<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended SEPTEMBER 30, 1997 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________________ to ________________
Commission file number 0-19335
BUILDING MATERIALS HOLDING CORPORATION
(Parent of BMC West Corporation)
Delaware 91-1834269
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Building Materials Holding Corporation
One Market Plaza, Steuart Street Tower, Ste 2650, San Francisco, CA 94105
Telephone: (208)331-4410 or (415)227-1650
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 month (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
--- ---
Shares Outstanding as
Class of November 7, 1997:
-----
Common stock $.001 par value 12,065,350
----------
Index to exhibits at page
This is Page 1 of 16 Pages
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BUILDING MATERIALS HOLDING CORPORATION
INDEX
Page
Number
------
PART I -- FINANCIAL INFORMATION
Item 1 - Financial Statements 3
Condensed Consolidated statements of Income for the three months
ended September 30, 1997 and 1996 and the nine months ended
September 30, 1997 and 1996 4
Condensed Consolidated Balance Sheets as of September 30, 1997
and December 31, 1996 5
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1997 and 1996 6
Notes to the Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II -- OTHER INFORMATION
Item 1 - Legal Proceedings 13
Item 4 - Submission of Matters to a Vote of Security Holders 13
Item 5 - Other Information 13
Item 6 - Exhibits and Reports on Form 8-K 13
SIGNATURES 14
INDEX TO EXHIBITS 15
EXHIBITS 16
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PART I - FINANCIAL INFORMATION
The condensed consolidated financial statements included herein have been
prepared by Building Materials Holding Corporation ("BMHC" or the "Company"),
on a consolidated basis without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. BMHC was formed on September 23,
1997 in a holding company reorganization in which BMC West Corporation, the
former, registrant, became a wholly owned subsidiary of BMHC. This new
structure was adopted to centralize certain administrative functions as the
Company expands its participation in the consolidation of the contractor
focused building materials distribution industry. All references to the
"Company" will mean BMHC on a consolidated basis if referring to periods
after September 23, 1997, or BMC West Corporation for all preceding periods.
In the opinion of management, all adjustments necessary to present fairly the
results for the periods presented have been included therein. The
adjustments made were of a normal, recurring nature. Certain information and
footnote disclosure normally included in the consolidated financial
statements have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission, although the Company
believes that the disclosures are adequate to make the information presented
not misleading. It is recommended that these condensed consolidated
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's 1996 Annual Report.
The condensed consolidated results of operations for the periods presented
are not necessarily indicative of the results that might be expected for the
fiscal year.
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BUILDING MATERIALS HOLIDNG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Dollars in Thousands Except per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 201,950 $ 206,455 $ 539,335 $ 547,076
Cost of sales 155,513 162,094 415,121 427,381
---------- ---------- ---------- ----------
Gross profit 46,437 44,361 124,214 119,695
Selling, general and administrative expense 37,717 34,780 105,462 97,493
Other income, net 487 289 1,378 1,270
---------- ---------- ---------- ----------
Income from operations 9,207 9,870 20,130 23,472
Interest expense 2,245 2,330 6,695 8,297
---------- ---------- ---------- ----------
Income before income taxes 6,962 7,540 13,435 15,175
Income taxes 2,750 2,980 5,307 5,993
---------- ---------- ---------- ----------
Net income before extraordinary item 4,212 4,560 8,128 9,182
Extraordinary item -- -- -- (342)
---------- ---------- ---------- ----------
Net Income $ 4,212 $ 4,560 $ 8,128 $ 8,840
========== ========== ========== ==========
Net income per common and common equivalent
share before extraordinary item $ .35 $ .38 $ .67 $ .86
Extraordinary item, net of tax -- -- -- ($ .03)
---------- ---------- ---------- ----------
Net income per Common and Common Equivalent Shares $ .35 $ .38 $ .67 $ .83
========== ========== ========== ==========
Weighted average number of common and common
equivalent shares 12,051,916 12,044,134 12,046,496 10,649,697
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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BUILDING MATERIALS HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(UNAUDITED)
September 30, December 31,
1997 1996
------------- ------------
CURRENT ASSETS
Cash $ 6,736 $ 7,066
Receivables, net 90,694 70,184
Inventories 71,507 76,415
Deferred income tax benefit 1,743 1,743
Prepaid expenses 935 1,874
-------- --------
Total current assets 171,615 157,282
PROPERTY AND EQUIPMENT, net 108,093 103,921
DEFERRED LOAN COSTS 1,162 1,438
GOODWILL, net 22,878 19,679
OTHER 5,892 6,049
-------- --------
Total assets $309,640 $288,369
-------- --------
-------- --------
CURRENT LIABILITIES
Current portion of long-term debt $ 588 $ 568
Current redemption requirement on Class B
preferred stock 1,000 1,994
Accounts payable 36,426 33,954
Accrued expenses 17,486 10,299
-------- --------
Total current liabilities 55,500 46,815
LONG-TERM DEBT, net of current portion 91,562 90,203
DEFERRED INCOME TAXES 4,368 4,368
OTHER LONG-TERM LIABILITIES 1,994 1,895
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 20,000,000
shares authorized, 12,065,350 and 11,825,106
shares outstanding at September 30, 1997 and
December 31, 1996, respectively 12 12
Additional paid-in-capital 100,736 97,731
Retained earnings 55,468 47,345
-------- --------
TOTAL STOCKHOLDERS' EQUITY 156,216 145,088
-------- --------
-------- --------
Total liabilities and stockholders' equity $309,640 $288,369
-------- --------
-------- --------
The accompanying notes are an integral part of these financial statements.
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BUILDING MATERIALS HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
Nine Months Ended
September 30, September 30,
1997 1996
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 8,128 $ 8,840
Adjustments to reconcile net income to cash
used in operating activities:
Depreciation and amortization 8,317 7,720
Gain on sale of assets (430) (366)
Extraordinary item, net of tax -- 342
Changes in working capital items, net of
effects of acquisitions 2,989 (11,097)
Other (559) (699)
-------- --------
Net cash provided from operating activities 18,445 4,740
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (9,927) (11,700)
Payment for acquisitions (10,259) (3,347)
Sale of property and equipment 1,337 1,774
-------- --------
Net cash used in investing activities (18,849) (13,273)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of 10% unsecured notes -- (20,000)
Repayment of Note Payable (561) (200)
Borrowings under revolving credit agreement 89,080 173,350
Repayments under revolving credit agreement (87,160) (180,780)
Redemption of Class B preferred stock (1,000) (1,000)
Issuance of debt -- 1,685
Issuance of Common Stock, net of expenses -- 38,486
Financing costs (201) (191)
Other (84) (342)
-------- --------
Net cash provided by financing activities 74 11,008
-------- --------
NET INCREASE (DECREASE) IN CASH (330) 2,475
CASH, beginning of period 7,066 6,004
-------- --------
CASH, end of period $ 6,736 $ 8,479
-------- --------
-------- --------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for -
Interest $ 5,060 $ 6,610
Income taxes $ 4,019 $ 4,850
The accompanying notes are an integral part of these financial statements.
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BUILDING MATERIALS HOLDING CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. WORKING CAPITAL CHANGES
Changes in working capital items, net of acquisitions, for the nine months
ended September 30, 1997 and 1996 are as follows (in thousands):
1997 1996
-------- --------
Increase in accounts receivable ($16,512) ($19,613)
(Increase)decrease in inventories 9,495 (6,555)
(Increase) decrease in prepaid expenses 958 (13)
Increase in accounts payable and accrued expenses 7,413 13,397
Increase in interest payable 1,635 1,687
-------- --------
$ 2,989 ($11,097)
======== ========
2. LONG-TERM DEBT
Long-term debt consisted of the following at (in thousands):
September 30, December 31,
1997 1996
------------- ------------
Revolving credit agreement borrowings $16,000 $14,080
9.18% unsecured senior notes 50,000 50,000
8.10% unsecured senior notes 25,000 25,000
Capital lease obligations and other 1,150 1,691
------- -------
92,150 90,771
Less current portion 588 568
------- -------
$91,562 $90,203
======= =======
3. ACQUISITIONS
In the first quarter of 1997, the Company purchased substantially all of
the assets of a building supply firm in Utah, which operates as a satellite
to the Orem location. The total cash purchase price was $930,000. In the
second quarter of 1997, the Company completed two acquisitions consisting of
one value-added facility and one building materials center located in
Colorado and Washington. The total cash purchase price was $4,808,000. In
the third quarter of 1997, the Company purchased substantially all of the
assets of a building supply firm in Nevada. The total purchase price for
this facility was $7,522,000, consisting of
This is Page 7 of 16 Pages
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230,000 shares of stock and $4,521,000 cash. The equity issued for this
acquisition was treated as a non-cash transaction and not included in the
condensed consolidated statement of cash flows.
4. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement 128, EARNINGS PER SHARE, which will be implemented in the fourth
quarter of 1997. Primary earnings per share will be replaced with basic
earnings per share and fully diluted earnings per share will be renamed
diluted earnings per share, neither of which will be significantly different
than previously reported primary and fully diluted earnings per share. All
previously reported amounts will be restated.
This is Page 8 of 16 Pages
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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage
relationship to net sales of certain costs, expenses and income items. The
table and subsequent discussion should be read in conjunction with the financial
statements and the notes thereto appearing elsewhere herein and in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
For The Three Months Ended For The Nine Month Ended
---------------------------- ----------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
Net sales 100.0% 100.0% 100.0% 100.0%
Gross profit 23.0 21.5 23.0 21.9
Selling, general and
administrative
expense 18.7 16.8 19.6 17.8
Other income, net .2 .1 .3 .2
Income from operations 4.6 4.8 3.7 4.3
Interest expense 1.1 1.1 1.2 1.5
Income taxes 1.4 1.4 1.0 1.1
Net Income 2.1 2.2 1.5 1.6
THIRD QUARTER OF 1997 COMPARED TO THE THIRD QUARTER OF 1996
Net sales for the three months ended September 30, 1997 were $202.0 million
down 2.2% from the third quarter of 1996 when sales were $206.5 million. The
decrease in net sales resulted from a 3.6% decrease from the third quarter of
1996 in sales at facilities that operated for at least two months in both the
third quarter of 1996 and the third quarter of 1997 ("Same-Store Sales").
Sales decreased due to an overall price deflation of 4.4% primarily
attributable to commodity wood product prices. Adjusting for the price
deflation, real same-store sales were about 1% ahead of the year-ago quarter,
despite lower building permit activity in the majority of the Company's
10-state market area.
Gross profit as a percentage of sales increased to 23.0% in the third quarter
of 1997 from 21.5% in the third quarter of 1996, primarily as a result of on
going efforts by the Company to improve margins through its increased focus
on value-added products, such as roof trusses, pre-hung doors and
pre-assembled windows.
This is Page 9 of 16 Pages
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Selling, general and administrative (SG&A) expense, was $37.7 million in the
third quarter of 1997 as compared to $34.8 million in 1996, and increased as
a percentage of net sales from 16.8% in 1996 to 18.7% in 1997. The Company
attributes this partially to increases in value-added sales that carry higher
SG&A expenses and new operating locations that were not included in the
comparable period.
Interest expense of $2.2 million in the third quarter of 1997 decreased from
$2.3 million in the same period of 1996, primarily due to less debt outstanding
during the third quarter of 1997 compared to the third quarter of 1996.
Income taxes were provided at estimated annual effective tax rates of 39.5% for
the periods ended September 30, 1997 and September 30, 1996.
As a result of the foregoing factors, net income decreased by $348,000, or 7.6%
to $4,212,000, or 2.1% of net sales in the third quarter of 1997, as compared to
$4,560,000, or 2.2% of net sales, in the third quarter of 1996.
FIRST NINE MONTHS OF 1997 COMPARED WITH THE FIRST NINE MONTHS OF 1996
Net sales for the nine months ended September 30, 1997 were $539.3 million down
1% from the first nine months of 1996 when sales were $547.1 million. The
decrease in net sales resulted from a decrease of 2.9% in Same-Store Sales over
the first nine months of 1996. This decrease was primarily a result of lower
building permit activity in the majority of the Company's 10-state market area
offset by the acquisition of new locations.
Gross profit as a percentage of sales improved to 23.0% in the first nine months
of 1997 from 21.9% in the first nine months of 1996, primarily as a result of on
going efforts by the Company to improve margins through its increased focus on
value-added products, such as roof trusses, pre-hung doors and pre-assembled
windows.
This is Page 10 of 16 Pages
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Selling, general and administrative (SG&A) expense, was $105.5 million in the
first nine months of 1997 as compared to $97.5 million in 1996, and increased
as a percentage of net sales to 19.6% in 1997 from 17.8% in 1996. The
Company attributes this partially to acquisition costs and increases in
value-added sales that carry higher SG&A expenses and new operating locations
that were not included in the comparable period.
Interest expense decreased to $6.7 million in the first nine months of 1997 from
$8.3 million in the same period of 1996, primarily due to less debt outstanding
during the nine months of 1997 compared to the first nine months of 1996.
Income taxes were provided at estimated annual effective tax rates of 39.5% for
the nine month period ended September 30, 1997 and September 30, 1996.
As a result of the foregoing factors, net income before extraordinary item,
decreased to $8,128,000 or 1.5% of net sales in the first nine months of 1997,
as compared to $9,182,000, or 1.7% of net sales, in the first nine months of
1996.
In the second quarter of 1996, the Company redeemed, with the net proceeds of an
equity offering, the 10% unsecured senior subordinated notes early in the third
quarter of 1996. In connection with this planned redemption, the Company wrote
off the related deferred loan cost. These write-offs were recorded as an
extraordinary charge of $342,000 in the second quarter of 1996.
LIQUIDITY AND CAPITAL RESOURCES
In the second quarter of 1996, the Company sold 2,300,000 shares of previously
unissued common stock. The net proceeds of this offering of $38.5 million, less
underwriting and estimated other issuance costs, were used to retire the $20
million of 10% unsecured senior subordinated notes in the third quarter of 1996
and reduce the debt under the revolving credit agreement.
At September 30, 1997 the Company had $91.6 million of long-term debt
outstanding, consisting of $75.6 million of term borrowings under fixed rate
This is Page 11 of 16 Pages
<PAGE>
notes, and $16.0 million of variable rate debt under the revolving credit
agreement.
In the first nine months of 1997, the Company generated $18.4 million of cash
from operating activities. Working capital increased from $110.5 million at
December 31, 1996 to $116.1 million at September 30, 1997, due primarily to the
seasonality in the Company's accounts receivable.
Based on its ability to generate cash from operations and the available
borrowing capacity at September 30, 1997 of $59.0 million under the revolving
credit agreement (availability of which is subject to the satisfaction of
certain customary borrowing conditions), the Company believes it will have
sufficient funds to meet its currently anticipated requirements.
NEW ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued Statement 128,
EARNINGS PER SHARE, which will be implemented in the fourth quarter of 1997.
Primary earnings per share will be replaced with basic earnings per share and
fully diluted earnings per share will be renamed diluted earnings per share,
neither of which will be significantly different than previously reported
primary and fully diluted earnings per share. All previously reported amounts
will be restated.
This is Page 12 of 16 Pages
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in litigation and administrative
proceedings primarily arising in the normal course of its business.
In the opinion of management, the Company's recovery, if any, or
the Company's liability, if any, under any pending litigation or
administrative proceedings would not materially affect its
financial condition or operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 - Statement regarding computation of per share earnings.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
On September 23, 1997, the Company filed a Form 8-K with the
Securities and Exchange Commission describing the merger of BMC
West Corporation with Building Materials Holding Corporation to
create a holding company structure.
On September 24, 1997, the Company's predecessor BMC West
Corporation filed a Form 8-K with the Securities and Exchange
Commission also related to the merger of BMC West Corporation with
Building Materials Holding Corporation.
This is Page 13 of 16 Pages
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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.
BUILDING MATERIALS HOLDING CORPORATION
Date: November 7, 1997 /s/ Robert E. Mellor
---------------------------------------
Robert E. Mellor
President, Chief Executive Officer
and Director (Principal Executive Officer)
Date: November 7, 1997 /s/ Ellis C. Goebel
---------------------------------------
Ellis C. Goebel
Senior Vice President - Finance
and Treasurer
(Principal Financial Officer)
This is Page 14 of 16 Pages
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INDEX TO EXHIBITS
BUILDING MATERIALS HOLDING CORPORATION
Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 1997
Page
Exhibit Description Number
- ------- ----------- ------
3.1 Restated Certificate of Incorporation, filed
with the office of the Secretary of State of
the State of Delaware on September 23, 1997.
3.2 Certificate of Correction Filed to Correct a
Certain Error in the Certificate of
Incorporation Filed in the Office of the
Secretary of State of Delaware on
September 23, 1997.
11 Computation of Earnings Per Share 16
27 Financial Data Schedule
This is Page 15 of 16 Pages
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EXHIBIT A.2
TO AGREEMENT AND
PLAN OF MERGER
--------------
RESTATED
CERTIFICATE OF INCORPORATION
OF
BUILDING MATERIALS HOLDING CORPORATION
---------------------------------
Building Materials Holding Corporation, a corporation organized under the
laws of the State of Delaware, hereby certifies as follows:
1. The original certificate of incorporation of Building Materials Holding
Corporation was filed with the Secretary of State of Delaware on April 14, 1997.
2. This Restated Certificate of Incorporation amends and restates the
provisions of the Certificate of Incorporation of Building Materials Holding
Corporation and has been duly adopted pursuant to Sections 242 and 245 of
the General Corporation Law of the State of Delaware.
3. The text of the Certificate of Incorporation of Building Materials
Holding Corporation is hereby amended and restated to read in its entirety as
follows:
FIRST: The name of the corporation (hereinafter called the "Corporation")
is Building Materials Holding Corporation.
SECOND: The address, including street, number, city, and county, of
registered office of the Corporation in the State of Delaware is 1013 Centre
Road Street, in the City of Wilmington County of New Castle; and the name of
the registered agent of the Corporation in the State of Delaware at such
address is Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the Corporation
is authorized to issue is Twenty-Two Million. Two Million (2,000,000) shares
shall be Preferred Stock, each having a par value of one-tenth cent ($.001).
Twenty Million (20,000,000) shares shall be Common Stock, each having a par
value of one-tenth cent ($.001). The Preferred Stock may be issued from time to
time in one or more series. The Board of Directors is authorized, by filing a
certificate pursuant to the applicable law of the State of Delaware (a
"Preferred Stock Designation"), to establish from time to time the number of
shares to be included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series
1
<PAGE>
and the qualifications, limitations or restrictions thereof, including but
not limited to the fixing or alteration of the dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preferences of any wholly unissued series of Preferred Stock; and to increase or
decrease the number of shares of any series subsequent to the issue of shares of
that series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
No share or shares of any class or series of Preferred Stock acquired by
the corporation by reason of redemption, purchase, conversion or otherwise shall
be reissued as part of such class or series, and the Board of Directors is
authorized, pursuant to Section 243 of the Delaware General Corporation Law, to
retire any such share or shares. The retirement of any such share or shares
shall not reduce the total authorized number of shares of Preferred Stock.
The first series of Preferred Stock shall consist of Forty Thousand One
Hundred Fifty (40,150) shares designated Class A Senior Preferred Stock (the
"Class A Preferred Stock"). The second series of Preferred Stock shall consist
of Fifty Thousand (50,000) shares designated Class B Senior Preferred Stock (the
"Class B Preferred Stock"). The third series of Preferred Stock shall consist
of One Hundred Fifty Thousand (150,000) shares designated Class C Junior
Participating Cumulative Preferred Stock (the "Series C Preferred Stock").
The rights, preferences, privileges and restrictions granted to or imposed
upon the Common Stock and the Preferred Stock are as follows:
L. DIVIDENDS AND DISTRIBUTIONS.
(a) COMMON STOCK. No distribution (as defined below) shall be made
to the holders of Common Stock so long as any shares of Preferred Stock are
outstanding or any accrued dividends thereon remain unpaid. As used in
this Section 1(a), "distribution" means the transfer of cash, obligations
of the Corporation or property without consideration or at less than fair
market value (but in such event only to the extent of the shortfall),
whether by way of dividend or otherwise (except a dividend in shares of the
Corporation) or the purchase or redemption of shares of the Corporation for
cash, obligations of the Corporation or property, including any such
transfer, purchase or redemption by a subsidiary of the Corporation, but
excluding repurchase of shares of employees of the Corporation or of any
affiliate thereof upon termination of their employment with the Corporation
and all affiliates thereof or otherwise pursuant to agreements providing
for the right of said repurchase between the Corporation and such persons
at a price not higher than the original purchase price of such stock or the
then current book value.
(b) CLASS A PREFERRED STOCK. No dividends shall accrue or be payable
on the Class A Preferred Stock prior to January l, 1993. The holders of
any outstanding shares of Class A Preferred Stock shall be entitled to
receive, and there shall accrue and become
2
<PAGE>
payable, on December 31 in each calendar year commencing with 1993 in which
such shares are outstanding at June 30 of such year, an annual dividend in
an amount equal to $6.00 per share and no more, payable out of funds
legally available therefor, at the election of the Board of Directors,
either in cash or in shares of Class A Preferred Stock having an aggregate
liquidation preference equal to the amount of the dividend. Any dividend
on Class A Preferred Stock not paid (in a form permitted or required by
this paragraph(b)) shall cumulate, whether or not funds were legally
available therefor.
(c) CLASS B PREFERRED STOCK. No dividends will accrue or be payable
on the Class B Preferred Stock prior to December 31, 1993. If in any year
thereafter the Corporation for any reason does not redeem all or any
portion of the Class B Preferred Stock pursuant to Section 3(a)(iv), a
dividend shall accrue and be payable on the Series B Preferred Stock in
accordance with the terms of this paragraph 1(c). For purposes of
calculating the amount of the dividend payable on the Class B Preferred
Stock, if any, the Corporation shall maintain a record of the total number
of shares which it has not redeemed pursuant to Section 3(a)(iv) and which
it has not subsequently redeemed pursuant to Section 3(a)(i)(B)
(collectively the "Deferred Redemption Shares"). The dividend shall accrue
and be payable quarterly on May 2, August 2, November 2 and February 2 of
each year commencing on May 2, 1994 (each a "Dividend Date") out of funds
legally available therefor to the holder of record of the Class B Preferred
Stock on each such Dividend Date. The amount of the dividend per share, if
any, for a particular Dividend Date shall be equal to (x) the product of
(i) the number of Deferred Redemption Shares on such Dividend Date and
(ii) $3.75, divided by (y) the number of shares of Class B Preferred Stock
outstanding on such Dividend Date. Any dividends on Class B Preferred
Stock not paid (in a form permitted or required by this paragraph (c))
shall cumulate, whether or not funds were legally available therefor.
(d) (i) SERIES C PREFERRED STOCK. The holders of shares of Series C
Preferred Stock, in preference to the holders of shares of Common Stock and
of any other junior stock of the Corporation that may be outstanding, 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 tenth 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 C Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the
greater of (i) $.25 per share ($1.00 per annum), or (ii) 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 or
combination or
3
<PAGE>
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series C Preferred Stock. In the event
that the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then and in each such event, the amount to which the holder
of each share of Series C Preferred Stock was entitled immediately prior to
such event under clause (ii) 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.
(ii) The Corporation shall declare a dividend or distribution
on the Series C Preferred Stock as provided in paragraph (d)(i) of this
Section 1 contemporaneously with any declaration of 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 Date, a dividend of $.25 per share ($1.00 per
annum) on the Series C Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series C Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series C
Preferred Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which cash
dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of holders of
shares of Series C Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which cases
such dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall cumulate but
shall not bear interest. Dividends paid on the shares of Series C
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 C Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
2. PREFERENCE ON LIQUIDATION.
(a) CLASS A AND CLASS B PREFERRED STOCK.
(i) LIQUIDATION AMOUNT. In the event of any liquidation,
dissolution or winding up of the Corporation, the holders of shares of
Class A Preferred Stock or Class B Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders' whether from capital, surplus or
earnings, before any payment shall be made in respect of Common Stock the
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amount of One Hundred Dollars ($100) per share for each share of Class A
Preferred Stock or Class B Preferred Stock then held by them, plus all
accrued and unpaid dividends thereon to the date fixed for distribution.
After setting apart or paying in full the preferential amounts due the
holders of record of the issued and outstanding Class A Preferred Stock and
Class B Preferred Stock, the Corporation's remaining equity (whether stated
capital or surplus), if any, shall, subject to Section 2(b), be distributed
exclusively to the holders of record of the issued and outstanding Common
Stock. If upon liquidation, dissolution or winding up of the Corporation,
the assets of the Corporation available for distribution to its
stockholders shall be insufficient to pay the holders of the Preferred
Stock the full preferential amounts to which they shall be entitled, such
assets as are available shall be distributed (pro rata, if necessary) first
to the holders of Class A Preferred Stock, and any assets remaining after
payment in full of the preferential amount on the Class A Preferred Stock
shall be distributed pro rata to the holders of the Class B Preferred
Stock.
(ii) MERGER OR SALE OF ASSETS. The merger or consolidation of
the Corporation into or with another corporation, or the sale of all or
substantially all of the assets of the Corporation, shall not be deemed to
be a liquidation, dissolution or winding up of the Corporation as those
terms are used in paragraph (a); provided, however, that nothing in this
clause (ii) shall be interpreted to lessen any rights granted to holders of
Class A Preferred Stock and Class B Preferred Stock in Section 4(a)(ii)
hereof.
(b) SERIES C PREFERRED STOCK.
(i) LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made to:
(A) the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series C Preferred Stock unless, prior
thereto, the holders of shares of Series C Preferred Stock shall
have received the greater of (1) $1.00 per share ($.01 per one
one-hundredth of a share), plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, or (2) an aggregate amount
per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock; or
(B) the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series C Preferred Stock, except
distributions made ratably on the Series C Preferred Stock and
all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
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In the event that the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then and in each such event, the
aggregate amount to which the holder of each shares of Series C Preferred
Stock was entitled immediately prior to such event under the proviso in
clause (A) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event, and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(ii) RANK. Unless otherwise provided in this Certificate of
Incorporation or a Certificate of Designation relating to a subsequent
series of Preferred Stock, the Series C Preferred Stock shall rank junior
to all other series of Preferred Stock as to the payment of dividends and
the distribution of assets on liquidation, dissolution or winding up, and
senior to the Common Stock.
3. REDEMPTION.
(a) CLASS A AND CLASS B PREFERRED STOCK.
(i) REDEMPTION AT THE OPTION OF THE CORPORATION.
(A) Subject to the provisions of Section 3(a)(vi), the
Corporation may at any time it may lawfully do so, at the option
of the Board of Directors, redeem the Class A Preferred Stock or
Class B Preferred Stock in whole or in part by paying in cash
therefor One Hundred Dollars ($100) for each share of Class A
Preferred Stock or Class B Preferred Stock, as the case may be,
together with all accrued and unpaid dividends on each such share
(the "Preferred Stock Redemption Price"); and
(B) So long as any Deferred Redemption Shares (as
defined in Section 1(c) hereof) exist, the Corporation may, at
any time it may lawfully do so, at the option of the Board of
Directors, redeem any amount of Class B Preferred Stock not in
excess of the number of Deferred Redemption Shares calculated
immediately before such redemption at the Preferred Stock
Redemption Price. Any redemption of Class B Preferred Stock made
pursuant to this Section 3(a)(i)(B) need not comply with the
first sentence of Section 3(a)(vii). The Notice of Optional
Redemption required by Section 3(a)(vi) in respect of stock
redeemed pursuant to this Section 3(a)(i)(B) shall specifically
state the redemption is being made pursuant to this
Section 3(a)(i)(B).
(ii) MANDATORY REDEMPTION OF CLASS A PREFERRED STOCK IN 1993.
Between January 1, 1993 and May l, 1993 (both inclusive), the Corporation
shall redeem all of the outstanding Class A Preferred Stock, or so much of
the outstanding Class A
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Preferred Stock as may be legally redeemed by paying in cash therefor the
Preferred Stock Redemption Price plus interest, if any, accrued thereon (at
the rate announced by Bank of America NT & SA from time to time as its
Reference Rate) from January 31, 1993 through May l, 1993 (or, if sooner,
the payment date), subject to the following limitations:
(A) The redemption (including interest) shall be
required only to the extent, if any, that the corporation's
Stockholders Equity (as defined below) at December 3l, 1992 was
greater than the difference between (1) $l7,000,000 and (2) the
total dollar amount paid to redeem any Class A Preferred Stock
and Class B Preferred Stock on or prior to December 31, 1992
pursuant to Section 3(a)(i)(A); and
(B) The redemption shall be required only to the
extent, if any, it is permitted by the terms of the Acquisition
Financing Agreements (as defined below).
(iii) MANDATORY REDEMPTION OF CLASS A PREFERRED STOCK AFTER
1993. If all of the Class A Preferred Stock is not redeemed by May 1,
1993, then, between January l and May l (both inclusive) in each year
thereafter, the Corporation shall redeem Ten Thousand (10,000) shares (or
such lesser amount as is then outstanding) of Class A Preferred Stock or so
much thereof as may legally be redeemed, in cash at the Preferred Stock
Redemption Price plus interest, if any, accrued thereon (at the rate
announced by Bank of America NT & SA from time to time as its Reference
Rate) from January 31 through May l of the year of the redemption (or, if
sooner, the payment date), subject to the following limitations:
(A) The redemption (including interest) provided for
in this Section 3(a)(iii) for a particular year shall be required
only to the extent, if any, that the Corporation's Stockholders
Equity as of December 31 of the immediately preceding year shall
exceed the sum of (1) $12,000,000 and (2) the aggregate
liquidation preference of all Class A Preferred Stock and Class B
Preferred Stock outstanding on January l of such year less
$1,000,000 (or such lesser liquidation preference as applies to
all Class A Preferred Stock then outstanding); and
(B) The redemption shall be required only to the
extent, if any, it is permitted by the terms of the Acquisition
Financing Agreements.
(iv) MANDATORY REDEMPTION OF SERIES B PREFERRED STOCK. Between
January l and May 1 (both inclusive) of each year from 1994 to 1997
(inclusive), the Corporation shall redeem Ten Thousand (10,000) shares (or
such lesser amount as is then outstanding) of the Class B Preferred Stock,
or so much thereof as may legally be redeemed, in cash at the Preferred
Stock Redemption Price plus interest, if any, accrued thereon (at the rate
announced by Bank of America NT & SA from time to time as its Reference
Rate) from January 31 through May l of the year of the redemption (or, if
sooner, the payment date), subject to the following limitations:
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<PAGE>
(A) The redemption (including interest) provided for
in this Section 3(a)(iv) for a particular year shall be required
only to the extent, if any, that the Corporation's Stockholders
Equity as of December 31 of the immediately preceding year shall
exceed the sum of (1) $15,000,000 and (2) the aggregate
liquidation preference of all Class A Preferred Stock and Class B
Preferred Stock outstanding on January l of such year less
$1,000,000 (or such lesser liquidation preference as applies to
all Class B Preferred Stock then outstanding);
(B) The redemption shall be required only to the
extent, if any, it is permitted by the terms of the Acquisition
Financing Agreements;
(C) No redemption shall be required if the ratio of
(1) the Corporation's EBIT for the preceding calendar
year to
(2) the Corporation's Senior Debt Service for the
preceding calendar year is below 150%; provided that, if
such ratio is greater than 150% but less than 200% and if
all of the other conditions to mandatory redemption set
forth in this Section 3(a)(iv) are satisfied, the
Corporation may by written notice given to the holder of
the Class B Preferred Stock on or before May 1 of such
year elect not to redeem all or any portion of the Class B
Preferred Stock then required to be redeemed pursuant to
this Section 3(a)(iv). The giving of such notice shall
create Deferred Redemption Shares as defined in
Section 1(c) and give rise to a dividend obligation in
respect of the Class B Preferred Stock which shall accrue
and be payable in accordance with Section 1(c); and
(D) The redemption shall be required only to the
extent, if any, it will not reduce
(1) the amount of funds available for borrowing under
the Corporation's revolving loan agreements, plus
(2) the cumulative amount of Business Expansion Debt
theretofore drawn under such revolving loan agreements,
minus
(3) the outstanding principal amount of the term loans
under the Acquisition Financing Agreements,
below $6,500,000.
(v) MANDATORY REDEMPTION OF ALL CLASS A AND CLASS B PREFERRED
STOCK. Notwithstanding anything to the contrary in this Section 2, on
December 31, 1997
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<PAGE>
the Corporation shall redeem in cash, out of any funds legally available
therefor, all outstanding shares of Class A and Class B Preferred Stock at
the Preferred Stock Redemption Price.
(vi) NOTICE OF OPTIONAL REDEMPTION. Notice of any redemption
pursuant to Section 3 (a)(i) shall be given by certified or registered
mail, postage prepaid, to the holders of record of the Class A Preferred
Stock and/or Class B Preferred Stock to be redeemed at least 15 but no more
than 30 days prior to the proposed date for redemption, such notice to be
addressed to each such stockholder at the address of such holder given to
the Corporation for the purposes of notice, or if no such address appears
or is so given, at the place where the principal office of the Corporation
is located. Such notice shall state the date fixed for redemption, the
number of shares to be redeemed and the redemption price per share and
shall call upon such holder to surrender to the Corporation on said date at
the place designated in the notice such holder's certificate or
certificates representing the shares to be redeemed. On or after the date
fixed for redemption and stated in such notice, each holder of shares of
Class A Preferred Stock and/or Class B Preferred Stock notified of the
redemption shall surrender the certificate(s) evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the redemption price. If less than all the
shares represented by any such surrendered certificate(s) are redeemed, a
new certificate shall be issued representing the unredeemed shares. If
such notice of redemption shall have been duly given, and if on the date
fixed for redemption funds necessary for the redemption shall be available
therefor, then, as to any certificates evidencing any Class A Preferred
Stock and Class B Preferred Stock so called for redemption and not
surrendered, all rights of the holders of such shares so called for
redemption and not surrendered shall cease with respect to such shares,
except only the right of the holders to receive the redemption price
without interest upon surrender of their certificates therefor.
(vii) PARTIAL REDEMPTION. In the case of the redemption of a
part only of the outstanding Class A or Preferred Stock or Class B
Preferred Stock under Section 3(a)(i)(A), the Corporation shall redeem the
Class A Preferred Stock and Class B Preferred Stock then outstanding on a
pro rata basis (rounded to the nearest whole share). If Class A Preferred
Stock or Class B Preferred Stock is held by more than one holder and less
than all the outstanding shares of such class are to be redeemed, the
amount to be redeemed shall be allocated (rounded to the nearest whole
share) among the holders of such class pro rata in accordance with the
amount held by each.
(b) NO REDEMPTION OF SERIES C PREFERRED STOCK. The shares of
Series C Preferred Stock shall not be redeemable. Notwithstanding the
foregoing, the Corporation may acquire shares of Series C Preferred Stock
in any other manner permitted by law or this Certificate of Incorporation.
Any shares of Series C Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock,
without designation as to series, and may be reissued as part of any series
of Preferred Stock
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created by resolution or resolutions of the Board of Directors (including
Series C Preferred Stock), subject to the conditions and restrictions on
issuance set forth herein.
4. VOTING.
(a) CLASS A AND CLASS B PREFERRED STOCK. The holders of the Class A
Preferred Stock or Class B Preferred Stock shall not be entitled to vote
for directors of the Corporation or upon any matter submitted to a vote of
stockholders, except that:
(i) Any amendment of this Certificate of Incorporation or the
Bylaws of the Corporation which adversely affects the rights, preferences,
privileges and restrictions granted to or imposed upon the Class A
Preferred Stock or Class B Preferred Stock in a manner different than its
effect upon other capital stock of the Corporation, shall not be adopted
without the vote of the holder(s) of two-thirds of the Class A Preferred
Stock or Class B Preferred Stock affected by such amendment then
outstanding.
(ii) Any increase in the authorized number of shares of any
class or series of Preferred Stock or any authorization or designation of a
class or series of Preferred Stock on a parity with the Class B Preferred
Stock shall not be adopted without the vote of the holder(s) of two-thirds
of the Class B Preferred Stock then outstanding.
(iii) Any authorization or designation of any equity security
which is senior to the Class B Preferred Stock shall not be adopted without
the vote of the holder(s) of two-thirds of the Class B Preferred Stock then
outstanding.
(iv) In the event that for any reason the Corporation does not
redeem all or any portion of the Class B Preferred Stock pursuant to
Section 3(a)(iv), the holder(s) of Class B Preferred Stock, voting as a
separate class, shall have the right to elect two (2) members of the Board
of Directors, with such right commencing at the time of the failure to
redeem and remaining in effect until the date upon which the Corporation
has redeemed all Deferred Redemption Shares (as defined in Section 1(c)).
(v) Such holders shall have the right to vote to the extent
required by the Delaware General Corporation Law.
(b) SERIES C PREFERRED STOCK. The holders of shares of Series C
Preferred Stock shall have the following voting rights:
(i) Each share of Series C Preferred Stock shall entitle the
holder thereof to 100 votes (and each one one-hundredth of a share of
Series C Preferred Stock shall entitle the holder thereof to one vote) on
all matters submitted to a vote of the stockholders of the Corporation. In
the event that the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then and in each such event, the number of votes
per share to which holders of shares of Series C
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<PAGE>
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately after such
event, and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(ii) Except as otherwise provided in this Certificate of
Incorporation or herein or by law, the holders of shares of Series C
Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of the
stockholders of the Corporation.
(iii) In addition, the holders of shares of Series C Preferred
Stock shall have the following special voting rights:
(A) In the event that at any time dividends on
Series C Preferred Stock, whenever accrued and whether or not
consecutive, shall not have been paid or declared and a sum
sufficient for the payment thereof set aside, in an amount
equivalent to six quarterly dividends on all shares of Series C
Preferred Stock at the time outstanding, then and in each such
event, the holders of shares of Series C Preferred Stock and each
other series of Preferred Stock now or hereafter issued that
shall be accorded such class voting right by the Board of
Directors and that shall have the right to elect two directors as
the result of a prior or subsequent default in payment of
dividends on such series (each such other series being
hereinafter called "Other Series of Preferred Stock"), voting
separately as a class without regard to series, shall be entitled
to elect two directors at the next annual meeting or a special
meeting called for such purpose, in addition to the directors to
be elected by the holders of all shares of the Corporation
entitled to vote for the election of directors. The remainder of
the board shall be elected by the holders of all shares
(including the Series C Preferred Stock and each Other Series of
Preferred Stock) of the Corporation entitled to vote for the
election of directors; provided, however, that the Series C
Preferred Stock and each Other Series of Preferred Stock, voting
as a class, shall not have the right to elect more than one-third
of the directors pursuant to the provisions of this
subsection (b)(iii)(A). Such special voting right of the holders
of shares of Series C Preferred Stock may be exercised until all
dividends in default on the Series C Preferred Stock shall have
been paid in full or declared and funds sufficient therefor set
aside, and when so paid or provided for, such special voting
right of the holders of shares of Series C Preferred Stock shall
cease, but subject always to the same provisions for the vesting
of such special voting rights in the event of any such future
dividend default or defaults. The provisions of this
subsection (b)(iii)(A) shall be in addition to, and shall not
affect, any other rights that the holders of any Other Series of
Preferred Stock may hold with respect to the election of
directors. In the event that the provisions of this
subsection (b)(iii)(A) are
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triggered, the authorized number of directors of the Corporation
shall be increased to such number as is necessary to effect the
voting rights set forth in this subsection (b)(iii)(A)
(B) At any time after such special voting rights shall
have so vested in the holders of shares of Series C Preferred
Stock, the Secretary of the Corporation may, and upon the written
request of the holders of record of 10% or more of the shares of
Series C Preferred Stock and each Other Series of Preferred Stock
then outstanding addressed to the Corporation shall, call a
special meeting of the holders of all shares of the Corporation
entitled to vote, for the election of directors to be elected as
herein provided, to be held within 60 days after such call and at
the place and upon the notice provided by law and in the Bylaws
for the holding of meetings of stockholders; provided, however,
that the Secretary shall not be required to call such special
meeting in the case of any such request received less than
90 days before the date fixed for any annual meeting of
stockholders, and if in such case such special meeting is not
called or held, the holders of shares of Series C Preferred Stock
so entitled to vote shall be entitled to exercise the special
voting rights provided in this paragraph at such annual meeting.
No such special meeting and no adjournment thereof shall be held
on a date later than 60 days before the annual meeting of
stockholders. If, at any meeting so called shares of Series C
Preferred Stock have the special voting rights provided for in
this paragraph, the holders of not less than 40% of the aggregate
voting power of Series C Preferred Stock and each Other Series of
Preferred Stock then outstanding are present in person or by
proxy, such percentage shall be sufficient to constitute a quorum
for the election of the two directors as herein provided.
(C) Upon the election at such meeting by the holders
of shares of Series C Preferred Stock and each Other Series of
Preferred Stock, voting as a class, of the directors they are
entitled so to elect, the persons so elected, together with such
persons as may be directors or as may have been elected as
directors by the holders of all shares (including Series C
Preferred Stock and each Other Series of Preferred Stock)
otherwise entitled to vote for directors, shall constitute the
duly elected directors of the Corporation. The directors so
elected by holders of shares of Series C Preferred Stock and each
Other Series of Preferred Stock, voting as a class, shall serve
until the next annual meeting or until their respective
successors shall be elected and qualified, or if any such
director is a member of a class of directors under provisions
dividing the directors into classes, each such director shall
serve until the annual meeting at which the term of office of
such director's class shall expire or until such director's
successor shall be elected and shall qualify, and at each
subsequent meeting of stockholders at which the directorship of
any director elected by the vote of holders of shares of Series C
Preferred
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Stock and each Other Series of Preferred Stock under the special
voting rights set forth in this paragraph is up for election,
said special class voting rights shall apply in the reelection of
such director or in the election of such directors successor;
provided, however, that whenever the holders of shares of Series
C Preferred Stock and each Other Series of Preferred Stock shall
be divested of the special rights to elect two directors as above
provided, the terms of office of all persons elected as directors
by the holders of shares of Series C Preferred Stock and each
Other Series of Preferred Stock, voting as a class, shall
forthwith terminate, and two directors shall be elected by the
holders of all shares (including the Series C Preferred Stock and
each Other Series of Preferred Stock) to fill their positions.
(D) If, at any time after a special meeting of
stockholders or an annual meeting of stockholders at which the
holders of shares of Series C Preferred Stock and each Other
Series of Preferred Stock, voting as a class, have elected
directors as provided above, and while the holders of shares of
Series C Preferred Stock and each Other Series of Preferred Stock
shall be entitled so to elect two directors, the number of
directors who have been elected by the holders of shares of
Series C Preferred Stock and each Other Series of Preferred Stock
(or who by reason of one or more resignations, deaths or removals
have succeeded any directors so elected) shall by reasons of
resignation, death or removal be less than two but at least one,
the vacancy in the directors so elected by the holders of shares
of the Series C Preferred Stock and each Other Series of
Preferred Stock may be filled by the remaining director elected
by such holders. In the event that such election shall not occur
within 30 days after such vacancy arises, or in the event that
there shall not be incumbent one director so elected by such
holders, the Secretary of the Corporation may, and upon the
written request of the holders of record of 10% or more of the
shares of Series C Preferred Stock and each Other Series of
Preferred Stock then outstanding addressed to the Secretary at
the principal office of the Corporation shall, call a special
meeting of the holders of shares of Series C Preferred Stock and
each Other Series of Preferred Stock so entitled to vote, for an
election to fill such vacancy or vacancies, to be held within
60 days after such call and at the place and upon the notice
provided by law and in the Bylaws for the holding of meetings of
stockholders; provided, however, that the Secretary shall not be
required to call such special meeting of stockholders, and if in
such case such special meeting is not called, the holders of
shares of Series C Preferred Stock so entitled to vote shall be
entitled to fill such vacancy or vacancies at such annual
meeting. If any such special meeting required to be called as
above provided shall not be called by the Secretary within
30 days after receipt of any such request, the holders of record
of 10% or more of the shares of Series C Preferred Stock and each
Other Series of Preferred Stock then outstanding may designate in
writing one of their number to call such
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meeting, and the person so designated may, at the expense of the
Corporation, call such meeting to be held at the place and upon
the notice above provided, and for that purpose shall have access
to the stock books of the Corporation; no such special meeting
and no adjournment thereof shall be held on a date later than
60 days before the annual meeting of stockholders.
(iv) Nothing herein shall prevent the directors or stockholders
from taking any action to increase the number of authorized shares of
Series C Preferred Stock, or increasing the number of authorized shares of
Preferred Stock of the same class as the Series C Preferred Stock or the
number of authorized shares of Common Stock, or changing the par value of
the Common Stock or Preferred Stock, or issuing options, warrants or rights
to any class of stock of the Corporation as authorized by this Certificate
of Incorporation, as it may hereafter be amended.
(v) Except as set forth herein, holders of shares of Series C
Preferred Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote as set
forth in this Certificate of Incorporation or by law) for taking any
corporate action.
5. CONVERSION RIGHTS OF CLASS A PREFERRED STOCK.
(a) CONVERSION OF CLASS A PREFERRED STOCK. Upon or at any time after
the effective date of a registration statement for the initial offering of
the Corporation's Common Stock to the general public, each holder of
Class A Preferred Stock which was not redeemed on or before such effective
date may, upon surrender of the certificates therefor at the principal
office of the Corporation, convert any or all of such holder's Class A
Preferred Stock into a number of fully paid and non-assessable shares of
Common Stock of the Corporation equal to (x) $100 multiplied by the number
of shares of Class A Preferred Stock to be converted, divided by (y) the
price to the public in such offering, in case the Conversion Date (as
defined below) is such effective date, or, in the case of a later
Conversion Date, the closing price as publicly reported on the principal
established public market for the Common Stock on the Conversion Date (or,
if the Conversion Date is not a trading day, the last prior trading day)
or, if no such closing price was publicly reported for such day or last
trading day, the mean of the asked and bid prices publicly reported on the
principal established public market on such day or last trading day.
Notwithstanding anything in this Section 5, any conversion right shall be
suspended for the period when no conversion price can be determined
pursuant to the preceding sentence.
(b) PROCEDURE FOR CONVERSION. Before any holder of Class A Preferred
Stock shall be entitled to convert the same into shares of Common Stock he
shall surrender the certificate or certificates therefor, duly endorsed in
blank or accompanied by forms appropriate for transfer, at the principal
office of the Corporation and shall give written notice to the Corporation
at its principal office that he elects to convert the same and shall state
in writing therein the name or names in which he wishes a certificate or
certificates
14
<PAGE>
for shares of Common Stock to be issued. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Class A Preferred Stock or to his nominee or nominees, certificates for the
number of full shares of Common Stock to which he shall be entitled. Upon
conversion, no fractional shares shall be issued and in lieu thereof the
Corporation shall pay in cash the fair market value of such fraction as
determined by the Board of Directors. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of
such surrender of the Class A Preferred Stock to be converted (such time
being herein called the "Conversion Date"), and the person or persons
entitled to receive the shares of Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock on the Conversion Date.
(c) MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. (i) In the event of
a merger or consolidation of the Corporation with or into another
corporation, or the sale of all or substantially all of the Corporation's
properties and assets to any other person, then, as a part of such merger,
consolidation or sale, provision shall be made so that the holders of the
Class A Preferred Stock shall thereafter be entitled to receive upon
conversion thereof, when and as such conversion right arises, the number of
shares of stock or other securities or property of the Corporation, or of
the successor corporation resulting from such merger or consolidation or
sale to which a holder of Common Stock deliverable upon conversion would
have been entitled on such merger, consolidation, or sale. Nothing in this
Section 5(c) shall diminish the voting rights of the Class A Preferred
Stock or Class B Preferred Stock provided for in Section 4(a)(ii).
(d) NOTICE OF RECORD DATE. If, at any time after the Class A
Preferred Stock has become convertible under this Section 5, there is any
capital reorganization of the Corporation, any reclassification or
recapitalization of the capital stock of the Corporation or any transfer of
all or substantially all of the assets of the Corporation to any other
person, any consolidation or merger, or any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, the Corporation
shall mail to each holder of Class A Preferred Stock at least 30 days prior
to the record date specified therein, a notice specifying (1) the date on
which any such transaction is expected to become effective, and (2) the
time, if any, that is to be fixed, as to when the holders of record of
Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other
property deliverable upon the consummation of such transaction. Nothing in
this Section 5(d) shall impair the voting rights of the Class A Preferred
Stock or Class B Preferred Stock provided in Section 4(a)(ii).
(e) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. If the Class A
Preferred Stock becomes convertible under this Section 5, the Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the Class A Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Class A Preferred Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all outstanding shares of
Class A Preferred Stock, the Corporation will take
15
<PAGE>
such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purposes.
6. CERTAIN DEFINED TERMS.
As used in this Article FOURTH, the following terms have the meanings
indicated:
ACQUISITION FINANCING AGREEMENTS--the agreements and other instruments
by which the Corporation or any of its assets are bound and which were entered
into or created (i) at or before the closing of the Purchase Agreement in
connection with its borrowing of money for the payment of the "Purchase Price"
under the Purchase Agreement and for its working capital and other funding
needs, or (ii) in connection with any refinancing of the debt described in
clause (i) on terms not more burdensome on the Class A Preferred Stock or
Class B Preferred Stock, in the aggregate, than the terms applicable under
clause (i).
BUSINESS EXPANSION DEBT--any indebtedness incurred by the Corporation
or its subsidiaries in connection with the acquisition of one or more businesses
other than those financed by the Acquisition Financing Agreements, or to
increase the number of separate locations at which the Corporation conducts
material sales or production operations (other than any merely temporary
location or any location within 100 miles of another location being disposed of,
deactivated or put to another use at substantially the same time). For purposes
of allocating indebtedness between Business Expansion Debt and other kinds of
indebtedness, amounts borrowed on a term basis for such purposes shall be
considered as outstanding Business Expansion Debt in the amount borrowed less
any subsequent repayments of such term debt. In the case of term debt, part of
which was incurred for such purposes and part of which was incurred for other
purposes but which is otherwise homogeneous, repayments shall be allocated pro
rata with the aggregate amounts originally borrowed for such purposes and for
other purposes.
EBIT--for any year, the consolidated net earnings of the Corporation
and its subsidiaries before deduction of interest, original issue discount, debt
issuance expense amortization and income tax expense, all determined in
accordance with generally accepted accounting principles consistently applied,
as set forth on the Corporation's audited annual financial statements.
SENIOR DEBT SERVICE--for any year, the aggregate amount payable in
such year by the Corporation and its subsidiaries on a consolidated basis on
account of principal of and interest on obligations incurred for the borrowing
of money or the deferred purchase price (or capitalized leases) of any property
with an original term of more than one year, other than (in each case) Business
Expansion Debt.
STOCKHOLDERS EQUITY--at any date, the consolidated stockholders equity
(both Class A Preferred Stock and Class B Preferred Stock and Common Stock) of
the Corporation and its subsidiaries, all determined in accordance with
generally accepted accounting principles consistently applied, as set forth on
the Corporation's audited annual financial statements.
16
<PAGE>
7. CERTAIN ADDITIONAL PROVISIONS OF SERIES C PREFERRED STOCK.
(a) CERTAIN RESTRICTIONS.
(i) Whenever any dividends or other distributions payable on
the Series C Preferred Stock as provided in Section 1 hereof are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series C Preferred
Stock outstanding shall have been paid in full, the Corporation shall not,
directly or indirectly:
(A) declare or pay dividends on, or make any other
distributions with respect to, any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series C Preferred Stock;
(B) declare or pay dividends on, or make any other
distributions with respect to, any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series C Preferred Stock, except
dividends paid ratably on shares on the Series C Preferred Stock
and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;
(C) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series C Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series C Preferred
Stock; or
(D) purchase or otherwise acquire for consideration
any shares of Series C Preferred Stock, or any shares of stock
ranking on a parity with the Series C Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective Series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(ii) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration, directly or
indirectly, any shares of stock of the Corporation unless the Corporation
could, under paragraph (i) of this Section 7(a), purchase or otherwise
acquire such shares at such time and in such manner.
17
<PAGE>
(b) AMENDMENT. This Certificate of Incorporation shall not be
amended in any manner that would materially and adversely alter or change
the powers, preference or special rights of the Series C Preferred Stock
without the affirmative vote of the holders of at least two-thirds of he
outstanding shares of Series C Preferred Stock, voting together as a single
series.
(c) FRACTIONAL SHARES. Series C Preferred Stock may be issued in
fractions of a share (in one one-hundredths (1/100) of a share and integral
multiples thereof) that shall entitle the holder thereof, in proportion to
such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and have the benefit of all other
rights of holders of shares of Series C Preferred Stock.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
SEVENTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
l. The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
fixed by, or in the manner provided in, the By-Laws. The phrase "whole
Board" and the phrase "total number of directors" shall be deemed to have
the same meaning, to wit, the total number of directors which the
Corporation would have if there were no vacancies. No election of
directors need be by written ballot.
2. After the original or other By-Laws of the Corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
18
<PAGE>
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and, after the Corporation has received any payment for any of
its stock, the power to adopt, amend, or repeal the By-Laws of the
Corporation may be exercised by the Board of Directors of the Corporation;
provided however, that any provision for the classification of directors of
the Corporation for staggered terms pursuant to the provisions of
subsection (d) of Section 141 of the General Corporation Law of the State
of Delaware shall be set forth in an initial By-Law or in a By-Law adopted
by the stockholders entitled to vote of the Corporation unless provisions
for such classification shall be set forth in this Certificate of
Incorporation.
3. Whenever the Corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever
the Corporation shall be authorized to issue more than one class of stock,
no outstanding share of any class of stock which is denied voting power
under the provisions of the Certificate of Incorporation shall title the
holder thereof to the right to vote at any meeting of stockholders except
as the provisions of paragraph (2) of subsection (b) of section 242 of the
General Corporation Law of the State of Delaware shall otherwise require;
provided, that no share of any such class which is otherwise denied voting
power shall entitle the holder thereof to vote upon she increase or
decrease in the number of authorized shares of said class.
EIGHTH: The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by paragraph (7) of
subsection (b) of Section 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
NINTH: Following registration of any of the classes of equity securities
of the Corporation pursuant to the provisions of the Securities Exchange Act of
1934, as amended, no action shall be taken by the stockholders of the
Corporation except at an annual or special meeting of stockholders called in
accordance with the Bylaws and no action shall be taken by the stockholders by
written consent.
TENTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article TENTH.
19
<PAGE>
IN WITNESS WHEREOF, Building Materials Holding Corporation has caused its
corporate seal to be affixed hereto and this restated certificate of
incorporation to be signed by its President and attested by its Secretary, on
this 23 day of September, 1997.
BUILDING MATERIALS HOLDING
CORPORATION
By:
------------------------------------------
Name: Robert E. Mellor
Title: President and Chief Executive Officer
(SEAL)
Attest:
- ------------------------------
Name: Paul S. Street
Title: Secretary
20
<PAGE>
STATE OF DELAWARE
CERTIFICATE OF CORRECTION
FILED TO CORRECT A CERTAIN ERROR
IN THE CERTIFICATE OF INCORPORATION
FILED IN THE OFFICE OF THE
SECRETARY OF STATE OF DELAWARE
ON SEPTEMBER 23, 1997
BUILDING MATERIALS HOLDING CORPORATION, a corporation organized and
existing under and by virtue of the General Corporation Law of Delaware (the
"Corporation") hereby certifies that:
1. The name of the corporation is Building Materials Holding Corporation.
2. The Restated Certificate of Incorporation of the Corporation was filed on
September 23, 1997 (the "Certificate").
3. The Certificate requires correction as permitted by Section 103 of the
General Corporation Law of Delaware.
4. The inaccuracies or defects to be corrected are as follows:
(a) Article FOURTH, Section 1(c) incorrectly used the term "Series B
Preferred Stock" when the term "Class B Preferred Stock" should have
been used.
Article FOURTH, Section 1(c) should instead read as follows:
(c) CLASS B PREFERRED STOCK. No dividends will accrue or be payable
on the Class B Preferred Stock prior to December 31, 1993. If in
any year thereafter the Corporation for any reason does not redeem all
or any portion of the Class B Preferred Stock pursuant to Section
3(a)(iv), a dividend shall accrue and be payable on the Class B
Preferred Stock in accordance with the terms of this paragraph 1(c).
For purposes of calculating the amount of the dividend payable on the
Class B Preferred Stock, if any, the Corporation shall maintain a record
of the total number of shares which it has not redeemed pursuant to
Section 3(a)(iv) and which it has not subsequently redeemed pursuant to
Section 3(a)(i)(B) (collectively the "Deferred Redemption Shares"). The
dividend shall accrue and be payable quarterly on May 2, August 2,
November 2 and February 2 of each year commencing on May 2, 1994 (each a
"Dividend Date") out of funds legally available therefor to the holder
of record of the Class B Preferred Stock on each such Dividend Date.
The amount of the dividend per share, if any, for a particular Dividend
Date shall be equal to (x) the product of (i) the number of Deferred
Redemption Shares on such Dividend Date and (ii) $3.75, divided by (y)
the number of shares of Class B Preferred Stock outstanding on such
Dividend Date. Any dividends on Class B
<PAGE>
Preferred Stock not paid (in a form permitted or required by this
paragraph (c)) shall cumulate, whether or not funds were legally
available therefor.
(b) Article FOURTH, Section 3(a)(iv) incorrectly used the term "Series B
Preferred Stock" when the term "Class B Preferred Stock" should have been
used.
Article FOURTH, Section 3(a)(iv) should instead read as follows:
(iv) MANDATORY REDEMPTION OF CLASS B PREFERRED STOCK. Between
January l and May 1 (both inclusive) of each year from 1994 to 1997
(inclusive), the Corporation shall redeem Ten Thousand (10,000) shares
(or such lesser amount as is then outstanding) of the Class B Preferred
Stock, or so much thereof as may legally be redeemed, in cash at the
Preferred Stock Redemption Price plus interest, if any, accrued thereon
(at the rate announced by Bank of America NT & SA from time to time as
its Reference Rate) from January 31 through May l of the year of the
redemption (or, if sooner, the payment date), subject to the following
limitations:
(A) The redemption (including interest) provided for
in this Section 3(a)(iv) for a particular year shall be required
only to the extent, if any, that the Corporation's Stockholders
Equity as of December 31 of the immediately preceding year shall
exceed the sum of (1) $15,000,000 and (2) the aggregate liquidation
preference of all Class A Preferred Stock and Class B Preferred
Stock outstanding on January l of such year less $1,000,000 (or
such lesser liquidation preference as applies to all Class B
Preferred Stock then outstanding);
(B) The redemption shall be required only to the
extent, if any, it is permitted by the terms of the Acquisition
Financing Agreements;
(C) No redemption shall be required if the ratio of
(1) the Corporation's EBIT for the preceding calendar year
to
(2) the Corporation's Senior Debt Service for
the preceding calendar year is below 150%; provided that, if such
ratio is greater than 150% but less than 200% and if all of the
other conditions to mandatory redemption set forth in this
Section 3(a)(iv) are satisfied, the Corporation may by written
notice given to the holder of the Class B Preferred Stock on or
before May 1 of such year elect not to redeem all or any portion
of the Class B Preferred Stock then required to be redeemed
pursuant to this Section 3(a)(iv). The giving of such notice
shall create Deferred Redemption Shares as defined in Section
1(c) and give rise to a dividend obligation in respect of the
Class B Preferred
<PAGE>
Stock which shall accrue and be payable in accordance with
Section 1(c); and
(D) The redemption shall be required only to the extent, if any,
it will not reduce
(1) the amount of funds available for borrowing under the
Corporation's revolving loan agreements, plus
(2) the cumulative amount of Business Expansion Debt
theretofore drawn under such revolving loan agreements, minus
(3) the outstanding principal amount of the term loans
under the Acquisition Financing Agreements,below $6,500,000.
(c) Article FOURTH, Section 7(d) was incorrectly omitted.
The following Article FOURTH, Section 7(d) should be inserted after
Section 7(c):
(d) CONSOLIDATION, MERGER, ETC.. In the event that 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, or otherwise changed, then and in each such event, the shares
of Series C Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate
number of stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event that the Corporation shall
at any time declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares
of Common Stock, then and in each such event, the amount set forth in
the preceding sentence with respect to the exchange or change of shares
of Series C Preferred Stock shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event, and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
<PAGE>
IN WITNESS WHEREOF, Building Materials Holding Corporation has caused this
certificate of correction to be signed by its Vice President-Finance and
Treasurer and attested by its Secretary, on this 30th day of September, 1997.
/s/ Ellis C. Goebel
------------------------------------
Ellis C. Goebel
Vice President-Finance and Treasurer
Attest:
/s/ Paul S. Street
- ------------------------------------
Paul S. Street
Secretary
<PAGE>
EXHIBIT 11
BUILDING MATERIALS HOLDING CORPORATION
Computation of Earnings Per Share
COMPUTATION OF PRIMARY EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income $4,212,000 $4,560,000 $8,128,000 $8,840,000
Class B preferred stock accretion -- (8,500) (6,500) (25,500)
---------- ---------- ----------- ----------
Adjusted net income $4,212,000 $4,551,500 $8,121,500 $8,814,500
========== ========== =========== ==========
Weighted average shares outstanding 11,833,728 11,807,613 11,830,365 10,401,785
Net effect of dilutive stock options based on the
treasury stock method using average market price 218,188 236,521 216,131 247,912
---------- ---------- ---------- ----------
Total common shares and equivalents 12,051,916 12,044,134 12,046,496 10,649,697
========== ========== ========== ==========
PRIMARY INCOME PER SHARE $ .35 $ .38 $ .67 $ .83
========== ========== =========== ==========
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
Adjusted net income $4,212,000 $4,551,500 $8,121,500 $8,814,500
========== ========== =========== ==========
Weighted average shares outstanding 11,833,728 11,807,613 11,830,365 10,401,785
Net effect of dilutive stock options based on the
treasury stock method using the higher of
quarter-end market price or average market price 225,840 236,521 224,924 247,912
---------- ---------- ---------- ----------
Total common shares and equivalents 12,059,568 12,044,134 12,055,289 10,649,697
========== ========== ========== ==========
FULLY DILUTED EARNINGS PER SHARE $ .35 $ .38 $ .67 $ .83
========= ========= ========= =========
</TABLE>
This is Page 16 of 16 Pages
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 6,736
<SECURITIES> 0
<RECEIVABLES> 92,882
<ALLOWANCES> 2,188
<INVENTORY> 71,507
<CURRENT-ASSETS> 171,615
<PP&E> 140,542
<DEPRECIATION> 32,449
<TOTAL-ASSETS> 309,640
<CURRENT-LIABILITIES> 55,500
<BONDS> 91,562
1,000
0
<COMMON> 12
<OTHER-SE> 156,204
<TOTAL-LIABILITY-AND-EQUITY> 309,640
<SALES> 539,335
<TOTAL-REVENUES> 539,335
<CGS> 415,121
<TOTAL-COSTS> 520,583
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,695
<INCOME-PRETAX> 13,435
<INCOME-TAX> 5,307
<INCOME-CONTINUING> 8,128
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,128
<EPS-PRIMARY> 0.67
<EPS-DILUTED> 0.67
</TABLE>
