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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1999
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from TO
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Commission file number: 01-13407
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Hussmann International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 43-1791715
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
12999 St. Charles Rock Road, Bridgeton, Missouri 63044-2483
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(Address of principal executive offices) (Zip Code)
(314) 291-2000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
Common Stock outstanding at June 30, 1999: 50,867,000 shares.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
HUSSMANN INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Dollars in million, except per share data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 324.0 $ 292.9 $ 595.1 $ 538.8
Cost of goods sold 252.1 229.3 478.2 434.4
----------- ----------- ----------- -----------
Gross profit 71.9 63.6 116.9 104.4
Selling, general and administrative expenses 39.3 33.8 72.3 63.3
----------- ----------- ----------- -----------
Operating income 32.6 29.8 44.6 41.1
Whitman charges - - - 1.5
Interest expense:
Whitman - - - 1.0
Other 5.7 4.9 10.0 8.4
----------- ----------- ----------- -----------
Total interest expense 5.7 4.9 10.0 9.4
Foreign exchange loss on purchase price hedge - - (10.3) -
Other income (expense), net 0.5 (0.6) 1.0 0.3
----------- ----------- ----------- -----------
Income before income tax expense and
minority interests 27.4 24.3 25.3 30.5
Income tax expense 9.9 9.0 9.1 11.3
----------- ----------- ----------- -----------
Net income before minority interests 17.5 15.3 16.2 19.2
Minority interests (0.3) 0.4 0.2 0.6
----------- ----------- ----------- -----------
Net income $ 17.2 $ 15.7 $ 16.4 $ 19.8
=========== =========== =========== ===========
Weighted average shares - Basic 50,835,000 50,895,000 50,813,000 50,872,000
Basic earnings per share $ 0.34 $ 0.31 $ 0.32 $ 0.39
=========== =========== =========== ===========
Weighted average shares - Diluted 51,868,000 52,477,000 51,786,000 52,147,000
Diluted earnings per share $ 0.33 $ 0.30 $ 0.32 $ 0.38
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
HUSSMANN INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except share data)
<CAPTION>
(Unaudited)
June 30, December 31,
1999 1998
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 43.5 $ 26.1
Receivables, net 275.4 285.3
Inventories 139.9 106.9
Other current assets 11.6 11.5
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Total current assets 470.4 429.8
Property and equipment, net 201.0 168.4
Goodwill, net 80.7 29.4
Other assets 55.8 26.1
------ ------
Total assets $807.9 $653.7
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current
maturities of long-term debt $ 28.2 $ 16.9
Accounts payable 122.4 137.5
Income taxes payable 5.2 9.1
Accrued expenses 57.2 72.7
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Total current liabilities 213.0 236.2
Long-term debt 355.8 200.7
Other liabilities 45.2 31.3
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Total liabilities 614.0 468.2
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Shareholders' equity:
Preferred stock, $.001 par value,
20,000,000 shares authorized,
none issued or outstanding - -
Common stock, $.001 par value, 150,000,000
shares authorized, 51,110,000 and
51,006,000 shares issued, 50,867,000 and
50,763,000 shares outstanding, respectively 0.1 0.1
Additional paid-in capital 91.4 90.6
Retained earnings 175.4 161.0
Cumulative translation adjustment (66.1) (59.3)
Minimum pension liability adjustment, net (2.9) (2.9)
Treasury stock, at cost, 243,000 shares (4.0) (4.0)
------ ------
Total shareholders' equity 193.9 185.5
------ ------
Total liabilities and shareholders'
equity $807.9 $653.7
====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
HUSSMANN INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in millions)
<CAPTION>
Six Months Ended
June 30,
-------------------
1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 16.4 $ 19.8
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 13.9 12.1
Changes in assets and liabilities,
exclusive of acquisitions:
(Increase) decrease in receivables, net 46.5 (46.1)
(Increase) decrease in inventories (6.6) 34.9
Decrease in accounts payable (35.6) (24.9)
Decrease in income taxes payable (7.9) (11.9)
Decrease in accrued expenses (17.7) (10.3)
Net change in other assets and liabilities 4.5 (0.4)
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Net cash from operating activities 13.5 (26.8)
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Cash flows from investing activities:
Capital investments (22.4) (15.4)
Companies acquired, net of cash (131.1) -
Other 6.3 0.4
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Net cash used in investing activities (147.2) (15.0)
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Cash flows from financing activities:
Net increase (decrease) in short-term debt (3.1) 12.9
Settlement of Whitman obligations - (221.7)
Proceeds from issuance of long-term debt 190.5 396.7
Principal payments on long-term debt (34.4) (155.1)
Dividends paid (2.0) (1.0)
Acquisition of treasury stock - (1.1)
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Net cash provided by financing activities 151.0 30.7
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Exchange rate changes on cash and cash equivalents 0.1 (0.7)
------- -------
Net change in cash and cash equivalents 17.4 (11.8)
Cash and cash equivalents as of beginning of period 26.1 38.4
------- -------
Cash and cash equivalents as of end of period $ 43.5 $ 26.6
======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
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HUSSMANN INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; Dollars in millions)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements present the operations
of Hussmann International, Inc. and subsidiaries ("Hussmann" or the
"Company") for the three month and six month periods ended June 30, 1999
and 1998. On January 30, 1998, Whitman Corporation ("Whitman")
distributed to its shareholders, all of the outstanding stock of
Hussmann (the "Distribution"). Prior to the Distribution, all of
Hussmann's subsidiaries, including Hussmann Corporation, and its wholly-
owned subsidiaries and other Hussmann companies owned by Whitman but
directly managed by Hussmann were subsidiaries of Whitman. Hussmann
became an independent, publicly traded company on January 30, 1998.
Prior to the Distribution, the historical financial statements were
combined for financial reporting purposes. For all periods presented
herein, the financial statements will be referred to as consolidated
financial statements.
The accompanying unaudited consolidated financial statements, in the
opinion of Management, include all adjustments (consisting of normal,
recurring items) necessary to present fairly Hussmann's consolidated
financial position and results of its operations and cash flows for the
periods presented. The unaudited consolidated financial statements are
presented in accordance with requirements of Regulation S-X and
consequently do not include all disclosures required by generally
accepted accounting principles. The interim results are not necessarily
indicative of the results that may be expected for a full year. Certain
prior year amounts have been reclassified to conform to current year
presentation.
2. EARNINGS PER SHARE
Although the Distribution did not occur until January 30, 1998, for
purposes of 1998's presentation, Hussmann has calculated earnings per
share on a pro forma basis assuming the Distribution occurred at January
1, 1998, for both basic and diluted earnings per share.
The number of shares of Hussmann common stock used in the calculation of
earnings per share for the three months and six months ended June 30, is
as follows (in thousands):
Quarter Six Months
Ended Ended
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1999
- ----
Weighted shares outstanding - basic 50,835 50,813
Dilutive effect of stock options 1,033 973
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Weighted shares outstanding - diluted 51,868 51,786
====== ======
Quarter Six Months
Ended Ended
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1998
- ----
Weighted shares outstanding - basic 50,895 50,872
Dilutive effect of stock options 1,582 1,275
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Weighted shares outstanding - diluted 52,477 52,147
====== ======
Options to purchase 515,000 shares of Hussmann common stock at prices
ranging from $16.28 to $17.94 per share were outstanding during the
three months and six months ended June 30, 1999, but were not included
in the computation of diluted earnings per share, for the respective
periods, due to the exercise price of these options being greater than
the average market price of Hussmann common stock. These options begin
to expire in 2008.
For 1998 all outstanding Hussmann stock options were included in the
computation of diluted earnings per share.
1
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3. INVENTORIES
Inventories consist of the following:
June 30, December 31,
1999 1998
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Raw materials and work in process $ 92.0 $ 81.2
Finished goods 47.9 25.7
------ ------
Total $139.9 $106.9
====== ======
4. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consist of the following:
June 30, December 31,
1999 1998
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Land $ 13.4 $ 5.3
Building and improvements 87.3 81.8
Machinery and equipment 225.1 212.3
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Total property and equipment 325.8 299.4
Accumulated depreciation (158.8) (157.6)
Construction in progress 34.0 26.6
------- -------
$ 201.0 $ 168.4
======= =======
5. BUSINESS SEGMENT INFORMATION
As the products and services sold by Hussmann are similar throughout the
world, Hussmann manages its business with separate senior management
teams responsible for geographic regions. The following segments
correspond to these geographic regions.
The following tables present financial information for each of these
business segments for the periods presented:
<TABLE>
<CAPTION>
Quarter Ended June 30,
------------------------------------------
Operating
Revenues Income
------------------ -----------------
1999 1998 1999 1998
------ ------ ----- -----
<S> <C> <C> <C> <C>
U.S. and Canada $224.8 $214.9 $36.9 $33.1
Europe 59.7 35.9 3.2 0.3
Other International 39.5 42.1 (0.2) 4.6
------ ------ ----- -----
Total $324.0 $292.9 39.9 38.0
====== ======
Corporate admin. expenses (7.3) (8.2)
----- -----
Total operating income $32.6 $29.8
===== =====
</TABLE>
2
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Six Months Ended June 30,
------------------------------------------
Operating
Revenues Income
------------------ ------------------
1999 1998 1999 1998
------ ------ ------ ------
U.S. and Canada $428.8 $411.6 $ 61.7 $ 52.0
Europe 95.3 58.6 0.7 (2.1)
Other International 71.0 68.6 (3.7) 6.0
------ ------ ------ ------
Total $595.1 $538.8 58.7 55.9
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Corporate admin. expenses (14.1) (14.8)
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Total operating income $ 44.6 $ 41.1
====== ======
Total Assets, as of:
----------------------
June 30, December 31,
1999 1998
-------- ------------
U.S. and Canada $358.1 $358.3
Europe 245.8 79.4
Other International 135.2 160.9
Corporate 68.8 55.1
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$807.9 $653.7
====== ======
The Company's European segment includes the results of operations and
the financial position of Koxka C.E. S.A. ("Koxka"), which was acquired
on March 23, 1999. Koxka's results of operations have been included in
the Company's results of operations from March 23, 1999 through June 30,
1999.
6. COMPREHENSIVE INCOME
Comprehensive income consists of the following:
Quarter Ended Six Months Ended
June 30, June 30,
---------------- ----------------
1999 1998 1999 1998
---- ---- ---- ----
Net income $17.2 $15.7 $16.4 $19.8
Foreign currency translation
adjustment 3.1 (2.2) (6.8) (3.7)
----- ----- ----- -----
Comprehensive income $20.3 $13.5 $ 9.6 $16.1
===== ===== ===== =====
3
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7. BUSINESS COMBINATION
As previously stated, on March 23, 1999, Hussmann completed its
acquisition of Koxka. Hussmann acquired virtually 100% of the
outstanding stock of Koxka through a cash tender offer. Koxka
manufactures a complete line of commercial and industrial refrigeration
products at five manufacturing facilities located throughout Spain.
Hussmann paid approximately $135.0 in cash for the acquisition. This
excludes the $10.3 loss related to the purchase price hedge used by the
Company to lock-in the U.S. dollar purchase price of $145.0. The
purchase price was principally funded with proceeds available under
Hussmann's 5-year unsecured revolving credit facility (the "Credit
Facility"). The acquisition of Koxka has been accounted for using the
purchase method of accounting, and accordingly, the purchase price was
allocated to the assets acquired and the liabilities assumed based upon
their estimated fair market values. Goodwill and the trademark
associated with this acquisition of approximately $51.5 and $33.3,
respectively, is being amortized over the period to be benefited, 40
years. The purchase price allocation process is still preliminary,
although Management does not expect amounts to differ materially.
The unaudited pro forma consolidated results, as if Koxka had been
acquired at January 1, 1999 and 1998, respectively, and as if MIL
(acquired on August 17, 1998) had been acquired on January 1, 1998,
are estimated to be:
Six Months Ended
($ in millions, except per share data) June 30,
----------------
1999 1998
---- ----
Revenues $624.7 $620.0
Net income 16.8 20.5
Net income per share:
Basic $0.32 $0.40
Diluted $0.32 $0.39
4
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Hussmann International, Inc. and Subsidiaries
(Dollars in millions)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
Hussmann manufactures, sells, installs and services merchandising and
refrigeration systems for the world's commercial food industry.
Products include refrigerated and non-refrigerated display
merchandisers, refrigeration systems and controls, beverage coolers, air
handlers, evaporative condensers, heat exchange coils and walk-in
storage coolers and freezers. Hussmann operates in three geographic
segments: U.S. and Canada, Europe and Other International, which
includes Mexico, Latin America and Asia-Pacific.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1999, COMPARED WITH
THREE MONTHS ENDED JUNE 30, 1998
REVENUES
Revenues for the three months ended June 30, 1999 of $324.0 were $31.1
or 11% over the same period 1998 revenues of $292.9. Revenue increases
in the U.S. and Canada and the Europe segments were partially offset by
a decrease in Other International. The following is a summarized
analysis:
1999 $ Change % Increase
Revenues 1998 (decrease)
- ------------------------------------------------------------------------
U.S. and Canada $224.8 $ 9.9 5%
Europe 59.7 23.8 66
Other International 39.5 (2.6) (6)
- ------------------------------------------------------------------------
Total $324.0 $31.1 11%
- ------------------------------------------------------------------------
The 5% increase in revenues in the U.S. and Canada was principally
driven by continued strong U.S. supermarket and specialty case demand.
Revenues in Europe increased 66% due to the acquisition of Koxka, which
was purchased on March 23, 1999. The 6% decrease in revenues in Other
International was due to the significant sales pressure in Latin America
on beverage coolers and a difficult comparison to a strong second
quarter 1998 performance. This decrease was partially offset by the
third quarter 1998 acquisition of McAlpine Investments Limited ("MIL"),
a distribution company. Excluding MIL, revenues in this segment would
have decreased nearly 40%. In addition, revenues in Brazil were
negatively impacted by the substantial devaluation of the Brazilian Real
during the first quarter of 1999.
GROSS PROFIT
Gross profit increased mainly due to the 11% increase in revenue. Gross
profit as a percent of revenue increased 0.5 points compared to 1998,
mainly driven by improvements in the U.S. and Canada, and offset by lower
volume in Mexico and a lower margin mix of revenue in the U.K. and MIL.
5
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Total selling, general and administrative ("SG&A") expenses increased
16% to $39.3 in 1999 from $33.8 in 1998. The increase in SG&A expenses
relates to the acquisitions of Koxka and MIL and costs associated with
converting to an integrated company-wide information system ("ERP").
OPERATING INCOME
Operating income for the three months ended June 30, 1999 of $32.6 was
9% or $2.8 greater than that reported for the comparable period in 1998.
This increase was attributable to the 11% increase in operating income
in the U.S. and Canada and the acquisition of Koxka. The following
table summarizes the fluctuations in operating income by segment:
1999 % Increase
Operating $ Change (decrease)
income 1998 1998
- ------------------------------------------------------------------------
U.S. and Canada $36.9 $ 3.8 11%
Europe 3.2 2.9 Fav
Other International (0.2) (4.8) Unfav
- ------------------------------------------------------------------------
39.9 1.9 5
Corporate admin. expenses (7.3) 0.9 11
- ------------------------------------------------------------------------
Total operating income $32.6 $ 2.8 9%
- ------------------------------------------------------------------------
The increase in the U.S. and Canada was due to increased volume,
productivity and efficiency improvements, continued favorable markets
for material prices, and enhancements in materials management. The
improvement in Europe is related solely to the acquisition of Koxka
during the second quarter of 1999. Operating income for Other
International decreased $4.8 from the $4.6 operating income recorded
during the second quarter of 1998, to an operating loss of $0.2 reported
in 1999. This decrease is mainly attributable to significantly lower
1999 volume in Mexico and a difficult comparison to a record setting
second quarter 1998.
INTEREST EXPENSE
Interest expense of $5.7 increased $0.8 or 16% from 1998 to 1999, solely
due to the debt used to finance the Koxka acquisition. Excluding the
Koxka related interest, interest expense would have decreased
approximately 20% due to better management of international debt and
strong cash flow from operations.
EFFECTIVE INCOME TAX RATE
Hussmann's effective income tax rate was 36.0% for the three months
ended June 30, 1999, or 1.0 points lower than the 1998 pro forma
effective rate of 37.0%. This lower effective tax rate is principally
due to a lower statutory rate in Spain and implemented tax strategies
relating to both domestic and international operations.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1999, COMPARED WITH
PRO FORMA SIX MONTHS ENDED JUNE 30, 1998
As previously stated, on January 30, 1998, Hussmann was spun off from
Whitman and became an independent, publicly traded company. The
following table provides a summary of what Management believes the 1998
operating results would have been if Hussmann had been an independent,
publicly traded company, excluding the impact of the Whitman
intercompany charges, and including the impact of borrowings under the
Credit Facility. Management believes the unaudited pro forma
consolidated operating results for 1998 provide a more meaningful
presentation for purposes of analyzing the Company's financial
performance.
6
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Six Months Ended June 30, 1998
Pro Forma
Actual Adjustments Pro Forma
- ------------------------------------------------------------------------
Revenues $538.8 - $538.8
Operating income 41.1 - 41.1
Whitman charges 1.5 (1.5) -
Total interest expense 9.4 0.1 9.5
Pretax income 30.5 1.4 31.9
Income tax expense 11.3 0.5 11.8
Net income 19.8 0.9 20.7
- ------------------------------------------------------------------------
Diluted earnings per share $ 0.38 $ 0.02 $ 0.40
- ------------------------------------------------------------------------
REVENUES
Revenues for the six months ended June 30, 1999 of $595.1 were $56.3 or
10% over the same period 1998 revenues of $538.8. Revenues increased in
all of the geographical segments. The following is a summarized
analysis:
1999 $ Change % Increase
Revenues 1998 (decrease)
- ------------------------------------------------------------------------
U.S. and Canada $428.8 $ 17.2 4%
Europe 95.3 36.7 62
Other International 71.0 2.4 4
- ------------------------------------------------------------------------
Total $595.1 $ 56.3 10%
- ------------------------------------------------------------------------
The 4% increase in revenues in the U.S. and Canada was principally
driven by continued strong U.S. supermarket and specialty case demand.
The increase in revenues in Europe of 62% was due to strong demand for
the U.K.'s service and contracting business and to the acquisition of
Koxka. The 4% increase in revenues in Other International was
principally due to the third quarter 1998 acquisition of MIL. This
increase was offset by significantly lower revenues in Mexico and
Brazil. The decrease in Mexico is twofold: difficult comparisons to a
record setting first half 1998 and significantly lower demand for
beverage coolers in Latin America. Revenues in Brazil were negatively
impacted by the substantial devaluation of the Brazilian Real during the
first quarter of 1999.
GROSS PROFIT
Gross profit increased mainly due to the 10% increase in revenue. Gross
profit as a percent of revenue was up slightly to 19.6%. Improvements
in the U.S. and Canada were offset by a lower margin mix of revenue in
the U.K. and at MIL. Gross profit in Mexico was also down from the
record setting performance in 1998, mainly due to volume.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Total selling, general and administrative ("SG&A") expenses increased
14% to $72.3 in 1999 from $63.3 in 1998. The increase in SG&A expenses
relates to the acquisitions of Koxka and MIL and costs associated with
converting to an integrated company-wide information system ("ERP").
7
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OPERATING INCOME
Operating income in 1999 of $44.6 was 9% or $3.5 greater than that
reported for the comparable period in 1998. This increase was mainly
attributable to the 19% increase in operating income in the U.S. and
Canada and the favorable increase in Europe related to the Koxka
acquisition. The following table summarizes the fluctuations in
operating income by segment:
1999
Operating $ Change % Increase
Income 1998 (decrease)
- ------------------------------------------------------------------------
U.S. and Canada $ 61.7 $ 9.7 19%
Europe 0.7 2.8 133
Other International (3.7) (9.7) Unfav
- ------------------------------------------------------------------------
58.7 2.8 5
Corporate admin. expenses (14.1) 0.7 4
- ------------------------------------------------------------------------
Total operating income $ 44.6 $ 3.5 9%
- ------------------------------------------------------------------------
The increase in the U.S. and Canada was due to increased volume,
productivity and efficiency improvements, continued favorable markets
for material prices, and enhancements in materials management. The
significant improvement in Europe was attributed to the acquisition of
Koxka, offset by lower margin revenues in the U.K. Although revenues in
the U.K. improved over 1998, the majority of the revenues in the first
half of 1999 were derived from lower margin service and contracting
revenues. Operating income for Other International decreased $9.7 from
the $6.0 operating income recorded during the first half of 1998, to an
operating loss of $3.7 reported in 1999. This decrease is mainly due to
lower 1999 volume in Mexico, caused by lower demand for beverage coolers
and difficult comparisons to a record setting first half 1998.
INTEREST EXPENSE
Interest expense of $10.0 increased $0.5 or 5% from pro forma 1998 to
1999, as a result of financing the Koxka acquisition. Excluding the
interest associated with Koxka, interest expense for the six month
comparable periods would have decreased approximately 15% primarily due
to better management of international debt and positive cash flow from
operations. For 1998's pro forma financial statement presentation, it
was assumed that $240.0 in borrowings were outstanding for the period
January 1, 1998 through the Distribution.
OTHER INCOME/OTHER EXPENSE
The Company recognized a one-time $10.3 pretax loss associated with the
hedge of the Koxka purchase price. Since Koxka was a publicly traded
company, the purchase price was denominated in Spanish Pesetas. In
order to avoid foreign currency exposure over the extended period
involved in completing the acquisition, Management hedged the Company's
Peseta exposure. The realized loss of $10.3 from settling the financial
instruments used to hedge the Koxka purchase price (the "Koxka Charge")
has been reflected in the consolidated statement of operations as
foreign exchange loss on purchase price hedge.
EFFECTIVE INCOME TAX RATE
Hussmann's effective income tax rate was 36.0% for the six months ended
June 30, 1999, or 1.0 points lower than the 1998 pro forma effective
rate of 37.0%. This lower statutory rate is principally due to a lower
statutory rate in Spain and implemented tax strategies relating to both
domestic and international operations.
8
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NET INCOME AND EARNINGS PER SHARE
Net income, excluding the aforementioned Koxka Charge, increased 10% to
$22.8 from $20.7 for the same period of 1998, reported on a pro forma
basis. Earnings per diluted share also increased 10% to 44 cents from
40 cents per diluted share for the same period of 1998. The after-tax
impact of the Koxka Charge was approximately $6.4, or 12 cents per
diluted share.
LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES
CASH FLOWS FROM OPERATIONS
As anticipated, Hussmann collected accounts receivable associated with
the late fourth quarter sales during the first quarter of 1999, which
drove the substantial improvement in cash flows from operations when
compared with the same period of 1998. Through the first half of 1999,
the Company provided cash from operations of $13.5 compared to a use of
cash of $26.8 for the same period of 1998. This improvement in cash flow
was driven by the approximate $40.0 improvement in working capital.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities was $147.2 and $15.0 for the six
months ended June 30, 1999 and 1998, respectively. The main component
in 1999's negative cash flow from investing activities is the purchase
price of Koxka. The increase in capital investments relates to the
timing of spending on Hussmann's ERP project and productivity and
efficiency programs in the U.S. and Canada. Included in other cash
flows from investing activities, are the cash proceeds from the sale of
the Company's interest in an airplane and the sale of the U.K.'s
manufacturing facility located in Scotland. This facility was part of
the 1997 U.K. restructuring.
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided by financing activities was $151.0 and $30.7 for the
six months ended June 30, 1999 and 1998, respectively. The significant
increase in 1999's reported balance represents the proceeds from long-
term debt to finance the acquisition of Koxka. For 1998, the net
proceeds from long-term debt of $270.0 were primarily used to settle the
Company's obligations to Whitman and to fund working capital. In
January 1998, Hussmann paid Whitman $240.0 to extinguish its
intercompany notes and to pay a cash dividend to Whitman of
approximately $80.0.
In January 1998, Hussmann entered into the Credit Facility with a
syndicate of commercial banks and financial institutions, which enables
Hussmann to borrow funds at variable interest rates on a revolving
credit basis up to an aggregate principal amount of $350.0. The Company
borrowed $270.0 million under the Credit Facility in January 1998, the
majority of which was used to settle the Company's obligations with
Whitman.
Additionally, on June 2, 1998, Hussmann issued $125.0 of its $250.0
shelf registration of 6.75% senior notes due 2008 (the "Shelf
Registration"). The net proceeds from the issuance were used to pay
down amounts previously borrowed under the Credit Facility.
On March 22, 1999, Hussmann borrowed approximately $145.0 under the
Credit Facility to fund the acquisition of Koxka and to pay related
expenses. At June 30, 1999, $129.0 was outstanding under the Credit
Facility. In addition, at June 30, 1999, Hussmann had $86.2 and $53.0
of uncommitted lines-of-credit available and outstanding, respectively,
in the U.S.
On June 2, 1999, as part of a structured financing arrangement, the
Company borrowed $46.0 million in the form of a seven year amortizing
note. The interest rate is established semi-annually based on LIBOR.
The current interest rate is approximately 6.20%. The Company used the
proceeds of the note to repay part of its Credit Facility.
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Management believes cash flows from operations, unused amounts available
under the Credit Facility and the Shelf Registration, and access to
capital markets will be sufficient to satisfy Hussmann's future working
capital, capital investment, acquisitions and other financing
requirements for the foreseeable future. Management also believes
Hussmann will be able to access capital markets on satisfactory terms,
although there can be no assurance this will be the case.
NON-U.S. OPERATIONS
The most significant non-U.S. operations are located in Canada, Mexico,
the U.K. and Spain, with smaller operations located in, among other
countries, Brazil, New Zealand, Australia, and China. Because the
majority of Hussmann's non-U.S. entities conduct business in their
respective local currencies, Hussmann is subject to foreign currency
risks when translating its non-U.S. entity financial statements into
U.S. dollars for financial statement reporting purposes. In addition to
foreign currency translation risks faced by Hussmann, other risks
associated with non-U.S. operations include the potential for
restrictive actions taken by host country governments, risks relating to
non-U.S. economic and political conditions, and risks relating to limits
on the transfer of funds from non-U.S. entities to Hussmann. Hussmann
does not currently use foreign currency risk management instruments to
manage its financial statement exposures to changes in foreign currency
exchange rates, however, due to the growth in Hussmann's foreign
operations, Management continually reassesses this policy to determine the
appropriateness of using foreign currency risk management instruments.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued its
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"). SFAS 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. In
June 1999, SFAS 133 was amended whereby the effective date was deferred
one year, to fiscal years beginning after June 15, 2000. Management is
assessing the effects of this statement on the Company's consolidated
financial statements and notes thereto. However, given the Company's
current policy regarding foreign currency risk management instruments
and other hedging activities, Management does not believe SFAS 133 will
have a significant impact on Hussmann's consolidated results of
operations, financial condition or its cash flows.
YEAR 2000
The Company has assessed the Year 2000 ("Y2K") issue as it relates to
information technology ("IT") and has determined it must modify or
upgrade certain portions of the hardware and software in its information
systems. The Company is utilizing both internal and external resources
to complete the reprogramming, upgrades and testing necessary to
complete this modification and replacement process. The Company's Y2K
efforts are being carried out by the Company's Y2K Team which has
created a plan to complete Y2K reprogramming and testing of the
Company's information systems ("the Plan"). During the second quarter,
the Company made the decision to accelerate the planned upgrade of its
hardware system at its main IT facility, which was not part of the
original Y2K Plan. This upgrade was accelerated to support the
additional capacity requirements from increased transactional volume.
However, this upgrade requires additional Y2K testing in order to ensure
that the Company's applications, which have been Y2K tested, work in the
new hardware environment. It is anticipated this additional testing
will be completed in November 1999. Given the results of the application
testing to date, Management does not anticipate any significant issues
related to this hardware upgrade. Progress against the Plan is monitored
and reported to Management and to the Audit and Finance Committee of the
Board of Directors on a regular basis. The Y2K Team believes it remains
on schedule, according to the Plan. As of June 30, 1999, the Company has
incurred approximately $2.8 related to Y2K work and anticipates the cost
of its remaining Y2K work (which will be incurred over the next 6 to 12
months) to total about $2.2. Management does not expect these costs to
have a material adverse effect on Hussmann's results of operations,
financial condition or cash flows.
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The Company is continuing to address its non-IT Y2K issues. The Y2K Team
continues to assess equipment embedded with microprocessors, products
sold and service contracts entered into, to determine what exposure, if
any, the Company has in this area. Given the far reaching implications
of these non-IT Y2K isues, some of which cannot be predicted or
anticipated, the Company is unable to estimate the ultimate costs
related to its non-IT Y2K issues. However, based upon results of
reviews performed to date, Management does not believe such costs will
be material.
As part of its non-IT Y2K Plan, the Company is also assessing the Y2K
compliance status of third parties with which it does business. The
Company has contacted its key suppliers and customers to evaluate their
Y2K readiness. Contingency plans to help protect the Company's business
from Y2K related interruptions have been developed. The Company will
continue to reassess its contingency plans as it completes this review
process.
The expected costs of the projects and the date on which Hussmann plans
to complete all of the Y2K work are based on Management's best
estimates, which are derived from numerous assumptions about future
events, including the availability of certain resources, third-party
modification plans, and other factors. However, there can be no
guarantee these estimates will be achieved and actual results could
differ materially from those plans. As previously stated, certain of the
non-IT Y2K issues have far reaching implications, some of which cannot
be anticipated or predicted with any degree of certainty. Specific
factors that might cause material differences include, but are not
limited to, the availability and cost of personnel trained in this area,
and the ability to identify and correct all relevant computer codes. In
addition, there can be no assurances the systems or products of third
parties on which the Company relies will be timely converted or that a
failure by a third party, or a conversion incompatible with the
Company's systems, would not have a material adverse effect on the
Company.
OTHER
The reconfiguration of the Bridgeton plant and the plant consolidation
of the production of refrigeration systems, discussed in previous
filings with the Securities and Exchange Commission (the "SEC"), remain
essentially on schedule. The new Atlanta plant opened during the third
quarter of 1998 and the Bridgeton refrigeration production was closed
during the second quarter of 1999. The new Bridgeton case line is
scheduled to begin production during the third quarter of 1999.
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Due to the initial construction problems encountered in Mexico and a
reassessment of its Mexican operations in view of the significant
decrease in export beverage sales to Columbia and Venezuela, Hussmann
has postponed the construction of the facility in Toluca, Mexico until
beverage cooler demand in Latin America strengthens.
Hussmann may continue to repurchase Hussmann common stock from time-to-
time to offset dilution resulting from the exercise of stock options in
accordance with the common stock repurchase plan approved by the Board
of Directors.
SAFE HARBOR STATEMENT
In addition to the historical information presented in this quarterly
report, the Company has made and will make certain forward-looking
statements in this report, other reports filed by the Company with the
SEC, reports to shareholders and in certain other contexts relating to
future revenues, costs, expenses, production schedules, profitability,
financial resources, and the Y2K issue, among others. Statements
relating to the foregoing or that predict or indicate future events and
trends and which do not relate solely to historical matters are forward-
looking statements. Forward-looking statements are made pursuant to the
safe harbor provisions of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 and are based on
Management's beliefs as well as assumptions made using information
currently available to Management. Accordingly, Hussmann's actual
results may differ materially from those projected, expressed or implied
in such forward-looking statements due to known and unknown risks and
uncertainties that exist in Hussmann's operations and business
environment, including among other factors: 1) the failure by Hussmann
to produce anticipated cost savings, improve productivity, or create
efficiencies; 2) the timing and magnitude of capital investments; 3)
economic and market conditions in the U.S. and worldwide; 4) currency
exchange rates; 5) changes in customer spending levels and demand for
new products; 6) cost and availability of raw materials; 7) the
continuation of growth in significant developing markets such as in
Mexico, South America and Asia-Pacific; 8) overall competitive
activities; 9) failure of the Company, its suppliers or vendors to
achieve Y2K compliance in a timely manner; 10) the ability of Hussmann
to successfully integrate the Koxka operations into its business; and
11) other risks associated with the Company's operations. Although the
Company believes its forward-looking statements are based on reasonable
assumptions, there can be no assurance that actual results, performance
or achievements will not differ materially from any future results,
performance or achievements projected, expressed or implied by such
forward-looking statements. Readers are cautioned not to place undue
reliance on forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Risk
Hussmann's non-U.S. entities conduct the majority of their business in
their respective local currencies. Therefore, Hussmann is subject to
foreign currency risks when translating its non-U.S. entity financial
statements into U.S. Dollars for financial reporting purposes. However,
the Company is not significantly exposed to foreign currency
translation. Hussmann currently does not use foreign currency risk
management instruments to manage its financial statement exposures to
changes in foreign currency exchange rates with respect to its non-U.S.
operations. However, as the significance of Hussmann's foreign
operations grows, Management will continue to monitor whether it would
be appropriate to use foreign currency risk management instruments to
mitigate its growing exposures.
Management will utilize foreign currency instruments to manage exposures
it may have on known individually significant foreign currency
transactions and balances. There were no significant balances
outstanding as of June 30, 1999. As previously announced, Hussmann
hedged the purchase price established in the agreement to purchase Koxka
which was denominated in Spanish Pesetas. Hussmann hedged the Peseta
exposure to lock-in a U.S. Dollar purchase price of $145.0 using forward
currency exchange contracts. The realized loss of $10.3 from settling
these forward contracts is reflected in the consolidated statement of
operations as foreign exchange loss on purchase price hedge.
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Interest Rate Risk
As of June 30, 1999, Hussmann had $355.8 in long-term debt outstanding,
$125.0 of which represented senior note obligations with a fixed rate of
6.75%. The majority of the remaining balance represents amounts
outstanding on the Company's Credit Facility, with interest based on
LIBOR (London Interbank Offer Rate). Given the current mix of the
Company's outstanding indebtedness, the Company does not believe its
exposure to short-term interest rate changes would be material.
Commodity Risk
Hussmann's products use copper wiring and tubing. As a result,
Hussmann's results are subject to fluctuations in the price of copper.
Hussmann uses hedging instruments to mitigate a portion of these risks.
Overall, this hedging activity is not considered to be material to
Hussmann's consolidated results of operations, financial position or
cash flows.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on May 13, 1999,
the following actions were taken:
The following Directors were elected to terms of office expiring in
2002:
VOTES FOR VOTES WITHHELD
J. Joe Adorjan 45,495,674 155,014
Archie R. Dykes 45,485,926 164,762
A proposal by the Board of Directors to approve the Company's existing
Stock Incentive Plan to maintain tax deductibility was approved by
stockholders. The stockholders cast 39,095,086 votes for the proposal
and 6,330,644 against. There were 224,958 abstentions.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
------- -----------
3 Amended and Restated By-Laws
4 Amended and Restated Rights Agreement between Hussmann
International, Inc. and First Chicago Trust Company of
New York, Rights Agent
27 Financial Data Schedule for the six months ended June 30,
1999
(b) Reports on Form 8-K:
Hussmann filed a Current Report on Form 8-K and a Current
Report on Form 8-K/A, each dated March 23, 1999, and filed on
April 7, 1999 and June 4, 1999, respectively, to report the
following items:
Item 2 (Acquisition or Disposition of Assets) to report that
Hussmann had completed the acquisition of Koxka C.E., S.A.
("Koxka") by means of a public tender offer
The Form 8-K/A was filed to include audited financial
statements and unaudited pro forma financial information as
follows:
Item 7 (Financial Statements and Exhibits). Financial
Statements filed with the report were:
a) Financial statements of business acquired
The audited consolidated balance sheet of Koxka at December 31,
1998, and the related consolidated statements of operations,
stockholders' equity and comprehensive income, and cash flows
for the year then ended
b) Pro forma financial information
Introduction to Unaudited Condensed and Pro Forma Consolidated
Financial Statements
Unaudited Condensed Consolidated Balance Sheet as of March 31,
1999
Unaudited Pro Forma Consolidated Statement of Operations for
the three months ended March 31, 1999
Unaudited Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1998
Notes to Unaudited Condensed Consolidated Balance Sheet and Pro
Forma Consolidated Statements of Operations
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUSSMANN INTERNATIONAL, INC.
/s/ Thomas G. Korte
-------------------------------------
Vice President
and Corporate Controller
(as duly authorized officer
and chief accounting
Dated: August 16, 1999 officer of the registrant)
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EXHIBIT INDEX
Exhibit
Number
- -------
3 Amended and Restated By-Laws
4 Amended and Restated Rights Agreement between Hussmann
International, Inc. and First Chicago Trust Company of
New York, Rights Agent
27 Financial Data Schedule for the six months ended June 30,
1999
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AMENDED AND RESTATED
BY-LAWS
OF
HUSSMANN INTERNATIONAL, INC.
(July 15, 1999)
Incorporated under the Laws of the State of Delaware
ARTICLE I
OFFICES AND RECORDS
Section 1.1 Delaware Office
The principal office of Hussmann International, Inc. (the
"Corporation") in the State of Delaware shall be located in the City of
Wilmington, County of New Castle, and the name and address of its
registered agent is The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware.
Section 1.2 Other Offices
The Corporation may have such other offices, either within or
without the State of Delaware, as the Board of Directors may from time
to time designate or as the business of the Corporation may from time to
time require.
Section 1.3 Books and Records
The books and records of the Corporation may be kept outside the
State of Delaware at such place or places as may from time to time be
designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
Section 2.1 Annual Meeting
The annual meeting of stockholders of the Corporation shall be
held at such place, either within or without the State of Delaware, and
at such time and date as the Board of Directors, by resolution, shall
determine for the purpose of electing directors and for the transaction
of such other business as may be properly brought before the meeting.
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Section 2.2 Special Meeting
Subject to the rights of the holders of any Preferred Stock (as
defined in the Certificate of Incorporation of the Corporation) to elect
additional directors under specific circumstances, if any, specified in
the provisions of the Certificate of Incorporation applicable thereto,
special meetings of the stockholders may be called only by the Board of
Directors pursuant to a resolution adopted by a majority of the total
number of directors which the Corporation would have if there were no
vacancies (the "Whole Board").
Section 2.3 Place of Meeting
The Board of Directors may designate the place of meeting for any
meeting of the stockholders. If no designation is made by the Board,
the place of meeting shall be the principal office of the Corporation.
Section 2.4 Notice of Meeting
Written or printed notice, stating the place, day and hour of a
meeting and the purpose or purposes for which the meeting is called,
shall be prepared and delivered by the Corporation not less than ten
days nor more than sixty days before the date of the meeting, either
personally or by mail, to each stockholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail with postage thereon prepaid,
addressed to the stockholder at such stockholder's address as it appears
on the stock transfer books of the Corporation. Only such business
shall be conducted at a special meeting of stockholders as shall have
been brought before the meeting pursuant to the Corporation's notice of
meeting. Any previously scheduled meeting of the stockholders may be
postponed or canceled by resolution of the Board of Directors upon
public notice given prior to the time previously scheduled for such
meeting of stockholders.
Section 2.5 Quorum and Adjournment
Except as otherwise provided by law or by the Certificate of
Incorporation, the holders of a majority of the voting power of the
outstanding shares of the Corporation entitled to vote generally in the
election of directors (the "Voting Stock"), represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders, except
that when specified business is to be voted on by a class or series
voting as a class, the holders of a majority of the voting power of the
shares of such class or series shall constitute a quorum for the
transaction of such business. The chairman of the meeting or a
majority of the shares of Voting Stock so represented may adjourn the
meeting from time to time, whether or not there is such a quorum (or, in
the case of specified business to be voted on by a class or series, the
chairman or a majority of the shares of such class or series so
represented may adjourn the meeting with respect to such specified
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business). Notice need not be given of any such adjourned meeting if
the date, time and place thereof are announced at the meeting at which
the adjournment is taken. At the adjourned meeting any business may be
transacted which might have been transacted at the original meeting. If
the adjournment is for more than 30 days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting in accordance with Section 2.4 of these
By-Laws. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
Section 2.6 Voting and Proxies
(A) Voting Rights of other Corporations. Voting Stock standing in
the name of another corporation and entitled to vote may be voted by
such officer, agent or proxy as the By-Laws or other internal
regulations of such other corporation may prescribe or, in the absence
of such provision, as the Board of Directors or comparable body of such
other corporation may determine.
(B) Voting Rights of Fiduciaries. Voting Stock standing in the
name of a deceased person, a minor, an incompetent or a debtor in a case
under Title 11, United States Code, and entitled to vote may be voted by
an administrator, executor, guardian, conservator, debtor-in-possession
or trustee, as the case may be, either in person or by proxy, without
transfer of such shares into the name of the official or other person so
voting.
(C) Voting Rights of Pledgors. A stockholder whose Voting Stock
is pledged shall be entitled to vote such stock unless on the transfer
records of the Corporation the pledgor has expressly empowered the
pledgee to vote such shares, in which case only the pledgee, or such
pledgee's proxy, may represent such shares and vote thereon.
(D) Voting Rights of Joint Owners. If Voting Stock is held of
record in the names of two or more persons, whether fiduciaries, members
of a partnership, joint tenants, tenants in common, tenants by the
entirety or otherwise, or if two or more persons have the same fiduciary
relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the
following effect: (i) if only one votes, such act binds all; (ii) if
more than one votes, the act of the majority so voting binds all; and
(iii) if more than one votes, but the vote is evenly split on any
particular matter, each faction may vote such Voting Stock
proportionally, or any person voting the shares, or a beneficiary, if
any, may apply to the Court of Chancery of the State of Delaware or such
other court as may have jurisdiction to appoint an additional person to
act with the persons so voting such Voting Stock, which shall then be
voted as determined by a majority of such persons and the person
appointed by the Court. If the instrument so filed shows that any such
tenancy is
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held in unequal interests, a majority or even split for the purpose of
this subsection shall be a majority or even split in interest.
(E) The Corporation's Rights Respecting the Voting Stock. Voting
Stock belonging to the Corporation, or to another corporation a majority
of the shares entitled to vote in the election of directors of such
other corporation of which are held by the Corporation, shall not be
voted at any meeting of stockholders and shall not be counted in the
total number of outstanding shares for the purpose of determining
whether a quorum is present. Nothing in this Section 2.6 shall limit
the right of the Corporation to vote shares of Voting Stock held by it
in a fiduciary capacity.
(F) Proxies. At all meetings of stockholders, a stockholder may
vote by proxy executed in writing by the stockholder or as may be
permitted by law, or by such stockholder's duly authorized
attorney-in-fact. Such proxy must be filed with the Secretary of the
Corporation or such stockholder's representative at or before the time
of the meeting. No such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and
voting in person or by filing with the Secretary an instrument in
writing revoking the proxy or another duly executed proxy bearing a
later date.
Section 2.7 Notice of Stockholder Business and Nominations
(A) Annual Meetings of Stockholders. (1) Nominations of persons
for election to the Board of Directors of the Corporation and the
proposal of business to be considered by the stockholders may be made at
an annual meeting of stockholders (a) pursuant to the Corporation's
notice of meeting delivered pursuant to Section 2.4 of these By-Laws,
(b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation who is entitled to vote at the meeting,
who complied with the notice procedures set forth in clauses (2) and (3)
of this paragraph (A) of this By-Law and who was a stockholder of record
at the time such notice was delivered to the Secretary of the
Corporation.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of
paragraph (A)(1) of this By-Law, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation and such
other business must otherwise be a proper matter for stockholder action.
To be timely, a stockholder's notice shall be delivered to the Secretary
at the principal office of the Corporation not earlier than the close of
business on the 120th calendar day nor later than the close of business
on the 90th calendar day prior to the date of the first anniversary of
the preceding year's annual meeting; provided, however, that in the
event that the date of an annual meeting is more than 30 calendar days
before or more than 60 calendar days after the date of the first
anniversary of the preceding year's annual meeting, notice by the
stockholder to be timely must be so delivered not earlier than the close
of business on the 120th calendar day prior to such annual meeting and
not later than
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the close of business on the later of (i) the 90th calendar day prior to
such annual meeting and (ii) the 10th calendar day after the day on
which public announcement of the date of such annual meeting is first
made by the Corporation. For the purpose of determining whether a
stockholder's notice shall have been delivered in a timely manner for
the 1999 annual meeting, the date of the first anniversary of the
preceding year's meeting shall be deemed to be May 7, 1999. In no event
shall the public announcement of an adjournment of an annual meeting
commence a new time period for the giving of a stockholder's notice as
described above. Such stockholder's notice shall set forth (a) as to
each person whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder, including such person's written consent to being named in
the proxy statement as a nominee and to serving as a director if
elected; (b) as to any other business that the stockholder proposes to
bring before the meeting, a brief description of the business desired to
be brought before the meeting, the reasons for conducting such business
at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the
proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal
is made (i) the name and address of such stockholder, as they appear on
the Corporation's stock transfer books, and of such beneficial owner and
(ii) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial
owner.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this By-Law to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement by the Corporation naming
all of the nominees for director or specifying the size of the increased
Board of Directors made by the Corporation at least 100 calendar days
prior to the date of the first anniversary of the preceding year's
annual meeting, a stockholder's notice required by this By-Law shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the
Secretary at the principal office of the Corporation not later than the
close of business on the 10th calendar day after the day on which such
public announcement is first made by the Corporation. For the purpose
of determining whether a stockholder's notice shall have been delivered
in a timely manner for the 1999 annual meeting, the first anniversary of
the preceding year's meeting shall be deemed to be May 7, 1999.
(B) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been
brought before the meeting pursuant to the Corporation's notice of
meeting pursuant to Section 2.4 of these By-Laws. Nominations of
persons for election to the Board of Directors may be made at a special
meeting of stockholders at which directors are to be elected pursuant to
the Corporation's notice of meeting (1) by or at the direction of the
Board or (2) by any stockholder of the Corporation who is entitled to
vote at the meeting, who complies with the notice procedures set forth
in this By-Law and who is a
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stockholder of record at the time such notice is delivered to the
Secretary of the Corporation. Nominations by stockholders of persons
for election to such positions on the Board as are specified in the
Corporation's notice of meeting may be made at such a special meeting of
stockholders if the stockholder's notice as required by paragraph (A)(2)
of this By-Law shall be delivered to the Secretary at the principal
executive offices of the Corporation not earlier than the close of
business on the 120th calendar day prior to such special meeting and not
later than the close of business on the later of (i) the 90th calendar
day prior to such special meeting and (ii) the 10th calendar day after
the day on which public announcement is first made of the date of such
special meeting and of the nominees proposed by the Board of Directors
to be elected at such meeting. In no event shall the public
announcement of an adjournment of a special meeting commence a new time
period for the giving of a stockholder's notice as described above.
(C) General. (1) Only persons who are nominated in accordance with
the procedures set forth in this By-Law shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance
with the procedures set forth in this By-Law. Except as otherwise
provided by law, the Certificate of Incorporation or these By-Laws, the
chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the
meeting was made or proposed in accordance with the procedures set forth
in this By-Law and, if any proposed nomination or business is not in
compliance with this By-Law, to declare that such defective proposal or
nomination shall be disregarded.
(2) For purposes of this By-Law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to
the matters set forth in this By-Law. Nothing in this By-Law shall be
deemed to affect any rights of (i) stockholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8
under the Exchange Act or (ii) the holders of any Preferred Stock to
elect directors under specific circumstances, if any, specified in the
provisions of the Certificate of Incorporation applicable thereto.
Section 2.8 Stockholder Vote Required
Election of directors at all meetings of the stockholders at which
directors are to be elected shall be by written ballot. Subject to the
rights of the holders of any series of Preferred Stock to elect
additional directors under specific circumstances, if any, specified in
the provisions of the Certificate of Incorporation applicable thereto,
directors shall be elected by a plurality of the votes of the shares of
Voting Stock present in person or represented by proxy at the meeting
and entitled to vote on the election of directors. Except as otherwise
provided by law, the Certificate of Incorporation or these By-Laws, in
all matters other than the election of directors,
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the affirmative vote of the majority of the shares of Voting Stock
present in person or represented by proxy at the meeting and entitled to
vote on the subject matter shall be the act of the stockholders.
Section 2.9 Inspectors of Elections; Opening and Closing the Polls
(A) Inspectors of Election. The Board of Directors by resolution
shall appoint one or more inspectors, which inspector or inspectors may
include individuals who serve the Corporation in other capacities,
including, without limitation, as officers, employees, agents or
representatives of the Corporation, to act at a meeting of stockholders
and make a written report thereof. One or more persons may be
designated as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate has been appointed to act, or if all
inspectors or alternates who have been appointed are unable to act at a
meeting of stockholders, the chairman of the meeting shall appoint one
or more inspectors to act at the meeting. Each inspector, before
discharging his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according
to the best of his or her ability.
(B) Duties. The inspectors shall (i) ascertain the number of
shares of Voting Stock outstanding and the voting power of each,
(ii) determine the number of shares of Voting Stock present in person or
by proxy at such meeting and the validity of proxies and ballots,
(iii) count all votes and ballots, (iv) determine and retain for a
reasonable period a record of the disposition of any challenges made to
any determination by the inspectors and (v) certify their determination
of the number of such shares present in person or by proxy at such
meeting and their count of all votes and ballots. The inspectors may
appoint or retain other persons or entities to assist them in the
performance of their duties.
(C) Opening and Closing the Polls. The chairman or secretary of
the meeting shall announce at the meeting the date and time of the
opening and the closing of the polls for each matter upon which the
stockholders will vote at a meeting. No ballots, proxies or votes, nor
any revocations thereof or changes thereto, shall be accepted by the
inspectors after the closing of the polls unless the Court of Chancery
of the State of Delaware upon application by any stockholder shall
determine otherwise.
Section 2.10 Fixing Date of Determination of Stockholders of
Record
(A) Fixing the Record Date. In order that the Corporation may
determine the stockholders entitled (i) to notice of or to vote at any
meeting of stockholders or any adjournment thereof, (ii) to receive
payment of any dividend or other distribution or allotment of any
rights, (iii) to exercise any rights in respect of any change,
conversion or exchange of stock or (iv) to take, receive or participate
in any other action, the Board of Directors may fix a record date, which
shall not be earlier than the date upon which the resolution fixing the
record date is adopted by the Board and which (1) in the case of a
determination of stockholders entitled to notice of or to vote at any
meeting of stockholders or adjournment thereof, shall, unless
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otherwise required by law, be not more than 60 nor less than ten days
before the date of such meeting; and (2) in the case of any other
action, shall be not more than 60 days before such action.
(B) If Record Date is Not Fixed. If no record date is fixed,
(i) the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, and
(ii) the record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
(C) Adjourned Meetings. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting, but the Board of Directors may
fix a new record date for the adjourned meeting.
Section 2.11 List of Stockholders Entitled to Vote
The Secretary shall prepare, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the
address and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during
the whole time thereof and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list of
stockholders or the books of the Corporation, or to vote in person or by
proxy at any meeting of stockholders.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 General Powers
The business and affairs of the Corporation shall be managed by or
under the direction of its Board of Directors. In addition to the
powers and authorities by these By-Laws expressly conferred upon them,
the Board may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by law or by the Certificate of
Incorporation or by these By-Laws required to be exercised or done by
the stockholders.
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Section 3.2 Number, Tenure and Qualifications
Subject to the rights of the holders of any series of Preferred
Stock to elect directors under specific circumstances, if any, specified
in the provisions of the Certificate of Incorporation applicable
thereto, the number of directors shall be fixed from time to time
exclusively pursuant to a resolution adopted by a majority of the Whole
Board but shall consist of not less than three directors. The
directors, other than those who may be elected by the holders of any
series of Preferred Stock, or any other series or class of stock, shall
be divided, with respect to the time for which they severally hold
office, into three classes, as nearly equal in number as possible, with
the term of office of the first class to expire at the 1999 annual
meeting of stockholders, the term of office of the second class to
expire at the 2000 annual meeting of stockholders and the term of office
of the third class to expire at the 2001 annual meeting of stockholders.
Each director shall hold office until his or her successor shall have
been duly elected and qualified. At each annual meeting of
stockholders, commencing with the 1999 annual meeting, (i) directors
elected to succeed those directors whose terms then expire shall be
elected for a term of office to expire at the third succeeding annual
meeting of stockholders after their election, with each director to hold
office until his or her successor shall have been duly elected and
qualified or until his or her earlier death, resignation or removal from
office, and (ii) if authorized by a resolution of the Board of
Directors, a director may be elected to fill any vacancy on the Board,
regardless of how such vacancy shall have been created.
Section 3.3 Regular Meetings
A regular meeting of the Board of Directors may be held without
other notice than this By-Law immediately after, and at the same place
as, each annual meeting of stockholders. The Board may, by resolution,
provide the time and place for the holding of additional regular
meetings without other notice than such resolution.
Section 3.4 Special Meetings
Special meetings of the Board of Directors may be called by the
Chairman, the Secretary or a majority of the directors then in office.
The person or persons authorized to call special meetings of the Board
of Directors may fix the place and time of the meetings.
Section 3.5 Notice
Notice of each special meeting of the Board shall be given by the
Secretary. Notice of each such meeting shall state the date, time and
place of the meeting, and shall be given to each director either
personally or delivered by telephone, facsimile, electronic mail,
telegraph, cable, or similar means, submitted for delivery at least
twenty-four hours before the time at which such meeting is to be held or
mailed by first-class mail, postage prepaid, addressed to the director
at his residence or usual place of business, at least five days before
the day on which such meeting is to be held. Notice of each special
meeting of the Board shall be given or delivered to the
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director at his or her residence or usual place of business, unless such
notice is actually received by the director at another place, or the
director has specified another place for delivery of notice. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board need be specified in the notice of such meeting,
except for amendments to these By-Laws as provided under Article IX
hereof. A meeting may be held at any time without notice if all the
directors are present or if those not present waive notice of the
meeting in writing, either before or after such meeting.
Section 3.6 Quorum
A whole number of directors equal to at least a majority of the
directors then in office shall constitute a quorum for the transaction
of business, but if at any meeting of the Board there shall be less than
a quorum present, a majority of the directors present may adjourn the
meeting from time to time without further notice. The act of the
majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. The directors
present at a duly organized meeting may continue to transact business
until adjournment, notwithstanding the withdrawal of enough directors to
leave less than a quorum.
Section 3.7 Vacancies
Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specific circumstances, if
any, specified in the provisions of the Certificate of Incorporation
applicable thereto, and unless the Board of Directors otherwise
determines, vacancies resulting from death, resignation, retirement,
disqualification, removal from office or other cause, and newly created
directorships resulting from any increase in the authorized number of
directors, may be filled only by the affirmative vote of a majority of
the remaining directors, though less than a quorum of the Board, and
each director so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the class
to which he or she has been elected expires and until his or her
successor has been duly elected and qualified or until his or her
earlier death, resignation or removal from office. No decrease in the
number of authorized directors constituting the Whole Board shall
shorten the term of any incumbent director.
Section 3.8 Executive and Other Committees
The Board of Directors may, by resolution adopted by a majority of
the Whole Board, designate an Executive Committee to exercise, subject
to applicable provisions of law, all the powers of the Board in the
management of the business and affairs of the Corporation when the Board
is not in session, including without limitation the power to declare
dividends, to authorize the issuance of the Corporation's capital stock
and to adopt a certificate of ownership and merger pursuant to Section
253 of the General Corporation Law of the State of Delaware, and may, by
resolution similarly adopted, designate one or more other committees.
The Executive Committee
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and each such other committee shall consist of two or more directors of
the Corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee
may to the extent permitted by law exercise such powers and shall have
such responsibilities as shall be specified in the designating
resolution. In the absence or disqualification of any member of such
committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the Board to act at
the meeting in the place of any such absent or disqualified member.
Each committee shall keep written minutes of its proceedings and shall
report such proceedings to the Board when required.
A majority of any committee may determine its action and fix the
time and place of its meetings, unless the Board shall otherwise
provide. Notice of such meetings shall be given to each member of the
committee in the manner provided for in Section 3.5 of these By-Laws.
The Board shall have power at any time to fill vacancies in, to change
the membership of, or to dissolve any such committee. Nothing herein
shall be deemed to prevent the Board from appointing one or more
committees consisting in whole or in part of persons who are not
directors of the Corporation; provided, however, that no such committee
shall have or may exercise any authority of the Board of Directors.
Section 3.9 Removal
Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specific circumstances, if
any, specified in the provisions of the Certificate of Incorporation
applicable thereto, any director, or the entire Board of Directors, may
be removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least 80 percent of the voting
power of the then outstanding Voting Stock, voting together as a single
class.
Section 3.10 Telephonic Meetings
Directors, or any committee of directors designated by the Board,
may participate in a meeting of the Board or such committee by means of
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 3.10 shall
constitute presence in person at such meeting.
Section 3.11 Action by Consent of Directors
Unless otherwise provided in the Certificate of Incorporation or
these By-Laws, any action required or permitted to be taken at any
meeting of the Board of Directors, or of any committee thereof, may be
taken without a meeting if all members of the Board or such
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committee, as the case may be, consent thereto in writing (which may be
in counterparts), and the written consent or consents are filed with the
minutes of proceedings of the Board or such committee.
Section 3.12 Reliance upon Records
Every director, and every member of any committee of the Board of
Directors, shall, in the performance of his or her duties, be fully
protected in relying in good faith upon the records of the Corporation
and upon such information, opinions, reports or statements presented to
the Corporation by any of its officers or employees, or committees of
the Board, or by any other person as to matters the director or member
reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or
on behalf of the Corporation, including, but not limited to, such
records, information, opinions, reports or statements as to the value
and amount of the assets, liabilities and/or net profits of the
Corporation, or any other facts pertinent to the existence and amount of
surplus or other funds from which dividends might properly be declared
and paid, or with which the Corporation's capital stock might properly
be purchased or redeemed.
Section 3.13 Interested Directors
A director who is directly or indirectly a party to a contract or
transaction with the Corporation, or is a director or officer of or has
a financial interest in any other corporation, partnership, association
or other organization which is a party to a contract or transaction with
the Corporation, may be counted in determining whether a quorum is
present at any meeting of the Board or a committee thereof at which such
contract or transaction is considered or authorized, and such director
may participate in such meeting and vote on such authorization if the
material facts as to such director's relationship or interest and as to
the contract or transaction are disclosed or are known to the Board or
the committee, and the Board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors are
less than a quorum.
Section 3.14 Compensation
The Board of Directors shall have the authority to fix the
compensation, including fees and reimbursement of expenses, of directors
for services to the Corporation in any capacity, provided that no such
payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 3.15 Presumption of Assent
Unless otherwise provided by the laws of the State of Delaware, a
director who is present at a meeting of the Board of Directors or a
committee thereof at which action is taken on any matter shall be
presumed to have assented to the action taken unless his or her dissent
shall be
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entered in the minutes of such meeting or unless he or she shall file
his or her written dissent to such action with the person acting as
secretary of such meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary immediately
after the adjournment of such meeting. Such right to dissent shall not
apply to a director who voted in favor of such action.
ARTICLE IV
OFFICERS
Section 4.1 Elected Officers
Unless otherwise determined by the Board of Directors, the
officers of the Corporation shall consist of the Chairman, the
President, one or more Vice Presidents, the Secretary, the Treasurer and
the Controller. Any two or more offices may be held by the same person.
The Board may designate the Chairman or the President as the Chief
Executive Officer of the Corporation. Such officers shall be elected
from time to time by the Board to hold office until their respective
successors shall have been duly elected and shall have qualified, or
until death, resignation or removal, as hereafter provided in these By-
Laws.
Section 4.2 Other Officers
The Board may from time to time elect, or the Chairman may
appoint, such other officers (including one or more Assistant Vice
Presidents, Assistant Secretaries, Assistant Treasurers, and Assistant
Controllers) and such agents, as may be necessary or desirable for the
conduct of the business of the Corporation. Such other officers and
agents shall have such duties and shall hold their offices for such
terms as shall be provided in these By-Laws or as may be prescribed by
the Board or by the Chairman.
Section 4.3 Resignation and Removal
Any officer or agent of the Corporation may resign at any time by
giving a written notice of resignation to the Board of Directors, the
Chairman, the President or the Secretary. Any such resignation shall
take effect at the time specified therein or, if the time when it shall
become effective shall not be specified therein, immediately upon its
receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective. Any officer or
agent of the Corporation may be removed, either with or without cause,
at any time, by a vote of the majority of the Whole Board, or, except in
the case of an officer or agent elected by the Board, by the Chairman.
Such removal shall be without prejudice to the contractual rights, if
any, of the person so removed.
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Section 4.4 Vacancies
A vacancy in any office, whether arising from death, resignation,
removal or any other cause, may be filled for the unexpired portion of
the term of the office which shall be vacant in the manner prescribed in
these By-Laws for the regular election or appointment of such office.
Section 4.5 Chairman
The Chairman shall have the general control and management of the
business and affairs of the Corporation, under the direction of the
Board of Directors. He shall have power to select and appoint all
necessary officers and employees of the Corporation except such officers
as under these By-Laws are to be elected by the Board; to remove all
appointed officers or employees whenever he shall deem it necessary, and
to make new appointments to fill the vacancies; and to suspend from
office for cause any elected officer, which shall be forthwith declared
in writing to the Board. The Chairman shall have such other authority
and shall perform such other duties as may be determined by the Board.
Section 4.6 President
The President shall have such authority and perform such duties
relative to the business and affairs of the Corporation as may be
determined by the Board of Directors or the Chairman. In the absence of
the Chairman, the President shall preside at meetings of the
stockholders and of the directors. If the Board shall not have elected
a Chairman, the President shall have such authority and shall perform
such additional duties as in these By-Laws is provided for the office of
Chairman.
Section 4.7 Vice Presidents and Assistant Vice Presidents
Each Vice President and each Assistant Vice President shall have
such powers and perform all such duties as from time to time may be
determined by the Board of Directors, the Chairman, the President or the
senior officer to whom such officer reports.
Section 4.8 Secretary
The Secretary shall record the proceedings of all meetings of the
Board of Directors, the committees of the Board and the stockholders;
shall see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law; shall be custodian
of the records and the seal of the Corporation and, if necessary or
appropriate, affix and attest the seal to all documents to be executed
on behalf of the Corporation under its seal; shall see that the books,
reports, statements, certificates and other documents and records
required by law to be kept and filed are properly kept and filed; and in
general, shall perform all the duties incident to
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the office of Secretary and such other duties as from time to time may
be determined by the Board, the Chairman or the President.
Section 4.9 Treasurer
The Treasurer shall exercise general supervision over the receipt,
custody and disbursement of corporate funds. The Treasurer shall have
such further powers and duties as may be determined from time to time by
the Board of Directors, the Chairman or the President.
Section 4.10 Controller
The Controller shall be the chief accounting officer of the
Corporation and shall maintain adequate records of all assets,
liabilities and transactions of the Corporation; shall establish and
maintain internal accounting controls; and, in cooperation with the
independent public accountants selected by the Board of Directors, shall
supervise internal auditing. The Controller shall have such further
powers and duties as may be determined from time to time by the Board,
the Chairman or the President.
Section 4.11 Assistant Officers
Any Assistant Secretary, Assistant Treasurer, or Assistant
Controller elected or appointed as heretofore provided, shall perform
the duties and exercise the powers of the Secretary, Treasurer and
Controller, respectively, in their absence or inability to act, and
shall perform such other duties and have such other powers as the Board
of Directors, the Chairman, the President, the Secretary, the Treasurer,
or the Controller (as the case may be), may from time to time prescribe.
Section 4.12 Compensation
The compensation of the officers of the Corporation for their
services as such officers shall be fixed from time to time by the Board
of Directors; provided, however, that the Board may by resolution
delegate to the Chairman the power to fix compensation of non-elected
officers and agents appointed by the Chairman. An officer of the
Corporation shall not be prevented from receiving compensation by reason
of the fact that such officer is also a director of the Corporation, but
any such officer who shall also be a director shall not have any vote in
the determination of such officer's compensation.
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ARTICLE V
CONTRACTS AND PROXIES
Section 5.1 Contracts
Except as otherwise required by law, the Certificate of
Incorporation or these By-Laws, any contracts or other instruments may
be executed and delivered in the name and on behalf of the Corporation
by such officer or officers (including any assistant officer) of the
Corporation as the Board of Directors may from time to time direct.
Such authority may be general or confined to specific instances as the
Board of Directors may determine. The Chairman, the President or any
Vice President may execute bonds, contracts, deeds, leases and other
instruments to be made or executed for or on behalf of the Corporation.
Subject to any restrictions imposed by the Board, the Chairman, the
President or any Vice President of the Corporation may delegate
contractual power to others under his jurisdiction, it being understood,
however, that any such delegation of power shall not relieve such
officer of responsibility with respect to the exercise of such delegated
power.
Section 5.2 Proxies
Unless otherwise provided by resolution adopted by the Board of
Directors, the Chairman, the President or any Vice President may from
time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the
votes which the Corporation may be entitled to cast as the holder of
stock or other securities or interests in any other corporation or
entity, any of whose stock or other securities or interests may be held
by the Corporation, at meetings of the holders of the stock or other
securities or interests, of such other corporation or entity, or to
consent in writing, in the name of the Corporation as such holder, to
any action by such other corporation or entity, and may instruct the
person or persons so appointed as to the manner of casting such votes or
giving such consent, and may execute or cause to be executed in the name
and on behalf of the Corporation and under its corporate seal or
otherwise, all such written proxies or other instruments as he may deem
necessary or proper in the premises.
ARTICLE VI
INDEMNIFICATION AND INSURANCE
(A) Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any
action, suit, or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that
he or she or a person of whom he or she is the legal representative is
or was, or had agreed to become, a director or officer of the
Corporation or is or was serving, or had agreed to serve, at the request
of the Corporation as a director, officer, employee or agent of any
other corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee
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benefit plans, whether the basis of such proceeding is alleged action in
an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including, without limitation,
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred by such
person in connection therewith and such indemnification shall continue
as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that except as provided in paragraph
(B) of this Article VI with respect to proceedings seeking to enforce
rights to indemnification, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part
thereof) initiated by such person was authorized by the Board of
Directors of the Corporation. The Corporation may, by action of its
Board of Directors, provide indemnification to employees and agents of
the Corporation with the same scope and effect as the indemnification of
directors and officers provided for in this paragraph (A).
(B) Recovery of Unpaid Indemnification. If a claim under
paragraph (A) of this By-Law is not paid in full by the Corporation
within 30 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to
be paid the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards
of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the Corporation to indemnify the claimant
for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel or stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because
he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including the Board of Directors,
independent legal counsel or stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable
standard of conduct.
(C) Change in Control. Following any "change in control" of the
Corporation, as defined in the Corporation's Stock Incentive Plan, any
determination as to entitlement to indemnification shall be made by
independent legal counsel selected by the claimant which independent
legal counsel shall be retained by the Board of Directors on behalf of
the Corporation.
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(D) Non-Exclusivity of Rights. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of
its final disposition conferred in this By-Law shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, By-Laws,
agreement, vote of stockholders or disinterested directors or otherwise.
(E) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the General
Corporation Law of the State of Delaware.
(F) Contractual Right. The right to indemnification conferred in
this By-Law shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition, such expenses to be paid
by the Corporation within 20 days after receipt by the Corporation of a
statement or statements from the claimant requesting such advance or
advances from time to time; provided, however, that if the General
Corporation Law of the State of Delaware requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was
or is rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in advance of
the final disposition of a proceeding, shall be made only upon delivery
to the Corporation of an undertaking by or on behalf of such director or
officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be
indemnified under this By-Law or otherwise.
(G) Amendment or Repeal. Any amendment or repeal of this Article
VI shall not adversely affect any right or protection existing hereunder
in respect of any act or omission occurring prior to such amendment or
repeal.
- 18 -
<PAGE>
<PAGE>
ARTICLE VII
STOCK CERTIFICATES AND TRANSFERS
(A) Certificated Shares and Transfers. The interest of each
stockholder of the Corporation shall be evidenced by certificates for
shares of stock in such form as the appropriate officers of the
Corporation may from time to time prescribe, unless it shall be
determined by, or pursuant to, a resolution adopted by the Board of
Directors that the shares representing such interest be uncertificated.
The shares of the stock of the Corporation shall be transferred on the
books of the Corporation by the holder thereof in person or by such
person's attorney, upon surrender for cancellation of certificates for
the same number of shares, with an assignment and power of transfer
endorsed thereon or attached thereto, duly executed, with such proof of
the authenticity of the signature as the Corporation or its agents may
reasonably require.
(B) Accepted Signatures. The certificates of stock shall be
signed, countersigned and registered in such manner as the Board of
Directors may by resolution prescribe, which resolution may permit all
or any of the signatures on such certificates to be in facsimile. In
case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if
he were such officer, transfer agent or registrar at the date of issue.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Fiscal Year
The fiscal year of the Corporation shall be the calendar year,
unless otherwise determined by resolution of the Board of Directors.
Section 8.2 Dividends
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner
and upon the terms and conditions provided by law and its Certificate of
Incorporation.
Section 8.3 Seal
The corporate seal shall have inscribed thereon the name of the
Corporation and the words "Corporate Seal, Delaware". The seal may be
used by causing it, or a facsimile thereof, to be impressed or affixed
or reproduced or otherwise.
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<PAGE>
<PAGE>
ARTICLE IX
AMENDMENTS
These By-Laws may be amended, added to, rescinded or repealed at
any meeting of the Board of Directors or of the stockholders, provided
notice of the proposed change was given in the notice of the meeting
and, in the case of a meeting of the Board of Directors, in a notice
given no less than twenty-four hours prior to the meeting; provided,
however, that, in the case of amendments by stockholders,
notwithstanding any other provisions of these By-Laws or any provision
of law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class
or series of the stock required by law, the Certificate of Incorporation
or these By-Laws, the affirmative vote of the holders of at least 80
percent of the voting power of the then outstanding Voting Stock, voting
together as a single class, shall be required to alter, amend or repeal
any provision of these By-Laws.
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<PAGE>
- ------------------------------------------------------------------------
HUSSMANN INTERNATIONAL, INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
--------------------
Amended and Restated Rights Agreement
Dated as of July 15, 1999
- ------------------------------------------------------------------------
<PAGE>
<PAGE>
Table of Contents
-----------------
Section Page
- ------- ----
Section 1. Certain Definitions 2
Section 2. Appointment of Rights Agent 6
Section 3. Issue of Rights Certificates 6
Section 4. Form of Rights Certificates 8
Section 5. Countersignature and Registration 10
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights
Certificates 10
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 11
Section 8. Cancellation and Destruction of Rights
Certificates 14
Section 9. Reservation and Availability of
Capital Stock 14
Section 10. Preferred Stock Record Date 16
Section 11. Adjustment of Purchase Price, Number
and Kind of Shares or Number of Rights 17
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares 28
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power 29
Section 14. Fractional Rights and Fractional Shares 31
Section 15. Rights of Action 33
Section 16. Agreement of Rights Holders 34
Section 17. Rights Certificate Holder Not
Deemed a Stockholder 35
Section 18. Concerning the Rights Agent 35
Section 19. Merger or Consolidation or Change of
Name of Rights Agent 35
Section 20. Duties of Rights Agent 36
Section 21. Change of Rights Agent 39
Section 22. Issuance of New Rights Certificates 40
Section 23. Redemption and Termination 41
Section 24. Exchange 42
Section 25. Notice of Certain Events 43
Section 26. Notices 44
Section 27. Supplements and Amendments 45
Section 28. Successors 46
Section 29. Determination and Actions by the Board of
Directors, etc. 46
Section 30. Benefits of this Agreement 46
Section 31. Severability 47
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<PAGE>
<PAGE>
Section 32. Governing Law 47
Section 33. Counterparts 47
Section 34. Descriptive Headings 47
Section 35. Book-Entry Account Statements 47
-ii-
<PAGE>
<PAGE>
AMENDED AND RESTATED RIGHTS AGREEMENT
-------------------------------------
AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of July 15,
1999 (the "Agreement"), between Hussmann International, Inc., a Delaware
corporation (the "Company"), and First Chicago Trust Company of New
York, a New York corporation (the "Rights Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on December 31, 1997 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company authorized and
declared a dividend distribution of one Right (as hereinafter defined)
for each share of Common Stock (as hereinafter defined) of the Company
outstanding at the close of business on January 30, 1998, after giving
effect to the distribution of shares of Common Stock (the "Spin-off") by
Whitman Corporation to its stockholders (the "Record Date"), each Right
initially representing the right to purchase one one-hundredth of a
share of Series A Junior Participating Preferred Stock of the Company
having the rights, powers and preferences set forth in the form of
Certificate of Designation attached hereto as Exhibit A, upon the terms
and subject to the conditions hereinafter set forth (the "Rights"), and
has further authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(p)
hereof) for each share of Common Stock of the Company issued between the
Record Date and the Distribution Date (as hereinafter defined);
WHEREAS, the Company and the Rights Agent originally entered
into the Rights Agreement, dated as of December 31, 1997 (the "Original
Rights Agreement");
WHEREAS, the Board of Directors of the Company, at a meeting
held on July 15, 1999, approved amendments to the Original Rights
Agreement to make certain changes to Sections 23 and 31 thereof and
certain related changes; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the
Company and the Rights Agent desire to incorporate such amendments by
amending and restating the Original Rights Agreement as set forth
herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
<PAGE>
<PAGE>
Section 1. Certain Definitions. For purposes of this
-------------------
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall
be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, but shall not include the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person
organized, appointed or established by the Company for or pursuant
to the terms of any such plan. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result of an
acquisition of shares of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person
to 15% or more of the shares of Common Stock then outstanding;
provided, however, that if a Person shall become the
-------- -------
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial
Owner of any additional shares of Common Stock, then such Person
shall be deemed to be an "Acquiring Person". Notwithstanding the
foregoing, if the Board of Directors of the Company determines in
good faith that a Person who would otherwise be an "Acquiring
Person" (as defined pursuant to the foregoing provisions of this
paragraph (a)) has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares
of Common Stock so that such Person would no longer be an
"Acquiring Person" (as defined pursuant to the foregoing
provisions of this paragraph (a)), then such Person shall not be
deemed to be an "Acquiring Person" for any purposes of this
Agreement.
(b) "Act" shall mean the Securities Act of 1933, as
amended.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement (the "Exchange
Act").
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<PAGE>
<PAGE>
(d) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
-------- -------
"Beneficial Owner" of, or to "beneficially own," (A)
securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange, or (B) securities issuable upon
exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities issuable upon exercise
of Rights from and after the occurrence of a Triggering
Event which Rights were acquired by such Person or any such
Person's Affiliates or Associates prior to the Distribution
Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect to any
Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule 13d-3 of the General Rules
and Regulations under the Exchange Act), including pursuant
to any agreement, arrangement or understanding, whether or
not in writing; provided, however, that a Person shall
-------- -------
not be deemed the "Beneficial Owner" of, or to "beneficially
own," any security under this subparagraph (ii) as a result
of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy given in response
to a public proxy or consent solicitation made pursuant to,
and in accordance with, the
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<PAGE>
<PAGE>
applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable
by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (d)) or disposing of any
voting securities of the Company;
provided, however, that nothing in this paragraph (d) shall cause
-------- -------
a Person engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such Person's participation in good
faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the
State of Missouri are authorized or obligated by law or executive
order to close.
(f) "close of business" on any given date shall mean 5:00
P.M., St. Louis time, on such date, provided, however, that if
-------- -------
such date is not a Business Day it shall mean 5:00 P.M., St. Louis
time, on the next succeeding Business Day.
(g) "Common Stock" shall mean the common stock, par value
$.001 per share, of the Company, except that "Common Stock" when
used with reference to any Person other than the Company shall
mean the capital stock of such Person with the greatest voting
power, or the equity securities or other equity interest having
power to control or direct the management, of such Person.
(h) "Person" shall mean any individual, firm, limited
liability company, corporation, partnership or other entity.
-4-
<PAGE>
<PAGE>
(i) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.001 per share, of the
Company, and, to the extent that there is not a sufficient number
of shares of Series A Junior Participating Preferred Stock
authorized to permit the full exercise of the Rights, any other
series of preferred stock, par value $.001 per share, of the
Company designated for such purpose containing terms substantially
similar to the terms of the Series A Junior Participating
Preferred Stock.
(j) "Section 11(a)(ii) Event" shall mean the event
described in Section 11(a)(ii) hereof.
(k) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(l) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section
13(d) under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such.
(m) "Subsidiary" shall mean, with reference to any Person,
any corporation of which an amount of voting securities sufficient
to elect at least a majority of the directors of such corporation
is beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(n) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
In addition, for purposes of this Agreement, the following
terms have the meanings indicated in specified sections of this
Agreement: (i) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof; (ii) "common stock equivalents" shall have the
meaning set forth in Section 11(a)(iii) hereof; (iii) "current market
price" shall have the meaning set forth in Section 11(d) hereof; (iv)
"Current Value" shall have the meaning set forth in Section 11(a)(iii)
hereof; (v) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof; (vi) "equivalent preferred stock" shall have the
meaning set forth in Section 11(b) hereof; (vii) "Exchange Ratio" shall
have the meaning set forth in Section 24(a) hereof; (viii) "Expiration
Date" shall have the meaning set
-5-
<PAGE>
<PAGE>
forth in Section 7(a) hereof; (ix) "Final Expiration Date" shall have
the meaning set forth in Section 7(a) hereof; (x) "NASDAQ" shall have
the meaning set forth in Section 11(d)(i) hereof; (xi) "Principal Party"
shall have the meaning set forth in Section 13(b) hereof; (xii)
"Purchase Price" shall have the meaning set forth in Section 4(a)
hereof; (xiii) "Record Date" shall have the meaning set forth in the
recitals hereof; (xiv) "Redemption Price" shall have the meaning set
forth in Section 23(a) hereof; (xv) "Rights" shall have the meaning set
forth in the recitals hereof; (xvi) "Rights Certificates" shall have the
meaning set forth in Section 3(a) hereof; (xvii) "Section 11(a)(ii)
Trigger Date" shall have the meaning set forth in Section 11(a)(iii)
hereof; (xviii) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof; (xix) "Substitution Period" shall have the meaning
set forth in Section 11(a)(iii) hereof; (xx) "Summary of Rights" shall
have the meaning set forth in Section 3(b) hereof; and (xxi) "Trading
Day" shall have the meaning set forth in Section 11(d)(i) hereof.
Section 2. Appointment of Rights Agent. Pursuant to the
---------------------------
Original Rights Agreement, the Company appointed the Rights Agent to act
as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall, prior to the Distribution Date,
also be the holders of the Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent accepted such appointment.
The Company may from time to time appoint such co-Rights Agents as it
may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
----------------------------
(a) Until the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date (or, if the tenth day after
the Stock Acquisition Date occurs before the Record Date, the close of
business on the Record Date), or (ii) the close of business on the tenth
Business Day (or such later date as may be determined by action of the
Board of Directors of the Company prior to such time as any Person
becomes an Acquiring Person) after the date that a tender or exchange
offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the Company, or any Person organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding (the earlier of
(i) and (ii) being herein referred to
-6-
<PAGE>
<PAGE>
as the "Distribution Date"), (x) the Rights will be evidenced (subject
to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed
also to be certificates for Rights) and not by separate certificates and
(y) the Rights will be transferable only in connection with the transfer
of the underlying shares of Common Stock (including a transfer to the
Company). As soon as practicable after the Distribution Date, the
Rights Agent will send by first-class, insured, postage prepaid mail, 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 Rights certificates, in
substantially the form of Exhibit B hereto (the "Rights Certificates"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to
Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) As promptly as practicable following the Record Date,
the Company sent a copy of a Summary of Rights to Purchase Preferred
Stock, in substantially the form attached hereto as Exhibit C (the
"Summary of Rights"), by first-class, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on the
Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding
as of the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the holders
thereof together with a copy of the Summary of Rights attached thereto.
Until the earlier of the Distribution Date or the Expiration Date (as
such term is defined in Section 7(a) hereof), the surrender for transfer
of any certificate representing shares of Common Stock in respect of
which Rights have been issued, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the
Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of
Common Stock which are issued (whether originally issued or from the
Company's treasury) after the Record Date but prior to the
-7-
<PAGE>
<PAGE>
earlier of the Distribution Date or the Expiration Date or, in certain
circumstances provided in Section 22 hereof, after the Distribution
Date. Certificates representing such shares of Common Stock shall also
be deemed to be certificates for Rights, and shall bear a legend
substantially in the form set forth in Section 3(c) of the Original
Rights Agreement or in the following form:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in the Amended and Restated
Rights Agreement between Hussmann International, Inc. (the
"Company") and First Chicago Trust Company of New York (the
"Rights Agent") dated as of July 15, 1999 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices
of the Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of
the Rights Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), may become null and
void.
With respect to such certificates containing such legends, 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 surrender for transfer of any of such certificates shall
also constitute the transfer of the Rights associated with the Common
Stock represented by such certificates.
Section 4. Form of Rights Certificates.
---------------------------
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such legends,
summaries or endorsements printed
-8-
<PAGE>
<PAGE>
thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof to
purchase such number of one one-hundredths of a share of Preferred Stock
as shall be set forth therein at the price set forth therein (such
exercise price per one one-hundredth of a share, the "Purchase Price"),
but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment
as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by any
Person known to be: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether
or not for consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which
the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect
avoidance of Section 7(e) hereof, and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in
this sentence, shall contain (to the extent feasible) the following
legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
7(e) of such Agreement.
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<PAGE>
<PAGE>
Section 5. Countersignature and Registration.
---------------------------------
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or
by facsimile signature. The Rights Certificates shall be countersigned
manually or by facsimile signature by the Rights Agent and shall not be
valid for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Rights Certificates shall
cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to
be such officer of the Company; and any Rights Certificates may be
signed on behalf of the Company by any person who, at the actual date of
the execution of such Rights Certificate, shall be a proper officer of
the Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated
as the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights
Certificates and the certificate number and the date of each of the
Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
-----------------------------------------------
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
- ----------------------------------------------------------------
Certificates. (a) Subject to the provisions of Section 4(b), Section
- ------------
7(e) and Section 14 hereof, at any time after the close of business on
the Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Certificates (other than
Rights Certificates representing Rights that have been exchanged
pursuant to Section 24 hereof) may be transferred, split up, combined or
exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of one
-10-
<PAGE>
<PAGE>
one-hundredths of a share of Preferred Stock (or, following a Triggering
Event, Common Stock, other securities, cash or other assets, as the case
may be) as the Rights Certificate or Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine
or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate or Certificates to be transferred, split up,
combined or exchanged at the principal office or offices of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request. Thereupon the Rights Agent shall, subject to Section 4(b),
Section 7(e), Section 14 and Section 24 hereof, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificates if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu
of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
----------------------------------------------
Date of Rights. (a) Subject to Section 7(e) hereof, the registered
- --------------
holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c)
and Section 11(a)(iii))in whole or in part at any time after the
Distribution Date upon surrender of
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the Rights Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price
with respect to the total number of one one-hundredths of a share of
Preferred Stock (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then exercisable, at or
prior to the earliest of (i) the close of business on December 31, 2007
(the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof or (iii) the time at which
such Rights are exchanged pursuant to Section 24 hereof (the earliest of
(i), (ii) and (iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a
share of Preferred Stock pursuant to the exercise of a Right shall
initially be $150, and shall be subject to adjustment from time to time
as provided in Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to each
Right so exercised, of the Purchase Price per one one-hundredth of a
share of Preferred Stock (or other shares, securities, cash or other
assets, as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-hundredths of a share of
Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B)
if the Company shall have elected to deposit the total number of shares
of Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a share of
Preferred Stock as are to be purchased (in which case certificates for
the shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such request,
(ii) requisition from the Company the amount of cash, if any, to be paid
in lieu of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause
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the same to be delivered to or upon the order of the registered holder
of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such
cash, if any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount
may be reduced pursuant to Section 11(a)(iii) hereof) shall be made in
cash or by certified bank check or bank draft payable to the order of
the Company. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights
Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that, upon any
exercise of Rights, a number of Rights be exercised so that only whole
shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or
upon the order of, the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a) (ii)
Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person
or to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as
a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this
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Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof
are complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or any of 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 such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
--------------------------------------
Certificates. All Rights Certificates surrendered for the purpose of
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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 Rights Certificates
shall be issued in lieu thereof, except as expressly permitted by any of
the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificates purchased or
acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all canceled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy such
canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event,
out of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
that, as provided in this Agreement, including Section 11(a)(iii)
hereof, will be
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sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or
other securities) issuable and deliverable upon the exercise of the
Rights may be listed on any national securities exchange, the Company
shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined
in accordance with Section 11(a)(iii) hereof, a registration statement
under the Act with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing,
and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the date of the expiration of the Rights.
The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. In addition, if the Company
shall determine that a registration statement is required following the
Distribution Date, and a Section 11(a)(ii) Event has not occurred, the
Company may temporarily suspend the exercisability of Rights until such
time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.
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(d) The Company covenants and agrees that it will take all
such actions as may be necessary to ensure that all one one-hundredths
of a share of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will
pay, when due and payable, any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or delivery
of the Rights Certificates and of any certificates for a number of one
one-hundredths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which
may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of a
number of one one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for a number of one one-hundredths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) in a
name other than that of the registered holder upon the exercise of any
Rights until such tax shall have been paid (any such tax being payable
by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such
tax is due.
Section 10. Preferred Stock Record Date. Each person in
---------------------------
whose name any certificate for a number of one one-hundredths of a share
of Preferred Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such fractional shares of
Preferred Stock (or Common Stock and/or other securities, as the case
may be) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable
transfer taxes) was made; provided, however, that if the date of
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such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books
of the Company are closed, such Person shall be deemed to have become
the record holder of such shares (fractional or otherwise) on, and such
certificate shall be
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dated, the next succeeding Business Day on which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books
of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any
rights of a stockholder of the Company with respect to shares or other
securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind
---------------------------------------------
of Shares or Number of Rights. The Purchase Price, the number and kind
- -----------------------------
of shares covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred
Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any shares of
its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred
Stock or capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate number
and kind of shares of Preferred Stock or capital stock, as the
case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer
books of the Company were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided
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for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) In the event any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person
organized, appointed or established by the Company for or pursuant
to the terms of any such plan), alone or together with its
Affiliates and Associates, shall, at any time after the Rights
Dividend Declaration Date, become an Acquiring Person, then each
holder of a Right (except as provided below and in Section 7(e)
hereof) shall thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of one one-hundredths
of a share of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of
one one-hundredths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event and (y) dividing that product (which,
following such first occurrence shall thereafter be referred to as
the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the current market price (determined pursuant
to Section 11(d) hereof) per share of Common Stock on the date of
such first occurrence (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number of shares of Common
Stock which are authorized by the Company's certificate of
incorporation, but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights, is not sufficient
to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section 11(a), the Company
shall: (A) determine the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value"), and (B) with
respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common
Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred
stock, such as the Preferred Stock, which the Board of Directors
of the Company has deemed to have the
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same value or economic rights as shares of Common Stock (such
shares of preferred stock, "common stock equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to
the Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been determined by
the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the
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Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the
first occurrence of a Section 11(a)(ii) Event (the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread.
For purposes of the preceding sentence, the term "Spread" shall
mean the excess of (i) the Current Value over (ii) the Purchase
Price. If the Board of Directors of the Company shall determine
in good faith that it is likely that sufficient additional shares
of Common Stock could be authorized for issuance upon exercise in
full of the Rights, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of
such additional shares (such thirty (30) day period, as it may be
extended, the "Substitution Period"). To the extent that action
is to be taken pursuant to the first and/or third sentences of
this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to
seek such stockholder approval for such authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension,
the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the
value of each Adjustment Share shall be the current market price
(as determined pursuant to Section 11(d) hereof) per share of
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the Common Stock on the Section 11(a)(ii) Trigger Date and the
value of any "common stock equivalent" shall be deemed to equal
the current market price (as determined pursuant to Section 11(d)
hereof) per share of the Common Stock on such date.
(b) In case the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to
all holders of Preferred Stock entitling them to subscribe for or
purchase (for a period expiring within forty-five (45) calendar
days after such record date) Preferred Stock (or shares having the
same rights, privileges and preferences as the shares of Preferred
Stock ("equivalent preferred stock")) or securities convertible
into Preferred Stock or equivalent preferred stock at a price per
share of Preferred Stock or per share of equivalent preferred
stock (or having a conversion price per share, if a security
convertible into Preferred Stock or equivalent preferred stock)
less than the current market price (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 prior to such record date by a fraction, the numerator
of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate offering price of the total
number of shares of Preferred Stock and/or equivalent preferred
stock so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of additional shares of
Preferred Stock and/ or equivalent preferred stock to be offered
for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case
such subscription price may be paid by delivery of consideration
part or all of which may be in a form other than cash, the value
of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Shares
of Preferred Stock owned by or held for the account of the Company
shall not be
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deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including
any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price
(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 and the holders of the Rights) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to a share of
Preferred Stock and the denominator of which shall be such current
market price (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 in the
event that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price which would have been
in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the
"current market price" per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices per share
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of such Common Stock for the thirty (30) consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such
date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per share of Common
Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date;
provided, however, that in the event that the current market
-------- -------
price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of
(A) 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 (B) any
subdivision, combination or reclassification of such Common Stock,
and the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification
shall not have occurred prior to the commencement of the requisite
thirty (30) Trading Day or ten (10) Trading Day period, as set
forth above, then, and in each such case, the "current market
price" shall be properly adjusted to take into account any trading
during the period prior to such ex-dividend date or record date.
The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the
principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares
of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated 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
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prices as furnished by a professional market maker making a market
in the Common Stock selected by the Board of Directors of the
Company. If on any such date no market maker is making a market
in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company
shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange,
a Business Day. If the Common Stock is not publicly held or not
so listed or traded, "current market price" per share shall mean
the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common
Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the current market price per share of
Preferred Stock cannot be determined in the manner provided above,
or if the Preferred Stock is not publicly held or listed or traded
in a manner described in clause (i) of this Section 11(d), the
"current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such number
may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) multiplied by
the current market price per share of the Common Stock. If
neither the Common Stock nor the Preferred Stock is publicly held
or so listed or traded, "current market price" per share of the
Preferred Stock shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. For all purposes of this Agreement, the
"current market price" of one one-hundredth of a share of
Preferred Stock shall be equal to the "current
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market price" of one share of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided, however, that
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any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one
ten-thousandth of a share of Common Stock or other share or one
one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than
the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment, or (ii) the Expiration
Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares
of capital stock other than Preferred Stock, thereafter the number
of such other shares so receivable upon exercise of any Right and
the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j),
(k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Preferred Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-hundredths of a share of Preferred Stock
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the
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<PAGE>
<PAGE>
calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one-hundredths of a share of
Preferred Stock (calculated to the nearest one-millionth) obtained
by (i) multiplying (x) the number of one one-hundredths of a share
covered by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such adjustment
of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment
of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in lieu of any adjustment in the number of one one-hundredths of a
share of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the number
of Rights shall be exercisable for the number of one one-
hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held
of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one-ten-
thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of
its election to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten
(10) days later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution
and replacement
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<PAGE>
<PAGE>
for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear,
at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of
Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per one one-hundredth of a share and
the number of one one-hundredths of a share which were expressed
in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any,
of the number of one one-hundredths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
fully paid and nonassessable 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 number of one one-
hundredths of a share of Preferred Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise
over and above the number of one one-hundredths of a share of
Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided,
--------
however, that the Company shall deliver to such holder a due
-------
bill or other appropriate
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<PAGE>
instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that
the Board of Directors of the Company, in its good faith judgment,
shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance
wholly for cash of any shares of Preferred Stock at less than the
current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred
to in this Section 11, hereafter made by the Company to holders of
its Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any
other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), (ii) merge
with or into any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)
hereof), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger, sale or
transfer there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation,
merger, sale or transfer, the stockholders of the Person who
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<PAGE>
constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or Section 27 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) In the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution
Date (i) declare a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of
shares, the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but
prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each share
of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or
-----------------------------------------
Number of Shares. Whenever an adjustment is made as provided in
- ----------------
Section 11 and Section 13 hereof, the Company shall (a) promptly prepare
a certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (b) promptly file with the Rights
Agent, and with each transfer agent for the Preferred Stock and the
Common Stock, a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares
of Common Stock) in accordance with Section 26 hereof. The Rights Agent
shall be fully protected in relying on any such certificate and
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<PAGE>
<PAGE>
on any adjustment therein contained and shall not be deemed to have
knowledge of such adjustment unless and until it shall have received
such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
--------------------------------------------
Assets or Earning Power.
- -----------------------
(a) In the event that, following the Stock Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), and
the Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or
part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related transactions, assets or
earning power aggregating 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 of the Company in one
or more transactions each of which complies with Section 11(o) hereof),
then, and in each such case, proper provision shall be made so that: (i)
each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to
any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (l) multiplying the
then current Purchase Price by the number of one one-hundredths of a
share of Preferred Stock for which a Right is exercisable immediately
prior to the first occurrence of a Section 13 Event (or, if a Section
11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such one one-hundredths of a share
of Preferred Stock for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event by the Purchase
Price in effect immediately prior to such first occurrence), and
dividing that
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<PAGE>
product (which, following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the Common
Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following the first
occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a), the Person that is
the issuer of any securities into which shares of Common Stock of
the Company are converted in such merger or consolidation, and if
no securities are so issued, the Person that is the other party to
such merger or consolidation; and
(ii) in the case of any transaction described in clause (z)
of the first sentence of Section 13(a), the Person that is the
party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of
- -------- -------
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered,
"Principal Party" shall refer to such other Person; and (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have been so
registered,
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<PAGE>
<PAGE>
"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 Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have
not been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer of assets mentioned in paragraph
(a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Act, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use
its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of
a Section 11(a)(ii) Event, the Rights which 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 Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal
to the same
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<PAGE>
<PAGE>
fraction of the current market value of a whole Right. For purposes of
this Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately prior to
the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed
or admitted to trading on the New York Stock Exchange, as reported to
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 fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock).
Fractions of shares of Preferred Stock in integral multiples of one
one-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,
--------
however, that such agreement shall provide that the holders of such
- -------
depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the
shares represented by such depositary receipts. In lieu of fractional
shares of Preferred Stock that are not integral multiples of one one-
hundredth of a share of Preferred Stock, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as herein
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<PAGE>
<PAGE>
provided an amount in cash equal to the same fraction of the current
market value of one one-hundredth of a share of Preferred Stock. For
purposes of this Section 14(b), the current market value of one one-
hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant
to Section 11(d)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common
Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional
shares of Common Stock, the Company shall pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current
market value of one share of Common Stock. For purposes of this Section
14(c), the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant
to Section 11(d)(i) hereof) for the Trading Day immediately prior to the
date of such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in
----------------
respect of this Agreement, other than rights of action vested in the
Rights Agent pursuant to Section 18 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior
to the Distribution Date, of the Common Stock), may, in his own behalf
and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise
act in respect of, his or her right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief
against actual or
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<PAGE>
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 holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and
certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in
whose name a Rights Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificates
made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent,
subject to the last sentence of Section 7(e) hereof, shall be
required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company must use
-------- -------
reasonable
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<PAGE>
efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
--------------------------------------
Stockholder. No holder, as such, of any Rights Certificate shall be
- -----------
entitled to vote, receive dividends or be deemed for any purpose to be
the holder of the number of one one-hundredths of a share of Preferred
Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the
rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements
incurred in the administration and execution of this Agreement and the
exercise and performance of its duties hereunder.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by
it in connection with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
--------------------------------------------
Rights Agent.
- ------------
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
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<PAGE>
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust
or stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided, however, that such
-------- -------
corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at the time any of the Rights
Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed, and at such time any of the Rights Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case, at that time, any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
----------------------
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it
-36-
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<PAGE>
necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established
by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman,
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 gross 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 recital contained in
this Agreement or in the Rights Certificates or be required to
verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11, Section 13 or
Section 24 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after
actual notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or
-37-
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<PAGE>
warranty as to the authorization or reservation of any shares of
Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of
Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman, 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
officer.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may
be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, that reasonable care
-------- -------
was exercised in the selection and continued employment thereof.
-38-
<PAGE>
<PAGE>
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof,
the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with
the Company.
Section 21. Change of Rights Agent. The Rights Agent or
----------------------
any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days' notice in writing mailed to
the Company, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (30) days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company
shall fail to make such appointment within a period of thirty (30) days
after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who
shall, with such notice, submit his or her Rights Certificate for
inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United States or of
the State of Missouri (or of any other state of the United States so
long as such corporation is authorized to do business as a banking
institution in the State of Missouri), in good standing, having an
office or
-39-
<PAGE>
<PAGE>
agency in the State of New York, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has
at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further
reasonable assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and
mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section
21 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 Rights Certificates.
-----------------------------------
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, in connection with
the issuance or sale of shares of Common Stock following the
Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded prior to the
Distribution Date, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of Directors of
the Company, issue Rights Certificates representing an appropriate
number of Rights in connection with such issuance or sale; provided,
--------
however, that (i) no such Rights Certificate shall be issued if, and
- -------
to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights
Certificate would be issued, and (ii) no such Rights Certificate shall
be issued
-40-
<PAGE>
<PAGE>
if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
--------------------------
(a) The Board of Directors of the Company may, at its
option, at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"). The Company may, at its option, pay the Redemption Price in
cash, shares of Common Stock (based on the "current market price", as
defined in Section 11(d)(i) hereof, of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the
Board of Directors. The redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and with
such conditions as the Board of Directors in its sole discretion may
establish.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, evidence of which
shall be filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive
the Redemption Price for each Right so held. Promptly after the action
of the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to all
such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any
notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made.
-41-
<PAGE>
<PAGE>
Section 24. Exchange.
--------
(a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 7(e) hereof) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any Person organized, appointed or
established by the Company for or pursuant to the terms of any such
plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of fifty percent (50%) or more of the
Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action and
without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to
receive that number of shares of Common Stock equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any exchange; provided,
--------
however, that the failure to give, or any defect in, such notice shall
- -------
not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange
of the Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any
partial exchange will be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute shares of Preferred Stock (or
equivalent preferred stock, as such term is defined in paragraph (b) of
Section 11 hereof) for shares of Common Stock
-42-
<PAGE>
<PAGE>
exchangeable for Rights, at the initial rate of one one-hundredth of a
share of Preferred Stock (or equivalent preferred stock) for each share
of Common Stock, 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.
(d) In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such actions as may be necessary
to authorize additional shares of Common Stock for issuance upon
exchange of the Rights.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, there shall be paid to the registered holders of the
Rights 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 subsection (e), the current market
value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
------------------------
(a) In case the Company shall propose, at any time after
the Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect
any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale
-43-
<PAGE>
<PAGE>
or other transfer), in one transaction or a series of related
transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o) hereof), or
(v) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, 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 prior to
the record date for determining holders of the shares of Preferred Stock
for purposes of such action, and in the case of any such other action,
at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of
the shares of Preferred Stock, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to
the extent feasible and in accordance with Section 26 hereof, a notice
of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph to Preferred
Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
Section 26. Notices. Notices or demands authorized by
-------
this Agreement to be given or made by the Rights Agent or by the holder
of any Rights Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as
follows:
Hussmann International, Inc.
12999 St. Charles Rock Road
Bridgeton, MO 63044
Attention: General Counsel
-44-
<PAGE>
<PAGE>
Subject to the provisions of Section 21, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of
any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
P.O. Box 2507
Suite 4660
Jersey City, New Jersey 07303-2507
Attention: Tenders & Exchanges Administration
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate
(or, if prior to the Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments. The Company may
--------------------------
from time to time supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to the Rights which the Company
may deem necessary or desirable, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent;
provided, however, that from and after such time as any Person
- -------- -------
becomes an Acquiring Person, this Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of
Rights. Prior to the Distribution Date, the interest of the holders of
Rights shall be deemed coincident with the interests of the holders of
Common Stock. Without limiting the foregoing, the Company may at any
time prior to such time as any Person becomes an Acquiring Person amend
this Agreement (a) to lower the thresholds set forth in Sections 1(a)
and 3(a) to a percentage that (subject to exceptions for specified
Persons or Groups excepted from the definition of "Acquiring Person") is
not less than the greater of (i) the sum of .001% and the largest
percentage of the outstanding shares of Common Stock then known by the
Company to be beneficially owned by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company, any Person organized, appointed or
established by the Company for or
-45-
<PAGE>
<PAGE>
pursuant to the terms of any such plan or, to the extent excepted from
the definition of "Acquiring Person", other specified Persons or Groups)
and (ii) 10.0% or (b) to raise the thresholds set forth in Sections 1(a)
and 3(a) to a percentage that is not greater than 20.0%.
Section 28. Successors. All the covenants and provisions
----------
of this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors
and assigns hereunder.
Section 29. Determination and Actions by the Board of
-----------------------------------------
Directors, etc. For all purposes of this Agreement, any calculation of
- --------------
the number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-
3(d)(l)(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 Directors of the Company or
to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement, and
(ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, but not limited to, a
determination to redeem or not redeem the Rights or to amend this
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made by the
Board of Directors of the Company in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board of
Directors of the Company to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this
--------------------------
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
-46-
<PAGE>
<PAGE>
Section 31. 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.
Section 32. Governing Law. This Agreement, each Right
-------------
and each Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws
of such State applicable to contracts made and to be performed entirely
within such State.
Section 33. Counterparts. This Agreement may be executed
------------
in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings
--------------------
of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any
of the provisions hereof.
Section 35. Book-Entry Account Statements. Except where
-----------------------------
the context otherwise indicates (a) if at any time or from time to time
the Company determines that shares of Common Stock shall be evidenced by
book-entry account statements or similar instruments or documents
("Book-Entry Account Statements"), then all references in this Agreement
to certificates for Common Stock or certificates for shares of Common
Stock shall be deemed to include such Book-Entry Account Statements
which evidence such shares of Common Stock, (b) if at any time or from
time to time the Company determines that after the Distribution Date the
Rights shall be evidenced by Book-Entry Account Statements, then all
references in this Agreement to certificates for Rights or Rights
Certificates shall be deemed to include such Book-Entry Account
Statements which evidence such Rights and (c) if at any time or from
time to time the Company determines that shares of Preferred Stock
issued upon the exercise of Rights shall be evidenced by Book-Entry
Account Statements, then all references in this Agreement to
certificates for such shares of Preferred Stock shall be deemed to
include such Book-Entry Account Statements which evidence such shares of
Preferred Stock.
-47-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.
Attest: HUSSMANN INTERNATIONAL, INC.
By: By:
------------------------- -------------------------
Name: Name:
Title: Title:
Attest: FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By: By:
------------------------- -------------------------
Name: Name:
Title: Title:
-48-
<PAGE>
<PAGE>
Exhibit A
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
HUSSMANN INTERNATIONAL, INC.
- ------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
- ------------------------------------------------------------------------
The undersigned do hereby certify that the following
resolution was duly adopted by the Board of Directors of Hussmann
International, Inc., a Delaware corporation (the "Corporation"), on
December 31, 1997:
RESOLVED, that pursuant to the authority vested in the board
of directors of the Corporation by the Certificate of Incorporation, the
Board of Directors does hereby create, authorize and provide for the
issue of a series of Preferred Stock, par value $.001 per share, of the
Corporation, to be designated "Series A Junior Participating Preferred
Stock" (hereinafter referred to as the "Series A Preferred Stock"),
initially consisting of _________ shares, and to the extent that the
designations, powers, preferences and relative and other special rights
and the qualifications, limitations or restrictions of the Series A
Preferred Stock are not stated and expressed in the Certificate of
Incorporation, does hereby fix and herein state and express such
designations, powers, preferences and relative and other special rights
and the qualifications, limitations and restrictions thereof, as follows
(all terms used herein which are defined in the Certificate of
Incorporation shall be deemed to have the meanings provided therein):
Section 1. Designation and Amount. The shares of such
----------------------
series shall be designated as "Series A Junior Participating Preferred
Stock" and the number of shares constituting such series shall be
_________.
<PAGE>
<PAGE>
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends
payable in cash on the first business day of January, April, July and
October 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 to the greater of (a) $.01 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends, and 100 times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or
a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value
$.001 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time after December 31, 1997 (the
"Rights Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a small number
of shares, then in each case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in paragraph
(A) above immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided, however, that, in the event no dividend or
-------- -------
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment
A-2
<PAGE>
<PAGE>
Date, subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior to and superior to
the shares of Series A Preferred Stock with respect to dividends, a
dividend of $.01 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Series A Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 60 days prior to the
date fixed for the payment thereof.
Section 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
stockholders of the Corporation. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator
A-3
<PAGE>
<PAGE>
of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock shall vote collectively as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall mark
the beginning of a period (herein called a "default period") which
shall extend until such time when all accrued and unpaid dividends
for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Preferred
Stock then outstanding shall have been declared and paid or set
apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Preferred
Stock) with dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, irrespective of
series, shall have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at
a special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders, provided that such
voting right shall not be exercised unless the holders of ten
percent (10%) in number of shares of Preferred Stock outstanding
shall be present in person or by proxy. The absence of a quorum
of the holders of Common Stock shall not affect the exercise by
the holders of Preferred Stock of such voting rights. At any
meeting at which the holders of Preferred Stock shall exercise
such voting right initially during an existing default period,
they shall have the right, voting as a class, to elect Directors
to fill such vacancies, if any, in the Board of Directors as may
then exist up to two (2) Directors or, if such right is exercised
at an annual meeting, to elect two (2) Directors. If the number
which may be so elected at any special meeting does not amount to
the required number, the holders of the Preferred Stock shall have
the right to make such increase in the number of
A-4
<PAGE>
<PAGE>
Directors as shall be necessary to permit the election by them of
the required number. After the holders of the Preferred Stock
shall have exercised their right to elect Directors in any default
period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of
the holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or pari
----
passu with the Series A Preferred Stock.
-----
(iii) Unless the holders of Preferred Stock shall, during
an existing default period, have previously exercised their right
to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than
ten percent (10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of
special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the Chairman, the President, a Vice
President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred
Stock are entitled to vote pursuant to this paragraph (C)(iii)
shall be given to each holder of record of Preferred Stock by
mailing a copy of such notice to him or her at his or her last
address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 10 days and
not later than 50 days after such order or request, or in default
of the calling of such meeting within 50 days after such order or
request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than
ten percent (10%) of the total number of shares of Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the
period within 50 days immediately preceding the date fixed for the
next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock,
and, if applicable, other classes of capital stock of the
Corporation, shall continue to be entitled to elect the whole
number of Directors until the holders of Preferred Stock shall
have exercised their right to elect two (2) Directors voting as a
class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in office
until their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy in
A-5
<PAGE>
<PAGE>
the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the
class of capital stock which elected the Director whose office
shall have become vacant. References in this paragraph (C) to
Directors elected by the holders of a particular class of stock
shall include Directors appointed by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors elected
by the holders of Preferred Stock as a class shall terminate, and
(z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or by-laws
irrespective of any increase made pursuant to the provisions of
paragraph (C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in
the certificate of incorporation or by-laws). Any vacancies in
the Board of Directors effected by the provisions of clauses (y)
and (z) in the preceding sentence may be filled by a majority of
the remaining Directors.
(D) Except as set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A 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 shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of capital stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
A-6
<PAGE>
<PAGE>
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A 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 capital stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any
capital 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) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of capital stock
ranking on a 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 respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares.
-----------------
Any shares of Series A 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
A-7
<PAGE>
<PAGE>
reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution shall be
made to the holders of shares of capital 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 (the "Series A
Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall
be made to the holders of shares of Series A Preferred Stock unless,
prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient
obtained by dividing (i) the Series A Liquidation Preference by (ii) 100
(as appropriately adjusted as set forth in subparagraph C below to
reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series A Preferred
Stock and Common Stock, respectively, and the payment of liquidation
preferences of all other shares of capital stock which rank prior to or
on a parity with Series A Preferred Stock, holders of Series A Preferred
Stock and holders of shares of Common Stock shall receive their ratable
and proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Series A
Preferred Stock, then such remaining assets shall be distributed ratably
to the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
A-8
<PAGE>
<PAGE>
(C) In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc.
--------------------------
In case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of Series A
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
capital stock, securities, cash and/or any other property (payable in
kind), as the case may be, for which or into which each share of Common
Stock is exchanged or changed. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change
of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption.
-------------
The shares of Series A Preferred Stock shall not be
redeemable.
Section 9. Ranking.
-------
The Series A Preferred Stock shall rank junior to all other
series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, whether or
A-9
<PAGE>
<PAGE>
not upon the dissolution, liquidation or winding up of the Corporation,
unless the terms of any such series shall provide otherwise.
Section 10. Amendment.
---------
The Certificate of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so
as to affect them adversely without the affirmative vote of the holders
of a majority of the outstanding shares of Series A Preferred Stock,
voting separately as a class.
Section 11. Fractional Shares.
-----------------
Series A Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights
of holders of Series A Preferred Stock.
A-10
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Hussmann International, Inc. has caused
its corporate seal to be hereunto affixed and this certificate to be
signed by , its , and the
------------------------------ ---------
same to be attested to by , its ,
----------------- -----------------
this day of January, 1998.
----
HUSSMANN INTERNATIONAL, INC.
By:
-----------------------
Name:
Title:
(Corporate Seal)
Attest:
- ------------------------
A-11
<PAGE>
<PAGE>
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- Rights
--------
NOT EXERCISABLE AFTER DECEMBER 31, 2007 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]<F*>
[FN]
- --------------------
<F*> The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
<PAGE>
<PAGE>
Rights Certificate
HUSSMANN INTERNATIONAL, INC.
This certifies that _______________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Amended and Restated Rights Agreement, dated as of
July 15, 1999 (the "Rights Agreement"), between Hussmann International,
Inc., a Delaware corporation (the "Company"), and First Chicago Trust
Company of New York, a New York corporation (the "Rights Agent"), to
purchase from the Company at any time prior to 5:00 P.M. (St. Louis
time) on December 31, 2007 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one one-
hundredth of a fully paid, nonassessable share of Series A Junior
Participating Preferred Stock, par value $.001 per share (the "Preferred
Stock"), of the Company, at a purchase price of $150 per one one-
hundredth of a share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to
Purchase and related Certificate duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Purchase
Price per share set forth above, are the number and Purchase Price as of
December 31, 1997, based on the Preferred Stock as constituted at such
date. The Company reserves the right to require prior to the occurrence
of a Triggering Event (as such term is defined in the Rights Agreement)
that, upon any exercise of Rights, a number of Rights be exercised so
that only whole shares of Preferred Stock will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), if the Rights evidenced by
this Rights Certificate are beneficially owned by (i) an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agreement), (ii) a transferee of
any such Acquiring Person, Associate or Affiliate, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of
a person who, after such transfer, became an Acquiring Person or an
Affiliate or Associate of such Person, such Rights shall become null and
void and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.
B-2
<PAGE>
<PAGE>
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock or other securities
which may be purchased upon the exercise of the Rights evidenced by this
Rights Certificate are subject to modification and adjustment upon the
happening of certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference
and made a part hereof and to which Rights Agreement reference is hereby
made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such
Rights under the specific circumstances set forth in the Rights
Agreement. Copies of the Rights Agreement are on file at the above-
mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the
Rights Agent designated for such purpose, may be exchanged for another
Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate
number of one one-hundredths of a share of Preferred Stock as the Rights
evidenced by the Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may, in each case at the option of
the Company, be (i) redeemed by the Company at its option at a
redemption price of $.01 per Right or (ii) exchanged in whole or in part
for shares of Common Stock or other securities of the Company.
Immediately upon the action of the Board of Directors of the Company
authorizing redemption, the Rights will terminate and the only right of
the holders of Rights will be to receive the redemption price.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a share
of Preferred Stock, which may, at the election of the
B-3
<PAGE>
<PAGE>
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 Rights Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of
shares of Preferred Stock or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced
by this Rights Certificate shall have been exercised as provided in the
Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned manually or by
facsimile signature by the Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of ,
------- -- ----
ATTEST: HUSSMANN INTERNATIONAL, INC.
By:
- ------------------------- ----------------------------
Secretary Name:
Title:
Countersigned:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By:
--------------------
Authorized Signature
B-4
<PAGE>
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
----------------------------------------------------
hereby sells, assigns and transfers unto
------------------------------
- -----------------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
-----------
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ,
------------------- ----
-------------------------------
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ,
------------- ---- ----------------------------
Signature
Signature Guaranteed:
B-5
<PAGE>
<PAGE>
NOTICE
------
The signature to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
TO: HUSSMANN INTERNATIONAL, INC.
The undersigned hereby irrevocably elects to exercise
-------
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable
upon the exercise of the Rights) and requests that certificates for such
shares (or other securities) be issued in the name of and delivered to:
Please insert social security
or other identifying number
- -----------------------------------------------------------------------
(Please print name and address)
- -----------------------------------------------------------------------
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate for the
balance of such Rights shall be registered in the name of and delivered
to:
B-6
<PAGE>
<PAGE>
Please insert social security
or other identifying number
- -----------------------------------------------------------------------
(Please print name and address)
- -----------------------------------------------------------------------
Dated: ,
-------------- ----
----------------------------------------
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated: ,
-------------- ---- ----------------------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.
B-7
<PAGE>
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
---------------------------------------------
On December 31, 1997, the Board of Directors of Hussmann
International, Inc. (the "Company") declared a dividend distribution of
one Right for each outstanding share of the Company's common stock, par
value $.001 per share ("Common Stock"), to stockholders of record at the
close of business on January 30, 1998. Each Right entitles the
registered holder to purchase from the Company a unit consisting of one
one-hundredth of a share (a "Unit") of Series A Junior Participating
Preferred Stock, par value $.001 per share (the "Preferred Stock"), at a
Purchase Price of $150 per Unit, subject to adjustment. The description
and terms of the Rights are set forth in an Amended and Restated Rights
Agreement (the "Rights Agreement") dated as of July 15, 1999 between the
Company and First Chicago Trust Company of New York, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate
Rights certificates will be distributed. The Rights will separate from
the Common Stock and the Distribution Date will occur upon the earlier
of (i) 10 days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired,
or obtained the right to acquire, beneficial ownership of 15% or more of
the outstanding shares of Common Stock (the "Stock Acquisition Date"),
or (ii) 10 business days (or such later date as may be determined by
action of the Board of Directors prior to such time as any person or
group becomes an Acquiring Person) following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 15% or more of the outstanding shares of Common
Stock.
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with
and only with such Common Stock certificates, (ii) new Common Stock
certificates issued on or after January 30, 1998 will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender
for transfer of any certificates for Common Stock outstanding will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
Pursuant to the Rights Agreement, the Company reserves the
right to require prior to the occurrence of a Triggering
<PAGE>
<PAGE>
Event (as defined below) that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock will be
issued.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on December 31, 2007, unless
earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
certificates will be mailed to holders of record of the Common Stock as
of the close of business on the Distribution Date and, thereafter, the
separate Rights certificates alone will represent the Rights. Except as
otherwise provided in the Rights Agreement, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
In the event that, at any time following the Distribution
Date, a person or group becomes an Acquiring Person, each holder of a
Right will thereafter have the right to receive, upon exercise, Common
Stock having a value equal to two times the exercise price of the Right.
If an insufficient number of shares of Common Stock is authorized for
issuance, then the Board would be required to substitute cash, property
or other securities of the Company for the Common Stock.
Notwithstanding any of the foregoing, following the occurrence of the
event set forth in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
For example, at an exercise price of $150 per Right, each
Right not owned by an Acquiring Person (or by certain related parties)
following an event set forth in the preceding paragraph would entitle
its holder to purchase $300 worth of Common Stock (or other
consideration, as noted above) for $150. Assuming that the Common Stock
had a per share value of $15 at such time, the holder of each valid
Right would be entitled to purchase 20 shares of Common Stock for $150.
In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or other
business combination transaction in which the Company is not the
surviving corporation, or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except
Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price
of the
C-2
<PAGE>
<PAGE>
Right. The events set forth in this paragraph and in the second
preceding paragraph are referred to as the "Triggering Events." In
addition, the Rights may be exchanged, in whole or in part, for shares
of the Common Stock, or shares of Preferred Stock having essentially the
same value or economic rights as such shares.
The purchase price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) if holders
of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the
current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or
of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of
the Purchase Price. No fractional Units will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of
the Preferred Stock on the last trading date prior to the date of
exercise.
At any time after any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or
more of the outstanding shares of Common Stock, the Board of Directors
of the Company may exchange the Rights (other than Rights owned by such
person or group which will have become void), in whole or in part, at an
exchange ratio of one share of Common Stock, or one one-hundredth of a
share of Preferred Stock (or of a share of a class or series of the
Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
In general, the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (payable in cash, Common Stock
or other consideration deemed appropriate by the Board of Directors) at
any time prior to any person or group becoming an Acquiring Person.
Immediately upon the action of the Board of Directors authorizing any
redemption, the Rights will terminate and the only right of the holders
of Rights will be to receive the redemption price.
C-3
<PAGE>
<PAGE>
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the Rights will not result in the recognition of taxable
income by stockholders or the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights
become exercisable for Common Stock (or other consideration of the
Company) or for common stock of the acquiring company as set forth
above.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the
Rights, including an amendment to lower certain thresholds described
above to not less than the greater of (i) the sum of .001% and the
largest percentage of the outstanding shares of Common Stock then known
to the Company to be beneficially owned by any person or group of
affiliated or associated persons and (ii) 10%, and (b) to raise such
thresholds to not more than 20%, except that from and after such time as
any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of
the holders of the Rights.
A copy of the Rights Agreement is available free of charge
from the Rights Agent. This description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
C-4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY CONSOLIDATED (JUNE 30, 1999)
AND COMBINED (JUNE 30, 1998) FINANCIAL INFORMATION EXTRACTED
FROM HUSSMANN INTERNATIONAL'S CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 44
<SECURITIES> 0
<RECEIVABLES> 281
<ALLOWANCES> 6
<INVENTORY> 140
<CURRENT-ASSETS> 470
<PP&E> 360
<DEPRECIATION> 159
<TOTAL-ASSETS> 808
<CURRENT-LIABILITIES> 213
<BONDS> 356
<COMMON> 0
0
0
<OTHER-SE> 194
<TOTAL-LIABILITY-AND-EQUITY> 808
<SALES> 595
<TOTAL-REVENUES> 595
<CGS> 478
<TOTAL-COSTS> 478
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> 25
<INCOME-TAX> 9
<INCOME-CONTINUING> 16
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16
<EPS-BASIC> .32<F1>
<EPS-DILUTED> .32
<FN>
<F1>For purposes of this exhibit, primary means basic.
</TABLE>
