary of the Company, and delivered
to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates or be required to verify the
same (except as to its countersignature on such Right Certificates),
but all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent),
or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition contained in
this Agreement or in any Right Certificate; nor shall it be responsible
for any adjustment required under the provisions of Section 11 or
Section 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 receipt of a
certificate furnished pursuant to Section 12 describing such change or
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any shares of Preferred Stock or other securities to be issued pursuant
to this Agreement or any Right Certificate or as to whether any shares
of Preferred Stock or other securities will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company will perform, execute, acknowledge, and
deliver or cause to be performed, executed, acknowledged, and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
26
30
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from a person believed by the Rights Agent to be the Chairman
of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer, or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action
taken or suffered to be taken by it in good faith in accordance with
instructions of any such person. Any application by the Rights Agent
for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Rights Agreement and the date on
and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken
by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after
the date any officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier
date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to
be taken or omitted.
(h) The Rights Agent and any stockholder, director,
officer, or employee of the Rights Agent may buy, sell, or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company, or otherwise act as
fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect, or misconduct of any such attorneys or agents, or for any loss
to the Company resulting from any such act, default, neglect or
misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of its rights if there is reasonable ground for believing that
repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate contained
in the form of assignment or the form of election to purchase set forth
on the reverse thereof, as the case may be, has either not been
27
31
completed or indicates an affirmative response to clause 1 or 2
thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting
with the Company.
(l) The Rights Agent shall not be required to take notice
or be deemed to have notice of any fact, event or determination
(including, without limitation, any dates or events defined in this
Agreement or the designation of any Person as an Acquiring Person,
Affiliate or Associate) under this Agreement unless and until the
Rights Agent shall be specifically notified in writing by the Company
of such fact, event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock, by registered or certified mail, and, at
the expense of the Company, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Preferred Stock, by registered or certified mail, and to the holders of
the Right Certificates by first-class mail. If the Rights Agent resigns or is
removed or otherwise becomes incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company fails to make such appointment
within a period of thirty (30) days after giving notice of such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by any 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 any State, in good standing, that is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and that has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $10,000,000. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the 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
28
32
any adjustment or change in the Purchase Price per share and the number, kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and before the redemption or expiration of the
Rights, the Corporation may, with respect to shares of Common Stock so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement granted or awarded on or before the Distribution Date or upon the
exercise, conversion, or exchange of securities hereafter issued by the
Corporation or in any other case, if deemed necessary or appropriate by the
Board of Directors, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale, provided that (i) no such
Right Certificate shall be issued if, and to the extent that, the Corporation
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Corporation or the Person to whom
such Rights Certificate would be issued, and (ii) no such Rights Certificate
shall be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination; Exchange.
(a) The Board of Directors of the Company may (at any time
when a majority of the directors then serving are Continuing
Directors), at its option, at any time before 5:00 p.m., Dallas, Texas,
time, on the earlier of (i) the close of business on the fifteenth day
(subject to extension by the Board of Directors as provided below)
following the Stock Acquisition Date, or (ii) the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $0.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). The
fifteen-day period referred to in the preceding sentence may be
extended by the Board of Directors, provided that no such extension may
be made when a majority of the directors in office are not Continuing
Directors, and any such extension shall expire immediately when a
majority of the directors in office are not Continuing Directors. If,
following the occurrence of a Stock Acquisition Date and following the
expiration of the Company's right of redemption set forth in the
preceding sentence but before any Triggering Event, each of the
following shall have occurred and remain in effect: (1) a Person who
was an Acquiring Person shall have transferred or otherwise disposed of
a number of shares of Common Stock in a transaction, or series of
transactions, that did not result in the occurrence of a Triggering
Event so that such Person is thereafter a Beneficial Owner of 5% or
less of the outstanding shares of Common Stock, (2) such Person
continues for a period of ninety (90) days to beneficially own 5% or
less of the outstanding shares of Common Stock, (3) during such
ninety-day period, there are no other Persons who are Acquiring
Persons, and (4) the transfer or other disposition described in clause
(1) above was other than pursuant to a transaction, or series of
transactions that directly or indirectly involved the Company or any of
its Subsidiaries; then the Company's right of redemption set forth in
the preceding sentence shall be reinstated. Notwithstanding anything
contained in this Agreement to the
29
33
contrary, the Rights shall not be exercisable pursuant to Section
11(a)(ii) hereof before the expiration of the Company's right of
redemption set forth in the first sentence of this Section 23(a).
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, evidence of which
shall have been filed with the Rights Agent, and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price for each Right so held. Promptly
after the action of the Board of Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the
Rights Agent and the holders of the Rights then outstanding by mailing
such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, before the
Distribution Date, on the registry books of the Transfer Agent for the
Common Stock. Any notice that is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
(c) The Board of Directors may, at its option, at any time
after the occurrence of a Triggering Event, exchange all or part of the
then outstanding and exercisable Rights for shares of Common Stock at
an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). 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 or any
Subsidiary, or any Person organized, appointed or established by the
Company or any Subsidiary for or pursuant to the terms of any such
plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(d) Immediately upon the effective time of the exchange of
the Rights as specified by the action of the Board of Directors
ordering the exchange of any Rights pursuant to Section 23(c) and
without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure
to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such
exchange to all of the holders of such Rights at their last addresses
as they appear upon the registry books of the Rights Agent.
30
34
Any notice that 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
shares of Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights that will be exchanged. Any
partial exchange shall be effected pro rata based on the number of
Rights held by each holder of Rights.
(e) In any exchange pursuant to Section 23(c), the Company,
at its option, may substitute shares of Preferred Stock (or equivalent
shares) for shares of Common Stock exchangeable for Rights, at the
initial rate of one one-hundredth of a share of Preferred Stock (or
equivalent shares) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred
Stock pursuant to the terms thereof, so that the fraction of a share of
Preferred Stock delivered in lieu of each share of Common Stock shall
have the same voting rights as one share of Common Stock.
In the event that there shall not be sufficient shares of
Common Stock or shares of Preferred Stock issued but not outstanding or
authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 23, the Company shall take
all such action as may be necessary to authorize additional shares of
Common Stock or Preferred Stock for issuance upon exchange of the
Rights.
(f) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share of Common
Stock. For the purposes of this Section 23(f), the current market value
of a whole share of Common Stock shall be the "current market price" of
a share of Common Stock (as determined pursuant to Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of exchange
pursuant to Section 23(c) hereof.
Section 24. Notice of Certain Events.
(a) If the Company proposes, at any time after the
Distribution Date, (i) to declare or pay any dividend payable in stock
of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification
of its Preferred Stock (other than a reclassification involving only
the subdivision of outstanding shares of Preferred Stock), or (iv) to
effect any 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
31
35
more transactions, of more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any other
Person, or (v) to effect the liquidation, dissolution or winding up of
the Company, or (vi) to declare or pay any dividend on the Common Stock
payable in shares of Common Stock or to effect a subdivision,
combination, or consolidation of the Common Stock (by reclassification
or otherwise then by payment of dividends in Common Stock), then, in
each such case, the Company shall give to each holder of a Right
Certificate, to the extent feasible, in accordance with Section 25
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 shares of Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days before
the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) days before the date of the taking of such
proposed action or the date of participation therein by the holders of
the shares of Preferred Stock, whichever shall be the earlier.
(b) If the event set forth in Section 11(a)(ii) hereof
occurs, then, in any such case, the Company shall as soon as
practicable thereafter give to each holder of a Right Certificate, to
the extent feasible, in accordance with Section 25 hereof, a notice of
the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii)
hereof.
Section 25. 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 first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
NCI Building Systems, Inc.
0000 Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sent by registered or certified
mail and shall be deemed given upon receipt, addressed (until another address is
filed in writing with the Company) as follows:
Xxxxxx Trust and Savings Bank
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxx Xxxxxxxxx
32
36
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 26. Supplements and Amendments. During any period in which the
Rights are redeemable, except for a supplement or amendment that would change
the Redemption Price, Final Expiration Date, Purchase Price, number of shares of
Preferred Stock for which a Right is then exercisable, or if the rights are not
then redeemable, reinstate a right of redemption, at any time and from time to
time, the Company may and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order (i) to change any provision of this Agreement if the
Rights are then redeemable, (ii) to cure any ambiguity, (iii) to correct or
supplement any provision contained herein that may be defective or inconsistent
with any other provisions herein, or (iv) to change or supplement the provisions
hereunder in any manner that the Company may deem necessary or desirable and
which does not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person). Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Before the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the Rights Agent
under this Agreement will be effective against the Rights Agent without the
execution of such supplement or amendment by the Rights Agent.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Preferred Stock or Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding shares
of Preferred Stock or Common Stock of which any Person is the Beneficial Owner,
shall be made in accordance with the provisions of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act. The Board of Directors of
the Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of the Company, or as may be necessary or advisable in the administration
of this Agreement, including the right and power to (i) interpret the provisions
of this Agreement, and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including a determination to
redeem or not to redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations, and determinations (including, for purpose of
clause (2) below, all omissions with respect to the foregoing) that are done
33
37
or made by the Board in good faith, shall (1) be final, conclusive, and binding
on the Company, the Rights Agent, the holders of the Right Certificates and all
other parties, and (2) not subject the Board to any liability to the holders of
the Right Certificates.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, before the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy, or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, before the Distribution Date, registered
holders of the Common Stock).
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;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant, or restriction is held by such
court or authority to be invalid, void, or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from the Agreement would adversely affect the purpose or effect
of the Agreement, the right of redemption set forth in Section 23 hereof shall
be reinstated, and shall not expire until the close of business on the tenth day
following the date of such determination by the Board of Directors.
Section 31. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware applicable to
contracts made and performed entirely within that state, except as to the rights
and obligations of the Rights Agent, which shall be governed by and construed in
accordance with the laws of the State of Illinois.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 33. Descriptive Headings. Descriptive headings of the 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.
[THE NEXT FOLLOWING PAGE IS THE SIGNATURE PAGE.]
34
38
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the date first above written.
NCI BUILDING SYSTEMS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
XXXXXX TRUST AND SAVINGS BANK,
as Rights Agent
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
35
39
EXHIBIT A
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
NCI BUILDING SYSTEMS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-----------------
NCI Building Systems, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies that the following resolution was adopted by the Board of Directors of
the Corporation in accordance with Section 151 of the General Corporation Law at
a meeting duly called and held on June 24, 1998:
RESOLVED, that, pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board of Directors" or the
"Board") in accordance with the provisions of the Restated Certificate
of Incorporation, the Board of Directors hereby creates a series of
Preferred Stock, par value $1.00 per share (the "Preferred Stock"), of
the Corporation and hereby states the designation and number of shares,
and fixes the relative rights, preferences, and limitations thereof as
follows:
Series A Junior Participating Preferred Stock:
1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the
Series A Preferred Stock shall be 600,000.
Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a number
less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options,
rights, or warrants or upon the conversion of any outstanding
securities issued by the Corporation convertible into Series A
Preferred Stock.
2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of
any series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with
Exhibit A - Page 1
40
respect to dividends, the holders of shares of Series A Preferred
Stock, in preference to the holders of Common Stock, par value $0.01
per share (the "Common Stock"), of the Corporation, and of any other
junior 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 first day of February, May,
August and November in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal, subject to the provision for
adjustment hereinafter set forth, to 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. If the
Corporation at any time declares or pays any dividend on the Common
Stock payable in shares of Common Stock, or effects 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 amount to which holders of
shares of Series A Preferred Stock were entitled immediately before
such event 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 before such event.
(b) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in Paragraph
(a) of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is before the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall being to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
Exhibit A - Page 2
41
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days before the
date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. If the Corporation at any time
declares or pays any dividend on the Common Stock payable in shares of
Common Stock, or effects 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 number of votes per share to which holders of shares of Series
A Preferred Stock were entitled immediately before 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 before such event.
(b) Except as otherwise provided herein, in any other
Certificate of Designation creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of
shareholders of the Corporation.
(c) Except as set forth herein, holders of Series A
Preferred Stock shall have no voting rights.
4. Certain Restrictions.
(a) Whenever dividends or distributions payable on the
Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking in parity
(either as to dividends or upon liquidation,
Exhibit A - Page 3
42
dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A 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 junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock, provided that the Corporation
may at any time redeem, purchase, or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking in parity with the Series A 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 annual
dividend rates and other relative rights and preferences of
the series and classes, shall determine in good faith will
result in fair and equitable treatment among the series or
classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
Paragraph (a) of this Section 4 purchase or otherwise acquire shares at
such time and in such manner.
5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled 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 subject to the conditions
and restrictions on issuance set forth herein, in the Restated
Certificate of Incorporation, in any other Certificate of Designations
creating a series of Preferred Stock or similar stock, or as otherwise
required by law.
6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (a) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Preferred Stock unless, prior thereto,
the holders of shares of Series A Preferred Stock shall have received
$100 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 A Preferred
Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter
Exhibit A - Page 4
43
set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of shares of Common Stock, or (b) to the holders
of shares of stock ranking in parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred
Stock and all 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. If the Corporation at any time
declares or pays any dividend on the Common Stock payable in shares of
Common Stock, or effects 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 A
Preferred Stock were entitled immediately before such event under the
provision in clause (a) 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 before such event.
7. Consolidation, Merger, etc. If the Corporation enters
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 or any other property, then in any such
case each share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount of stock, securities, cash 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. If the Corporation at
any time declares or pays any dividend on the Common Stock payable in
shares of Common Stock, or effects 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 amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A
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 before such event.
8. Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets,
junior to all series and any other class of the Corporation's Preferred
Stock.
10. Amendment. The Restated Certificate of Incorporation of
the Corporation shall not be amended in any manner that would
materially alter or change the powers,
Exhibit A - Page 5
44
preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at
least a majority of the outstanding shares of Series A Preferred Stock,
voting together as a single series.
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its _____________________ and attested by its
Secretary this ____ day of ________, 1998.
NCI BUILDING SYSTEMS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[SEAL]
ATTEST:
---------------------------------
Name:
----------------------------
Title:
---------------------------
Exhibit A - Page 6
45
EXHIBIT B
Form of Right Certificate
Certificate No. R_______ ________ Rights
NOT EXERCISABLE AFTER JUNE 24, 2008, OR EARLIER IF REDEMPTION OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT), RIGHTS
BENEFICIALLY OWNED BY ACQUIRING PERSONS OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.]*
Right Certificate
--------------
This certifies that _____________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of June 24, 1998 (the "Rights Agreement"), between NCI
Building Systems, Inc., a Delaware corporation (the "Company"), and Xxxxxx Trust
and Savings Bank (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such time is defined in the Rights Agreement)
and before 5:00 p.m., Texas time, on June 24, 2008, at the offices of the Rights
Agent, or at the office of its successor as Rights Agent, one one-hundredth of a
fully paid and nonassessable share of Series A Junior Participating Preferred
--------------
*The portion of the legend in brackets is inserted only if applicable.
Exhibit B - Page 1
46
Stock, par value $1.00 per share (the "Preferred Shares"), of the Company, at a
purchase price of $______ per one one-hundredth of a Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of hundredths of a Preferred
Share that may be purchased upon exercise hereof) set forth above, are the
number and the Purchase Price as of ________, 19__, based on the Preferred
Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of hundredths of a Preferred Share that 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.
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 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
offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal offices of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor (except for the
issuance date thereof) 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 entitled such holder to purchase.
If this Right Certificate is 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.
Exhibit B - Page 2
47
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may, but are not required to, be redeemed by the Company at
a redemption price of $0.01 per Right.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions that 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 that may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting hereof, 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 have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it has 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__.
Exhibit B - Page 3
48
ATTEST: NCI BUILDING SYSTEMS, INC.
By:
-------------------------------- ----------------------------------
Secretary Its:
---------------------------------
Countersigned:
--------------------------------
By:
-----------------------------
Authorized Signature
Exhibit B - Page 4
49
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 correspondence
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
50
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To: NCI BUILDING SYSTEMS, 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)
--------------------------------------------------------------------------------
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 correspondence
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
51
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.
If the certification set forth above in the Forms of Assignment and
Election is not completed, the Company 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, in the
case of an Assignment, will affix a legend to that effect on any Right
Certificate issued in exchange for this Right Certificate.
