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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 COMMISSION FILE NUMBER 1-14982
HUTTIG BUILDING PRODUCTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 43-0334550
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OR ORGANIZATION)
</TABLE>
LAKEVIEW CENTER, SUITE 400
14500 SOUTH OUTER FORTY ROAD
CHESTERFIELD, MISSOURI 63017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(314) 216-2600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<S> <C>
COMMON STOCK, PAR VALUE $.01 PER SHARE NEW YORK STOCK EXCHANGE
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
(TITLE OF EACH CLASS) (NAME OF EACH EXCHANGE ON WHICH REGISTERED)
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 at least the past 90 days. Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates of
the registrant as of February 16, 2000 was approximately $56,430,813.
The number of shares of Common Stock outstanding on February 16, 2000 was
20,519,379 shares.
Documents incorporated by reference:
Portions of the Proxy Statement for the 2000 Annual Meeting of
Shareholders Part III
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PART I
ITEM 1--BUSINESS
GENERAL
Huttig Building Products, Inc. ("Huttig" or the "Company") is one of the
largest domestic distributors of building materials used principally in new
residential construction and in home improvement, remodeling and repair work.
Its products are distributed through 76 distribution centers serving 45 states,
principally to building materials dealers (who, in turn, supply the end-user),
directly to professional builders and large contractors, and to home centers,
national buying groups and industrial and manufactured housing builders. The
Company's American Pine Products manufacturing facility, located in Prineville,
Oregon, produces softwood moldings. Approximately 20% of its sales are to
Huttig's distribution centers.
On December 16, 1999, Crane Co. ("Crane") distributed to its stockholders
(the "Spin-Off") all of the Company's outstanding common stock, par value $.01
per share (the "Common Stock"). Following the Spin-Off, Mr. R.S. Evans, Chairman
and Chief Executive Officer of Crane, continues to serve as the Company's
Chairman, and five of the nine Huttig directors are also directors of Crane.
None of Crane's executive officers serves as an executive officer of Huttig.
Immediately after the Spin-Off, Huttig completed the acquisition of Rugby USA,
Inc. ("Rugby USA") in exchange for 6,546,424 newly issued shares of Huttig
Common Stock. Rugby USA is also a distributor of building materials. For its
year ended December 31, 1999, Rugby USA's revenues were $458 million. In this
Annual Report on Form 10-K, "Huttig" refers to Huttig Building Products, Inc.
and its subsidiaries and predecessors, including Rugby USA, unless the context
indicates otherwise.
INDUSTRY TRENDS
The building materials distribution industry is characterized by its
substantial size, highly fragmented ownership structure and dependence on the
cyclical and seasonal home building industry.
New housing starts in the U.S. in 1999 approximated 1.8 million based on
data from F.W. Dodge, including 1.4 million single family residences.
Approximately 76% of single family new construction in 1999 occurred in markets
served by Huttig's distribution centers. According to the U.S. Department of
Commerce, total spending on U.S. new residential construction in 1999 was $240
billion. Huttig estimates that aggregate expenditures for residential repair and
remodeling were an additional $135 billion. Huttig believes that sales of
windows, doors and other millwork accounted for approximately $15 billion in
1999.
Prior to the 1970's, building materials were sold in both rural and
metropolitan markets largely by local dealers, such as lumberyards and hardware
stores. These dealers, who generally purchased their products from wholesale
distributors, sold building products directly to homeowners, contractors and
homebuilders. In the late 1970's and 1980's, The Home Depot and Lowe's began to
alter this distribution channel, particularly in metropolitan markets, as these
retailers started to displace some local dealers. These mass merchandisers
market a broad range of competitively priced building materials to the homeowner
and small home improvement contractor. Also during this period, some building
materials manufacturers such as Georgia Pacific and Weyerhauser began selling
their products directly to home center chains and to local dealers as well.
Accordingly, most wholesale distributors have been diversifying their businesses
by seeking to sell directly to large contractors and homebuilders in selected
markets and by providing home centers with fill-in and specialty products. Also,
as large homebuilding companies seek to streamline the new residential
construction process, building materials distributors have increasing
opportunities to provide higher margin turnkey products and services.
The increasingly competitive environment faced by dealers also has prompted
a trend toward industry consolidation that Huttig believes offers significant
opportunities. Many distributors in the building materials industry are small,
privately-held companies that generally lack the purchasing power of a larger
entity and may also lack the broad lines of products and sophisticated inventory
management and control systems typically needed to operate a multi-branch
distribution network. These characteristics are also driving the consolidation
trend in favor of companies like Huttig that operate nationally and have
significant infrastructure in place.
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PRODUCTS
Each of the Company's distribution centers carries a variety of products
that vary by location. Huttig's principal products are doors, windows, moldings,
specialty building materials such as housewrap, stair parts, engineered wood
products, branded roofing and insulation and lumber and other commodity building
products.
The following table sets forth information regarding the percentage of net
sales represented by the specified categories of total products sold by Huttig's
distribution centers during each of the last three fiscal years. While it is
believed that the percentages included in the table generally indicate the mix
of Huttig's sales by category of product, the specific percentages are affected
year-to-year by changes in the prices of commodity wood products, as well as
changes in unit volumes sold. In addition, Rugby's sales are included in 1999
for only 14 days. As a result, 1999 product mix is not indicative of the mix
that would result from a full year of Rugby's sales.
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Doors................................................... 34% 37% 37%
Specialty Building Materials............................ 21% 20% 21%
Windows................................................. 17% 19% 21%
Lumber and Other Commodity Products..................... 15% 12% 6%
Moldings................................................ 13% 12% 15%
</TABLE>
The Company's sales of doors were approximately $272 million in 1999 and
included both interior and exterior doors and pre-hung door units. Huttig sells
wood, steel and composite doors from various branded manufacturers such as
Therma-Tru(R), Jeld-Wen(R), Florida Made, and Premdor(R), as well as providing
value-priced unbranded products. The pre-hanging of a door within its frame is a
value-added service that Huttig provides, allowing an installer to quickly place
the unit in the house opening. Coupled with pre-hanging, the Company also
assembles many exterior doors with added sidelites and transoms, also
value-added services and products. To meet the increasing demand for pre-hung
doors, Huttig invested $2.7 million in state-of-the-art equipment during 1999,
which allowed it to increase its capacity by approximately 20%.
Sales of specialty building materials were $170 million in 1999. Included
in this category are products differentiated through branding or value-added
characteristics. Branded products include Tyvek(R) and Typar(R) housewrap, L. J.
Smith Stair Systems, Simpson Strong-Tie(R) connectors and Owens Corning(R)
roofing and insulation. Also included in specialty sales are trusses, wall
panels and engineered wood products such as floor systems assembled in Huttig's
facility in Topeka, Kansas serving the eastern Kansas and western Missouri
markets.
Window sales amounted to $139 million in 1999 and included shipments of
wood, vinyl-clad, vinyl and aluminum windows from branded manufacturers such as
Andersen(R), Caradco(R), Weather Shield and Marvin, as well as unbranded
products. Andersen(R) trademarked products, sold to dealers through 15 of the
Company's distribution centers, accounted for a significant majority of Huttig's
1999 sales of windows. Huttig is working to expand the depth of its offerings of
windows to include a wider range of quality and price as part of the strategy to
better serve the customer.
Sales of lumber and other commodity building products were $120 million in
1999. Growth of Huttig's lumber sales has resulted primarily from its
acquisition of Mallco Lumber Company in Phoenix in 1997 and Huttig's acquisition
of certain assets of and assumption of certain liabilities of Consolidated
Lumber Company, Inc. in Kansas City in 1998. These acquisitions reflect Huttig's
strategy to provide builders with the capability to purchase a house's framing
and millwork package of products from one source and have each component
delivered when needed. Other commodity building products include dry wall, metal
vents, siding, nails and other miscellaneous hardware.
Molding sales, including door jams, door and window frames, and decorative
ceiling, chair and floor molding, were $100 million in 1999. The vast majority
of these sales were made by American Pine Products. Profitability of this highly
competitive, commodity-priced product depends upon efficient plant operations,
rapid inventory turnover and quick reaction to changing market conditions.
Moldings are a necessary complementary product line to doors and windows as part
of a house's millwork package.
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SALES AND MARKETING
Each of the Company's distribution centers is focused on meeting local
market needs and offering competitive prices. Inventory levels, merchandising
and pricing are tailored to local markets. Huttig's information system provides
each distribution center manager with real-time pricing, inventory availability
and margin analysis to facilitate this strategy. Huttig also supports its
distribution centers with centralized product management, credit and financial
controls, training and marketing programs and human resources expertise.
Huttig's marketing programs center on fostering strong customer
relationships and providing superior service. This strategy is furthered by the
high level of technical knowledge and expertise of Huttig's personnel. The
Company focuses its marketing efforts on the residential new housing and
remodeling segments, with efforts directed toward the commercial and industrial
segments limited to a small portion of its business. Certain of the Company's
suppliers advertise to the trade and directly to the individual consumer through
nationwide print and other media.
The Company's distribution center sales organization consists of outside
field sales personnel serving the customer on-site who report directly to their
local distribution center manager. They are supported by inside customer
services representatives at each branch. This sales force is compensated by
commissions determined on the basis of return on sales or total margin on sales.
PURCHASING
Huttig generally negotiates with its major vendors on a company-wide basis
to obtain favorable pricing, volume discounts and other beneficial purchase
terms. A majority of the Company's purchases are made from suppliers offering
payment, discount and volume purchase programs. Distribution center managers are
responsible for inventory selection and ordering on terms negotiated centrally.
This approach allows Huttig's distribution centers to remain responsive to local
market demand, while still maximizing purchasing leverage through volume orders.
Distribution center managers are also responsible for inventory management at
their respective locations.
Huttig is a party to distribution agreements with certain vendors,
including Andersen(R), on an exclusive or non-exclusive basis, depending on the
product and the territory involved. The Company's distributorships generally are
terminable at any time by either party, in some cases without notice, and
otherwise on notice ranging up to 60 days.
CUSTOMERS
Building materials dealers represent the Company's single largest customer
group. Despite the advent of the home center chains and the trends toward
consolidation of dealers and increased direct participation in wholesale
distribution by some building materials manufacturers, the Company believes that
the wholesale distribution business continues to provide opportunities for
increased sales. Huttig is targeting home centers for sales of fill-in and
specialty products. In addition, some manufacturers are seeking to outsource the
marketing function for their products, a role that Huttig, as a large,
financially stable distributor, is well-positioned to fill. Opportunities also
exist for large distributors with the necessary capabilities to perform
increasing amounts of services such as pre-hanging doors, thereby enabling the
Company to enhance the value-added component of its business.
The percentage of the Company's 1999 revenues attributable to various
categories of customers are as follows:
<TABLE>
<CAPTION>
1999
----
<S> <C>
Dealers..................................................... 62%
Home Centers and Buying Groups.............................. 15%
Builders and Contractors.................................... 13%
Industrial and Manufactured Housing......................... 10%
</TABLE>
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COMPETITION
The Company's competition varies by product line, customer classification
and geographic market. Huttig competes with many local and regional building
product distributors, and, in certain markets and product categories, with
national building product distributors and dealers. Huttig also competes with
major corporations with national distribution capability, such as
Georgia-Pacific, Weyerhauser and other product manufacturers that engage in
direct sales; however, it also acts as a distributor for certain products of
these manufacturers. Huttig sells products to large home center chains such as
The Home Depot and Lowe's and, to a limited extent in certain markets, competes
with them for business from smaller contractors. Competition from such large
home center chains may, in the future, include more competition for the business
of larger contractors.
The Company believes that competition in the wholesale distribution
business is largely on the basis of product availability, service and delivery
capabilities and breadth of product offerings. Also, financial stability and
geographic coverage are important to manufacturers in choosing distributors for
their products. In the builder support business, Huttig's target customers
generally select building products distributors on the basis of service and
delivery, ability to assist with problem-solving, relationships and breadth of
product offerings. The Company's relative size and financial position are
advantageous in obtaining and retaining distributorships for important products.
Huttig's relative size also permits it to attract experienced sales and service
personnel and gives it the resources to provide company-wide sales, product and
service training programs. By working closely with its customers and utilizing
its information technology, Huttig's branches are able to maintain appropriate
inventory levels and are well-positioned to deliver completed orders on time.
Huttig's American Pine Products softwood molding manufacturing business competes
on the basis of relative length of lead times to produce and deliver product,
service and geographic coverage.
SEASONALITY
The Company's first quarter and, to a lesser extent, its fourth quarter,
are typically adversely affected by winter construction cycles and weather
patterns in colder climates as the level of activity in both the new
construction and home improvement markets decreases. The effects of winter
weather patterns on Huttig's business are offset somewhat by the increase in
residential construction activity during the same period in the deep South,
Southwest and Southern California markets in which Huttig participates. Huttig
also closely monitors operating expenses and inventory levels during seasonally
affected periods and, to the extent possible, controls variable operating costs
to minimize seasonal effects on profitability.
BACKLOG
The Company's customers generally order products on an as-needed basis. As
a result, virtually all product shipments in a given fiscal quarter result from
orders received in that quarter. Consequently, order backlog represents only a
very small percentage of the product sales that the Company anticipates in a
given quarter and is not indicative of its actual sales for any future period.
TRADENAMES
Historically, Huttig has operated under various tradenames in the markets
it serves, retaining the name of an acquired business to preserve local
identification. To capitalize on its increasing national presence, Huttig has
been converting most branch operations to the primary tradename "Huttig Building
Products." Some local branches continue to use historical tradenames as
secondary tradenames to maintain goodwill. In connection with the Company's
acquisition of Rugby USA, Huttig has an exclusive, royalty-free right to operate
in the United States under the tradename "Rugby Building Products," in all the
lines of business which Huttig conducted on December 16, 1999, for a period of
two years from that date. The Company expects to phase out use of the Rugby
tradename during this period.
EMPLOYEES
As of December 31, the Company employed 3,237 persons, of which
approximately 10% were represented by unions. None of the Company's collective
bargaining agreements expire in 2000. Huttig has not experienced
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any strikes or other work interruptions in recent years and has maintained
generally favorable relations with its employees. The following table shows the
approximate breakdown by job function of the Company's employees:
<TABLE>
<S> <C>
Distribution centers........................................ 2,308
Manufacturing............................................... 407
Field Sales................................................. 375
Office and Corporate Administration......................... 147
</TABLE>
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EXECUTIVE OFFICERS OF THE COMPANY
The Company's executive officers as of February 16, 2000 and their
respective ages and positions are set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Barry J. Kulpa....................... 51 President and Chief Executive Officer
Gregory D. Lambert................... 48 Vice President, Administration, Chief Financial
Officer and Secretary
David Dean........................... 56 Treasurer
Clifford Gordon...................... 39 Controller
George M. Dickens, Jr................ 37 Regional Vice President
Daniel Geller........................ 38 Regional Vice President
Carl A. Liliequist................... 45 Regional Vice President
Paul Lyle............................ 40 Regional Vice President
Stokes R. Ritchie.................... 48 Regional Vice President
</TABLE>
Set forth below are the positions held with the Company, and other
principal occupations and employment during the past five years, of Huttig's
executive officers. Except for Messrs. Kulpa, Dean and Gordon, each executive
officer of the Company serves in his capacity pursuant to the terms of an
employment agreement with the Company.
Barry J. Kulpa has served as the Company's President and Chief Executive
Officer since October of 1997. Prior to joining Huttig, Mr. Kulpa served as
Senior Vice President and Chief Operating Officer of Dal-Tile International
(manufacturer and distributor of ceramic tile) from 1994 to 1997. From 1992 to
1994, he was Vice President and Chief Financial Officer of David Weekley Homes
(regional homebuilder).
Gregory D. Lambert has served as the Company's Vice President,
Administration and Chief Financial Officer since January 1999 and as Secretary
of the Company since October of 1999. Prior to joining Huttig, Mr. Lambert
served as Senior Vice President and Treasurer of Ames Department Store (discount
retailer) from 1996 to 1998. From 1994 to 1996, he was Vice President of
Strategic Planning for Homart Development, a shopping center developer.
David Dean has served as Treasurer of Huttig since January of 2000.
Previously, Mr. Dean served as Controller of Huttig since August of 1992.
Clifford Gordon has served as the Company's Controller since January of
2000. Previously, Mr. Gordon was Interim General Manager at the Company's
Baltimore and Scarborough branches between June 1999 and December 1999, and
Director of Process Improvement between June 1998 and June 1999. Prior to that,
Mr. Gordon held several positions at PepsiCo Inc. (beverage and snack food
business) between August 1989 and June 1998, most recently as Regional
Performance Manager for The Frito-Lay Company (snack food business), an
operating group of PepsiCo Inc.
George M. Dickens, Jr. has been a Regional Vice President of the Company
since December 1999. Prior to that, Mr. Dickens was a Vice President of Rugby's
Millwork Division since July, 1997. Prior to that, Mr. Dickens had been the
President of Rugby's Midwest Division since February of 1996, and a Rugby Branch
General Manager since July 1990.
Daniel Geller has been a Regional Vice President of the Company since
December 1999. Prior to that, Mr. Geller was Regional District Manager at G. E.
Supply (wholesale distributor of electrical supplies), a division of General
Electric Co. since 1997. Prior to that, Mr. Geller served as a General Manager
at G. E. Supply since 1995 and as Branch Manager from 1991.
Carl A. Liliequist has served as a Regional Vice President of the Company
since Huttig's acquisition of PGL Building Products in July of 1988.
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Paul Lyle has been a Regional Vice President of the Company since December
1999. Prior to that, Mr. Lyle was Vice President of Rugby's Building Materials
Division since July 1997. Prior to that, Mr. Lyle had been a Branch General
Manager at MacMillan Bloedel Limited (lumber and building products distributor)
since 1988.
Stokes R. Ritchie has been a Regional Vice President since August of 1998.
Prior to joining Huttig, Mr. Ritchie was Vice President of Sales and Marketing
of the Westex Division of LYDALL, Inc. (OEM automotive products manufacturer)
from 1996 to 1998. From 1994 to 1996, Mr. Ritchie was Vice President, Sales and
Marketing for American Woodmark Corporation (cabinet manufacturer).
ITEM 2--PROPERTIES
The Company's corporate headquarters are located at 14500 South Outer Forty
Road, Chesterfield, Missouri 63017, in leased facilities. Its manufacturing
facility for softwood moldings is a 280,000-square foot facility owned by Huttig
and located in Prineville, Oregon. Approximately 45% of the Company's 76
distribution centers are leased and the remainder are owned. The Company's
facilities serve 45 states. Warehouse space at Huttig's distribution centers
aggregates approximately 5.5 million square feet. Distribution centers range in
size from approximately 12,000 square feet to 207,000 square feet. The types of
facilities at these centers vary by location, from traditional wholesale
distribution warehouses that may have particular value-added service
capabilities such as pre-hung door operations, to classic lumber yards, and to
builder support facilities with broad product offerings and capabilities for a
wide range of value-added services. Huttig believes that its locations are well
maintained and generally adequate for their purposes.
The following table sets forth the geographic location of the Company's
distribution centers as of February 16, 2000:
<TABLE>
<CAPTION>
REGION NUMBER OF LOCATIONS
- ------ -------------------
<S> <C>
Florida................................................... 5
Lake Central (Great Lakes)................................ 5
Mid-Atlantic.............................................. 8
Midwest................................................... 21
New England............................................... 12
Northern California....................................... 1
Rocky Mountain............................................ --
Southeast................................................. 15
Southwest................................................. 2
Western................................................... 7
--
Total..................................................... 76
</TABLE>
ITEM 3--LEGAL PROCEEDINGS
Huttig is involved in various lawsuits, claims and proceedings arising in
the ordinary course of its business. While the outcome of any lawsuits, claims
or proceedings cannot be predicted, Huttig does not believe that the disposition
of any pending matters will have a material adverse effect on its financial
condition, results of operations or liquidity.
The Company is subject to federal, state and local environmental laws and
regulations. Huttig has been identified as a potentially responsible party in
connection with the clean up of contamination at two sites. In addition, some of
the Company's distribution centers are located in areas of current or former
industrial activity where environmental contamination may have occurred, and for
which Huttig, among others, could be held responsible. The Company does not
believe that its contribution to the clean up of the two sites will be material
or that there are any material environmental liabilities at any of its
distribution center locations. The Company also believes that it is in
compliance with applicable laws and regulations regulating the discharge of
hazardous substances into the environment.
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ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 21, 1999, Crane International Holdings, Inc. ("Holdings"), a
wholly owned subsidiary of Crane and the Company's sole shareholder prior to the
Spin-Off, approved the Restated Certificate of Incorporation of the Company. On
October 18, 1999, Holdings elected Mr. R. S. Evans and Mr. Barry J. Kulpa as
directors of the Company; no other director's term of office continued after
that date. Also on October 18, 1999, Holdings approved (a) the Company's
Non-Employee Director Restricted Stock Plan, Stock Incentive Plan and the
original version of the Company's EVA Incentive Compensation Plan and (b) the
acquisition of Rugby USA.
On September 21, 1999 and October 18, 1999, Holdings owned 1,000 shares of
the Company's Common Stock. Holdings approved each of the matters described
above by written consent in lieu of a shareholder's meeting.
PART II
ITEM 5-- MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock has been traded on the New York Stock Exchange
under the symbol "HBP" since December 8, 1999. The high and low closing sales
prices per share for the Common Stock as reported on the New York Stock Exchange
Composite Transactions Tape were $5.06 and $3.44, respectively, for the period
from December 8, 1999 to December 31, 1999. The Company's securities did not
trade on an exchange or automated quotation system for any full quarter during
its two most recent fiscal years.
At February 16, 2000, there were 4,510 holders of record of the Company's
Common Stock. The Company currently anticipates that no cash dividends will be
paid on Huttig Common Stock in the foreseeable future in order to conserve cash
for use in Huttig's business, for possible acquisitions and for debt reduction.
Pursuant to the Company's $125 million credit facility with Bank One N.A. as
agent for a group of lenders (the "Bank One Facility"), the Company may not pay
dividends if payment would result in noncompliance with certain financial
covenants regarding leverage, consolidated net worth and interest expense
coverage.
ITEM 6-- SELECTED CONSOLIDATED FINANCIAL DATA
The following table summarizes certain selected financial data of Huttig
for each of the five years in the period ended December 31, 1999. The
information contained in the following table may not necessarily be indicative
of Huttig's past or future performance as a separate, stand-alone company. Such
historical data should
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be read in conjunction with "Huttig Management's Discussion and Analysis of
Results of Operations and Financial Condition" and Huttig's financial statements
and notes thereto included elsewhere in this report.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net Sales........................... $800,338 $707,450 $625,503 $595,089 $570,856
Depreciation and amortization....... 6,563 5,586 4,409 4,929 5,228
Operating profit.................... 22,785 28,632 19,842 22,105 18,889
Interest expense, net............... 7,823 6,870 4,467 200 352
Income before taxes................. 14,353 21,851 14,814 20,757 20,094
Provision for income taxes.......... 5,889 8,255 5,759 8,469 8,243
Net income.......................... 8,464 13,596 9,055 12,288 11,851
Net income per share (basic and
diluted).......................... .59 .97 .65 .88 .85
BALANCE SHEET DATA (AT END OF
PERIOD):
Assets.............................. 301,351 218,462 153,950 206,430 191,535
Long-term debt: Bank Credit......... 120,700 -- -- -- --
Long-term debt: Note Payable -
Parent............................ -- 93,940 67,100 -- --
Other long-term debt................ 1,117 1,379 1,715 2,074 2,540
</TABLE>
ITEM 7-- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FISCAL 1999 COMPARED TO FISCAL 1998
Revenue increased 13% from $707 million in 1998 to $800 million in 1999.
$52 million of this increase was due to the 1998 mid-year acquisitions of
Consolidated Lumber Company and Number One Supply and $16 million due to the
Cherokee and Rugby acquisitions in May and December, 1999, respectively. The
balance was attributable to same-branch sales growth of 4%.
Gross profit grew $18 million to $162 million in 1999. $14 million resulted
from the acquisitions discussed above and $4 million from the increase in
same-branch sales. Gross profit as a percentage of sales was 20.2%, unchanged
from 1998. Gross profit was negatively impacted by $3 million of non-recurring
charges discussed below. Excluding the $3 million in non-recurring charges,
gross profit as a percentage of sales would have been 20.5% in 1999. Gross
profit as a percentage of sales on a same-branch basis excluding the
non-recurring charges increased 0.2% from 20.0% in 1998 to 20.2% in 1999.
Total operating costs and expenses, less cost of sales, increased by a net
amount of $24 million. This net increase included approximately $12 million
attributable to the Company's acquisitions and $18 million related to an
increase in same-branch expenses. These were partially offset by an
approximately $6 million non-recurring gain resulting from the curtailment of
the Company's post retirement health benefit plan described below. Total
expenses as a percent of sales were 17.3% in 1999, as compared to 16.2% in 1998.
As a result of the contribution from the acquisitions, operating profit
before the non-recurring charges in 1999 was $25.1 million as compared to $28.6
million in 1998.
Non-recurring charges totaled $8.2 million, including $5.3 million of
restructuring reserves from lease terminations, severance, inventory impairment
and other costs associated with the closing and/or consolidation of four Company
distribution facilities, $1.5 million of unreported insurance claims and $1.4
million related to environmental and other costs. In addition, the Company
assumed accruals totaling $4.7 million included in the Rugby USA acquisition
costs related to lease and contract terminations, severance, inventory
impairment and other costs associated with the closing and/or consolidation of
four Rugby USA distribution centers and the Rugby USA corporate office. Closing
the eight duplicate distribution centers and the former corporate office and
other initiatives resulting from the acquisition will reduce the ongoing cost
structure of the Company by an
10
<PAGE> 11
estimated $15 million annually. The non-recurring costs were partially offset by
the $5.8 million non-recurring gain from the curtailment of the Company's
post-retirement health benefit plan.
Net interest expense increased $1.0 million as the result of higher
borrowings and other income declined $.7 million.
Net income decreased $5.1 million from $13.6 million in 1998 to $8.5
million in 1999.
Rugby USA's 1999 operating results for the period prior to the December 16,
1999 acquisition by the Company are summarized in the table below. Included in
operating expense are approximately $3.0 million of non-recurring costs related
to the sale of Rugby USA to the Company. Subsequent to the acquisition,
depreciation and amortization expenses will be eliminated in accordance with
purchase accounting rules.
<TABLE>
<S> <C>
Net Sales................................... $446.0
Cost of Sales............................... 368.0
Operating Expense........................... 66.2
Depreciation and Amortization............... 4.8
Operating Profit............................ 7.0
</TABLE>
FISCAL 1998 COMPARED TO FISCAL 1997
Revenue increased 13.1% from $625 million in 1997 to $707 million in 1998.
$32 million of this increase was due to the mid-1997 acquisition of MALLCO
Lumber Co. and $43.0 million was due to the mid-1998 acquisitions of Number One
Supply and Consolidated Lumber Company, Inc. Same-branch sales grew $6 million,
or 1.1%, in 1998.
Gross profit in 1998 grew $24 million, or 20.2%, from the prior year and
gross profit margins improved to 20.2% from 19.0%. Total gross profit increased
$15 million as a result of the acquisitions, and $9 million from same store
sales increases as margins increased due to an improved product mix, including a
greater percentage of value-added products, primarily an increase in pre-hung
doors.
Total expenses increased $15 million, or 15.4%, to $115 million in 1998
from $99 million in 1997. This was primarily because of the $11.0 million effect
of acquisitions, but also due to an increase in compensation expense. This
caused these expenses as a percentage of sales to increase from 15.9% in 1997 to
16.2% in 1998.
Because the gross profit margin increase was greater than the related
increase in expenses, operating profit margins increases as a percentage of
sales to 4.0% in 1998 from 3.2% in 1997. Operating profit totaled $28.6 million
in 1998, a 44.2% increase from $19.8 million in 1997.
Interest expense increased 53.8% from $4.5 million in 1997 to $6.9 million
in 1998 and net income as a percentage of sales increased from 1.4% in 1997 to
1.9% in 1998.
LIQUIDITY AND CAPITAL RESOURCES
Huttig has depended primarily on the cash generated from its own operations
to finance its needs. The combination of income from operations and cash
generation from improved working capital management has been used to finance
capital expenditures and seasonal working capital needs. Huttig's working
capital requirements are generally greatest in the first eight months of the
year and Huttig generates cash from working capital reductions in the last four
months of the year. A continuing management focus to improve inventory turnover
and accounts receivable and accounts payable days outstanding resulted in
reduced working capital needs. Inventory turns remained 10.0 in 1999, the same
as 1998 but up from 8.0 in 1997, resulting in a positive effect on cash flow of
$7.1 million over the two years. Prior to the Spin-Off, to the extent internal
funds generated were insufficient, Huttig borrowed from Crane and to the extent
cash generated by Huttig was greater than current requirements, the cash was
returned to Crane. In particular, Huttig historically had borrowed from Crane to
finance acquisitions, but has typically been able to generate cash sufficient to
finance all other needs. In 1999, capital expenditures of $8.5 million were
financed from cash generated from operations.
11
<PAGE> 12
At December 31, 1999, Huttig had commitments for approximately $0.4 million
of capital improvements. No single commitment exceeded $0.1. The commitments are
primarily for machinery for productivity improvements and transportation
equipment replacement.
The Company closed the Bank One Facility on December 16, 1999. $100 million
of the proceeds from the Bank One Facility were used to repay indebtedness to
Crane and The Rugby Group PLC, the parent company of Rugby USA, in connection
with the closing of the Spin-Off and the Rugby USA acquisition. The Company had
$20.0 million available under the Bank One Facility at February 16, 2000.
In the future, Huttig expects to continue to finance seasonal working
capital requirements and acquisitions through cash from operations and a secured
$200 million credit facility with Chase Manhattan Bank ("Chase") as agent for a
group of lenders (the "Chase Facility"), for which Chase has provided a
commitment. The Chase Facility will replace the existing Bank One Facility. The
Chase Facility is expected to close by March 31, 2000. Closing is subject to a
number of conditions, including completion of due diligence and definitive
documentation. Chase has also committed to provide an interim $25 million
short-term facility to meet the Company's working capital needs. Both the Bank
One Facility and the short-term facility will be repaid with proceeds from the
Chase Facility. Huttig believes that, together with cash generated from
operations, the Chase Facility will meet all of the Company's financing needs.
EFFECTS OF INFLATION
In 1997, raw material price increases had a negative impact on Huttig's
results of operations as it was unable to pass along these added costs to
customers through sales price increases due to increased competition from
imports. However, as Huttig continues to grow, its manufacturing operations
decrease as a percentage of its overall business and any impact of inflation is
lessened. Furthermore, management believes that, to the extent inflation affects
its costs in the future and competitive conditions permit, Huttig can offset
these increased costs by increasing sales prices.
YEAR 2000
Huttig successfully completed its Year 2000 remediation plan in the fall of
1999. The plan included assessment of business critical systems and the upgrade
or replacement of those systems which were determined to be Year 2000 affected.
Also completed was an assessment of the Year 2000 readiness of key vendors and
customers. As of this date, Huttig has experienced no significant problems as a
result of the Year 2000 date change and, based upon testing and system
validation studies conducted in 1999, management does not foresee any
significant future problems or costs related to the Year 2000 millennium date
change. However, it is possible that problems have gone undetected, or that
other dates in the year 2000 may further affect computer software and systems.
The Company is currently unable to assess completely whether its products,
internal computer systems, or the operation of its software or the software of
third parties contains errors or faults with respect to the Year 2000. Unknown
errors or defects that affect the operation of the Company's software and
systems or those of third parties could result in delay or loss of revenue,
interruption of services, cancellation of customer contracts, diversion of
development resources, damage to reputation, increased service and warranty
costs and litigation costs, any of which could harm the Company's business.
CYCLICALITY AND SEASONALITY
Huttig's sales depend heavily on the strength of the national and local new
residential construction and home improvement and remodeling markets. The
strength of these markets depends on new housing starts and residential
renovation projects, which are a function of many factors beyond Huttig's
control, including interest rates, employment levels, availability of credit,
prices of commodity wood products and consumer confidence. Future downturns in
the markets that Huttig serves could have a material adverse effect on Huttig's
operating results or financial condition. In addition, because these markets are
sensitive to cyclical changes in the economy in general, future downturns in the
economy could have a material adverse effect on Huttig's financial condition and
results of operations.
12
<PAGE> 13
Huttig's first quarter and, to a lesser extent, its fourth quarter, are
typically adversely affected by winter construction cycles and weather patterns
in colder climates as the level of activity in the new construction and home
improvement markets decreases. Because much of Huttig's overhead and expense
remains relatively fixed throughout the year, its profits also tend to be lower
during the first and fourth quarters. The effects of winter weather patterns on
Huttig's business are offset somewhat by the increase in residential
construction activity during the same period in the deep South, Southwest and
Southern California markets in which Huttig participates. It is expected that
these seasonal variations will continue in the future.
ENVIRONMENTAL REGULATION
Huttig is subject to federal, state and local environmental laws and
regulations. Huttig has been identified as a potentially responsible party in
connection with the clean up of contamination at two sites. In addition, some of
Huttig's distribution centers are located in areas of current or former
industrial activity where environmental contamination may have occurred, and for
which Huttig, among others, could be held responsible. Huttig does not believe
that its contribution to the clean up of the two sites will be material or that
there are any material environmental liabilities at any of its distribution
center locations. Huttig believes that it is in compliance with applicable laws
and regulations regulating the discharge of hazardous substances into the
environment. However, there can be no assurance that environmental liabilities
of Huttig or the combined company will not have a material adverse effect on
Huttig's financial condition or results of operations.
ITEM 7A--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Huttig has exposure to market risk as it relates to effects of changes in
interest rates. The Company had $120.7 million and $0 of variable rate debt
outstanding at December 31, 1999 and 1998, respectively. A hypothetical 100
basis point increase in the LIBOR rate would have had an unfavorable impact of
$905,000 on the Company's earnings and cash flows.
Huttig currently does not hold or issue derivative instruments. Huttig does
not generate significant income from non-U.S. sources and accordingly, changes
in foreign currency exchange rates do not generally have a direct effect on
Huttig's financial position. Huttig is subject to periodic fluctuations in the
price of wood commodities. Profitability is influenced by these changes as
prices change between the time Huttig buys and sells the wood. In addition, to
the extent changes in interest rates affect the housing and remodeling market,
Huttig would be affected by such changes.
13
<PAGE> 14
ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Huttig Building Products, Inc.:
We have audited the accompanying consolidated balance sheets of Huttig
Building Products, Inc. and its subsidiaries (the "Company") as of December 31,
1999 and 1998, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the Company at
December 31, 1999 and 1998, and the consolidated results of their operations and
their cash flows for the three years in the period ended December 31, 1999 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
St. Louis, Missouri
January 24, 2000
(February 11, 2000 as to Note 14)
14
<PAGE> 15
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash...................................................... $ 6,794 $ 9,423
Accounts receivable, net.................................. 116,602 67,028
Receivable -- Crane....................................... 17,098
Inventories............................................... 78,133 43,130
Prepaid expenses.......................................... 2,788 585
Deferred tax asset........................................ 1,247
-------- --------
Total current assets................................... 205,564 137,264
-------- --------
PROPERTY, PLANT AND EQUIPMENT --
At cost:
Land...................................................... 7,324 7,335
Buildings and improvements................................ 36,660 39,081
Machinery and equipment................................... 28,764 24,638
-------- --------
Gross property, plant and equipment.................... 72,748 71,054
Less accumulated depreciation............................. 33,207 33,746
-------- --------
Property, plant and equipment -- net................... 39,541 37,308
-------- --------
OTHER ASSETS:
Costs in excess of net assets acquired, net............... 38,952 40,783
Other..................................................... 3,656 3,003
Deferred income taxes..................................... 13,638 104
-------- --------
Total other assets..................................... 56,246 43,890
-------- --------
TOTAL....................................................... $301,351 $218,462
======== ========
</TABLE>
See notes to consolidated financial statements.
15
<PAGE> 16
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt...................... $ 263 $ 319
Accounts payable -- trade and collections as agents....... 72,478 54,424
Income taxes payable...................................... 5,765
Accrued payrolls.......................................... 9,226 11,109
Accrued insurance......................................... 6,164 3,834
Accrued liabilities....................................... 15,448 4,699
-------- --------
Total current liabilities.............................. 109,344 74,385
NON-CURRENT LIABILITIES:
Notes payable -- Crane.................................... -- 93,940
Other long-term debt...................................... 121,817 1,379
Accrued postretirement benefits........................... 2,089 7,303
Deferred credit........................................... 798 --
-------- --------
Total non-current liabilities.......................... 124,704 102,622
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 9)
SHAREHOLDERS' EQUITY:
Preferred shares, $.01 par $5,000,000 shares
authorized)............................................ -- --
Common shares, 1999 -- $.01 par (50,000,000 shares
authorized, 20,797,812 shares issued); 1998 -- no par
value (3,000 shares authorized,
1,000 shares issued and outstanding)...................... 208 10
Additional paid-in capital on common stock................ 32,788 746
Retained earnings......................................... 35,438 40,699
-------- --------
Less: Treasury shares (278,433 shares at cost)............ (1,131)
-------- --------
Total shareholders' equity............................. 67,303 41,455
-------- --------
TOTAL....................................................... $301,351 $218,462
======== ========
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 17
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
NET SALES.......................................... $ 800,338 $ 707,450 $ 625,503
----------- ----------- -----------
OPERATING COSTS AND EXPENSES:
Cost of sales.................................... 638,760 564,236 506,399
Operating expenses............................... 128,808 110,657 94,853
Depreciation and amortization.................... 6,563 5,586 4,409
Restructuring provision.......................... 3,075 -- --
Loss (gain) on disposal of capital assets........ 347 (1,661) --
----------- ----------- -----------
Total operating costs and expenses............ 777,553 678,818 605,661
----------- ----------- -----------
OPERATING PROFIT................................... 22,785 28,632 19,842
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense -- Crane........................ (7,275) (6,703) (4,285)
Interest expense -- net of interest income of $4,
$-0- and $3 in 1999, 1998 and 1997,
respectively.................................. (548) (167) (182)
Other miscellaneous -- net....................... (609) 89 (561)
----------- ----------- -----------
Total other expense -- net.................... (8,432) (6,781) (5,028)
----------- ----------- -----------
INCOME BEFORE TAXES................................ 14,353 21,851 14,814
PROVISION FOR INCOME TAXES......................... 5,889 8,225 5,759
----------- ----------- -----------
NET INCOME......................................... $ 8,464 $ 13,596 $ 9,055
=========== =========== ===========
NET INCOME PER SHARE (basic and diluted)........... $ 0.59 $ 0.97 $ 0.65
=========== =========== ===========
AVERAGE SHARES OUTSTANDING......................... 14,259,922 13,972,955 13,972,955
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 18
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON
SHARES ADDITIONAL TREASURY TOTAL
OUTSTANDING, PAID-IN RETAINED SHARES, SHAREHOLDERS'
AT PAR VALUE CAPITAL EARNINGS AT COST EQUITY
------------ ---------- --------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCES, January 1, 1997........ $ 10 $ 746 $ 147,988 $ -- $ 148,744
Net income..................... 9,055 9,055
Dividends paid to Crane........ (129,940) (129,940)
---- ------- --------- ------- ---------
BALANCES, December 31, 1997...... 10 746 27,103 -- 27,859
Net income..................... 13,596 13,596
---- ------- --------- ------- ---------
BALANCES, December 31, 1998...... 10 746 40,699 -- 41,455
Dividends paid to Crane........ (13,725) (13,725)
Capital contribution from
Crane....................... 4,530 4,530
Recapitalization in connection
with spin-off from Crane.... 132 999 (1,131)
Shares issued in acquisition of
Rugby USA................... 66 26,513 26,579
Net income..................... 8,464 8,464
---- ------- --------- ------- ---------
BALANCES, December 31, 1999...... $208 $32,788 $ 35,438 $(1,131) $ 67,303
==== ======= ========= ======= =========
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 19
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................... $ 8,464 $ 13,596 $ 9,055
Loss (gain) on disposal of capital assets................ 347 (1,661)
Depreciation............................................. 3,614 3,540 3,372
Amortization............................................. 2,949 2,046 1,037
Deferred taxes........................................... 3,020 (102) (202)
Accrued postretirement benefits.......................... (5,214) 553 500
Changes in operating assets and liabilities
(exclusive of acquisitions):
Accounts receivable................................... 11,217 (1,864) (1,742)
Inventories........................................... 5,050 2,081 10,297
Other current assets.................................. 481 324 265
Accounts payable...................................... (8,955) 16,629 494
Accrued liabilities................................... 2,430 2,812 (165)
Other................................................. (714) (3,720) 175
-------- -------- --------
Total cash from operating activities.................. 22,689 34,234 23,086
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................... (8,504) (5,765) (3,338)
Cash received (used) in acquisitions..................... 89 (44,861) (12,050)
Proceeds from disposition of capital assets.............. 2,380 7,730 388
-------- -------- --------
Total cash from investing activities.................. (6,035) (42,896) (15,000)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividend paid to Crane.............................. (13,725) -- (62,840)
Repayment of long-term debt.............................. (126,258) (376) (386)
Net proceeds from revolving credit agreement............. 120,700 -- --
Proceeds from Crane...................................... 16,251 55,672
-------- -------- --------
Total cash from financing activities.................. (19,283) 15,875 (7,554)
-------- -------- --------
(DECREASE) INCREASE IN CASH................................ (2,629) 7,213) 532
CASH, BEGINNING OF YEAR.................................... 9,423 2,210 1,678
-------- -------- --------
CASH, END OF YEAR.......................................... $ 6,794 $ 9,423 $ 2,210
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 20
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ---------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid.......................................... $ 9,347 $6,860 $ 4,471
======= ====== =========
Income taxes paid...................................... $ 4,320 $4,466 $ 6,099
======= ====== =========
NONCASH FINANCING ACTIVITY:
Dividends paid to Crane................................ $(129,940)
---------
Issuance of note payable to Crane...................... 67,100
---------
Cash dividends paid to Crane...................... $ (62,840)
=========
Capital contribution from Crane through reduction of
payable to Crane..................................... $ 4,530
=======
Liabilities assumed in connection with asset
acquisitions......................................... $74,338 $4,224 $ 864
======= ====== =========
</TABLE>
See notes to consolidated financial statements.
20
<PAGE> 21
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
1. ACCOUNTING POLICIES AND PROCEDURES
ORGANIZATION -- Huttig Building Products, Inc. and subsidiaries (the
"Company" or "Huttig") is a distributor of doors, windows, molding, trim
and related building products in the United States and operates one
finished lumber production plant. The Company primarily sells its products
for new residential construction and renovation. The Company was formerly a
wholly owned subsidiary of Crane Co. ("Crane") through Crane International
Holdings, a direct subsidiary of Crane. On December 16, 1999, Crane
distributed all of the outstanding common stock of the Company to Crane's
stockholders. In addition, on December 16, 1999, the Company acquired the
building products and millwork branches of Rugby USA, a subsidiary of Rugby
Group PLC. Huttig common stock is listed on the New York Stock Exchange.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of Huttig Building Products, Inc. and its wholly owned
subsidiaries. All significant intercompany accounts and transactions have
been eliminated.
REVENUE RECOGNITION -- Revenues are recorded generally when title passes to
the customer, which occurs upon delivery of product, or when services are
rendered.
USE OF ESTIMATES -- The preparation of the Company's financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results may differ from these estimates.
INVENTORIES -- Inventories are stated at the lower of cost or market.
Substantially all of the Company's inventory is finished goods.
Approximately 80% and 68% of inventories were determined by using the LIFO
(last in, first out) method of inventory valuation as of December 31, 1999
and 1998, respectively; the remainder were determined by the FIFO (first
in, first out) method. Had the Company used the FIFO method of inventory
valuation for all inventories, net income would have decreased by $1,216,
$2,632 and $1,956 in 1999, 1998 and 1997, respectively. During 1999, 1998
and 1997, the LIFO inventory quantities were reduced, resulting in a
partial liquidation of the LIFO bases, the effect of which increased net
income by $1,611, $1,922 and $2,377, respectively. The replacement cost
would be higher than the LIFO valuation by $13,307 in 1999 and $15,368 in
1998.
PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment are stated
at cost. Depreciation is computed primarily by the straight-line method
over the estimated useful lives of the respective assets which range from
three to twenty-five years. Amortization expense on property under capital
leases is included in depreciation expense.
OTHER ASSETS/LIABILITIES -- Costs in excess of net assets acquired and the
deferred credit are being amortized on a straight-line basis over fifteen
to forty years. Other intangible assets are being amortized on a
straight-line basis over their estimated useful lives which range from two
to five years.
VALUATION OF LONG-LIVED ASSETS -- The Company periodically evaluates the
carrying value of its long-lived assets, including goodwill and other
tangible assets, when events and circumstances warrant such a review. The
carrying value of a long-lived asset is considered impaired when the
anticipated undiscounted cash flow from such asset is separately
identifiable and is less than its carrying value. In that event, a loss is
recognized based on the amount by which the carrying value exceeds the fair
market value of the long-lived asset. Fair market value is determined
primarily using the anticipated cash flows discounted at a rate
commensurate with the risk involved.
21
<PAGE> 22
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
SERVICES PROVIDED BY CRANE -- Prior to the Spin-off, Crane supplied the
Company certain shared services including insurance, legal, tax and
treasury functions. The costs associated with these services were charged
to the Company through the intercompany account based upon specific
identification.
INCOME TAXES -- Through the date of its Spin-off from Crane, the Company
was included in the federal income tax return of Crane. The Company was
charged its proportionate share of federal income taxes determined as if it
filed a separate federal income tax return. Income tax payments represented
payments of intercompany balances. Subsequent to December 16, 1999, the
date of the Spin-off, Huttig will file stand-alone federal tax returns.
Deferred income taxes reflect the impact of temporary differences between
assets and liabilities recognized for financial reporting purposes and such
amounts recognized for tax purposes using currently enacted tax rates.
NET INCOME PER SHARE -- The Company's basic earnings per share calculations
are based on the weighted average number of common shares outstanding
during the year including restated shares outstanding of 13,973 thousand
for all periods prior to the Spin-off from Crane (see Note 2). The Company
has issued no stock options, stock warrants, or convertible securities.
CONCENTRATION OF CREDIT RISK -- The Company is engaged in the distribution
of building products throughout the United States. The Company grants
credit to customers, substantially all of whom are dependent upon the
construction economic sector. The Company continuously evaluates its
customers' financial condition but does not generally require collateral.
The concentration of credit risk with respect to trade accounts receivable
is limited due to the Company's large customer base located throughout the
United States. The Company maintains an allowance for doubtful accounts
based upon the expected collectibility of its accounts receivable.
RECENT ACCOUNTING PRONOUNCEMENTS -- In June 1998, Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), Accounting for Derivative
Instruments and Hedging Activities, was released. SFAS 133, as amended by
SFAS 137, is effective beginning the first quarter of 2001. The Company has
historically made no use of derivative instruments and financial hedges and
believes there will be no impact of the new accounting pronouncement on the
financial statements.
RECLASSIFICATIONS -- Certain prior year amounts have been reclassified to
conform to the current year presentation.
2. SPIN-OFF FROM CRANE
On December 16, 1999, the Company completed its tax-free Spin-off from
Crane. Crane made a capital contribution of $4,530 to the Company. Then
Crane distributed all issued and outstanding shares of Huttig common stock,
together with accompanying preferred share purchase rights (see Note 7), to
holders of record of Crane common stock as of the close of business on
December 8, 1999. The Spin-off was made on the basis of one share of Huttig
common stock for every 4.5 shares of Crane common stock.
22
<PAGE> 23
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
3. ACQUISITIONS
Costs in excess of net assets acquired, net at December 31 consists of the
following:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Costs in excess of net assets acquired.................. $47,643 $47,086
Accumulated amortization.............................. 8,691 6,303
------- -------
Total -- net....................................... $38,952 $40,783
======= =======
</TABLE>
On December 16, 1999 the Company completed its acquisition of Rugby USA.
Crane, Huttig and Rugby Group PLC entered into a Share Exchange Agreement
which provided for the transfer to Huttig of all the outstanding capital
stock of Rugby USA in exchange for 6,546 thousand newly issued shares of
Huttig common stock. As a result of this exchange, Rugby USA became a wholly
owned subsidiary of Huttig.
The acquisition of Rugby USA was accounted for under the purchase method of
accounting. The $26,579 value of the 6,546 thousand shares of stock issued
in 1999 was allocated to the assets acquired and liabilities assumed based
upon their fair values at the closing date. The relative fair values of the
assets acquired and liabilities assumed are based upon valuations and other
studies. However, the fair value of the net assets acquired exceeded the
purchase price resulting in the write-off of all non-current assets of Rugby
USA and a deferred credit of $798 being recorded, which will be amortized
using the straight-line basis over 15 years.
The following table summarizes the allocation of the stock consideration
paid to the fair value of the assets acquired and the liabilities assumed by
the Company in connection with the acquisition of Rugby USA:
<TABLE>
<S> <C>
Accounts receivable......................................... $42,568
Inventories................................................. 39,431
Other current assets........................................ 4,664
Deferred income taxes -- noncurrent......................... 13,748
Note payable to Rugby Group PLC............................. (32,000)
Accounts payable............................................ (26,503)
Accrued liabilities......................................... (12,706)
Income taxes payable........................................ (1,825)
Deferred credit............................................. (798)
-------
Stock consideration paid............................... $26,579
=======
</TABLE>
Costs of $2,270 for professional fees related to the acquisition were
included in accrued liabilities in the allocation of the acquisition cost
above.
In connection with the acquisition, the Company also assumed accruals and
included them in the allocation of the acquisition cost above. The accruals
at the date of the acquisition and at December 31, 1999 are for the
following items:
<TABLE>
<S> <C>
Lease and other contract terminations....................... $2,150
Excess and obsolete inventory resulting from
reorganization............................................ 1,001
Severance and termination benefits.......................... 591
Other....................................................... 965
------
$4,707
======
</TABLE>
23
<PAGE> 24
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
Severance and termination benefits relate to approximately 110 employees in
various sales and administrative positions that have become duplicative
through the combination of operations and process efficiencies realized.
Such restructuring actions are to be substantially completed in 2000.
During 1999, the Company acquired Cherokee Lumber Company and Cherokee
Millwork Company, a manufacturer and distributor of lumber and millwork
products in the Maryville, Tennessee area for a total cost of $1,900. In
connection with the acquisition, the Company recorded approximately $600 of
goodwill which will be amortized using the straight-line basis over 15
years.
During 1998, the Company completed two acquisitions. In June, the Company
acquired Number One Supply, a building products distribution business based
in Baltimore, Maryland and Raleigh, North Carolina, for a total cost of
$4,900. In July, the Company acquired Consolidated Lumber Company, a
wholesale distributor of lumber and millwork products in the greater Kansas
City, Missouri area for a total cost of $40,000. In connection with the
acquisition of Consolidated Lumber Company, the Company recorded $26,200 of
goodwill which will be amortized using the straight-line basis over 15
years.
During July 1997, the Company completed one acquisition at a total cost of
$12,100. The Company acquired MALLCO Lumber & Building Materials Inc., a
leading wholesale distributor of lumber, doors and engineered wood products
serving Arizona and the surrounding region.
All acquisitions were accounted for by the purchase method. The results of
operations for all acquisitions have been included in the financial
statements from their respective dates of purchase. The following unaudited
pro forma financial information presents the combined results of operations
of the Company and Rugby USA, Number One Supply and Consolidated Lumber as
if the acquisition of Rugby USA had taken place at the beginning of 1998 and
as if the acquisitions of Number One Supply and Consolidated Lumber had
taken place at the beginning of 1997. The pro forma amounts give effect to
certain adjustments including the amortization of goodwill and intangibles,
increased interest expense and income tax effects. This pro forma
information does not necessarily reflect the results of operations as it
would have been if the businesses had been managed by the Company during
these periods and is not indicative of results that may be obtained in the
future.
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
Net sales............................... $1,247,138 $1,200,588 $706,993
Net income.............................. 13,339 22,393 12,751
Net income per share (basic and
diluted).............................. 0.65 1.09 0.91
</TABLE>
4. BUSINESS RESTRUCTURING
In December 1999, the Company recorded provisions for restructuring which
reduced income before taxes by $5,285 and net income by $3,118. The
restructuring charge reflects strategic plans to consolidate and integrate
various branch operations and support functions.
24
<PAGE> 25
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
Components of the restructuring reserve at December 31, 1999 are as
follows:
<TABLE>
<S> <C>
Excess and obsolete inventory resulting from reorganization
(included in cost of sales)............................... $2,210
Lease and other contract terminations....................... 1,752
Severance and termination benefits.......................... 494
Other....................................................... 829
------
$5,285
======
</TABLE>
Severance and termination benefits relate to approximately 95 employees in
various sales and administrative positions that have become duplicative
through the combination of operations and process efficiencies realized.
Such restructuring actions are to be substantially completed in 2000.
5. ACCOUNTS RECEIVABLE
Receivables are carried at net realizable value.
A summary of the activity in the allowance for doubtful accounts follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year......................... $200 $466 $594
Provision charged to expense......................... 570 399 772
Write-offs, less recoveries.......................... (94) (665) (900)
---- ---- ----
Balance at end of year............................... $676 $200 $466
==== ==== ====
</TABLE>
6. LONG-TERM DEBT
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
Revolving credit agreement............................. $120,700 $ --
Notes payable -- Crane................................. -- 93,940
Industrial Revenue Bond................................ 272 429
Capital lease obligations (see Note 9)................. 1,108 1,269
-------- -------
Total long-term debt.............................. 122,080 95,638
Less current portion................................... 263 319
-------- -------
Long-term debt -- net of current portion............... $121,817 $95,319
======== =======
</TABLE>
NOTES PAYABLE -- CRANE -- The notes payable to Crane bear interest at a
weighted-average rate of 8.09%. Accrued interest was $1,908 at December 31,
1998. As of December 16, 1999, the Company had repaid the notes to Crane.
INDUSTRIAL REVENUE BOND -- The Industrial Revenue Bond is a floating rate
obligation issued by the City of Deerfield Beach, Florida ($3,000). The bond
is collateralized by property with a net book value of $1,905 and $1,908 at
December 31, 1999 and 1998, respectively. The obligation is due in quarterly
principal installments of $39 plus interest until 2001. The interest rate
for the bond was 6.37% and 6.46% at December 31, 1999 and 1998,
respectively.
CREDIT AGREEMENT -- On December 16, 1999 the Company executed a Revolving
Credit Agreement (the "Credit Agreement") with certain financial
institutions, which provides for a $125,000 revolving credit
25
<PAGE> 26
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
facility. The Credit Agreement has a five-year term, and can be used for
both loans and letters of credit. As of December 31, 1999, the Company had
borrowed $120,700 and had letters of credit of $2,235 outstanding. The
provisions of the Credit Agreement require a commitment fee to be paid on
the unused portion of the revolving credit facility. Interest is paid based
on floating rates which fluctuate based on the prime rate, or the London
Interbank Offer Rate (LIBOR) plus various increments. At December 31, 1999,
the weighted-average interest rate on the borrowings was 7.3%.
Provisions of the Credit Agreement contain various covenants which, among
other things, limit the Company's ability to incur indebtedness, incur
liens, declare or pay dividends or make restricted payments, consolidate,
merge or sell assets and require the Company to attain certain financial
ratios in regards to leverage, consolidated net worth, and interest expense
coverage. The Company is required to perform financial covenant compliance
tests beginning March 31, 2000.
MATURITIES -- At December 31, 1999, the aggregate scheduled maturities of
long-term debt are as follows:
<TABLE>
<S> <C>
2000................................................. $ 263
2001................................................. 228
2002................................................. 121
2003................................................. 122
2004................................................. 120,832
Thereafter........................................... 514
--------
Total........................................... $122,080
========
</TABLE>
7. PREFERRED SHARE PURCHASE RIGHTS
On December 6, 1999, the Company adopted a Shareholder Rights Plan. The
Company distributed one preferred share purchase right for each outstanding
share of common stock at the date of the Spin-off. The preferred rights
were not exercisable when granted and may only become exercisable under
certain circumstances involving actual or potential acquisitions of the
Company's common stock by a person or affiliated persons. Depending upon
the circumstances, if the rights become exercisable, the holder may be
entitled to purchase shares of the Company's Series A Junior Participating
Preferred Stock. Preferred shares purchasable upon exercise of the rights
will not be redeemable. Each preferred share will be entitled to
preferential rights regarding dividend and liquidation payments, voting
power, and, in the event of any merger, consolidation or other transaction
in which common shares are exchanged, preferential exchange rate. The
rights will remain in existence until December 6, 2009 unless they are
earlier terminated, exercised or redeemed. The Company has authorized five
million shares of $.01 par value preferred stock of which 250 thousand
shares have been designated as Series A Junior Participating Preferred
Stock.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of investments and short-term debt approximates the fair
value. Long-term debt rates currently available to the Company for debt
with similar terms and remaining maturities are used to estimate the fair
value for debt issues that are not quoted on an exchange. The estimated
fair value of long-term debt at December 31, 1999 approximates the carrying
value of $121,817.
26
<PAGE> 27
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
9. COMMITMENTS AND CONTINGENCIES
The Company leases certain of its vehicles, equipment and warehouse and
manufacturing facilities under capital and operating leases with various
terms. Certain leases contain renewal or purchase options. Future minimum
payments, by year, and in the aggregate, under these leases with initial or
remaining terms of one year or more consisted of the following at December
31, 1999:
<TABLE>
<CAPTION>
MINIMUM
CAPITAL OPERATING SUBLEASE
LEASES LEASES INCOME NET
------- --------- -------- -------
<S> <C> <C> <C> <C>
2000............................................. $ 204 $ 8,229 $1,205 $ 7,408
2001............................................. 204 6,636 768 6,072
2002............................................. 204 4,853 590 4,467
2003............................................. 161 2,627 402 2,386
2004............................................. 161 1,357 17 1,501
Thereafter....................................... 392 708 1,101
------ ------- ------ -------
Total minimum lease payments..................... 1,326 $24,410 $2,802 $22,934
======= ====== =======
Amount representing interest..................... (218)
------
Present value of minimum lease payments
(including current portion of $105)............ $1,108
======
</TABLE>
The weighted average interest rate for capital leases is 9.2%. These
obligations mature in varying amounts through 2007. Rental expense for all
operating leases was $8,237, $6,672, and $5,778 for 1999, 1998 and 1997,
respectively.
The cost of assets capitalized under leases is as follows at December 31:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Land, buildings and improvements.......................... $2,325 $3,966
Less accumulated depreciation............................. 1,217 2,696
------ ------
Cost of leased assets -- net............................ $1,108 $1,270
====== ======
</TABLE>
LITIGATION -- As of December 31, 1999, the Company is involved in various
claims and legal actions arising in the ordinary course of business. In the
opinion of management, the ultimate disposition of these matters will not
have a material effect on the Company's financial condition and results of
operations. The Company is involved in two remediation actions to clean up
hazardous wastes as required by federal and state laws. Estimated future
environmental remediation costs of $1,130 at December 31, 1999 and $500 at
December 31, 1998 were fully accrued.
The Company has established insurance programs to cover product and general
liability losses. These programs have deductible amounts before coverage
begins. The Company does not deem its deductible exposure to be material.
10. EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT PLANS -- Prior to the Spin-off, the Company participated in
Crane's defined benefit pension plans covering substantially all salaried
and hourly employees not covered by collective bargaining agreements.
27
<PAGE> 28
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
Effective with the Spin-off, Company employees who have accrued benefits
under a Crane pension plan will be fully vested in those benefits but will
accrue no further benefits under the Crane pension plan after the Spin-off.
Prior to the Spin-off, the liabilities of the Company for such plans were
included in the Receivable -- Crane balance. As a result, the Company was
charged its proportionate share of the total expense for the plans. Pension
expense related to Crane's defined benefit pension plans was $1,108, $780
and $559 in 1999, 1998 and 1997, respectively.
The Company also participates in several multi-employer pension plans which
provide benefits to certain employees under collective bargaining
agreements. Total contributions to these plans were $503 in 1999, $468 in
1998 and $454 in 1997.
HEALTH BENEFITS PLANS -- Prior to the Spin-off, employees hired before
January 1, 1992 were eligible for postretirement medical and life insurance
benefits if they met minimum age and service requirements.
Effective with the Spin-off, the Company will pay 50% of any premium or
cost of such coverage for its current retirees between the ages of 55 and
65 and those who reach 55 and choose to retire in the first quarter of
2000. All other employees not currently qualified will not receive
postretirement medical and life insurance benefits. The reduction in
benefits has resulted in a curtailment gain of $5,876.
28
<PAGE> 29
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
The following table sets forth the amounts recognized in the Company's
balance sheet at December 31, for company sponsored postretirement benefit
plan:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year...... $ 7,303 $ 6,750 $ 6,250
Plan participant contributions............... 238
Service cost................................. 158 248 236
Interest cost................................ 372 500 447
Amendments................................... (962)
Actuarial (gain) loss........................ (1,300) (12) (52)
Curtailment.................................. (5,080)
Benefits paid................................ (397) (183) (131)
------- ------- -------
Benefit obligation at end of year............ $ 332 $ 7,303 $ 6,750
======= ======= =======
Funded status.................................. $ (332) $(7,303) $(6,750)
Unrecognized net actuarial (gain) loss......... (1,757) 242 667
------- ------- -------
Accrued benefit cost......................... $(2,089) $(7,061) $(6,083)
======= ======= =======
Discount rate.................................. 7.50% 6.75% 7.25%
Components of net periodic benefit cost:
Service cost................................. $ 158 $ 248 $ 236
Interest cost................................ 372 500 447
Amortization of prior service cost........... (135)
Recognized actuarial gain.................... (51) (12) (52)
------- ------- -------
344
Recognition of curtailment gain.............. (5,876)
-------
Net periodic benefit cost...................... $(5,532) $ 736 $ 631
======= ======= =======
</TABLE>
In 1999, the cost of covered healthcare benefits was assumed to increase
7.2%, and then to decrease gradually to 5% by 2005 and remain at that level
thereafter. In 1998, the cost of covered healthcare benefits was assumed to
increase 8.5%, and then to decrease gradually to 4.75% by 2005 and remain at
that level thereafter.
<TABLE>
<CAPTION>
1 PERCENTAGE 1 PERCENTAGE
POINT INCREASE POINT INCREASE
-------------- --------------
<S> <C> <C>
Effect on total of service and interest cost
components..................................... $50 $43
Effect on postretirement benefit obligation...... 12 12
</TABLE>
DEFINED CONTRIBUTION PLANS -- Effective with the spin-off, the Company
established a new qualified defined contribution plan for its employees that
is substantially similar to the Crane plan.
At the spin-off date, all of the account balances of employees under the
Crane plan are fully vested and a corresponding amount of assets was
transferred from the Crane plan to one or more of the qualified defined
contribution plans maintained by the Company.
The cost of the defined contribution plans to the Company was $1,528, $1,673
and $1,532 in 1999, 1998 and 1997, respectively.
29
<PAGE> 30
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
11. STOCK AND INCENTIVE COMPENSATION PLANS
Effective as of the spin-off date, December 16, 1999, Huttig established
nonqualified stock and incentive compensation plans and arrangements
including the EVA Incentive Compensation Plan for Executive Officers, an
omnibus stock incentive plan providing for stock options and awards of
restricted stock, and a restricted stock awards plan for non-employee
directors of Huttig. Huttig assumed the liability for account balances of
its employees under Crane's EVA Incentive Compensation Plan.
12. INCOME TAXES
A reconciliation between income taxes based on the application of the
statutory federal income tax rate to income taxes as set forth in the
consolidated statements of income follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Income before taxes......................... $14,353 $21,851 $14,814
======= ======= =======
Statutory federal tax at 35%................ $ 5,024 $ 7,648 $ 5,185
Increase resulting from:
State and local income taxes.............. 272 411 280
Nondeductible goodwill and other
expenses............................... 593 196 294
------- ------- -------
Provision for income taxes.................. $ 5,889 $ 8,255 $ 5,759
======= ======= =======
Percentage of income before taxes........... $ 41.0% $ 37.8% $ 38.9%
======= ======= =======
</TABLE>
Deferred income taxes at December 31 are comprised of the following:
<TABLE>
<CAPTION>
1999 1998
--------------------- --------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------- ----------- ------ -----------
<S> <C> <C> <C> <C>
Accelerated depreciation................ $ -- $ 612 $ -- $ 698
Purchase price book and tax basis 12,217 838
differences...........................
Inventory related....................... 3,918 273
Insurance related....................... 1,273 -- 1,301 --
Employee benefits related............... 1,756 -- 3,113 --
Other accrued liabilities............... 6,291 -- 1,745 --
Other................................... 797 2,919 -- 193
------- ------ ------ ------
Total................................... $22,334 $7,449 $6,159 $2,002
======= ====== ====== ======
</TABLE>
At December 31, 1998, net current deferred tax assets of $4,053 and income
taxes payable of $4,881 were included in Receivable -- Crane.
30
<PAGE> 31
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
The provision for income taxes is composed of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Current:
U.S. Federal tax............................... $3,281 $7,708 $5,499
State and local tax............................ 175 649 462
------ ------ ------
Total current............................... 3,456 $8,357 $5,961
------ ------ ------
Deferred:
U.S. Federal tax............................... 2,190 (86) (170)
State and local tax............................ 243 (16) (32)
------ ------ ------
Total deferred.............................. 2,433 (102) (202)
------ ------ ------
Total income tax................................. $5,889 $8,255 $5,759
====== ====== ======
</TABLE>
13. SALES BY PRODUCT
The Company operates in one business segment, the distribution of building
materials used principally in new residential construction and in home
improvement, remodeling and repair work. The Company derives substantially
all of its revenues from domestic customers. The following table presents
the Company's sales by product:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Doors...................................... $272,176 $259,943 $232,502
Specialty building materials............... 169,836 140,871 133,746
Windows.................................... 138,746 132,991 128,195
Moldings................................... 99,710 88,641 93,907
Lumber and other commodity products........ 119,870 85,004 37,153
-------- -------- --------
Total sales........................... $800,338 $707,450 $625,503
======== ======== ========
</TABLE>
14. SUBSEQUENT EVENT
On February 11, 2000, the Company received a commitment letter from a
financial institution for a three-year $200,000 Senior Secured Credit
Facility. This facility will replace the existing $125,000 Credit Agreement
dated December 16, 1999.
31
<PAGE> 32
HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table sets forth selected consolidated financial information
on a quarterly basis for each quarter of 1999 and 1998. The Company's
business is seasonal and particularly sensitive to weather conditions.
Interim amounts are therefore subject to significant fluctuations.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH FULL
QUARTER QUARTER QUARTER QUARTER YEAR
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1999
Net sales................... $174,775 $205,979 $214,160 $205,424 $800,338
Operating profit............ 4,009 7,571 7,745 3,460 22,785
Net income.................. 1,232 3,288 3,933 11 8,464
1998
Net sales................... $146,858 $172,782 $202,209 $185,601 $707,450
Operating profit............ 2,961 5,599 10,647 9,425 28,632
Net income.................. 966 2,612 5,312 4,706 13,596
</TABLE>
32
<PAGE> 33
ITEM 9-- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 (other than the information regarding
executive officers set forth at the end of Item 1 of Part I of this Form 10-K)
will be contained in the Company's definitive Proxy Statement for its 2000
Annual Meeting of Shareholders under the captions "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance," and is incorporated
herein by reference.
ITEM 11--EXECUTIVE COMPENSATION
The information required by Item 11 will be contained in the Company's
definitive Proxy Statement for its 2000 Annual Meeting of Shareholders under the
captions "Election of Directors" and "Executive Compensation," and is
incorporated herein by reference.
ITEM 12--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 will be contained in the Company's
definitive Proxy Statement for its 2000 Annual Meeting of Shareholders under the
caption "Beneficial Ownership of Common Stock by Directors and Management," and
is incorporated herein by reference.
ITEM 13--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 will be contained in the Company's
definitive Proxy Statement for its 2000 Annual Meeting of Shareholders under the
caption "Other Transactions and Relationships," and is incorporated herein by
reference.
PART IV
ITEM 14--EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
The financial statements, financial statement schedules and exhibits listed
below are filed as part of this annual report:
(A)(1) FINANCIAL STATEMENTS:
The following consolidated financial statements of the Company and the
Report of Independent Auditors thereon are included in Item 8 above:
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Income and Retained Earnings for the Years Ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Changes in Shareholders Equity for the Years
Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997
Notes to Consolidated Financial Statements for the Years Ended December 31,
1999, 1998 and 1997
Independent Auditors' Report of Deloitte & Touche LLP, Independent Auditors
33
<PAGE> 34
(A)(2) FINANCIAL STATEMENT SCHEDULES:
None.
(A)(3) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1 Distribution Agreement dated December 6, 1999 between Crane
and the Company. (Incorporated by reference from Exhibit No.
2.1 of Amendment No. 4 to the Company's Registration
Statement on Form 10 (File No. 1-14982) filed with the
Commission on December 6, 1999.)
2.2 Share Exchange Agreement dated October 19, 1999 among the
Rugby Group PLC, Crane and the Company. (Incorporated by
reference from Exhibit No. 2.2 to Amendment No. 1 to the
Company's Registration Statement on Form 10 (File No.
1-14982) filed with the Commission on October 29, 1999.)
3.1 Restated Certificate of Incorporation of the Company.
(Incorporated by reference from Exhibit 3.1 to the Company's
Registration Statement on Form 10 (File No. 1-14982) filed
with the Commission on September 21, 1999.)
3.2 Bylaws of the Company. (Incorporated by reference from
Amendment No. 4 to the Company's Registration Statement on
Form 10 (File No. 1-14982) filed with the Commission on
December 6, 1999.)
4.1 Rights Agreement dated December 6, 1999 between the Company
and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent. (Filed herewith.)
4.2 Credit Agreement dated December 6, 1999 between the Company
and Bank One NA, as agent for the lenders named therein, and
the Lenders. (Incorporated by reference from Exhibit 4.1 to
the Company's Current Report on Form 8-K filed with the
Commission on December 22, 1999.)
4.3 Amendment No. 1 to Credit Agreement dated March 3, 2000.
(Filed herewith.)
4.4 Form of Revolving Loan Note dated December 16, 1999 in favor
of certain lenders. (Filed herewith.)
4.5 Schedule to Form of Revolving Loan Note dated December 16,
1999 in favor of certain lenders. (Filed herewith.)
4.6 Certificate of Designations of Series A Junior Participating
Preferred Stock of the Company. (Filed herewith.)
10.1 Tax Allocation Agreement by and between Crane and the
Company dated December 16, 1999. (Filed herewith.)
10.2 Employee Matters Agreement between Crane and the Company
dated December 16, 1999. (Filed herewith.)
*10.3 EVA Incentive Compensation Plan. (Filed herewith.)
*10.4 Form of Restricted Stock Agreement under the Company's EVA
Incentive Compensation Plan. (Filed herewith.)
*10.5 Non-Employee Director Restricted Stock Plan. (Incorporated
by reference from Exhibit 10.4 to Amendment No. 4 to the
Company's Registration Statement on Form 10 (File No.
1-14982) filed with the Commission on December 6, 1999.)
*10.6 Form of Stock Option Agreement under the Company's Stock
Incentive Plan. (Filed herewith.)
*10.7 Schedule to Stock Option Agreement under the Company's Stock
Incentive Plan. (Filed herewith.)
*10.8 Stock Incentive Plan. (Incorporated by reference from
Exhibit 10.5 to Amendment No. 4 to the Company's
Registration Statement on Form 10 (File No. 1-14982) filed
with the Commission on December 6, 1999.)
*10.9 Form of Indemnification Agreement for Executive Officers and
Directors. (Filed herewith.)
</TABLE>
34
<PAGE> 35
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.10 Schedule to Indemnification Agreement for Executive Officers
and Directors. (Filed herewith.)
*10.11 Employment/Severance Agreement between the Company and Barry
J. Kulpa dated October 18, 1999. (Incorporated by reference
from Exhibit 10.7 to Amendment No. 1 to the Company's
Registration Statement on Form 10 (File No. 1-14982) filed
with the Commission on October 29, 1999.)
*10.12 Form of Employment Agreement between the Company and certain
of its executive officers. (Filed herewith.)
*10.13 Schedule to Employment Agreement between the Company and
certain of its executive officers. (Filed herewith.)
10.14 Registration Rights Agreement by and between The Rugby Group
PLC and the Company dated December 16, 1999. (Filed
herewith.)
*10.15 Restricted Stock Agreement dated January 24, 2000 between
the Company and Barry J. Kulpa. (Filed herewith.)
*10.16 Restricted Stock Agreement dated December 17, 1999 between
the Company and Barry J. Kulpa. (Filed herewith.)
10.17 Restricted Stock Agreement dated December 17, 1999 between
the Company and Barry J. Kulpa. (Filed herewith.)
21.1 Subsidiaries of the Company. (Filed herewith.)
23.1 Consent of Deloitte & Touche LLP, independent certified
public accountants. (Filed herewith.)
27.1 Financial Data Schedule for the year ended December 31,
1999. (Filed herewith.)
</TABLE>
- ---------------
* Management contract or compensatory plan or arrangement.
The registrant hereby agrees to furnish supplementally to the Commission,
upon request, a copy of any omitted schedule to any of the agreements contained
or incorporated by reference herein.
(B) REPORTS ON FORM 8-K:
The Company filed a Current Report on Form 8-K dated December 22, 1999,
which reported under Item 2 that the Company had been separated from Crane by
means of a tax-free spin-off to the shareholders of Crane and that, immediately
thereafter, Huttig completed the acquisition of Rugby USA, Inc. from The Rugby
Group PLC. The Current Report on Form 8-K filed on December 22, 1999, included
the following financial statements and notes thereto of Rugby USA, Inc.,
together with the report thereon of PriceWaterhouseCoopers LLP, which were
incorporated by reference to Amendment No. 4 to the Company's Registration
Statement on Form 10/A that became effective December 7, 1999:
Consolidated Balance Sheets at December 31, 1998 and 1997 and Unaudited
Consolidated Balance Sheet at September 30, 1999
Consolidated Statements of Operations and Retained Earnings/Accumulated
Deficit for the Years Ended December 31, 1998, 1997 and 1996 and Unaudited
Consolidated Statements of Operations and Retained Earnings/Accumulated
Deficit for the Nine Months Ended September 30, 1999 and 1998
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998
and 1997 and Unaudited Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1999 and 1998
The Current Report on Form 8-K filed on December 22, 1999 also included pro
forma financial information (and notes thereto) for the Company, including
Unaudited Pro Forma Condensed Combined Statements of Income for the year ended
December 31, 1998, and the nine months ended September 30, 1999, and Unaudited
Pro Forma Condensed Combined Balance Sheet on September 30, 1999.
35
<PAGE> 36
(C) EXHIBITS
See (a)(3) above.
Copies of exhibits may be retrieved electronically at the Securities and
Exchange Commission's home page at www.sec.gov. Exhibits will also be furnished
at a charge of $.20 per page by writing to the Company, c/o Corporate Secretary,
Lakeview Center, Suite 400, 14500 South Outer Forty Road, Chesterfield, Missouri
63017.
(D) FINANCIAL STATEMENT SCHEDULES
See (a)(2) above.
36
<PAGE> 37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
HUTTIG BUILDING PRODUCTS, INC.
By: /s/ GREGORY D. LAMBERT
----------------------------------
Gregory D. Lambert
Vice President, Administration,
Chief Financial Officer and
Secretary
Date: March 3, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BARRY J. KULPA President and Chief Executive March 3, 2000
---------------------------------------- Officer (Principal Executive)
Barry J. Kulpa
/s/ GREGORY D. LAMBERT Vice President, Administration, March 3, 2000
---------------------------------------- Chief Financial Officer and
Gregory D. Lambert Secretary (Principal Financial
Officer)
/s/ CLIFFORD GORDON Controller (Principal Accounting March 3, 2000
---------------------------------------- Officer)
Clifford Gordon
/s/ E. THAYER BIGELOW, JR. Director March 3, 2000
----------------------------------------
E. T. Bigelow, Jr.
/s/ ALAN S. DURANT Director March 3, 2000
----------------------------------------
Alan S. Durant
/s/ R. S. EVANS Director March 3, 2000
----------------------------------------
R. S. Evans
/s/ R. S. FORTE Director March 3, 2000
----------------------------------------
R. S. Forte
/s/ DORSEY R. GARDNER Director March 3, 2000
----------------------------------------
Dorsey R. Gardner
/s/ B. J. KULPA Director March 3, 2000
----------------------------------------
Barry J. Kulpa
/s/ R. E. LAMBOURNE Director March 3, 2000
----------------------------------------
Robert E. Lambourne
/s/ JAMES L. L. TULLIS Director March 3, 2000
----------------------------------------
James L. L. Tullis
/s/ PETER L. YOUNG Director March 3, 2000
----------------------------------------
Peter L. Young
</TABLE>
37
<PAGE> 38
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1 Distribution Agreement dated December 6, 1999 between Crane
and the Company. (Incorporated by reference from Exhibit No.
2.1 of Amendment No. 4 to the Company's Registration
Statement on Form 10 (File No. 1-14982) filed with the
Commission on December 6, 1999.)
2.2 Share Exchange Agreement dated October 19, 1999 among the
Rugby Group PLC, Crane and the Company. (Incorporated by
reference from Exhibit No. 2.2 to Amendment No. 1 to the
Company's Registration Statement on Form 10 (File No.
1-14982) filed with the Commission on October 29, 1999.)
3.1 Restated Certificate of Incorporation of the Company.
(Incorporated by reference from Exhibit 3.1 to the Company's
Registration Statement on Form 10 (File No. 1-14982) filed
with the Commission on September 21, 1999.)
3.2 Bylaws of the Company. (Incorporated by reference from
Amendment No. 4 to the Company's Registration Statement on
Form 10 (File No. 1-14982) filed with the Commission on
December 6, 1999.)
4.1 Rights Agreement dated December 6, 1999 between the Company
and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent. (Filed herewith.)
4.2 Credit Agreement dated December 6, 1999 between the Company
and Bank One NA, as agent for the lenders named therein, and
the Lenders. (Incorporated by reference from Exhibit 4.1 to
the Company's current report on Form 8-K filed with the
Commission on December 22, 1999.)
4.3 Amendment No. 1 to Credit Agreement dated March 3, 2000.
(Filed herewith.)
4.4 Form of Revolving Loan Note dated December 16, 1999 in favor
of certain lenders. (Filed herewith.)
4.5 Schedule to Form of Revolving Loan Note dated December 16,
1999 in favor of certain lenders. (Filed herewith.)
4.6 Certificate of Designations of Series A Junior Participating
Preferred Stock of the Company. (Filed herewith.)
10.1 Tax Allocation Agreement by and between Crane and the
Company dated December 16, 1999. (Filed herewith.)
10.2 Employee Matters Agreement between Crane and the Company
dated December 16, 1999. (Filed herewith.)
*10.3 EVA Incentive Compensation Plan. (Filed herewith.)
*10.4 Form of Restricted Stock Agreement under the Company's EVA
Incentive Compensation Plan. (Filed herewith.)
*10.5 Non-Employee Director Restricted Stock Plan. (Incorporated
by reference from Exhibit 10.4 to Amendment No. 4 to the
Company's Registration Statement on Form 10 (File No.
1-14982) filed with the Commission on December 6, 1999.)
*10.6 Form of Stock Option Agreement under the Company's Stock
Incentive Plan. (Filed herewith.)
*10.7 Schedule to Stock Option Agreement under the Company's Stock
Incentive Plan. (Filed herewith.)
*10.8 Stock Incentive Plan. (Incorporated by reference from
Exhibit 10.5 to Amendment No. 4 to the Company's
Registration Statement on Form 10 (File No. 1-14982) filed
with the Commission on December 6, 1999.)
*10.9 Form of Indemnification Agreement for Executive Officers and
Directors. (Filed herewith.)
10.10 Schedule to Indemnification Agreement for Executive Officers
and Directors. (Filed herewith.)
*10.11 Employment/Severance Agreement between the Company and Barry
J. Kulpa dated October 18, 1999. (Incorporated by reference
from Exhibit 10.7 to Amendment No. 1 to the Company's
Registration Statement on Form 10 (File No. 1-14982) filed
with the Commission on October 29, 1999.)
</TABLE>
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
*10.12 Form of Employment Agreement between the Company and certain
of its executive officers. (Filed herewith.)
*10.13 Schedule to Employment Agreement between the Company and
certain of its executive officers. (Filed herewith.)
10.14 Registration Rights Agreement by and between The Rugby Group
PLC and the Company dated December 16, 1999. (Filed
herewith.)
*10.15 Restricted Stock Agreement dated January 24, 2000 between
the Company and Barry J. Kulpa. (Filed herewith.)
*10.16 Restricted Stock Agreement dated December 17, 1999 between
the Company and Barry J. Kulpa. (Filed herewith.)
10.17 Restricted Stock Agreement dated December 17, 1999 between
the Company and Barry J. Kulpa. (Filed herewith.)
21.1 Subsidiaries of the Company. (Filed herewith.)
23.1 Consent of Deloitte & Touche LLP, independent certified
public accountants. (Filed herewith.)
27.1 Financial Data Schedule for the year ended December 31,
1999. (Filed herewith.)
</TABLE>
- ---------------
* Management contract or compensatory plan or arrangement.
<PAGE> 1
Exhibit 4.1
HUTTIG BUILDING PRODUCTS, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Rights Agent
RIGHTS AGREEMENT
Dated as of December 6, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Certain Definitions...................................................................................1
Section 2. Appointment of Rights Agent...........................................................................4
Section 3. Issue of Right Certificates...........................................................................4
Section 4. Form of Right Certificates............................................................................5
Section 5. Countersignature and Registration.....................................................................5
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates...............................................................6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.........................................7
Section 8. Cancellation and Destruction of Right Certificates....................................................8
Section 9. Availability of Preferred Shares......................................................................8
Section 10. Preferred Shares Record Date..........................................................................8
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights....................................9
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...........................................15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................................15
Section 14. Fractional Rights and Fractional Shares..............................................................16
Section 15. Rights of Action.....................................................................................17
Section 16. Agreement of Right Holders...........................................................................17
Section 17. Right Certificate Holder Not Deemed a Stockholder....................................................18
Section 18. Concerning the Rights Agent..........................................................................18
Section 19. Merger or Consolidation or Change of Name of Rights Agent............................................19
Section 20. Duties of Rights Agent...............................................................................19
Section 21. Change of Rights Agent...............................................................................21
Section 22. Issuance of New Right Certificates...................................................................22
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 23. Redemption...........................................................................................22
Section 24. Exchange.............................................................................................22
Section 25. Notice of Certain Events.............................................................................24
Section 26. Notices..............................................................................................24
Section 27. Supplements and Amendments...........................................................................25
Section 28. Successors...........................................................................................26
Section 29. Benefits of this Agreement...........................................................................26
Section 30. Severability.........................................................................................26
Section 31. Governing Law........................................................................................26
Section 32. Counterparts.........................................................................................26
Section 33. Descriptive Headings.................................................................................26
Section 34. Administration.......................................................................................26
</TABLE>
Exhibit A - Form of Certificate of Designation, Preferences and
Rights of Series A Junior Participating Preferred
Stock
Exhibit B - Form of Right Certificate
-ii-
<PAGE> 4
RIGHTS AGREEMENT
Agreement, dated as of December 6, 1999, between Huttig
Building Products, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized
and declared a dividend of one preferred share purchase right (a "Right") for
each Common Share (as hereinafter defined) of the Company to be distributed in
the distribution of Common Shares of the Company (the "Spin-Off") by Crane Co.,
a Delaware corporation ("Crane"), to Crane's stockholders, each Right
representing the right to purchase one one-hundredth of a Preferred Share (as
hereinafter defined), upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right with
respect to each Common Share that shall become outstanding between the effective
date of the Spin-Off and the earliest of the Distribution Date, the Redemption
Date and the Final Expiration Date (as such terms are hereinafter defined).
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 20% or more of the Common Shares
of the Company then outstanding, but shall not include Rugby, any Subsidiary (as
such term is hereinafter defined) of Rugby, Crane, any Subsidiary of Crane, the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any Subsidiary of the Company, or any entity holding Common Shares of the
Company for or pursuant to the terms of any such plan, The Crane Fund or The
Crane Fund for Widows and Children; provided, however, that the foregoing
exception for Rugby and any Subsidiary of Rugby shall be effective only for so
long as Rugby and its Affiliates and Associates shall beneficially own no Common
Shares of the Company other than (i) Common Shares of the Company acquired by
Rugby or a Subsidiary of Rugby pursuant to the Share Exchange Agreement dated as
of October 19, 1999 among the Company, Crane Co., and Rugby ("Share Exchange
Shares"); and/or (ii) Common Shares of the Company issued as a dividend on Share
Exchange Shares or issued in a reclassification, subdivision, consolidation, or
combination of Share Exchange Shares and/or (iii) additional Common Shares of
the Company in an aggregate amount not exceeding 1% of the Common Shares of the
Company outstanding at the time of acquisition of any Common Shares; provided,
further, that the foregoing exception for Crane and any Subsidiary of Crane
shall be effective only until the effective date of the Spin-Off.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to
<PAGE> 5
20% or more of the Common Shares of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 20% or more of
the Common Shares of the Company then outstanding by reason of share purchases
by the Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares of the Company, then such
Person shall be deemed to be an "Acquiring Person". 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 Common Shares 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) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to
vote such security (l) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and
-2-
<PAGE> 6
between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to
Section l(c)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Owner to the contrary, the phrase "then outstanding," when used with reference
to a Person's beneficial ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
Notwithstanding the foregoing, none of the Company's directors
or officers shall be deemed to be the Beneficial Owner of, or to beneficially
own, any Common Shares of the Company owned by any other director or officer of
the Company solely by virtue of such persons acting in their capacities as such,
including, without limitation, in connection with any formulation and
publication of the Board of Directors' recommendation of a position, and any
actions taken in furtherance thereof, with respect to any acquisition proposal
relating to the Company, a tender or exchange offer for any Common Shares of the
Company or any solicitation of proxies with respect to any Common Shares of the
Company.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in New York, New York or
Ridgefield Park, New Jersey are authorized or obligated by law or executive
order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.
New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M. New York time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $.01 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(h) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(i) "Person" shall mean any individual, firm, corporation,
limited liability company or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(j) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the rights and preferences set
-3-
<PAGE> 7
forth in the Form of Certificate of Designations, Preferences and Rights of
Series A Junior Participating Preferred Stock, a copy of which is attached to
this Agreement as Exhibit A.
(k) "Purchase Price" shall have the meaning set forth in
Section 7(b) hereof.
(l) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(m) "Rugby" shall mean The Rugby Group PLC and any entity
surviving or resulting from the merger or consolidation of The Rugby Group PLC.
(n) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(o) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of the Close of Business on (i) the
tenth day after the Shares Acquisition Date or (ii) the tenth Business Day (or
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, any entity holding Common Shares for or pursuant to the terms of any
such plan, The Crane Fund or The Crane Fund for Widows and Children) of, or of
the first public announcement of the intention of 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 entity holding Common Shares for or
pursuant to the terms of any such plan, The Crane Fund or The Crane Fund for
Widows and Children) to commence, a tender or exchange offer the consummation of
which would result in any Person becoming an Acquiring Person (including any
such date which is after the date of this Agreement and prior to the issuance of
the Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced by the certificates for
Common Shares of the Company registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of Common Shares of
the Company. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
-4-
<PAGE> 8
Shares of the Company as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share of the Company so
held. As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) Until the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date, certificates for Common Shares of
the Company (including, without limitation, reacquired Common Shares of the
Company referred to in the last sentence of this paragraph (b)) shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Huttig
Building Products, Inc. and ChaseMellon Shareholder Services, L.L.C.,
dated as of December 6, 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 executive offices of Huttig Building
Products, Inc. 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. Huttig Building
Products, Inc. will mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, Rights issued to any Person who becomes an Acquiring Person
(as defined in the Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares of the Company
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares of the Company
represented thereby. In the event that the Company purchases or acquires any
Common Shares of the Company prior to the Distribution Date, any Rights
associated with such Common Shares of the Company shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares of the Company which are no longer
outstanding.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate (which do not affect the duties or responsibilities of the Rights
Agent) 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 22 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of one one-hundredths of a
Preferred Share as
-5-
<PAGE> 9
shall be set forth therein at the Purchase Price, but the number of such one
one-hundredths of a Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, its Chief Operating Officer,
any of its Vice Presidents or its Treasurer, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such Person was not such an officer.
Following the Distribution Date and receipt by the Rights
Agent of notice and a list of record holders of Rights, the Rights Agent will
keep or cause to be kept, at its office designated pursuant to Section 26
hereof, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by
each of the Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become null and void pursuant to Section 11(a)(ii) hereof or
that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
Right Certificate or Certificates until the registered holder shall have
completed and signed the certificate contained in the form of assignment set
forth on the reverse side of such Right Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner or Affiliates or
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Associates thereof as the Company or the Rights Agent shall reasonably request.
Thereupon the Rights Agent shall countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates, and the Rights Agent
shall not be obligated to effect any transfer of a Right Certificate or
Certificates until it has received evidence satisfactory to it that any such
taxes or charges have been paid.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right Certificate
if mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) The registered holder of any Right Certificate may,
subject to the second paragraph of Section 11(a)(ii), exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each one one-hundredth
of a Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on December 6, 2009 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share purchasable pursuant to the exercise of a Right shall initially
be $27.50, and shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below (the "Purchase Price").
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable tax or governmental charge required to be paid
by the holder of such Right Certificate in accordance with Section 9 hereof by
wire transfer, certified check, cashier's check, official bank check or money
order payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred Shares
certificates for the number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from the depository agent depository receipts
representing such
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number of one one-hundredths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depository agent) and the
Company hereby directs the depository agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depository receipts, cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all taxes and governmental charges which may be payable
in respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates or depository receipts for the Preferred Shares in a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depository receipts for Preferred Shares upon the exercise of
any
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<PAGE> 12
Rights until any such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's reasonable satisfaction that no such tax is
due.
Section 10. Preferred Shares Record Date. Each Person in whose
name any certificate for Preferred Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable taxes and
governmental charges) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Shares transfer books
of the Company are closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of Preferred Shares or other
securities covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares 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; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person, each holder of a Right shall thereafter have
a right to receive, upon exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-
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hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of the Company as shall equal the result obtained
by (x) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share market price of
the Company's Common Shares (determined pursuant to Section 11(d) hereof) on the
date of the occurrence of such event; provided, however, that if the transaction
that would otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii). In the event that any Person shall become an Acquiring Person and the
Rights shall then be outstanding, the Company shall not take any action which
would eliminate or diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of such event, any Rights that
are or were acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be null and void and any
holder of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. No Right Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially owned by an Acquiring
Person whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof; no Right Certificate shall be issued at any time
upon the transfer of any Rights to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence or any Associate or Affiliate thereof or
to any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence shall be canceled.
The Company shall notify the Rights Agent when this Section applies and shall
use all reasonable efforts to insure that the provisions of this Section are
complied with, but neither the Company nor the Rights Agent shall have any
liability to any holder of Right Certificates or other Person as a result of the
Company's failure to make any determination with respect to an Acquiring Person
or any of their respective Affiliates or transferees or transactions hereunder.
(iii) In the event that there shall not be sufficient Common
Shares of the Company issued but not outstanding or authorized but unissued to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be necessary to
authorize additional Common Shares of the Company for issuance upon exercise of
the Rights. In the event the Company shall, after good faith effort, be unable
to take all such action as may be necessary to authorize such additional Common
Shares of the Company, the Company shall substitute, for each Common Share of
the Company that would otherwise be issuable upon exercise of a Right, a number
of Preferred Shares or fraction thereof such that the current per share market
price of one Preferred Share multiplied by such number or fraction is equal to
the current per share market price of one Common Share of the Company as of the
date of issuance of such Preferred Shares or fraction thereof.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares
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<PAGE> 14
having the same rights, privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible into Preferred Shares
or equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as defined in
Section 11(d) hereof) 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 Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and the
denominator of which shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent. Preferred Shares owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights, options
or warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
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(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) which fall within the
one-year period ending on such date and have the lowest such average; provided,
however, that in the event that the current per share market price of the
Security is determined during a period following the announcement by the issuer
of such Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and prior to the
expiration of thirty (30) Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Security selected by the
Board of Directors of the Company. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares of the Company as determined pursuant to Section
11(d)(i) (appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by one hundred.
If neither the Common Shares of the Company nor the Preferred Shares are
publicly held or so listed or traded, "current per share market price" shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations
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<PAGE> 16
under this Section 11 shall be made to the nearest cent or to the nearest one
one-millionth of a Preferred Share or one ten-thousandth of any other share or
security as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right 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 Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. A copy of such public
announcement shall be delivered to the Rights Agent. This record date may be the
date on which the Purchase Price is adjusted or any day thereafter, but, if the
Right Certificates have been issued, shall be at least 10 days later than the
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date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder and to the Rights Agent a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
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<PAGE> 18
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares of the Company payable in Common Shares of
the Company or (ii) effect a subdivision, combination or consolidation of the
Common Shares of the Company (by reclassification or otherwise than by payment
of dividends in Common Shares of the Company) into a greater or lesser number of
Common Shares of the Company, then in any such case (A) the number of one
one-hundredths of a Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of Common Shares of
the Company outstanding immediately before such event and the denominator of
which is the number of Common Shares of the Company outstanding immediately
after such event, and (B) each Common Share of the Company outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each Common Share of the Company outstanding immediately prior to
such event had issued with respect to it. The adjustments provided for in this
Section 11(n) shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief, reasonably detailed statement of the facts,
computations and accounting for such adjustment, (b) file with the Rights Agent
and with each transfer agent for the Common Shares of the Company or the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall have no duty with respect to, and
shall not be deemed to have knowledge of, any adjustment unless and until it
shall have received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event, directly or indirectly, at any time after
a Person has become an Acquiring Person, (a) the Company shall consolidate with,
or merge with and into, any other Person, (b) any Person shall consolidate with
the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares of the Company shall be changed into or
exchanged for stock or other securities of any other Person (or the Company) or
cash or any other property, or (c) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (other than Rights which have become void
pursuant to Section 11(a)(ii) hereof) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred
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<PAGE> 19
Shares, such number of Common Shares of such other Person (including the Company
as successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Shares shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of its Common Shares to permit the exercise in full of all
outstanding Rights in accordance with this Agreement) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon the exercise of the Rights. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing. The Company
shall not enter into any transaction of the kind referred to in this Section 13
if at the time of such transaction there are any rights, warrants, instruments
or securities outstanding or any agreements or arrangements which, as a result
of the consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the
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<PAGE> 20
fair value of the Rights on such date as determined in good faith by the Board
of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depository
receipts, pursuant to an appropriate agreement between the Company and a
depository selected by it; provided, that such agreement shall provide that the
holders of such depository receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depository receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided above).
(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, judgment or ruling (whether
interlocutory or final) 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, that the Company must use its best efforts to have any such
order, decree, judgment or ruling lifted or otherwise overturned as soon as
possible.
Section 15. Rights of Action. All rights of action in respect
of this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders
of the Common Shares of the Company); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares of the
Company), without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common Shares of
the Company), may, in such holder's own behalf and for such holder's own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right
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<PAGE> 21
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 will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares of the
Company;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
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 Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred by the Rights Agent
in the preparation, delivery, amendment, administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, obligation, damage, judgment, fine, penalty, claim, demand,
settlement, cost or expense (including reasonable attorneys' fees and other
professional services) (collectively, "Losses"), incurred without gross
negligence, bad faith or willful misconduct on
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<PAGE> 22
the part of the Rights Agent, for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including, without limitation, the costs and expenses of defending
against any claim of liability in the premises.
The Rights Agent shall be authorized and protected and shall
incur no liability and shall be indemnified for and held harmless against any
and all Losses for, or in respect of, any action taken, suffered or omitted by
it in connection with, the acceptance and administration of this Agreement (i)
in reliance upon any Right Certificate or certificate for the Preferred Shares
or Common Shares 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 or (ii) otherwise upon
the advice of counsel as set forth in Section 20 hereof. The Rights Agent shall
be fully protected in relying on any such item and shall have no duty with
respect to and shall not be deemed to have any knowledge unless and until it
shall have received any such item. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation or other Person into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation or other Person resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation or other Person succeeding to the shareholder services business of
the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, that such
corporation or other Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
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<PAGE> 23
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations, and only the duties and obligations,
expressly imposed by this Agreement (no duties or obligations being implied
hereunder) upon the following terms and conditions, by all of which the Company
and the holders of Right Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted by it in good faith and in accordance with or in reliance on
such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking, suffering or
omitting 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 in form reasonably
satisfactory to the Rights Agent signed by any one of the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization and protection to the Rights Agent, and
the Rights Agent shall incur no liability for or in respect of, any action
taken, suffered or omitted to be taken 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 recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any liability or
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming null and void pursuant to Section
11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in this Agreement, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it be responsible for any determination of the market value of the
Rights or any Common Shares of the Company pursuant to the provisions hereof;
nor shall it by any act hereunder be deemed to make any representation or
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<PAGE> 24
warranty as to the authorization or reservation of any Preferred Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares will, when 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
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary or the Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and such instructions shall be full authorization and protection to the
Rights agent and the Rights Agent shall incur no liability for or in respect of
any action taken, or suffered or omitted by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. The Rights Agent may conclusively rely on the most recent
instructions given by any such officer.
(h) The Rights Agent and any stockholder, affiliate, 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 Person
or 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 or any other Person
resulting from any such act, default, neglect or misconduct, absent gross
negligence, bad faith or willful misconduct in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if it believes that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
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 Shares of the Company or Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 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 Shares of the Company or Preferred Shares by registered or
certified mail, and to the holders of the Right
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<PAGE> 25
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
Right Certificate (who shall, with such notice, submit such holder's Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (i) a Person organized and doing
business under the laws of the United States or of any state of the United
States so long as such Person is authorized to do business under such laws, in
good standing, which is subject to supervision or examination by federal or
state authorities and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million or (ii) an affiliate of an
institution that satisfies the requirements set forth in clause (i) of this
sentence. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
of the Company or Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to appoint a successor
Rights Agent or to give any notice provided for in this Section 21, however, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option,
at any time prior to such time as any Person becomes an Acquiring Person, redeem
all but not less than all the then outstanding Rights at a redemption price of
$.01 per Right, 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 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 pursuant to paragraph (a) of
this Section 23, and without
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<PAGE> 26
any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give public notice of
any such redemption and a copy of such notice shall be provided to the Rights
Agent; provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within ten (10) days
after such action of the Board of Directors ordering the redemption of the
Rights, the Company shall mail a notice of redemption to all the holders of the
then outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares of the Company. 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. Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 hereof, and other
than in connection with the purchase of Common Shares of the Company prior to
the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares of the Company at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Company's Board of Directors shall not be empowered to effect
such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares of the Company for or pursuant
to the terms of any such plan, The Crane Fund or The Crane Fund for Widows and
Children), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Common Shares of the Company then
outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (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 holders
of such Rights shall be to receive that number of Common Shares of the Company
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange and shall provide a copy of such public notice to the Rights Agent;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares of the Company for Rights will
be effected and, in the event of any partial
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<PAGE> 27
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 11(a)(ii) hereof)
held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares of the Company 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 action as may be necessary to authorize
additional Common Shares of the Company for issuance upon exchange of the
Rights. In the event the Company shall, after good faith effort, be unable to
take all such action as may be necessary to authorize such additional Common
Shares of the Company, the Company shall substitute, for each Common Share of
the Company that would otherwise be issuable upon exchange of a Right, a number
of Preferred Shares or fraction thereof such that the current per share market
price of one Preferred Share multiplied by such number or fraction is equal to
the current per share market price of one Common Share of the Company as of the
date of issuance of such Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of
Common Shares of the Company or to distribute certificates which evidence
fractional Common Shares of the Company. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares of the Company
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share of the Company. For the purposes of
this paragraph (d), the current market value of a whole Common Share shall be
the closing price of a Common Share of the Company (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 (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to make
any other distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the Common
Shares of the Company payable in Common Shares of the Company or to effect a
subdivision, combination or consolidation of the Common Shares of the Company
(by reclassification or otherwise than by payment of dividends in Common Shares
of the Company), then, in each such case, the Company shall give to the Rights
Agent and to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall
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<PAGE> 28
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares of the Company and/or Preferred Shares, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least ten (10) days prior to the record date for
determining holders of the Preferred Shares for purposes of such action, and in
the case of any such other action, at least ten (10) days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of the Common Shares of the Company and/or Preferred Shares, whichever
shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Huttig Building Products, Inc.
14500 South Outer Forty Road, Suite 400
Chesterfield, MO 63017
Attention: President
With a copy to:
Kirkpatrick & Lockhart LLP
Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, PA 15222
Attention: Janice C. Hartman, Esq.
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
450 West 33rd Street
New York, NY 10001
-25-
<PAGE> 29
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from
time to time and the Rights Agent shall, if the Company so directs, supplement
or amend this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment 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 (other than any
Acquiring Person and its Affiliates and Associates). Without limiting the
foregoing, the Company may at any time prior to such time as any Person becomes
an Acquiring Person amend this Agreement to (a) lower the thresholds set forth
in Sections l(a) and 3(a) hereof from 20% to not less than the greater of (i)
any percentage greater than the largest percentage of the outstanding Common
Shares of the Company 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 any Subsidiary of the Company, any entity holding
Common Shares of the Company for or pursuant to the terms of any such plan or
any Person who is not deemed an Acquiring Person) and (ii) 10%, (b) fix a Final
Expiration Date later than the date set forth in Section 7 hereof, (c) reduce
the Redemption Price or (d) increase the Purchase Price. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, and, if requested by the Rights Agent, an opinion of counsel, the Rights
Agent shall execute such supplement or amendment.
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. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares of the Company) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares of the Company).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this
-26-
<PAGE> 30
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State; except that all provisions
regarding the rights, duties and obligations of the Rights Agent shall be
governed by and construed in accordance with the laws of the state of New York
applicable to contracts made and to be performed entirely within such state.
Section 32. 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 33. 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 34. Administration. The Board of Directors of the
Company shall have the exclusive power and authority to administer and interpret
the provisions of 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. All
such actions, calculations, determinations and interpretations which are done or
made by the Board of Directors of the Company in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other Persons and shall not subject the Board of Directors of the
Company to any liability to the holders of the Rights.
-27-
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year first
above written.
HUTTIG BUILDING PRODUCTS, INC.
Attest:
By: Gregory Lambert By: Barry J. Kulpa
------------------------- -----------------------------------------
Title: Secretary Title: President and Chief Executive Officer
CHASEMELLON SHAREHOLDERS SERVICES, L.L.C.
Attest:
By: Ruth Brunette By: Jane A. Marten
------------------------- -----------------------------------------
Title: Account Administrator Title: Assistant Vice President
-28-
<PAGE> 32
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
HUTTIG BUILDING PRODUCTS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
---------------------------------
Huttig Building Products, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (hereinafter
called the "Corporation"), hereby certifies that the following resolution was
adopted by the Board of Directors of the Corporation as required by Section 151
of the General Corporation Law at a meeting duly called and held on December 6,
1999:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation in accordance with the provisions
of the Restated Certificate of Incorporation of the Corporation, the Board of
Directors hereby creates a series of Preferred Stock, par value $.01 per share
(the "Preferred Stock"), of the Corporation and hereby states the designation
and number of shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of this series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 250,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any other stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock, in preference to the
holders of Common Stock, par value $.01 per share (the "Common Stock"),
of the Corporation, and of any other junior stock, shall be entitled to
receive,
<PAGE> 33
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
first day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1 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 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 declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the 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) of this
Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1 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,
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
A-2
<PAGE> 34
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 not 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 declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the 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 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, in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, in the Restated Certificate of Incorporation of the
Corporation or by law, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, 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:
A-3
<PAGE> 35
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking 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 stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking 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 reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set forth
herein, in the Restated Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (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
A-4
<PAGE> 36
thereon, whether or not declared, to the date of such payment, provided that the
holders of shares of Series A Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be distributed per share
to holders of shares of Common Stock, or (2) to the holders of shares of stock
ranking on a parity (upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the 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 each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the 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. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of Preferred Stock.
Section 10. Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the
A-5
<PAGE> 37
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 at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, Huttig Building Products, Inc. has caused
this Certificate of Designations of Series A Junior Participating Preferred
Stock to be duly executed by its President and Chief Executive Officer this ____
day of December, 1999.
Huttig Building Products, Inc.
-------------------------------------
Barry J. Kulpa
President and Chief Executive Officer
A-6
<PAGE> 38
Exhibit B
Form of Right Certificate
Certificate No. R- ____________ Rights
NOT EXERCISABLE AFTER _______________ OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED
IN THE RIGHTS AGREEMENT) SHALL BECOME NULL AND VOID.
Right Certificate
HUTTIG BUILDING PRODUCTS, 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 Rights Agreement, dated as of ___________, 1999 (the "Rights
Agreement"), between Huttig Building Products, Inc., a Delaware corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M., Eastern time,
on _______________ at the principal office of the Rights Agent, or at the office
of its successor as Rights Agent, one one-hundredth of a fully paid
non-assessable share of Series A Junior Participating Preferred Stock, par value
$.01 per share (the "Preferred Shares"), of the Company, at a purchase price of
$____ per one one-hundredth of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of ___________, 1999, based on
the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths of a
Preferred Share which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
<PAGE> 39
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.01 per Right or (ii) may be exchanged in whole or in part for
Preferred Shares or shares of the Company's Common Stock, par value $.01 per
share.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
B-2
<PAGE> 40
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of _______________, ____.
ATTEST: HUTTIG BUILDING PRODUCTS, INC.
By
- ---------------------------------------- ----------------------------
Countersigned:
ChaseMellon Shareholder Services, L.L.C.
By
--------------------------------------
Authorized Signature
B-3
<PAGE> 41
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Right
Certificate.)
FOR VALUE RECEIVED ________________________________ hereby
sells, assigns and transfers unto ________________________________
_____________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ____________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ____________, ____
________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
________________________________
Signature
B-4
<PAGE> 42
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the Right
Certificate.)
To: HUTTIG BUILDING PRODUCTS, INC.
The undersigned hereby irrevocably elects to exercise
___________ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
_____________________________________________
(Please print name and address)
_____________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
_____________________________________________
(Please print name and address)
_____________________________________________
Dated: ______________, ____
________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
B-5
<PAGE> 43
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
________________________________
Signature
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
<PAGE> 1
Exhibit 4.3
AMENDMENT NO. 1
TO
CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO THE CREDIT AGREEMENT (the "Amendment") is made
as of March 3, 2000 by and among HUTTIG BUILDING PRODUCTS, INC. (the
"Borrower"), the financial institutions listed on the signature pages hereof
(the "Lenders") and BANK ONE, NA (having its principal office in Chicago,
Illinois) in its individual capacity as a Lender and in its capacity as
contractual representative (the "Agent") under that certain Credit Agreement
dated as of December 16, 1999 by and among the Borrower, the financial
institutions party thereto and the Agent (the "Credit Agreement"). Defined terms
used herein and not otherwise defined herein shall have the meanings given to
them in the Credit Agreement.
WITNESSETH:
WHEREAS, the Borrower, the Lenders and the Agent are parties to the
Credit Agreement; and
WHEREAS, the Borrower, the requisite number of Lenders under
Section 9.3 of the Credit Agreement and the Agent have agreed to amend the
Credit Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto have agreed to the following amendments to the Credit Agreement:
1. AMENDMENTS TO THE CREDIT AGREEMENT. Effective as of March 3, 2000
and subject to the satisfaction of the conditions precedent set forth in Section
2 below, the Credit Agreement is hereby amended as follows:
1.1. Section 2.14(D) of the Credit Agreement is amended to
delete clauses (ii) and (iii) thereof in their entirety and to
substitute the following therefor:
(ii) The (a) Applicable Eurodollar Margin shall be
the greater of (1) 1.75% per annum and (2) the margin over
LIBOR or the applicable eurodollar rate charged with respect
to the Interim Financing (as defined in Section 7.3(A)(ix)
below); (b) the Applicable Floating Rate Margin shall be equal
to the Applicable Eurodollar Rate Margin minus 1.00%; (c) the
Applicable L/C Fee Percentage shall be equal to the Applicable
Eurodollar Margin; and (d) the Applicable Commitment Fee
Percentage shall be equal to 0.375% per annum.
<PAGE> 2
1.2. Section 7.2 of the Credit Agreement is amended to add new
Section 7.2(M) as follows:
(M) In the event the Borrower shall have not
refinanced the Obligations (including providing cash
collateral for all L/C Obligations or a back-to-back letter of
credit from an issuer reasonably acceptable to the Issuing
Bank) and terminates this Agreement not later than the
maturity date of the Interim Financing (as defined in Section
7.3(A)(ix) hereof), (i) Borrower shall, and shall cause each
of its Subsidiaries who are parties to the Subsidiary
Guaranty, (i )to promptly execute security agreements and
financing statements in forms reasonably acceptable to the
Agent and the Borrower granting to the Agent on behalf of the
Lenders a security interest in Borrower's and such
Subsidiaries' accounts receivable and inventory, and (ii)
notwithstanding the provisions of this Agreement, including
but not limited to Section 7.3(c) hereof, Borrower and such
Subsidiaries may, at the time of granting of the security
interests described in subpart (i) above, grant and perfect
pari passu liens and security interests in their respective
accounts receivable and inventory in favor of The Chase
Manhattan Bank, as agent for the benefit of the lenders under
the Interim Financing.
1.3. Section 7.3(A)(ix) of the Credit Agreement is hereby
deleted in its entirety, and the following is substituted therefor:
(ix) short-term unsecured Indebtedness provided by
The Chase Manhattan Bank or one of its affiliates (and their
assignees) to the Borrower, the outstanding principal amount
of which shall not exceed $25,000,000 and the other terms and
conditions of which shall be substantially similar to the
Credit Agreement except that the maturity date thereof shall
be the date sixty calendar days after all conditions to the
effectiveness of Amendment No. 1 to this Credit Agreement have
been satisfied (the "INTERIM FINANCING");
1.4. Section 7.3(E) of the Credit Agreement is amended to
delete clause (vi) therefrom in its entirety and to substitute the
following therefor:
(vi) Contingent Obligations of Subsidiaries which are
Guarantors under the Guaranty consisting of the guaranty of
the Interim Financing,
1.5. Section 7.3 of the Credit Agreement is amended to add the
following at the end thereof:
(S) Pari Passu Payments and Prepayments with Interim
Financing; No Reduction of Interim Financing. Without the
prior written consent of Agent and the Required Lenders, the
Borrower shall not (i) repay or prepay any amount outstanding
under the Interim Facility without making a simultaneous
ratable
2
<PAGE> 3
repayment or prepayment (based upon relative outstandings) of
the Revolving Credit Obligations and (ii) reduce the
commitment or otherwise take action the result of which would
be to reduce the aggregate amount available to the Borrower
under the Interim Facility to be less than $25,000,000.
1.6. Section 7.4(B) of the Credit Agreement is hereby deleted
in its entirety, and the following is substituted therefor:
(B) Minimum Consolidated Net Worth. The Borrower
shall not permit its Consolidated Net Worth at any time to be
less than the sum of (a) $65,000,000 plus (b) fifty percent
(50%) of Net Income (if positive) earned in each fiscal
quarter calculated beginning with the fiscal quarter ending
March 31, 2000, plus (c) one-hundred percent (100%) of any
positive adjustment to stockholders' equity resulting from any
transaction involving any capital contribution to the Borrower
or the issuance by the Borrower or any Subsidiary of any
Capital Stock to the extent such capital contribution or any
other cash or other property received by the Borrower or such
Subsidiary from such issuance is used by the Borrower or any
Subsidiary to pay all or any part of the purchase price of any
Permitted Acquisition.
2. CONDITIONS OF EFFECTIVENESS. The effectiveness of this Amendment is
subject to the conditions precedent that the Agent shall have received the
following documents:
(a) duly executed originals of this Amendment from each
of the Borrower and the requisite number of Lenders
under Section 9.3 of the Credit Agreement;
(b) duly executed originals of a Reaffirmation in the
form of Exhibit A attached hereto from each of
Rondels, Inc., a Washington corporation, CIPCO Inc.,
an Illinois corporation; Rugby USA, Inc., a Georgia
corporation, and Rugby Building Products, Inc., a
Delaware corporation; and
(c) The Borrower shall have paid all amounts payable
under and pursuant to the terms of Section 10.7(A) of
the Credit Agreement and payable pursuant to the
separate fee agreement between the Borrower, Banc One
Capital Markets, Inc. and the Agent.
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Credit Agreement, as
previously executed and as amended hereby, constitute
legal, valid and binding obligations of the Borrower
and are enforceable against the Borrower in
accordance with their terms.
3
<PAGE> 4
(b) Upon the effectiveness of this Amendment and after
giving effect hereto, (i) the Borrower hereby
reaffirms all covenants, representations and
warranties made in the Credit Agreement as amended
hereby, and agrees that all such covenants,
representations and warranties (other than covenants,
representations and warranties that are expressly
made as of a specific date) shall be deemed to have
been remade as of the effective date of this
Amendment and (ii) no Default or Unmatured Default
has occurred and is continuing.
(c) The Borrower:
(i) has received and has accepted a
fully-underwritten commitment from The Chase
Manhattan Bank (or one of its affiliates)
for committed financing to be provided to
the Borrower in an amount not less than
$200,000,000 for the refinancing of the
Obligations, which commitment contains only
customary conditions precedent relating to
credit facilities of this type;
(ii) has reasonably determined that it is able to
meet all of the conditions precedent
contained in such commitment on or prior to
the date sixty calendar days after all
conditions to the effectiveness of this
Amendment have been satisfied; and
(iii) has provided or caused to be provided a true
and accurate copy of such commitment letter
and term sheet to the Agent and, other than
a fee letter in connection therewith, has
entered into no other agreements which alter
the terms thereof.
4. REFERENCE TO THE EFFECT ON THE CREDIT AGREEMENT.
(a) Upon the effectiveness of Section 1 hereof, on and
after the date hereof, each reference in the Credit
Agreement (including any reference therein to "this
Credit Agreement," "hereunder," "hereof," "herein" or
words of like import referring thereto) or in any
other Loan Document shall mean and be a reference to
the Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit
Agreement and all other documents, instruments and
agreements executed and/or delivered in connection
therewith, shall remain in full force and effect, and
are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or
remedy of the Agent or the Lenders, nor constitute a
waiver of
4
<PAGE> 5
any provision of the Credit Agreement or any other
documents, instruments and agreements executed and/or
delivered in connection therewith.
5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ., BUT
OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS) OF THE STATE OF
ILLINOIS.
6. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
7. COUNTERPARTS; FACSIMILE EFFECTIVENESS. This Amendment may be
executed by one or more of the parties to this Amendment on any number of
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A facsimile signature page
hereto sent to the Agent or the Agent's counsel shall be effective as a
counterpart signature provided each party executing such a facsimile counterpart
agrees to deliver originals to the Agent thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first above written.
HUTTIG BUILDING PRODUCTS, INC.
By: /s/ BARRY J. KULPA
---------------------------------
Name: Barry J. Kulpa
Title: President and Chief Executive Officer
BANK ONE, NA
(Main Office Chicago),
as Agent and as Lender
By: /s/ NATHAN L. BLOCH
---------------------------------
Name: Nathan L. Bloch
Title: First Vice President
THE CHASE MANHATTAN BANK,
as a Lender
By: /s/ ALAN J. ARIA
---------------------------------
Name: Alan J. Aria
Title: Vice President
COMERICA BANK,
as a Lender
By: /s/ JEFFREY E. PECK
---------------------------------
Name: Jeffrey E. Peck
Title: Vice President
<PAGE> 7
MERCANTILE BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ GERALD S. KIRK
---------------------------------
Name: Gerald S. Kirk
Title: Vice President
FIRST UNION NATIONAL BANK,
as a Lender
By:
---------------------------------
Name:
Title:
BANK OF NEW YORK,
as a Lender
By:
---------------------------------
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD.,
as a Lender
By: /s/ NELSON Y. CHANG
---------------------------------
Name: Nelson Y. Chang
Title: Assistant Vice President
<PAGE> 8
EXHIBIT A
REAFFIRMATION
Each of the undersigned hereby acknowledges receipt of a copy of the
foregoing Amendment No. 1 to the Credit Agreement dated as of December 16, 1999
by and among HUTTIG BUILDING PRODUCTS, INC. (the "Borrower"), the financial
institutions from time to time party thereto (the "Lenders") and BANK ONE, NA
(having its principal office in Chicago, Illinois), in its individual capacity
as a Lender and in its capacity as contractual representative (the "Agent") (as
amended and as the same may be amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), which Amendment No. 1 is
dated as of March 3, 2000 (the "Amendment"). Capitalized terms used in this
Reaffirmation and not defined herein shall have the meanings given to them in
the Credit Agreement. Without in any way establishing a course of dealing by the
Agent or any Lender, each of the undersigned reaffirms the terms and conditions
of the Guaranty and any other Loan Document executed by it and acknowledges and
agrees that such Guaranty and each and every such Loan Document executed by the
undersigned in connection with the Credit Agreement remains in full force and
effect and is hereby reaffirmed, ratified and confirmed. All references to the
Credit Agreement contained in the above-referenced documents shall be a
reference to the Credit Agreement as so modified by the Amendment and as the
same may from time to time hereafter be amended, modified or restated.
Dated: March 3, 2000
RONDELS, INC.
CIPCO INC.
RUGBY USA, INC.
RUGBY BUILDING PRODUCTS, INC.
By /s/ Gregory D. Lambert
----------------------------
Name: Gregory D. Lambert
Title: Vice President
<PAGE> 1
Exhibit 4.4
Huttig promissory note in favor of certain of the lenders.
FORM OF REVOLVING LOAN NOTE
U.S. $[____________]
Chicago, Illinois
December 16, 1999
FOR VALUE RECEIVED, the undersigned, Huttig Building Products,
Inc., a Delaware Corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES
TO PAY to the order of [____________________] (the "Lender") the principal sum
of [_________________________] AND NO/100 DOLLARS ($[________________]), or, if
less, the aggregate unpaid amount of all "Revolving Loans" (as defined in the
Credit Agreement referred to below) made by the Lender to the Borrower pursuant
to the "Credit Agreement" (as defined below), on the "Termination Date" (as
defined in the Credit Agreement) or on such earlier date as may be required by
the terms of the Credit Agreement. Capitalized terms used herein and not
otherwise defined herein are as defined in the Credit Agreement.
The Borrower promised to pay interest on the unpaid principal
amount of each Revolving Loan made to it from the date of such Revolving Loan
until such principal amount is paid in full at a rate or rates per annum
determined in accordance with the terms of the Credit Agreement Interest
hereunder is due and payable at such times and on such dates as set forth in the
Credit Agreement.
Both principal and interest are payable in Dollars to the Agent (as
defined below), to such account as the Agent may designate, in same day funds.
At the time of each Revolving Loan, and upon each payment or prepayment of
principal of each Revolving Loan, the Lender shall make a notation either on the
schedule attached hereto and made a part hereof, or in such Lender's own books
and records, in each case specifying the amount of such Revolving Loan, the
respective Interest Period thereof (in the case of Eurocurrency Rate Loans) or
the amount of principal paid or prepaid with respect to such Revolving Loan, as
applicable; provided that the failure of the Lender to make any such recordation
or notation shall not affect the Obligations of the Borrower hereunder or under
the Credit Agreement.
This Revolving Loan Note is one of the promissory notes referred to
in, and is entitled to the benefits of, that certain Credit Agreement dated as
of December 16, 1999 among the Borrower, the financial institutions parties
thereto (the "Lenders"), and Banc One, NA (having its principal office in
Chicago, Illinois), individually and as agent (the "Agent") on behalf on the
Lenders, and Banc One Capital Markets, Inc., as lead arranger and sole book
runner (the "Lead Arranger and Sole Book Runner") on behalf of the Lenders (as
amended, restated, supplemented or modified from time to time, the "Credit
Agreement"). The Credit Agreement, among other things, (i) provides for the
making of Revolving Loans by the lender to the
<PAGE> 2
borrower under the Credit Agreement from time to time in an aggregate amount not
to exceed at any time outstanding the dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Revolving Loan to it being
evidenced by this Revolving Loan Note, and (ii) contains provisions for
acceleration of the maturing hereof upon the happening of certain stated events
and also for prepayments of the principal hereof prior to the maturity hereof
upon the terms and conditions therein specified.
Demand, presentment, protest and notice of nonpayment and protest
are hereby waived by the Borrower.
Whenever in this Revolving Loan Note reference is made to the
Agent, the Lender or the Borrower, such reference shall be deemed to include, as
applicable, a reference to their respective successors and assigns. The
provisions of this Revolving Loan Note shall be binding upon and shall inure to
the benefit of said successors and assigns. The Borrower's successors and
assigns shall include, without limitation, a receiver, trustee or debtor in
possession of or for the Borrower.
This Revolving Loan Note shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the laws of the
State of Illinois.
Huttig Building Products, Inc.
By: /s/ Gregory Lambert
-------------------------------
Name: Gregory Lambert
Title: Chief Financial Officer
<PAGE> 1
EXHIBIT 4.5
Schedule to Huttig promissory note in favor of certain lenders.
Lender Principal sum
First Union National Bank $15,000,000
The Dai-Ichi Kangyo Bank, Ltd. $10,000,000
The Bank of New York $15,000,000
Mercantile Bank National Association $15,000,000
<PAGE> 1
Exhibit 4.6
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
HUTTIG BUILDING PRODUCTS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-------------------------------------------------
Huttig Building Products, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (hereinafter
called the "Corporation"), hereby certifies that the following resolution was
adopted by the Board of Directors of the Corporation as required by Section 151
of the General Corporation Law at a meeting duly called and held on December 6,
1999:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation in accordance with the provisions
of the Restated Certificate of Incorporation of the Corporation, the Board of
Directors hereby creates a series of Preferred Stock, par value $.01 per share
(the "Preferred Stock"), of the Corporation and hereby states the designation
and number of shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of this series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 250,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any other stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the holders of
Common Stock, par value $.01 per share (the "Common Stock"), of the
Corporation, and of any other junior stock, shall be
<PAGE> 2
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June, September and December
in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share
of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1 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 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 declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the 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) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1 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, 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
<PAGE> 3
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 not 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 declare or
pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
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 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, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock,
in the Restated Certificate of Incorporation of the Corporation or by
law, the holders of shares of Series A Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
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.
<PAGE> 4
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, or make any other distributions,
on any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series
A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking 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 stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock
ranking 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.
<PAGE> 5
(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 reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set forth
herein, in the Restated Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
$100 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the 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 each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
<PAGE> 6
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of Preferred Stock.
Section 10. Amendment. The Restated 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 at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, Huttig Building Products, Inc. has caused
this Certificate of Designations of Series A Junior Participating Preferred
Stock to be duly executed by its President and Chief Executive Officer this 6th
day of December, 1999.
Huttig Building Products, Inc.
/s/ Barry J. Kulpa
-------------------------------------
Barry J. Kulpa
President and Chief Executive Officer
<PAGE> 1
Exhibit 10.1
TAX ALLOCATION AGREEMENT
BY AND BETWEEN
CRANE CO.
AND
HUTTIG BUILDING PRODUCTS, INC.
December 16, 1999
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TAX ALLOCATION AGREEMENT
THIS TAX ALLOCATION AGREEMENT (this "Agreement"), dated as of December
16, 1999 by and between Crane Co., a Delaware corporation ("Crane"), and Huttig
Building Products, Inc., a Delaware corporation and a wholly owned, indirect
subsidiary of Crane ("Huttig").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Crane and Huttig have entered into a Distribution Agreement
dated as of December 6, 1999 (the "Distribution Agreement"), providing for the
Distribution (as defined in the Distribution Agreement) of all of the
outstanding stock of Huttig to Crane's shareholders;
WHEREAS, the Board of Directors of Crane and Crane International
Holdings, Inc. ("Crane International"), a Delaware corporation and a wholly
owned subsidiary of Crane and the direct owner of all of the outstanding stock
of Huttig prior to its distribution to Crane, have approved the Distribution
Agreement;
WHEREAS, the execution and delivery of this Agreement by the parties
hereto is a condition to the obligations of the parties to the Distribution
Agreement to consummate the Distribution; and
WHEREAS, Crane on behalf of itself and the Crane Group (as defined
herein) and Huttig, on behalf of itself and the Huttig Group (as defined
herein), wish to provide for the allocation between the Crane Group and the
Huttig Group of all responsibilities, liabilities and benefits relating to or
affecting Taxes (as defined herein) paid or payable by either of them for all
taxable periods, whether beginning before, on or after the Distribution Date (as
defined herein) and to provide for certain other matters.
NOW, THEREFORE, in consideration of the premises and of the respective
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. Capitalized terms used in this Agreement and
not otherwise defined herein shall have the meanings assigned to such terms in
the Distribution Agreement, as the case may be. As used in this Agreement, the
following terms shall have the following respective meanings:
"Actually Realized" or "Actually Realizes" means, for purposes of
determining the timing of any Taxes (or related Tax cost or benefit) relating to
any Payment, transaction, occurrence or event (including the receipt of any Tax
Refund), the time at which the amount of
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Taxes payable by such person is increased above or reduced below, as the case
may be, the amount of Taxes that such person would be required to pay but for
such payment, transaction, occurrence or event.
"Affiliate" means with respect to each of the parties hereto, (i) a
corporation, partnership, limited liability company, trust, joint venture or
other business entity in which 50% or more of the outstanding equity or voting
power is owned (directly or indirectly) by such party, and (ii) a partnership in
which a general partner interest is owned by such party. For purposes of this
Agreement, in no event shall Crane or Huttig be treated as an Affiliate of the
other.
"Affiliated Group" means the affiliated group of corporations within
the meaning of Section 1504 of the Code of which Crane is the common parent.
"Code" means the Internal Revenue Code of 1986, as amended, and shall
include corresponding provisions of any subsequently enacted Federal Tax laws.
"The Crane Group" means, solely for purposes of this Agreement, Crane
and its Affiliates, other than Huttig and its Affiliates (determined after
giving effect to the Distribution).
"Crane Tax Difference" has the meaning set forth in Section 4.1(b).
"Crane Tax Item" means a Tax Item that is attributable to the Crane
Group and is not a Huttig Tax Item.
"Consolidated Federal Tax Returns" are the Federal Tax Returns for the
Affiliated Group filed on a consolidated basis pursuant to Section 1501 of the
Code for any Pre-Distribution Taxable Period.
"Consolidated State Tax Returns" are the state Tax Returns for the
Affiliated Group filed on a consolidated, unitary or combined basis pursuant to
the laws of any state Taxing Authority for any Pre-Distribution Taxable Period.
"Distribution" means the distributions of Huttig Common Stock to Crane
and to the holders of Crane Common Stock pursuant to the Distribution Agreement.
"Distribution Agreement" mean the Distribution Agreement dated as of
December 6, 1999 between Crane and Huttig.
"Distribution Date" means the date on which the Distribution occurs or
is deemed to occur for Federal Income Tax purposes and shall be deemed effective
as of the close of business on such date.
"Group" means either the Crane Group or the Huttig Group, as the
context provides.
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"Huttig Group" means Huttig and its Affiliates, determined immediately
after the Distribution, specifically, Rondel's Inc. and CIPCO Inc.
"Huttig Tax Item" means a Tax Item solely attributable to the Huttig
Group.
"Income Tax Benefit" means for any taxable period the excess of (i) the
Income Tax liability of the taxpayer for the taxable period calculated as if the
Timing Difference or Reverse Timing Difference, as the case may be, had not
occurred but with all other facts unchanged, over (ii) the Income Tax liability
of the taxpayer for the taxable period, calculated taking into account the
Timing Difference or Reverse Timing Difference, as the case may be (treating an
Income Tax Refund as a negative Income Tax liability for purposes of such
calculation).
"Income Tax Detriment" means for any taxable period the excess of (i)
the Income tax liability of the taxpayer for the taxable period, calculated
taking into account the Timing Difference or Reverse Timing Difference, as the
case may be, over (ii) the Income Tax liability of the taxpayer for the taxable
period, calculated as if the Timing Difference or Reverse Timing Difference, as
the case may be, had not occurred but with all other facts unchanged (treating
an Income Tax Refund as a negative Income Tax liability for purposes of such
calculation).
"Income Taxes" means any Tax based upon, measured by, or calculated
with respect to (i) net income or profits (including, but not limited to, any
capital gains, alternative minimum Tax and any Tax on items of Tax preference,
but not including sales, use, real property gains, real or personal property,
gross or net receipts, transfer or similar Taxes) or (ii) multiple bases
(including, but not limited to, corporate franchise, doing business or
occupation Taxes) if one or more of the bases upon which such Tax may be based,
measured by, or calculated with respect to, is described in clause (i) above.
"Indemnitee" has the meaning set forth in Section 6.2.
"Indemnitor" has the meaning set forth in Section 6.2.
"Indemnity Issue" has the meaning set forth in Section 6.2.
"IRS" means the Internal Revenue Service.
"Loss Group" has the meaning set forth in Section 4.1(a)(ii).
"Opinion of Counsel" means an opinion of independent tax counsel of
recognized national standing and experienced in the issues to be addressed and
otherwise reasonably acceptable to Crane, which sets forth an Unqualified Tax
Opinion in form and substance satisfactory to Crane. In no event shall Crane be
required to conclude that an opinion is satisfactory if there is any risk,
however remote, that the transaction which is the subject of the opinion will
cause the Distribution to be taxable to any extent under the Code in a manner
inconsistent with the rulings requested in the Ruling Request.
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"Post-Distribution Taxable Period" means a taxable period beginning
after the Distribution Date.
"Post-Tax Indemnification Period" means any Post-Distribution Taxable
Period and that portion of any Straddle Period that begins on the day after the
Distribution Date.
"Pre-Distribution Taxable Period" means a taxable period ending on or
before the Distribution Date.
"Restricted Period" means the two year period beginning on the
Distribution Date.
"Reverse Timing Difference" means an increase in income, gain or
recapture, or a decrease in deduction, loss or credit, as calculated for Income
Tax purposes, of the taxpayer for any Tax Indemnification Period coupled with an
increase in deduction, loss or credit, or a decrease in income, gain or
recapture, of the taxpayer for any Post-Tax Indemnification Period.
"Ruling Request" means the request for rulings (including all
appendices, exhibits and supplements) under Section 355 of the Code, dated July
2, 1999 and filed with the IRS National Office on behalf of Crane, in respect of
the Distribution.
"Straddle Period" means a taxable period that begins before and
includes but does not end on the Distribution Date.
"Tax" or "Taxes" means all forms of taxation, whenever created or
imposed, and whether imposed by a local, municipal, governmental, state,
foreign, federal or other body, and without limiting the generality of the
foregoing, shall include income, sales, use, ad valorem, gross receipts,
license, value added, franchise, transfer, recording, withholding, payroll, wage
withholding, employment, excise, occupation, unemployment insurance, social
security, business license, business organization, stamp, environmental, premium
and property taxes, together with any related interest (including the actual
interest that would have accrued if there were no netting of Taxes), penalties
and additions to any such tax, or additional amounts imposed by any Taxing
Authority (domestic or foreign) upon the Crane Group or the Huttig Group.
"Tax Audit Proceeding" means any audit or other examination, judicial
or administrative proceeding relating to liability for, or refunds or
adjustments with respect to, Taxes.
"Tax Binder" means the annual information package prepared by Huttig
for use by Crane in preparing state and federal tax returns.
"Tax Contest" has the meaning set forth in Section 6.2.
"Tax Deficiency" means a net increase in Taxes payable as a result of a
Tax Audit Proceeding or an amendment of a Tax Return or an event having a
similar effect.
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"Tax Indemnification Period" means any Pre-Distribution Taxable Period
and that portion of any Straddle Period that ends on and includes the
Distribution Date.
"Tax Item" means any item of income, gain, loss, deduction, credit,
provisions for reserves, recapture of credits or any other item which is taken
into account in determining taxable income or is otherwise taken into account in
determining Taxes paid or payable, including an adjustment under Section 481 of
the Code resulting from a change in accounting method, and amounts of property,
payroll, sales or other items that are relevant to the apportionment, allocation
and determination of Taxes for purposes of determining Tax liabilities other
than Federal Income Tax liability.
"Tax Records" has the meaning set forth in Section 7.2
"Tax Refund" means a refund of Taxes (including a reduction in Taxes as
a result of the utilization of any credit or any offset against Taxes or Tax
Items) reduced (but not below zero) by any net increase in Taxes Actually
Realized by the recipient (or its Affiliate) thereof as a result of the receipt
thereof.
"Tax Return" means any return, filing, questionnaire, information
return or other document required to be filed, including requests for extensions
of time, filings made with respect to estimated tax payments, claims for refund
and amended returns that may be filed, for any period with any Taxing Authority
(whether domestic or foreign) in connection with any Tax or Taxes (whether or
not a payment is required to be made with respect to such filing).
"Taxing Authority" means any governmental or quasi-governmental body
exercising any Taxing authority or Tax regulatory authority.
"Timing Difference" means an increase in income, gain or recapture, or
a decrease in deduction, loss or credit, as calculated for Income Tax purposes,
of the taxpayer for any Post-Tax Indemnification Period coupled with an increase
in deduction, loss or credit, or a decrease in income, gain or recapture, of the
taxpayer for any Tax Indemnification Period.
"Unqualified Tax Opinion" means an unqualified "will" opinion of tax
counsel to the effect that a transaction does not disqualify the Distribution
from qualifying for tax-deferred treatment for the shareholders of Crane and any
member of the Crane Group under Code ss. 355 and any other applicable sections
of the Code, assuming that the Distribution would have qualified for
tax-deferred treatment if such transaction did not occur. An Unqualified Tax
Opinion may rely upon, and assume the accuracy of, any representations contained
in the Ruling Request, and any representations contained in an officer's
certificate delivered by an officer of Crane or Huttig to such counsel.
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ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
Section 2.1. PREPARATION OF TAX RETURNS.
(a) Consistent with Agreements. Each of the parties to this
Agreement agrees to, and to cause each of its relevant Affiliates to, report the
Distribution as a series of transactions that satisfy the requirements of Code
Section 355.
(b) Consistent with Past Practice. Except for any accounting
method changes pursuant to applications that are approved by the IRS, all Tax
Returns described in Section 2.2 filed after the date of this Agreement, in the
absence of a controlling change in law or circumstance, shall be prepared on a
basis consistent with the elections, accounting methods, conventions and
principles of taxation used for the most recent taxable periods for which Tax
Returns involving similar Tax Items have been filed. Subject to the provisions
of this Agreement, all decisions relating to the preparation of Tax Returns
shall be made in the sole discretion of the party responsible under this
Agreement for such preparation.
(c) Huttig Obligations. Huttig agrees to cooperate in good
faith with Crane to determine the appropriate amount of Tax Items, if any,
attributable to the Crane Group to be reflected on any Tax Returns for Straddle
Periods to be prepared by Crane in accordance with Section 2.2(c). With respect
to such Tax Returns, Huttig (i) will deliver to Crane no later than 60 days
after the Closing Date a Tax Binder for itself and each Affiliate for such
taxable years and (ii) will consult with Crane with respect to the application
of the Tax Items to be shown on the Tax Returns. Huttig will inform and consult
with Crane regarding any Tax Audit Proceedings or any other adjustments which
would materially affect any of the Tax Items shown on the Tax Returns. Huttig
shall provide Crane with comments and/or objections to such Tax Returns at least
21 days prior to the due date for filing such Tax Returns (giving effect to
applicable extensions).
(d) Crane Obligations. Crane agrees to cooperate in good faith
with Huttig to determine the appropriate amount of Tax Items attributable to the
Huttig Group to be reflected on any Tax Returns for Pre-Distribution Taxable
Periods and Straddle Periods to be prepared and filed by Crane in accordance
with Section 2.2(a), (b) and (c). Crane further agrees to (i) provide Huttig
with a copy of each such Tax Return at least 10 days prior to the due date for
filing of any such Tax Returns (giving effect to applicable extensions) for such
taxable years and (ii) consult with Huttig with respect to the Tax Items to be
shown on such Tax Returns. The computations made with respect to the Tax Returns
shall be made, when applicable, on a basis consistent with the principles of
Treasury Regulation ss. 1.1502-76(b)(2). Crane will inform and consult with
Huttig regarding any Tax Audit Proceedings or any other adjustments that would
materially offset any of the Tax Items shown on the Tax Returns. Crane will
provide Huttig with copies of all Tax Returns prepared and filed by Crane in
accordance with Sections 2.2(a), (b) and (c) promptly after filing.
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Section 2.2. FILING OF TAX RETURNS.
(a) Consolidated Federal Tax Returns and Consolidated State
Tax Returns. The Consolidated Federal Tax Returns and the Consolidated State Tax
Returns required to be filed after the date hereof shall be prepared or caused
to be prepared and filed by Crane.
(b) Pre-Distribution Taxable Period Tax Returns. All Tax
Returns other than those described in Section 2.2(a) that are required to be
filed for any Pre-Distribution Taxable Period shall be prepared and timely filed
or caused to be prepared and timely filed by Crane.
(c) Huttig Straddle Period Tax Returns. All Tax Returns other
than those described in Section 2.2(a) which are required to be filed by any
member of the Huttig Group for any Straddle Period shall be prepared and timely
filed or caused to be prepared and timely filed by Huttig.
(d) Crane Straddle Period Tax Returns. All Tax Returns other
than those described in Section 2.2(a) which are required to be filed by any
member of the Crane Group for any Straddle Period shall be prepared and timely
filed or caused to be prepared and timely filed by Crane.
(e) Post-Distribution Taxable Period Tax Returns. The filing
of all Tax Returns for all Post-Distribution Taxable Periods shall be the
responsibility of the Huttig Group if such Tax Returns relate to a member or
members of the Huttig Group or their respective assets or businesses, and shall
be the responsibility of the Crane Group if such Tax Returns relate to a member
or members of the Crane Group or their respective assets or businesses.
Section 2.3. DESIGNATION. Huttig hereby irrevocably designates, and
agrees to cause each of its Affiliates to so designate, Crane as its agent to
take any and all actions necessary or incidental to the preparation and filing
of the Tax Returns described in Section 2.2(a), (b) and (d). Crane hereby
irrevocably designates, and agrees to cause each of its Affiliates to so
designate, Huttig as its agent to take any and all actions necessary or
incidental to the preparation and filing of the Tax Returns described in Section
2.2(c).
ARTICLE III
PAYMENT OF TAXES
Section 3.1. PAYMENT OF TAX LIABILITIES.
(a) Consolidated and Pre-Distribution Tax Liabilities.
(i) Huttig Liability. Except as otherwise provided in
this Agreement, Huttig or a member of the Huttig Group shall pay or cause to be
paid, directly to, or at the
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direction of, Crane (such direction may specify payment by direct wire
transfer), at least two days prior to the date payment (including any estimated
payment) thereof is due, all Taxes due with respect to the Tax Returns described
in Section 2.2(a) and (b) that are attributable to any member or members of the
Huttig Group, the respective assets or businesses of any member or members of
the Huttig Group and any Huttig Tax Item.
(ii) Crane Liability. Except as otherwise provided in
this Agreement, Crane or a member of the Crane Group shall pay or cause to be
paid, on a timely basis, all Taxes due with respect to the Tax Returns described
in Section 2.2(a) and (b) that are attributable to any member or members of the
Crane Group, the respective assets or businesses of any member or members of the
Crane Group and any Crane Tax Item.
(b) Separate Straddle Period Tax Liabilities.
(i) Huttig Liability. Except as otherwise provided in
this Agreement, Huttig or a member of the Huttig Group shall pay or cause to be
paid, on a timely basis, all Taxes due with respect to the Tax Returns described
in Section 2.2(c); provided, however, that Crane shall pay directly to, or at
the direction of, Huttig (such direction may specify payment by direct wire
transfer), at least two days prior to the date payment (including estimated
payment) thereof is due, that portion of those Taxes due that are attributable
to any member or members of the Crane Group, the respective assets or businesses
of any member or members of the Crane Group or any Crane Tax Item.
(ii) Crane Liability. Except as otherwise provided in
this Agreement, Crane or a member of the Crane Group shall pay or cause to be
paid, on a timely basis, all Taxes due with respect to the Tax Returns described
in Section 2.2(d); provided, however, that Huttig shall pay directly to, or at
the direction of, Crane (such direction may specify payment by direct wire
transfer), at least two days prior to the date payment (including estimated
payment) thereof is due, that portion of those Taxes due that are attributable
to any member or members of the Huttig Group, the respective assets or
businesses of any member or members of the Huttig Group or any Huttig Tax Item.
(c) Post-Distribution Taxable Period Tax Liabilities. Except
as otherwise provided in this Agreement, all Taxes for all Post-Distribution
Taxable Periods shall be paid or caused to be paid by the party responsible
under this Agreement for filing the Tax Return pursuant to which such Taxes are
due or, if no such Tax Returns are due, by the party liable, without regard to
this Agreement, for such Taxes.
Section 3.2. TAX REFUNDS AND CARRYBACKS.
(a) Retention and Payment of Tax Refunds. Except as otherwise
provided in this Agreement, Huttig shall be entitled to retain, and to receive
within 10 days after Actually Realized by the Crane Group, the portion of all
Tax Refunds of Taxes for which the Huttig Group is liable pursuant to Section
3.1 or Section 6.1(a), and Crane shall be entitled to retain, and
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to receive within 10 days after Actually Realized by the Huttig Group, the
portion of all Tax Refunds of Taxes for which the Crane Group is liable pursuant
to Section 3.1 or Section 6.1(b). Notwithstanding the foregoing, (i) all Tax
Refunds resulting from the carryback of any Crane Tax Item arising in a Post-Tax
Indemnification Period to a Tax Indemnification Period shall be for the account
and benefit of the Crane Group and, if and to the extent Actually Realized by
Huttig, Huttig shall pay over to Crane any such Tax Refund within 10 days after
it is Actually Realized by Huttig or any member of the Huttig Group, (ii) all
Tax Refunds resulting from the carryback of any Huttig Tax Item arising in a
Post-Tax Indemnification Period to a Tax Indemnification Period shall be for the
account of Huttig and, if and to the extent Actually Realized by Crane, Crane
shall pay over to Huttig any such Tax Refund within 10 days after it is Actually
Realized by Crane or any member of the Crane Group, (iii) all Tax Refunds
resulting from the utilization of any Tax Items (such as the utilization of a
minimum or foreign tax credit or Section 481(a) adjustments which reduce current
year Taxes) attributable to the Huttig Group or the respective assets or
businesses of any member or members of the Huttig Group arising in a Tax
Indemnification Period shall be for the account of Huttig and, if and to the
extent Actually Realized by Crane, Crane shall pay over to Huttig any such Tax
Refund within 10 days after it is Actually Realized by Crane or any member of
the Crane Group, and (iv) all Tax Refunds resulting from the utilization of any
Tax Items (such as the utilization of a minimum or foreign tax credit or Section
481(a) adjustments which reduce current year Taxes) attributable to the Crane
Group or the respective assets or businesses of any member or members of Crane
Group arising in a Tax Indemnification Period shall be for the account of Crane
and, if and to the extent Actually Realized by Huttig, Huttig shall pay over to
Crane any such Tax Refund within 10 days after it is Actually Realized by Huttig
or any member of the Huttig Group. In computing the amount of any Tax Refunds
described in (i), (ii), (iii) or (iv) above, the party paying over such Tax
Refunds shall be deemed to recognize all other items of income, gain, loss,
deduction or credit for that taxable period together with the utilization of any
Tax Item causing a Tax Refund described in this Section 3.2(b). Huttig and Crane
and their respective Affiliates will use commercially reasonable efforts to
claim and utilize the Tax Items referred to in (i), (ii), (iii) or (iv) in a
manner which is designed to maximize (on a present value basis) the Tax Refunds
described therein.
(b) Refund Claims. Huttig shall be permitted to file at
Huttig's sole expense, and Crane shall reasonably cooperate with Huttig in
connection with, any claims for Tax Refunds to which Huttig is entitled pursuant
to this Section 3.2 or any other provision of this Agreement. Huttig shall
reimburse Crane for any reasonable out-of-pocket costs and expenses incurred by
any member of the Crane Group in connection with such cooperation. Crane shall
be permitted to file at Crane's sole expense, and Huttig shall reasonably
cooperate with Crane in connection with, any claims for Tax Refund to which
Crane is entitled pursuant to this Section 3.2 or any other provision of this
Agreement. Crane shall reimburse Huttig for any reasonable out-of-pocket costs
and expenses incurred by any member of the Huttig Group in connection with such
cooperation. Any claim for a Tax Refund under this Section 3.2 to which Huttig
is entitled and which relates to a Tax Return for which Crane is required to
file under Section 2.2 shall be subject to the Crane Group's consent (such
consent not to be unreasonably withheld). A copy of a claim for any Tax Refund
to which either party is entitled to file under this Section 3.2
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shall be provided to the other party no later than 30 days prior to the filing
of such Tax Refund claim. In the event that Huttig and Crane are each entitled
to file a Tax Refund claim pursuant to this Section 3.2 for the same period,
such Tax Refunds of Crane and Huttig shall be allocated in a manner
corresponding to the allocation and calculation of Taxes for such periods under
Article IV.
ARTICLE IV
ALLOCATION AND CALCULATION OF TAXES
Section 4.1. ALLOCATIONS.
(a) (i) In the case of any Consolidated Federal Tax Return
described in Section 2.2(a), the Crane Group and the Huttig Group will each be
allocated the portion of such Taxes due with respect to such Tax Returns
attributable to each Group, the respective assets or businesses of any member or
members of each Group and any Tax Item of each Group. This allocation shall be
made in accordance with the principles set forth in Treasury Regulation Section
1.1552-1(a)(2) on the basis of the percentage of the total Tax liability for
each Group, if computed on a separate consolidated federal income tax return of
each Group, would bear to the aggregate amount of such Tax liability of the
Crane Group and the Huttig Group so computed.
(ii) The principles of Treasury Regulation Section
1.1502-33(d)(3) also shall apply to the allocation set forth in Section
4.1(a)(i). If the amount of the Affiliated Group's consolidated federal income
tax liability is less than the sum of the aggregate separate return tax
liabilities of the Huttig Group and the Crane Group (as computed pursuant to
Section 4.1(a)(i) above) due to losses or tax credits of one Group (including
losses or tax credits carried over from prior years), the decrease in tax
liability resulting therefrom shall be allocated 100 percent to that Group. A
Group thus may have a "negative" income tax liability as a result of such an
allocation (a "Loss Group"). If a Loss Group exists, the other Group shall pay
to the Loss Group an amount equal to such "negative" income tax liability. In
other words, if Tax attributes (e.g., losses or tax credits) of one Group are
utilized by the other Group to reduce taxable income or Tax, as the case may be,
the Group utilizing such Tax attributes shall pay to the other Group, with
respect to losses, an amount equal to such reduction in taxable income resulting
from the utilization of such losses multiplied by the top marginal federal
corporate income Tax rate actually used by the Group utilizing the losses in
calculating its deemed Tax liability (prior to the application of Tax credits
against such liability) under this Section 4.1(a) for the taxable period during
which such losses are utilized and, with respect to Tax credits, an amount equal
to the actual amount by which the deemed Tax liability calculated pursuant to
this Section 4.1(a) is reduced by such Tax credits for the taxable period during
which such Tax credits are utilized. Any such payments shall be consistent with
the procedures and timing set forth in Section 3.1(b) hereof.
(b) In the case of any Tax Return described in Section 2.2(b)
to be prepared by Crane or any Consolidated State Tax Returns described in
Section 2.2(a) or any Tax returns
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described in Section 2.2(c), the Huttig Group will be allocated all of the Taxes
due with respect to each such Tax Return; provided, however, if a Crane Tax Item
is included in any such Tax Return, the Taxes that would be due with respect to
such Tax Return, calculated as if the Crane Tax Item had not been included but
with all other Tax Items unchanged, shall be subtracted from the Taxes due with
respect to such Tax Return taking into account the Crane Tax Items (the "Crane
Tax Difference"). If the Crane Tax Difference is a positive amount, the Crane
Group shall be allocated an amount of Taxes due on such Tax Return equal to the
Crane Tax Difference. If the Crane Tax Difference is a negative amount, the
Huttig Group shall pay to the Crane Group an amount equal to the Crane Tax
Difference consistent with the procedures and timing set forth in Section 3.1(b)
hereof.
(c) In the case of any Tax Return described in Section 2.2(d),
the principles set out in Section 4.1(b) hereof shall govern.
(d) In the case of any Tax Return described in Section 2.2(e)
to be filed by Huttig, the Huttig Group will be allocated all the Taxes due with
respect to each such Tax Return.
(e) In the case of any Tax Return described in Section 2.2(e)
to be filed by Crane, the Crane Group will be allocated all the Taxes due with
respect to each such Tax Return.
(f) The allocations under this Section 4.1 shall be determined
in a manner consistent with the principles set forth in Section 4.3.
Section 4.2. CALCULATIONS AND DETERMINATIONS. All calculations and
determinations required to be made pursuant to this Agreement (including the
calculation in Section 4.1) shall be made in good faith by the party making such
calculations or determinations. Except for any accounting method changes
pursuant to applications for accounting method changes filed prior to the date
hereof and any accounting method elections and changes that may be effective as
of the day after the Distribution Date, all calculations and determinations
required to be made pursuant to this Agreement (including the calculation in
Section 4.1), shall be made, in the absence of a controlling change in law or
circumstance, on a basis consistent with the elections, accounting methods,
conventions and principles of taxation used for the most recent taxable periods
for which Tax Returns involving similar Tax Items have been filed.
Section 4.3. PRINCIPLES OF DETERMINATION. In implementing this
Agreement, except as otherwise specifically provided, the parties shall make any
adjustments that are necessary to ensure that, with respect to Taxes for
Straddle Periods or Pre-Distribution Taxable Periods, payments and
reimbursements between the parties reflect the principles that (i) Huttig is to
bear responsibility only for that portion of Taxes for Straddle Periods and
Pre-Distribution Taxable Periods that are attributable to the Huttig Group, the
respective assets or businesses of any member or members of the Huttig Group and
any Huttig Tax Item, (ii) Crane is to bear responsibility for all other Taxes
for Straddle Periods and Pre-Distribution Taxable Periods, (iii) Crane is
responsible for all Taxes for Post-Distribution Taxable Periods (calculated by
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treating the day after the Distribution Date as the first day of any
Post-Distribution Taxable Period) reflected on the Tax Returns, the
responsibility for the filing thereof is imposed on Crane pursuant to this
Agreement, (iv) Huttig is responsible for all Taxes for Post-Distribution
Taxable Periods (calculated by treating the day after the Distribution Date as
the first day of any Post-Distribution Taxable Period) reflected on the Tax
Returns, the responsibility for the filing thereof is imposed on Huttig pursuant
to this Agreement, (v) Crane will be entitled to any Tax Refunds relating to Tax
Items attributable to the Crane Group, the respective assets or businesses of
any member or members of the Crane Group or any Crane Tax Item arising in a Tax
Indemnification Period and (vi) Huttig will be entitled to any Tax Refunds
relating to Tax Items attributable to the Huttig Group or the respective assets
or businesses of any member or members of the Huttig Group or any Huttig Tax
Item arising in a Tax Indemnification Period.
ARTICLE V
REPRESENTATIONS AND COVENANTS
Section 5.1. REPRESENTATIONS.
(a) Crane Representations.
(i) Crane has reviewed the materials submitted to the
IRS in connection with the Ruling Request and, to the best of Crane's knowledge,
these materials, including, without limitation, any statements and
representations concerning Crane, its business operations, capital structure
and/or organization, are complete and accurate in all material respects. All
representations made by Crane in the Ruling Request were accurate as of the date
of the Ruling Request and will be accurate as of the effective date of this
Agreement. With respect to any representation or statement made by or on behalf
of Crane or the Crane Group in connection with the Ruling Request and to the
extent such representation or statement relates to future actions or events
under their control, neither Crane nor any member of the Crane Group will take
any action that would have caused such representation or statement to be untrue
if Crane or any member of the Crane Group had planned or intended to take such
action at the time such representation or statement was made by or on behalf of
Crane.
(ii) Crane hereby represents and warrants to Huttig
that Crane has no plan or intention to undertake any of the transactions set
forth in Section 5.2(a) nor does Crane or any member of the Crane Group have any
intention to cease to engage in the active conduct of its current trades or
businesses (within the meaning of Section 355(b)(2) of the Code) during the
Restricted Period.
(b) Huttig Representations.
(i) Huttig has reviewed the materials submitted to
the IRS in connection with the Ruling Request and, to the best of Huttig's
knowledge, these materials, including, without limitation, any statements and
representations concerning Huttig, its business operations, capital structure
and/or organization, are complete and accurate in all material
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respects. All representations made by or on behalf of Huttig or the Huttig Group
in connection with the Ruling Request were accurate as of the date of the Ruling
Request and will be accurate as of the effective date of this Agreement. With
respect to any representation or statement made by or on behalf of Huttig or the
Huttig Group in connection with the Ruling Request and to the extent such
representation or statement relates to future actions or events under their
control, neither Huttig nor any member of the Huttig Group will take any action
that would have caused such representation or statement to be untrue if Huttig
or any member of the Huttig Group had planned or intended to take such action at
the time such representation or statement was made by or on behalf of Huttig.
(ii) Huttig hereby represents and warrants to Crane
that Huttig has no plan or intention to undertake any of the transactions set
forth in Section 5.2(b) nor does Huttig or any member of the Huttig Group have
any intention to cease to engage in the active conduct of its current trade or
business (within the meaning of Section 355(b)(2) of the Code) during the
Restricted Period.
Section 5.2. COVENANTS.
(a) Crane Covenants. Crane hereby agrees that:
(i) Crane shall, and shall cause each member of the
Crane Group to, comply in all material respects with each such representation
and statement concerning Crane and the Crane Group made in the materials
submitted to the IRS in the Ruling Request.
(ii) Crane will, during the Restricted Period,
continue the active conduct of the historic businesses conducted by Crane
throughout the five-year period prior to the Distribution.
(iii) Crane will not, nor will it permit any member
of the Crane Group to, take any action inconsistent with the information and
representations furnished to the IRS or any other Taxing Authority in connection
with the Ruling Request (or any comparable pronouncement by a Taxing Authority
under applicable law) with respect to the Distribution, regardless of whether
such information and representations are included in the ruling or pronouncement
issued by the IRS or other Taxing Authority.
(b) Huttig Covenants. Huttig hereby agrees that:
(i) Huttig shall, and shall cause each member of the
Huttig Group to, comply in all material respects with each such representation
and statement concerning Huttig and the Huttig Group made in the materials
submitted to the IRS in the Ruling Request.
(ii) During the Restricted Period, neither Huttig,
nor any member of the Huttig Group conducting an active trade or business relied
upon in connection with the Distribution, will liquidate, merge or consolidate
with any other person without the prior written
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consent of Crane; provided that the foregoing shall not be deemed to prohibit
Huttig and the members of the Huttig Group from entering into or acquiring other
businesses or operations (subject to the limitations of this Section 5.2(b)),
from disposing of or shutting down segments of such businesses or undertaking
restructurings or reorganizations within the Huttig Group so long as Huttig and
the members of the Huttig Group continue to engage in such businesses and
continue to so maintain a substantial portion of their assets and business
operations as they existed prior to the Distribution.
(iii) Huttig will, during the Restricted Period,
continue the active conduct of the historic business conducted by Huttig
throughout the five-year period prior to the Distribution.
(iv) Huttig will not, nor will it permit any member
of the Huttig Group to, take any action inconsistent with the information and
representations furnished to the IRS or any other Taxing Authority in connection
with the Ruling Request (or any comparable pronouncement by a Taxing Authority
under applicable law) with respect to the Distribution, regardless of whether
such information and representations are included in the ruling or pronouncement
issued by the IRS or other Taxing Authority.
(v) Huttig will not repurchase stock of Huttig in a
manner contrary to the requirements of section 4.05(1)(b) of Revenue Procedure
96-30 or in a manner contrary to the representations made in connection with the
Ruling Request.
(vi) Except as provided in Section 6.2(c), during the
applicable period provided in Section 355(e)(2)(B) of the Code with respect to
the Distribution, Huttig will not enter into any transaction or make any change
in its equity structure (including stock issuances, pursuant to the exercise of
options or otherwise, option grants, the adoption of, or authorization of shares
under, a stock option plan, capital contributions, or acquisitions, but not
including the Distribution) which may cause the Distribution to be treated as
part of a plan pursuant to which one or more persons acquire directly or
indirectly Huttig stock representing a "50-percent or greater interest" in
Huttig within the meaning of Section 355(e)(4)(A) of the Code.
(vii) Huttig shall provide to Crane, on the first
business day of every month during the Restricted Period, a certificate
describing any transaction or change in equity structure described in this
Section 5.2.(b) and any option grants which occurred during the preceding month.
Huttig agrees that Crane is to have no liability for any tax resulting from any
action referred to in this Section 5.2.(b) and agrees to indemnify and hold
harmless the Crane Group against any such tax. Huttig shall also bear all costs
incurred in connection with obtaining any opinion of counsel or in connection
with Crane's determination of whether or not to grant any written consent
required under this Section 5.2.(b).
(c) Permitted Transactions. Following the Distribution Date,
Huttig and its Affiliates may take any action or engage in conduct otherwise
prohibited by Section 5.2 so long as prior to such action or conduct, as the
case may be, Huttig receives either a ruling from the
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<PAGE> 16
IRS or an Opinion of Counsel in form and substance reasonably satisfactory to
Crane and upon which Crane can rely to the effect that the proposed action or
conduct, as the case may be, will not cause the Distribution to fail to qualify
for the tax treatment requested in the Ruling Request.
ARTICLE VI
TAX INDEMNIFICATION; TAX CONTESTS
Section 6.1. INDEMNIFICATION.
(a) Huttig Indemnification. Except as otherwise provided in
Section 6.1(b), Huttig and the Huttig Group shall be liable for and shall
indemnify, defend and hold harmless the members of the Crane Group from and
against (A) all Taxes of or attributable to the Huttig Group, the respective
assets or businesses of any member or members of the Huttig Group and any Huttig
Tax Item for any Pre-Distribution Taxable Period, Straddle Period or
Post-Distribution Taxable Period, (B) all liability (as a result of Treasury
Regulation Section 1.1502-6(a) or a comparable state, local or foreign law) for
Income Taxes of any person (other than a member of the Crane Group or the Huttig
Group) which is or has ever been affiliated with any member of the Huttig Group
or with which any member of the Huttig Group joins or has ever joined (or is or
has ever been required to join) in filing any consolidated, combined or unitary
Tax Return for any Pre-Distribution Taxable Period or Straddle Period; provided,
however, if any member of the Crane Group also is or ever has been affiliated
with or files or has ever filed (or is or has ever joined in the filing of) any
such consolidated, combined or unitary Tax Return for the same Pre-Distribution
Period or Straddle Period with any such person, then the amount of the liability
under this provision shall be allocated between such member or members of the
Crane Group and the Huttig Group in accordance with the principles described in
Section 4.1(a), (C) all Taxes (including but not limited to Taxes assessed by
reason of the Distribution failing to qualify for tax-deferred treatment under
Code ss. 355) for any taxable period (whether beginning before, on or after the
Distribution Date) that would not have been payable but for the breach by any
member of the Huttig Group of any representation, warranty or obligation made by
Huttig under this Agreement, the Distribution Agreement or the Ruling Request
and (D) all liability for any reasonable legal, accounting, appraisal,
consulting or similar fees and expenses relating to the foregoing.
(b) Crane Indemnification. Except as otherwise provided in
Section 6.1(a), Crane and the Crane Group shall be liable for and shall
indemnify, defend and hold harmless the Huttig Group from and against (A) all
Taxes attributable to the Crane Group, the respective assets or businesses of
any member or members of the Crane Group and any Crane Tax Item for any
Pre-Distribution Taxable Period, Straddle Period or Post-Distribution Taxable
Period, (B) all liability (as a result of Treasury Regulation Section
1.1502-6(a) or a comparable state, local or foreign law) for Income Taxes of any
person (other than a member of the Crane Group or the Huttig Group) which is or
has ever been affiliated with any member of the Crane Group or with which any
member of the Crane Group joins or has ever joined (or is or has ever been
required to join) in filing any consolidated, combined or unitary Tax Return for
any Pre-Distribution Taxable Period or Straddle Period; provided, however, if
any member of the Huttig Group also is
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or ever has been affiliated with or files or has ever filed (or is or has ever
joined in the filing of) any such consolidated, combined or unitary Tax Return
for the same Pre-Distribution Period or Straddle Period with any such person,
then the amount of the liability under this provision shall be allocated between
such member or members of the Crane Group and the Huttig Group in accordance
with the principles described in Section 4.1(a), (C) all Taxes for any taxable
period (whether beginning before, on or after the Distribution Date) that would
not have been payable but for the breach by any member of the Crane Group of any
representation, warranty or obligation made by Crane under this Agreement, the
Distribution Agreement or the Ruling Request and (D) all liability for any
reasonable legal, accounting, appraisal, consulting or similar fees and expenses
relating to the foregoing.
(c) Payments. Subject to Section 6.5(b), any indemnity payment
required to be made pursuant to this Section 6.1 shall be paid within 30 days
after the indemnified party makes written demand upon the indemnifying party,
but in no case earlier than five business days prior to the date on which the
relevant Taxes are required to be paid (or would be required to be paid if no
such Taxes are due) to the relevant Taxing Authority.
Section 6.2. NOTICE OF INDEMNITY. Whenever any member of the Crane
Group or the Huttig Group, as the case may be, (hereinafter an "Indemnitee")
receives written notice from any Tax Authority or otherwise of any pending or
threatened Tax examination, audit or other administrative or judicial proceeding
(hereinafter a "Tax Contest") which could reasonably be expected to result in a
determination that would increase the liability for any Tax of such member or
any other member of its Group for any Tax Indemnification Period or for any
Post-Tax Indemnification Period or require a payment hereunder to the other
party (hereinafter an "Indemnity Issue"), the Indemnitee shall notify the other
Group (hereinafter the "Indemnitor") of such Indemnity Issue within 30 days of
receipt of such notice. The failure of any Indemnitee to give (or any delay in
giving) such notice shall not relieve any Indemnitor of its obligations under
this Agreement except to the extent that such failure to give (or such delay in
giving) such notice shall have adversely affected the Indemnitor's ability to
defend against, settle, or satisfy any action, suit or proceeding against
Indemnitor, or any damage, loss, claim, or demand for which Indemnitee is
entitled to indemnification from Indemnitor under this Agreement.
Section 6.3. TAX CONTESTS. To the extent that a Tax Contest relates to
any Taxes for which a member of the Huttig Group is directly liable or has
indemnification obligations hereunder, Huttig shall at its own expense control
the defense and settlement of that portion of such Tax Contest. To the extent
that a Tax Contest relates to any Taxes for which a member of the Crane Group is
directly liable hereunder, Crane shall at its own expense control the defense
and settlement of that portion of such Tax Contest. Provided, however, that the
party in control of the Tax Contest shall in no event take any position in any
such proceeding that would subject the party not in control of the defense to
any civil fraud or any civil or criminal penalty, and provided, further, that
the party in control of the Tax Contest shall not consent, without the prior
written consent of the party not in control of the defense, which prior written
consent shall not be unreasonably withheld, to any change in the treatment of
any Tax Item that in any material
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respect adversely affects the Tax liability of the party not in control of the
defense for a period for which that party is directly or indirectly liable under
this Agreement.
Section 6.4. TIMING ADJUSTMENTS.
(a) Timing Differences. If a Tax Audit Proceeding or an
amendment of a Tax Return results in a Timing Difference, and such Timing
Difference results in a decrease in an indemnity obligation Crane or Huttig has,
or otherwise would have had, under Section 6.1 and/or an increase in the amount
of a Tax Refund to which Crane or Huttig is entitled under Section 3.2, then in
each Post-Tax Indemnification Period in which the Crane Group or the Huttig
Group Actually Realizes an Income Tax Detriment, either Crane or Huttig, as the
case may be, shall pay to the other an amount equal to such Income Tax
Detriment; provided, however, that the aggregate payments required to be made
under this Section 6.4(a) with respect to any Timing Difference shall not exceed
the aggregate amount of the Income Tax Benefits realized by the Group from which
such payment is made for all taxable periods and the Group receiving such
payment for all Tax Indemnification Periods as a result of such Timing
Difference. All such payments shall be made within 10 days after the relevant
Income Tax Detriment has been Actually Realized and the Group Actually Realizing
such Income Tax Detriment notifies the other Group, as the case may be.
(b) Reverse Timing Differences. If a Tax Audit Proceeding or
an amendment of a Tax Return results in a Reverse Timing Difference, and such
Reverse Timing Difference results in an increase in an indemnity obligation of
Crane or Huttig under Section 6.1 and/or a decrease in the amount of a Tax
Refund to which Crane or Huttig is or would otherwise be entitled to under
Section 3.2, then in each Post-Tax Indemnification Period in which the Crane
Group or the Huttig Group Actually Realizes an Income Tax Benefit, Crane or
Huttig, as the case may be, shall pay to the other an amount equal to such
Income Tax Benefit; provided, however, that the aggregate payments required to
be made under this Section 6.4(b) with respect to any Reverse Timing Difference
shall not exceed the aggregate amount of the Income Tax Detriments realized by
the Group from which such payment is made for all taxable periods and the Group
receiving such payment for all Tax Indemnification Periods as a result of such
Reverse Timing Difference. All such payments shall be made within ten days after
the relevant Income Tax Benefit has been Actually Realized.
Section 6.5. PAYMENTS NET OF TAXES.
(a) Gross Up and Characterization. The amount of any payment
under this Agreement shall be (i) increased to take account of any net Tax cost
incurred by the recipient thereof as a result of the receipt or accrual of
payments hereunder (grossed-up for such increase) and (ii) reduced to take
account of any net Tax benefit realized by the recipient arising from the
incurrence or payment of any such payment, other than any such net Tax benefit
that the recipient is specifically entitled to retain pursuant to this
Agreement. In computing the amount of any such Tax cost or Tax benefit, the
recipient shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt or
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accrual of any payment hereunder. Except as provided in Section 6.5(b), or
unless the parties otherwise agree to an alternative method for determining the
present value of any such anticipated Tax benefit or Tax cost, any payment
hereunder shall initially be made without regard to this Section and shall be
increased or reduced to reflect any such net Tax cost (including gross-up) or
net Tax benefit only after the recipient has Actually Realized such cost or
benefit. It is the intention of the parties that payments made pursuant to this
Agreement are to be treated as relating back to the Contribution and
Distribution as an adjustment to the assets and liabilities contributed
thereunder, and the parties shall not take any position inconsistent with such
intention before any Taxing Authority, except to the extent that a final
determination (as defined in Section 1313 of the Code) with respect to the
recipient party causes any such payment not to be so treated.
(b) Time for Payment. Notwithstanding any other provision of
this Agreement, to simplify the administration of this Agreement, the payment of
any amount less than [$150,000] required to be made pursuant to this Agreement
by one party hereto to another party hereto need not be made to such other party
prior to 30 days following the close of the calendar quarter during which such
payment obligation arose.
(c) Right to Offset. Any party making a payment under this
Agreement shall have the right to reduce any such payment by any amounts owed to
it by the other party to this Agreement.
ARTICLE VII
COOPERATION AND EXCHANGE OF INFORMATION
Section 7.1. COOPERATION AND EXCHANGE OF INFORMATION. Each party
hereto, on behalf of itself and its Affiliates, agrees to provide the other
parties hereto with such cooperation and information as such other parties shall
reasonably request, and as promptly as practicable, in connection with the
preparation or filing of any Tax Return or claim for or allocation of a Tax
Refund not inconsistent with this Agreement or in conducting any Tax Audit
Proceedings or other proceeding in respect to Taxes or to carry out the
provisions of this Agreement. To the extent necessary to carry out the purposes
of this Agreement and subject to the other provisions of this Agreement, such
cooperation and information shall include without limitation the non-exclusive
designation of an officer of Crane as an officer of Huttig solely for the
purpose of pursuing refund claims, dealing with Taxing Authorities and defending
Tax Audit Proceedings, in each case if such actions relate to Tax matters
pertaining to or arising in the Tax Indemnification Period, as well as promptly
forwarding copies of appropriate notices and forms or other communications
received from or sent to any Taxing Authority and providing copies of all
relevant Tax Returns for the Tax Indemnification Period, together with
accompanying schedules and related workpapers, documents relating to rulings or
other determinations by Taxing Authorities, and records concerning the ownership
and Tax basis of property, which either party may possess and which relate to
the Tax Items on the Tax Returns. Subject to the rights of the Huttig Group
under the other provisions of this Agreement, such officer shall have
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the authority to execute powers of attorney (including Form 2848) on behalf of
each member of the Huttig Group with respect to Tax Returns and Taxes for the
Tax Indemnification Period. Each party to this Agreement shall make, or shall
cause its Affiliates to make, their employees and facilities available on a
mutually convenient basis to provide an explanation of any documents or
information provided hereunder.
Section 7.2. RECORD RETENTION. Crane and Huttig agree to (i) retain all
Tax Returns, related schedules and workpapers, and all material records and
other documents as required under Section 6001 of the Code and the regulations
promulgated thereunder relating thereto ("Tax Records") existing on the
Distribution Date or created through the Distribution Date, for 10 years from
the Distribution Date and (ii) allow the other parties to this Agreement and
their representatives (and representatives of any of its Affiliates), at times
and dates reasonably acceptable to the retaining party, to inspect, review and
make copies of such records, and have access to such employees, as Crane and
Huttig may reasonably deem necessary or appropriate from time to time, such
activities to be conducted during normal business hours and without disruption
to the respective business of either party. At the end of the 10-year period
described in clause (i) Crane or Huttig, as the case may be, shall transfer such
records (or cause such records to be transferred) to the other party (at such
other party's sole expense), unless such other party notifies Crane or Huttig,
as the case may be, within 90 days prior to the expiration of the 10-year
period, that such other party does not desire to receive such Tax Records, in
which case Crane or Huttig, as the case may be, may destroy or otherwise dispose
of such undesired documents.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. ENTIRE AGREEMENT. This Tax Allocation Agreement
constitutes the entire agreement, and supersedes all other prior agreements,
understandings, representations and warranties, both written and oral, among the
parties, with respect to the subject matter hereof and thereof.
Section 8.2. MODIFICATION OR AMENDMENT. The parties hereto may modify
or amend this Agreement only by written agreement executed and delivered by duly
authorized officers of the respective parties. Anything in this Agreement or the
Distribution Agreement to the contrary notwithstanding, in the event and to the
extent that there shall be a conflict between the provisions of this Agreement
and the Distribution Agreement, the provisions of this Agreement shall control.
Section 8.3. RESOLUTION OF DISPUTES. Any disputes between the parties
with respect to this Agreement that cannot be resolved by good faith effort by
the parties shall be submitted to the office of Deloitte & Touche LLP
("Deloitte"), which shall render its opinion as to such matters. Deloitte's
determination shall be final and binding on all parties and Deloitte's fees and
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<PAGE> 21
expenses shall be shared by each of Huttig and Crane in accordance with the
final allocation of the Tax liability in dispute.
Section 8.4. NOTICES. Any notice, request, instruction or other
communication to be given hereunder by any party to any other party shall be in
writing and shall be deemed to have been duly given (i) on the date of delivery
if delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (ii) on the first business day following the date of dispatch if
delivered by Federal Express or other nationally reputable next-day courier
service, or (iii) on the third business day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:
(a) If to Huttig:
Gregory D. Lambert
Huttig Sash and Door, Inc.
Lakeview Center, Suite 400
145 South Outer Forty Road
Chesterfield, Missouri 63006-1041
(b) if to Crane:
David S. Smith
Crane Co.
100 First Stamford Place
Stamford, Connecticut 06902
Section 8.5. NO THIRD PARTY BENEFICIARIES. Except as otherwise
expressly provided herein, nothing contained in this Agreement is intended to
confer upon any person or entity other than the parties hereto and their
respective successors and permitted assigns, any benefit, right or remedies
under or by reason of this Agreement.
Section 8.6. ASSIGNMENT. No party to this Agreement shall convey,
assign or otherwise transfer any of its rights or obligations under this
Agreement without the express written consent of the other parties hereto in
their sole and absolute discretion. Any such conveyance, assignment or transfer
without the express written consent of the other parties shall be void ab
initio. No assignment of this Agreement shall relieve the assigning party of its
obligations hereunder.
Section 8.7. TERM. This Agreement shall commence on the date of
execution indicated below and shall continue in effect until otherwise agreed to
in writing by Huttig and Crane, or their successors.
20
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Section 8.8. CAPTIONS. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
Section 8.9. SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon any such determination, the parties shall negotiate
in good faith in an effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the parties.
Section 8.10. SPECIFIC PERFORMANCE. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Agreement, the party or parties who are or are to be thereby aggrieved
shall have the right of specific performance and injunctive relief giving effect
to its or their rights under this Agreement, in addition to any and all other
rights and remedies at law or in equity, and all such rights and remedies shall
be cumulative. The parties agree that the remedies at law for any breach or
threatened breach, including monetary damages, are inadequate compensation for
any loss and that any defense in any action for specific performance that a
remedy at law would be adequate is waived.
Section 8.11. COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
Section 8.12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
applicable to contracts made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
Section 8.13. AGENT. Any consent rights of members of the Huttig Group
under this Agreement shall be exercised by Huttig on behalf of the Huttig Group,
and any notices given by the Crane Group to Huttig shall be deemed to be given
to each member of the Huttig Group. Any consent rights of the Crane Group under
this Agreement shall be exercised by Crane on behalf of the Crane Group on
behalf of the Crane Group, and any notices given by Huttig to Crane shall be
deemed to be given to each member of the Crane Group.
[the remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the date first
hereinabove written.
CRANE CO.
By:/s/ R.S. Evans
--------------------------------------
R. S. Evans
Chairman and Chief Executive Officer
HUTTIG BUILDING PRODUCTS, INC.
By: /s/ B.J. Kulpa
--------------------------------------
Barry J. Kulpa
President and Chief Executive Officer
22
<PAGE> 1
Exhibit 10.2
EMPLOYEE MATTERS AGREEMENT
BETWEEN
CRANE CO.
AND
HUTTIG BUILDING PRODUCTS, INC.
DATED AS OF DECEMBER 16, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS.............................................................................................1
1.1 Adverse Change............................................................................................1
1.2 Affected Pension Plan Participants........................................................................1
1.3 Agreement.................................................................................................1
1.4 ASO Contract..............................................................................................1
1.5 Award.....................................................................................................1
1.6 Benefit Liabilities.......................................................................................2
1.7 Close of the Distribution Date............................................................................2
1.8 COBRA.....................................................................................................2
1.9 Code......................................................................................................2
1.10 Crane Entity..............................................................................................2
1.11 Crane Hourly Pension Plan.................................................................................2
1.12 Crane Restricted Stock Plan...............................................................................2
1.13 Crane Salaried Pension Plan...............................................................................2
1.14 Crane Savings Plan........................................................................................2
1.15 Crane Stock Option Plan...................................................................................2
1.16 Crane Stock Value.........................................................................................2
1.17 Distribution Agreement....................................................................................2
1.18 ERISA.....................................................................................................3
1.19 EVA Plan..................................................................................................3
1.20 Group Insurance Policies..................................................................................3
1.21 Group Life Program........................................................................................3
1.22 Health and Welfare Plans..................................................................................3
1.23 Huttig Employee Stock Purchase Plan.......................................................................3
1.24 Huttig Entity.............................................................................................3
1.25 Huttig Individual.........................................................................................3
1.26 Huttig Savings & Profit Sharing Plan......................................................................3
1.28 Huttig Stock Incentive Plan...............................................................................3
1.29 Huttig Stock Value........................................................................................4
1.30 Immediately After the Distribution Date...................................................................4
1.31 IRS.......................................................................................................4
1.32 Option....................................................................................................4
1.32 Option Ratio..............................................................................................4
1.33 Plan......................................................................................................4
1.34 Ratio.....................................................................................................4
ARTICLE II GENERAL PRINCIPLES.....................................................................................4
2.1 Assumption of Liabilities.................................................................................4
2.2 Establishment of Huttig Plans and Related Trusts..........................................................5
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2.3 Terms of Participation by Huttig Individuals in Huttig Plans..............................................5
ARTICLE III DEFINED BENEFIT PLANS.................................................................................5
3.1 Freezing of Pension Plan Benefits.........................................................................5
3.2 Vesting and Crediting Service Under Crane's Pension Plans.................................................6
ARTICLE IV DEFINED CONTRIBUTION PLANS.............................................................................6
4.1 Savings and Profit Sharing Plan...........................................................................6
4.2 Other Defined Contribution Plans..........................................................................7
ARTICLE V HEALTH AND WELFARE PLANS................................................................................7
5.1 General Provisions........................................................................................7
5.2 Vendor Contracts..........................................................................................8
5.3 Procedures for Amendments to Plans, Plan Designs, Administrative Practices, and Vendor Contracts..........9
5.4 COBRA....................................................................................................10
5.5 Post-Distribution-Transitional Arrangements..............................................................11
ARTICLE VI STOCK AND INCENTIVE COMPENSATION BENEFITS AND EXECUTIVE BENEFITS......................................11
6.1 Crane Stock-Based Plans..................................................................................11
6.2 Crane EVA Plan...........................................................................................12
6.3 Employee Stock Purchase Plan.............................................................................12
ARTICLE VII GENERAL AND ADMINISTRATIVE...........................................................................12
7.1 Non-Termination of Employment, No Third-Party Beneficiaries..............................................13
7.2 Beneficiary Designations.................................................................................13
7.3 Collective Bargaining....................................................................................13
7.4 Consent of Third Parties.................................................................................13
7.5 Sharing of Participant Information.......................................................................13
ARTICLE VIII MISCELLANEOUS.......................................................................................14
8.1 Effect if Distribution Does Not Occur....................................................................14
8.2 Relationship of Parties..................................................................................14
8.3 Affiliates...............................................................................................14
8.4 Governing Law............................................................................................14
8.5 Entire Agreement, Construction...........................................................................14
8.6 Expenses.................................................................................................15
8.7 Notices..................................................................................................15
8.8 Consent to Jurisdiction..................................................................................16
8.9 Amendments...............................................................................................16
</TABLE>
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8.10 Assignment...............................................................................................16
8.11 Captions.................................................................................................16
8.12 Severability.............................................................................................16
8.13 Parties in Interest......................................................................................17
8.14 Schedules................................................................................................17
8.15 Waivers; Remedies........................................................................................17
8.16 Further Assurances.......................................................................................17
8.17 Counterparts.............................................................................................17
</TABLE>
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<PAGE> 5
EMPLOYEE MATTERS AGREEMENT
December 16, 1999
The parties to this Employee Matters Agreement, dated as of the date
written above, are Crane Co., a Delaware corporation ("Crane"), and Huttig
Building Products, Inc., a Delaware corporation ("Huttig"). Capitalized terms
used herein and not otherwise defined shall have the respective meanings
assigned to them in Article I hereof or as assigned to them in the Distribution
Agreement (as defined below).
WHEREAS, the Board of Directors of Crane has determined that it is in
the best interests of Crane and its stockholders to separate Crane and its
subsidiary, Huttig, such that Huttig will be an independent business entity;
WHEREAS, in furtherance of the foregoing, Crane and Huttig have entered
into a Distribution Agreement, dated as of December 6, 1999 (the "Distribution
Agreement"), and certain other agreements that will govern certain matters
relating to the Distribution and the relationship of Crane and Huttig, and their
respective Subsidiaries following the Distribution; and
WHEREAS, pursuant to the Distribution Agreement, Crane and Huttig have
agreed to enter into this agreement allocating between them the assets,
liabilities and responsibilities with respect to certain employee compensation
and benefit plans and programs.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement the following terms shall have the
following meanings:
1.1 Adverse Change is defined in Section 5.3(a).
1.2 Affected Pension Plan Participants is defined in Section 3.1.
1.3 Agreement means this Employee Matters Agreement, including all the
Schedules hereto.
1.4 ASO Contract is defined in Section 5.2(a)(i).
1.5 Award means an award under the Crane Stock Option Plan, the Crane
Restricted Stock Plan, the EVA Plan or the Huttig Stock Incentive Plan. When
immediately preceded by
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"Crane," the term Award means an award under the applicable Plan described in
this Section 1.5 as established or maintained by Crane. When immediately
preceded by "Huttig," the term Award means an award under the applicable Plan
established or maintained by Huttig.
1.6 Benefit Liabilities means any Liabilities (as defined in the
Distribution Agreement) relating to any contributions, compensation or other
benefits accrued or payable under any profit sharing, pension, savings, deferred
compensation, fringe benefit, insurance, medical, medical reimbursement, life,
disability, accident, post-retirement health or welfare benefit, stock option,
stock purchase, sick pay, vacation, employment, severance, termination or other
compensation or benefit plan, agreement, contract, policy, trust fund or
arrangement.
1.7 Close of the Distribution Date means 11:59:59 P.M., Eastern
Standard Time or Eastern Daylight Time (whichever shall then be in effect), on
the Distribution Date.
1.8 COBRA means the continuation coverage requirements for "group
health plans" under Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, and as codified in Code Section 4980B and ERISA
Sections 601 through 608.
1.9 Code means the Internal Revenue Code of 1986, as amended, or any
successor federal income tax law. Reference to a specific Code provision also
includes any proposed, temporary, or final regulation in force under that
provision.
1.10 Crane Entity means any entity that is, at the relevant time, an
Affiliate of Crane, except that, for periods beginning Immediately After the
Distribution Date, the term "Crane Entity" shall not include Huttig or a Huttig
Entity.
1.11 Crane Hourly Pension Plan means the Crane Co. Master Pension Plan
for Hourly and Certain Non-Bargaining Employees (Plan C), effective December 31,
1987, as amended further effective January 1, 1994.
1.12 Crane Restricted Stock Plan means the Crane Co. Restricted Stock
Award Plan.
1.13 Crane Salaried Pension Plan means the Crane Co. Pension Plan for
Non-Bargaining Employees, effective December 31, 1987, as amended further
effective January 1, 1994.
1.14 Crane Savings Plan means the Crane Co. Savings and Investment
Plan, effective January 1, 1989, as amended further effective June 1, 1997.
1.15 Crane Stock Option Plan means the Crane Co. Stock Option Plan.
1.16 Crane Stock Value means the average of the high and low per-share
prices of the Crane Common Stock, regular way, as reported on the New York Stock
Exchange - Composite Transactions Tape on the trading day immediately prior to
the Distribution Date.
1.17 Distribution Agreement is defined in the third paragraph of the
preamble of this Agreement.
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1.18 ERISA means the Employee Retirement Income Security Act of 1974,
as amended. Reference to a specific provision of ERISA also includes any
proposed, temporary, or final regulation in force under that provision.
1.19 EVA Plan, when immediately preceded by "Crane," means the Crane
Co. Economic Value Added Incentive Compensation Plan for Executive Officers.
When immediately preceded by "Huttig," EVA Plan means the Economic Value Added
Incentive Compensation Plan to be established by Huttig pursuant to Section 2.2.
1.20 Group Insurance Policies is defined in Section 5.2(b)(i).
1.21 Group Life Program, when immediately preceded by "Crane," means
the Crane Co. group life programs, policies and arrangements. When immediately
preceded by "Huttig," Group Life Program means the life insurance programs,
policies and arrangements to be established by Huttig pursuant to Section 2.2
that correspond to the respective Crane Group Life Programs.
1.22 Health and Welfare Plans, when immediately preceded by "Crane,"
means the health and welfare plans listed on Schedule 1.22 established and
maintained by Crane for the benefit of employees and retirees of Crane and
certain Crane Entities, and such other welfare plans or programs as may apply to
such employees and retirees as of the Distribution Date. When immediately
preceded by "Huttig," Health and Welfare Plans means the health and welfare
plans to be established by Huttig pursuant to Section 2.2 that correspond to the
respective Crane Health and Welfare Plans.
1.23 Huttig Employee Stock Purchase Plan means the employee stock
purchase plan to be established by Huttig pursuant to Section 2.2.
1.24 Huttig Entity means any Person that is, at the relevant time, a
Subsidiary of Huttig or is otherwise controlled, directly or indirectly, by
Huttig.
1.25 Huttig Individual means any individual (i) who, Immediately After
the Distribution Date, is either actively employed by or on leave of absence
from Huttig or a Huttig Entity, or (ii) whose last employment within the
Pre-Distribution Group (as defined in the Distribution Agreement) was with
Huttig or a Huttig Entity.
1.26 Huttig Savings & Profit Sharing Plan means the defined
contribution plan established by Huttig pursuant to Section 2.2 and Article IV.
1.27 Huttig Stock Incentive Plan means the plan or program established
by Huttig pursuant to Section 2.2 consisting of a stock option plan that
corresponds to the Crane Stock Option Plan and a restricted stock award plan
that corresponds to the Crane Restricted Stock Plan.
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1.28 Huttig Stock Value means the average of the high and low per-share
prices of the Huttig Common Stock as reported on the New York Stock Exchange on
the first trading day after the Distribution Date.
1.29 Immediately After the Distribution Date means 12:00 A.M., Eastern
Standard Time or Eastern Daylight Time (whichever shall then be in effect), on
the day after the Distribution Date.
1.30 IRS means the Internal Revenue Service.
1.31 Option, when immediately preceded by "Crane," means an option to
purchase Crane Common Stock pursuant to the Crane Stock Option Plan. When
immediately preceded by "Huttig," Option means an option to purchase Huttig
Common Stock pursuant to the Huttig Stock Incentive Plan.
1.32 Option Ratio means the amount obtained by dividing the Crane Stock
Value by the average of the high and low sales prices of the Crane Common Stock
on the first trading day after the Distribution Date.
1.33 Plan, when immediately preceded by "Crane" or "Huttig," means any
plan, policy, program, payroll practice, on-going arrangement, contract, trust,
insurance policy or other agreement or funding vehicle providing benefits to
employees or former employees of Crane or a Crane Entity, or Huttig or a Huttig
Entity, as applicable.
1.34 Ratio means the amount obtained by dividing the Crane Stock Value
by the Huttig Stock Value.
ARTICLE II
GENERAL PRINCIPLES
2.1 Assumption of Liabilities. Except as otherwise expressly provided
in Article III, Huttig hereby assumes and agrees to pay, perform, fulfill and
discharge, in accordance with their respective terms, all of the following
(regardless of when or where such Benefit Liabilities arose or arise or were or
are incurred): (i) all Benefit Liabilities to or relating to Huttig Individuals,
and their respective dependents and beneficiaries, in each case relating to,
arising out of or resulting from employment by Crane, a Crane Entity, Huttig or
a Huttig Entity before the Distribution Date (including Benefit Liabilities
under Crane Plans and Huttig Plans); (ii) all other Benefit Liabilities to or
relating to Huttig Individuals, and their respective dependents and
beneficiaries, to the extent relating to, arising out of or resulting from
future, present or former employment with Huttig or a Huttig Entity (including
Benefit Liabilities under Crane Plans and Huttig Plans); (iii) all Benefit
Liabilities relating to, arising out of or resulting from any other actual or
alleged employment relationship with Huttig or a Huttig Entity; (iv) all Benefit
Liabilities relating to, arising out of or resulting from the imposition of
withdrawal liability under Subtitle E of Title IV of ERISA as a result of a
complete or partial withdrawal of any Crane Entity from a "multiemployer plan"
within the meaning of ERISA Section 4021 which occurs solely as a result of the
Distribution; and (v) all other Benefit Liabilities relating to, arising out of
or resulting from
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<PAGE> 9
obligations, liabilities and responsibilities expressly assumed or retained by
Huttig, a Huttig Entity, or a Huttig Plan pursuant to this Agreement.
2.2 Establishment of Huttig Plans and Related Trusts. Effective prior
to or Immediately After the Distribution Date, Huttig shall adopt, or cause to
be adopted, the Huttig Savings and Profit Sharing Plan and its related trust,
the Huttig Employee Stock Purchase Plan, the Huttig Stock Incentive Plan, the
Huttig EVA Plan and the Huttig Health and Welfare Plans for the benefit of the
Huttig Individuals and other current and future employees of Huttig and the
Huttig Entities. Subject to the provisions of Section 4.1 regarding the Huttig
Savings and Profit Sharing Plan, Section 6.2 regarding the Huttig EVA Plan,
Section 6.3 regarding the Huttig Employee Stock Purchase Plan and Section 5.1(b)
regarding the Huttig Health and Welfare Plans, the foregoing Huttig Plans as in
effect Immediately After the Distribution Date shall be substantially identical
in all material respects to the corresponding Crane Plans as in effect as of the
Distribution Date.
2.3 Terms of Participation by Huttig Individuals in Huttig Plans. The
Huttig Plans shall be, with respect to Huttig Individuals, in all respects the
successors in interest to, and shall not provide benefits that duplicate
benefits provided by, the corresponding Crane Plans. Crane and Huttig shall
agree on methods and procedures, including amending the respective Plan
documents and/or requesting approvals or consents of Huttig Individuals where
the parties deem appropriate, to prevent Huttig Individuals from receiving
duplicative benefits from the Crane Plans and the Huttig Plans. With respect to
Huttig Individuals, each Huttig Plan shall provide that all service, all
compensation and all other benefit-affecting determinations that, as of the
Close of the Distribution Date, were recognized under the corresponding Crane
Plan shall, as of Immediately After the Distribution Date, receive full
recognition, credit, and validity and be taken into account under such Huttig
Plan to the same extent as if such items occurred under such Huttig Plan, except
to the extent that duplication of benefits would result.
ARTICLE III
DEFINED BENEFIT PLANS
3.1 Freezing of Pension Plan Benefits. Effective Immediately After the
Distribution Date, the accrued benefits with respect to Huttig Individuals who,
as of the Distribution Date, were participants under the Crane Salaried Pension
Plan or the Crane Hourly Pension Plan (collectively, the "Affected Pension Plan
Participants") shall be frozen and the Affected Pension Plan Participants shall
not accrue any additional benefits from and after the Distribution Date under
the Crane Salaried Pension Plan or the Crane Hourly Pension Plan, as the case
may be. The assets and Benefit Liabilities with respect to the Affected Pension
Plan Participants, determined as of the Distribution Date, shall be retained by
the applicable Crane Plan and its related trust and paid therefrom when due
under the terms of the applicable Crane Plan.
3.2 Vesting and Crediting Service Under Crane's Pension Plans.
Effective Immediately After the Distribution Date, notwithstanding anything
contained in the Crane
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<PAGE> 10
Salaried Pension Plan or the Crane Hourly Pension Plan to the contrary, the
Affected Pension Plan Participants shall be fully vested in their respective
accrued benefits under the Crane Salaried Pension Plan or the Crane Hourly
Pension Plan, as the case may be. Affected Pension Plan Participants shall
continue to receive service credit for retirement benefit eligibility purposes
under the applicable Crane Plan for service with Huttig after the Distribution
Date.
ARTICLE IV
DEFINED CONTRIBUTION PLANS
4.1 Savings and Profit Sharing Plan.
(a) Establishment of Savings and Profit Sharing Plan and Trust. The
Huttig Savings and Profit Sharing Plan, established by Huttig pursuant to
Section 2.2, (i) shall be a qualified defined contribution plan within the
meaning of Code Section 401(a), (ii) except as provided under Section 4.1(c),
shall contain provisions, terms and conditions that are in the aggregate
substantially similar to the provisions, terms and conditions of the Crane
Savings Plan, and (iii) shall provide coverage from and after the Distribution
Date with respect to Huttig Individuals. The trust related to the Huttig Savings
and Profit Sharing Plan, established by Huttig pursuant to Section 2.2, shall be
exempt from taxation under Code Section 501(a).
(b) Assumption of Liabilities and Transfer of Assets.
(i) Effective Immediately After the Distribution Date: (A) the
Huttig Savings and Profit Sharing Plan shall assume and be solely responsible
for all Benefit Liabilities to or relating to Huttig Individuals under the Crane
Savings Plan, and (B) Crane shall cause an amount equal to the aggregate account
balances of the Huttig Individuals participating under the Crane Savings Plan,
whether such amounts are vested or unvested under the terms of the Crane Savings
Plan, which are held by the related trust as of the Close of the Distribution
Date to be transferred to the Huttig Savings and Profit Sharing Plan, and its
related trust, or such other qualified plan and trust designated by Huttig, and
Huttig shall cause such transferred accounts to be accepted by such plan and
trust. In Crane's sole and absolute discretion, the amount so transferred may be
in cash or in kind or a combination thereof; provided, however, that the
following shall be transferred in kind: (A) shares of Crane Common Stock and
shares of Huttig Common Stock allocated to participants' accounts as a result of
the Distribution; and (B) all promissory notes reflecting participant loans to
Huttig Individuals under the Crane Savings Plan outstanding as of the
Distribution Date.
(ii) If any benefit with respect to a Huttig Individual under
the Crane Savings Plan is subject to a qualified domestic relations order at the
time of transfer, all documentation concerning such qualified domestic relations
order shall be assigned to the Huttig Savings and Profit Sharing Plan.
(c) Retirement Benefit Feature of Savings and Profit Sharing Plan. The
Huttig Savings and Profit Sharing Plan shall contain provisions regarding
employer profit sharing
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<PAGE> 11
contributions that, in the sole discretion of Huttig, are appropriate retirement
benefit provisions with respect to Huttig Individuals.
(d) Vesting. Effective Immediately After the Distribution Date,
participants in the Huttig Savings and Profit Sharing Plan shall be fully vested
in any amounts transferred with respect to such participants from the Crane
Savings Plan and its related trust under Section 4.1(b).
4.2 Other Defined Contribution Plans. Effective Immediately After the
Distribution Date, Huttig shall retain sole responsibility for sponsorship and
administration of the Huttig Sash & Door Company Compensation and Investment
Plan (formerly known as the Palmer G. Lewis 401(k) Plan) (the "Lewis 401(k)
Plan"), the Huttig Sash & Door Company Tax-Sheltered Investment Plan (formerly
known as the American Pine Products 401(k) Profit Sharing Plan) (the "Prineville
401(k) Plan") and the Whittier-Ruhle Millwork Company's Employees' Savings and
Investment Plan (the "Whittier-Ruhle Plan"), including all Benefit Liabilities
arising under those plans prior to or after the Distribution Date, and Crane
shall have no responsibility or liability with respect to the Lewis 401(k) Plan,
the Prineville 401(k) Plan or the Whittier-Ruhle Plan.
ARTICLE V
HEALTH AND WELFARE PLANS
5.1 General Provisions.
(a) Assumption of Health and Welfare Plan Liabilities. Immediately
After the Distribution Date, all Benefit Liabilities to or relating to Huttig
Individuals under the Crane Health and Welfare Plans shall cease to be Benefit
Liabilities of the Crane Health and Welfare Plans and shall be assumed by the
corresponding Huttig Health and Welfare Plans.
(b) Postretirement Medical and Life Insurance Benefits.
(i) Effective Immediately After the Distribution Date, Huttig
may, but shall not be required to, alter or amend the postretirement medical and
life insurance benefits offered, or the manner in which such benefits are
offered, to Huttig Individuals as follows (subject to all terms and conditions
of the applicable Huttig Plan): (A) Huttig shall continue to contribute 50% of
the applicable premium or cost of coverage for postretirement medical benefits
for Huttig Individuals who are currently retired and participating in such
coverage as of the Distribution Date, such contribution to continue in each case
only until such Huttig Individual attains age 65; (B) Huttig shall make no
contribution regarding the premium or other cost of coverage for postretirement
life insurance benefits for Huttig Individuals who are currently retired and
participating in such coverage as of the Distribution Date; (C) Huttig shall
make no contribution regarding the premium or other cost of coverage for
postretirement medical or life insurance benefits for Huttig Individuals who are
active employees of Huttig or a Huttig Entity Immediately After the Distribution
Date and who commenced employment with Huttig or a Huttig Entity prior to 1992;
and (D) Huttig shall not offer postretirement medical or life
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insurance benefits to Huttig Individuals who are active employees of Huttig or a
Huttig Entity Immediately After the Distribution Date and who commenced
employment with Huttig or a Huttig Entity after 1991.
(ii) Crane agrees and acknowledges that any alteration or
amendment by Huttig of the postretirement medical and life insurance benefits
offered under one or more of the Huttig Health and Welfare Plans as described in
Section 5.1(b)(i) shall not be considered or otherwise deemed to be an Adverse
Change as defined under Section 5.3(a). Notwithstanding the foregoing, Huttig
acknowledges that any decision or action with respect to postretirement medical
or life insurance benefits offered under any Huttig Plan after the Distribution
Date shall be in the sole discretion of Huttig and Huttig shall be solely
responsible for such decision or action. Furthermore, Huttig acknowledges that
Crane shall in no way be considered or deemed to have consented to or agreed to
such decision or action of Huttig.
5.2 Vendor Contracts.
(a) Third-Party ASO Contracts.
(i) Crane shall use its reasonable efforts to amend each
administrative services only contract with a third-party administrator that
relates to any of the Crane Health and Welfare Plans (an "ASO Contract") in
existence as of the date of this Agreement to permit Huttig to participate in
the terms and conditions of such ASO Contract from Immediately After the
Distribution Date until the expiration of the financial fee guarantees in effect
under such ASO Contract as of the Close of the Distribution Date. Crane shall
use its reasonable efforts to cause all ASO Contracts into which Crane enters
after the date of this Agreement but before the Close of the Distribution Date
to allow Huttig to participate in the terms and conditions thereof effective
Immediately After the Distribution Date on the same basis as Crane.
(ii) Crane shall have the right to determine, and shall
promptly notify Huttig of, the manner in which Huttig's participation in the
terms and conditions of ASO Contracts as set forth above shall be effectuated.
The permissible ways in which Huttig's participation may be effectuated include
automatically making Huttig a party to the ASO Contracts or obligating the third
party to enter into a separate ASO Contract with Huttig providing for the same
terms and conditions as are contained in the ASO Contracts to which Crane is a
party. Such terms and conditions shall include the financial and termination
provisions, performance standards, methodology, auditing policies, quality
measures, reporting requirements and target claims. Huttig hereby authorizes
Crane to act on its behalf to extend to Huttig the terms and conditions of the
ASO Contracts. Huttig shall fully cooperate with Crane in such efforts, and
Huttig shall not perform any act, including discussing any alternative
arrangements with any third party, that would prejudice Crane's efforts.
(b) Group Insurance Policies.
(i) This Section 5.2(b) applies to group insurance policies
not subject to allocation or transfer pursuant to the foregoing provisions of
this Article V ("Group Insurance Policies").
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(ii) Crane shall use its reasonable efforts to amend each
Group Insurance Policy in existence as of the date of this Agreement for the
provision or administration of benefits under the Crane Health and Welfare Plans
to permit Huttig to participate in the terms and conditions of such policy from
Immediately After the Distribution Date until the expiration of the financial
fee and rate guarantees in effect under such Group Insurance Policy as of the
Close of the Distribution Date. Crane shall use its reasonable efforts to cause
all Group Insurance Policies into which Crane enters or which Crane renews after
the date of this Agreement but before the Close of the Distribution Date to
allow Huttig to participate in the terms and conditions thereof effective
Immediately After the Distribution Date on the same basis as Crane.
(iii) Huttig's participation in the terms and conditions of
each such Group Insurance Policy shall be effectuated by obligating the
insurance company that issued such insurance policy to Crane to issue one or
more separate policies to Huttig. Such terms and conditions shall include the
financial and termination provisions, performance standards and target claims.
Huttig hereby unconditionally and irrevocably authorizes Crane to act on its
behalf to extend to Huttig the terms and conditions of such Group Insurance
Policies. Huttig shall fully cooperate with Crane in such efforts, and Huttig
shall not perform any act, including discussing any alternative arrangements
with third parties, that would prejudice Crane's efforts.
(c) Effect of Change in Rates. Crane and Huttig shall use their
reasonable efforts to cause each of the insurance companies, point-of-service
vendors and third-party administrators providing services and benefits under the
Crane Health and Welfare Plans and the Huttig Health and Welfare Plans to
maintain the premium and/or administrative rates based on the aggregate number
of participants in both the Crane Health and Welfare Plans and the Huttig Health
and Welfare Plans through the expiration of the financial fee or rate guarantees
in effect as of the Close of the Distribution Date under the respective ASO
Contracts and Group Insurance Policies. To the extent they are not successful in
such efforts, Crane and Huttig shall each bear the revised premium or
administrative rates attributable to the individuals covered by their respective
Health and Welfare Plans.
5.3 Procedures for Amendments to Plans, Plan Designs, Administrative
Practices, and Vendor Contracts.
(a) Changes in Vendor Contracts, Group Insurance Policies, Plan Design,
and Administration Practices and Procedures. From Immediately After the
Distribution Date through the expiration of the respective financial fee or rate
guarantees in effect as of the Close of the Distribution Date under the
applicable ASO Contract or Group Insurance Policy, any party must comply with
Section 5.3(b) if that party seeks to materially amend, modify, alter or take
other action which would have a material effect on, any of the following items
that, in the reasonable opinion of the other party, shall have a material
adverse impact on one or more of the other party's Health and Welfare Plans
(each such modification, an "Adverse Change"): (i) the termination date,
administration, or operation of (A) an ASO contract between Crane or Huttig and
a third-party administrator, or (B) a Group Insurance Policy issued to Crane or
Huttig, in each case, the material terms and conditions of which contracts and
policies are extended to
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Huttig or to which Huttig becomes a party pursuant to Section 5.2; (ii) the
design of either a Crane Health and Welfare Plan or a Huttig Health and Welfare
Plan; or (iii) the financing, operation, administration or delivery of benefits
under either a Crane Health and Welfare Plan or a Huttig Health and Welfare
Plan.
(b) Procedure for Implementing Changes. Unless the other party consents
in writing, neither Crane nor Huttig shall make any Adverse Change unless the
party intending to make the Adverse Change has: (i) given the other party
written notice of the intention to make the Adverse Change, accompanied by a
written description of the Adverse Change, at least 30 days in advance of the
proposed effective date of the Adverse Change; (ii) agreed to bear all of the
costs of implementing the Adverse Change which are incurred by all third-party
administrators, insurance companies and other vendors and passed through to one
or both of the parties; and (iii) certified to the other party, and provided to
the other party the written concurrence of each third-party administrator,
insurance company or other vendor associated with or performing services in
connection with the Health and Welfare Plan affected by the Adverse Change, that
(after taking into account the effect of clause (ii)) the proposed Adverse
Change will have no material adverse impact (financial, administrative or
otherwise) on the corresponding Health and Welfare Plan sponsored by the other
party.
5.4 COBRA. Effective Immediately After the Distribution Date, Huttig
shall solely be responsible for administering compliance with the health care
continuation coverage requirements of COBRA with respect to Huttig Individuals
under the Huttig Health and Welfare Plans.
5.5 Post-Distribution-Transitional Arrangements.
(a) Continuance of Elections, Co-Payments and Maximum Benefits.
(i) Huttig shall cause the Huttig Health and Welfare Plans to
recognize and maintain all coverage and contribution elections made by Huttig
Individuals under the Crane Health and Welfare Plans and apply such elections
under the Huttig Health and Welfare Plans for the remainder of the period or
periods for which such elections are by their terms applicable. The transfer or
other movement of employment from Crane to Huttig at any time before the Close
of the Distribution Date shall neither constitute nor be treated as a "status
change" under the Crane Health and Welfare Plans or the Huttig Health and
Welfare Plans.
(ii) Huttig shall cause the Huttig Health and Welfare Plans to
recognize and give credit for (A) all amounts applied to deductibles,
out-of-pocket maximums, and other applicable benefit coverage limits with
respect to which such expenses have been incurred by Huttig Individuals under
the Crane Health and Welfare Plans for the remainder of the year in which the
Distribution occurs, and (B) all benefits paid to Huttig Individuals under the
Crane Health and Welfare Plans for purposes of determining when such persons
have reached their lifetime maximum benefits under the Huttig Health and Welfare
Plans.
(iii) Huttig shall use reasonable efforts to (A) provide
coverage to Huttig Individuals under the Huttig Group Life Program without the
need to undergo a physical
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<PAGE> 15
examination or otherwise provide evidence of insurability, and (B) recognize and
maintain all irrevocable assignments and accelerated benefit option elections
made by Huttig Individuals under the Crane Group Life Program.
(b) Health and Welfare Plans Subrogation Recovery. After the Close of
the Distribution Date, Crane shall pay to Huttig any amounts Crane recovers from
time to time through subrogation or otherwise for claims incurred by or
reimbursed to any Huttig Individual. If Huttig recovers any amounts through
subrogation or otherwise for claims incurred by or reimbursed to employees and
former employees of Crane or a Crane Entity and their respective beneficiaries
and dependents (other than Huttig Individuals), Huttig shall pay such amounts to
Crane.
ARTICLE VI
STOCK AND INCENTIVE COMPENSATION BENEFITS
AND EXECUTIVE BENEFITS
6.1 Crane Stock-Based Plans.
(a) Stock Options. Effective as soon as practicable after the
Distribution Date, Crane shall cause each Crane Option that is outstanding as of
the Close of the Distribution Date and is held by a Huttig Individual to be
adjusted to reflect the effect of the Distribution (each such Option shall be
called an "Adjusted Option"). Each Adjusted Option shall provide for the option
to purchase a number of shares of Crane Common Stock equal to the number of
shares of Crane Common Stock subject to the original Crane Option as of the
Close of the Distribution Date, multiplied by the Option Ratio, and then rounded
to the nearest whole share. The per-share exercise price of such Adjusted Option
shall equal the per-share exercise price of the original Crane Option as of the
Close of the Distribution Date divided by the Option Ratio. Each Adjusted Option
shall otherwise have the same terms and conditions as were applicable to the
original Crane Option as of the Close of the Distribution Date. Solely for
purposes of this Section 6.1(a), any Huttig Individual holding a Crane Option
(or an Adjusted Option) shall be considered to have incurred a termination of
employment with Crane for a reason other than (i) retirement, death or
disability or (ii) after a change in control for purposes of the Crane Stock
Option Plan and any option agreement or other contract evidencing the grant or
award of a Crane Option to such Individual. Such Crane Option (or Adjusted
Option) shall be exercisable and subject to termination as provided in such
agreement or contract.
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<PAGE> 16
(b) Restricted Stock. Effective as soon as administratively practicable
after the Distribution Date, Huttig shall cause the Restricted Stock Award held
by Mr. Barry Kulpa under the Crane Restricted Stock Plan as of the Distribution
Date, to the extent that vesting of shares granted under that Award is not
dependent upon any performance or market value criteria (i.e. time-based
restrictions), to be converted to a Restricted Stock Award under the Huttig
Stock Incentive Plan by multiplying the number of shares of Crane Restricted
Stock by the Ratio, and then rounding the product to the nearest whole share.
Such Huttig Restricted Stock Award shall have the same terms and conditions as
were applicable to the corresponding Crane Restricted Stock Award. Crane shall
use reasonable efforts to cancel any certificate in Mr. Kulpa's name with
respect to restricted shares of Crane Common Stock. To the extent that Mr.
Kulpa's Restricted Stock Award is not subject to conversion under the prior
provisions of this Section 6.1(b) (i.e. performance-based restrictions), such
Restricted Stock Award shall be canceled.
6.2 Crane EVA Plan. Effective Immediately After the Distribution Date,
Huttig shall assume all Benefit Liabilities to or relating to Huttig Individuals
under the Crane EVA Plan. The Huttig EVA Plan shall reflect appropriate
adjustments, as determined by Huttig in its sole discretion, of the cost of
capital and other factors that shall be applicable to the benefits under the
Huttig EVA Plan after the Distribution Date.
6.3 Employee Stock Purchase Plan. The Huttig Employee Stock Purchase
Plan, established pursuant to Section 2.2, shall provide employees of Huttig or
a Huttig Entity after the Distribution Date with an opportunity to purchase
Huttig Common Stock at current market prices.
ARTICLE VII
GENERAL AND ADMINISTRATIVE
7.1 Non-Termination of Employment, No Third-Party Beneficiaries. Except
as expressly provided herein, no provision of this Agreement or the Distribution
Agreement shall be construed to create any right, or accelerate entitlement, to
any compensation or benefit whatsoever on the part of any Huttig Individual or
other future, present or former employee of Crane, a Crane Entity, Huttig, or a
Huttig Entity under any Crane Plan or Huttig Plan or otherwise. Without limiting
the generality of the foregoing: (i) except as expressly provided in Section
6.1(a), the Distribution shall not cause any employee to be deemed to have
incurred a termination of employment which entitles such individual to the
commencement of benefits under any of the Crane Plans, any of the Huttig Plans,
or any individual agreements; and (ii) except as expressly provided in this
Agreement, nothing in this Agreement shall preclude Huttig, at any time after
the Close of the Distribution Date, from amending, merging, modifying,
terminating, eliminating, reducing, or otherwise altering in any respect any
Huttig Plan, any benefit under any Plan or any trust, insurance policy or
funding vehicle related to any Huttig Plan.
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<PAGE> 17
7.2 Beneficiary Designations. All beneficiary designations made by
Huttig Individuals for Crane Plans shall be transferred to and be in full force
and effect under the corresponding Huttig Plans until such beneficiary
designations are replaced or revoked by the Huttig Individual who made the
beneficiary designation.
7.3 Collective Bargaining. To the extent any provision of this
Agreement is contrary to the provisions of any collective bargaining agreement
to which Crane or any Affiliate of Crane is a party, the terms of such
collective bargaining agreement shall prevail. Should any provisions of this
Agreement be deemed to relate to a topic determined by an appropriate authority
to be a mandatory subject of collective bargaining, Crane or Huttig may be
obligated to bargain with the union representing affected employees concerning
those subjects.
7.4 Consent of Third Parties. If any provision of this Agreement is
dependent on the consent of any third party (such as a vendor or a union) and
such consent is withheld, Crane and Huttig shall use their reasonable efforts to
implement the applicable provisions of this Agreement to the full extent
practicable. If any provision of this Agreement cannot be implemented due to the
failure of such third party to consent, Crane and Huttig shall negotiate in good
faith to implement the provision in a mutually satisfactory manner. The phrase
"reasonable efforts" as used herein shall not be construed to require the
incurrence of any non-routine or unreasonable expense or liability or the waiver
of any right.
7.5 Sharing of Participant Information. Crane and Huttig shall share,
Crane shall cause each applicable Crane Entity to share, and Huttig shall cause
each applicable Huttig Entity to share, with each other and their respective
agents and vendors (without obtaining releases) all participant information
necessary for the efficient and accurate administration of each of the Crane
Plans and the Huttig Plans. Crane and Huttig and their respective authorized
agents shall, subject to applicable laws on confidentiality, be given reasonable
and timely access to, and may make copies of, all information relating to the
subjects of this Agreement in the custody of the other party, to the extent
necessary for such administration. Until December 31, 2000, or such other date
as the parties may mutually agree, all participant information shall be provided
in a manner and medium that is compatible with the data processing systems of
Crane as in effect on the Close of the Distribution Date, unless otherwise
agreed to by Crane and Huttig.
ARTICLE VIII
MISCELLANEOUS
8.1 Effect if Distribution Does Not Occur. If the Distribution does not
occur, then all actions and events that are, under this Agreement, to be taken
or occur effective as of the Close of the Distribution Date, Immediately After
the Distribution Date, or otherwise in connection with the Distribution, shall
not be taken or occur except to the extent specifically agreed by Huttig and
Crane.
8.2 Relationship of Parties. Nothing in this Agreement shall be deemed
or construed by the parties or any third party as creating the relationship of
principal and agent, partnership or
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<PAGE> 18
joint venture between the parties, it being understood and agreed that no
provision contained herein, and no act of the parties, shall be deemed to create
any relationship between the parties other than the relationship set forth
herein.
8.3 Affiliates. Each of Crane and Huttig shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by a Crane Entity or a
Huttig Entity, respectively.
8.4 Governing Law. To the extent not preempted by applicable federal
law, this Agreement shall be governed by, construed and interpreted in
accordance with the laws of the State of Delaware, irrespective of the choice of
laws principles of the state of Delaware, as to all matters, including matters
of validity, construction, effect, performance and remedies.
8.5 Entire Agreement, Construction. This Agreement and the Ancillary
Agreements, including, without limitation, any annexes, schedules and exhibits
hereto or thereto, and other agreements and documents referred to herein and
therein, will together constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof and will supersede all prior
negotiations, agreements and understandings of the parties of any nature,
whether oral or written, with respect to such subject matter. In the event and
to the extent that there is a conflict between the provisions of this Agreement
and the provisions of the Distribution Agreement, the Transition Services
Agreement or the Tax Allocation Agreement, the provisions of this Agreement
shall control.
8.6 Expenses. Except as expressly set forth in this Agreement, all
costs and expenses incurred through the Close of the Distribution Date with
respect to any employee matters described herein shall be charged to and paid by
Crane. Except as otherwise set forth in this Agreement, all costs and expenses
incurred following the Distribution Date with respect to any employee matters
described herein shall be charged to and paid by the party for whose benefit the
expenses are incurred, with any expenses that cannot be allocated on such basis
to be split equally between the parties.
8.7 Notices. All notices, requests, claims, demands and other
communications required or permitted to be given hereunder will be in writing
and will be delivered by hand or telecopied or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service and
will be deemed given when so delivered by hand or telecopied, or three business
days after being so mailed (one business day in the case of express mail or
overnight courier service). All such notices, requests, claims, demands and
other communications will be addressed as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:
(a) If to Crane:
Crane Co.
100 First Stamford Place
Stamford, CT 06902
Attention: Augustus I. duPont
Telecopy: (203) 363-7350
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<PAGE> 19
(b) If to Huttig:
Huttig Building Products, Inc.
14500 South Outer Forty Road
Suite 400
Chesterfield, MO 63017
Attention: Gregory D. Lambert
Telecopy: (314) 216-2601
8.8 Consent to Jurisdiction. Each of Crane and Huttig irrevocably
submits to the exclusive jurisdiction of (i) the Court of Chancery in and for
the State of Delaware and the Superior Court in and for the State of Delaware
and (ii) the United States District Court for the District of Delaware, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated thereby (and agrees not to commence any action,
suit or proceeding relating thereto except in such courts). Each of Crane and
Huttig further agrees that service of any process, summons, notice or document
hand delivered or sent by U.S. registered mail to such party's respective
address set forth in Section 8.6 will be effective service of process for any
action, suit or proceeding in Delaware with respect to any matters to which it
has submitted to jurisdiction as set forth in the immediately preceding
sentence. Each of Crane and Huttig irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement in (i) the Court of Chancery in and for the State of Delaware
and the Superior Court in and for the State of Delaware or (ii) the United
States District Court for the District of Delaware, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
8.9 Amendments. This Agreement cannot be amended, modified or
supplemented except by a written agreement executed by Crane and Huttig.
8.10 Assignment. Neither party to this Agreement will convey, assign or
otherwise transfer any of its rights or obligations under this Agreement without
the prior written consent of the other party in its sole and absolute
discretion, except that other than as expressly provided herein any party may
(without obtaining any consent) assign any of its rights hereunder to a
successor to all or any part of its business. Any such conveyance, assignment or
transfer requiring the prior written consent of another party which is made
without such consent will be void ab initio. No assignment of this Agreement
will relieve the assigning party of its obligations hereunder.
8.11 Captions. The article, section and paragraph captions herein and
the table of contents hereto are for convenience of reference only, do not
constitute part of this Agreement and will not be deemed to limit or otherwise
affect any of the provisions hereof. Unless otherwise specified, all references
herein to numbered articles or sections are to articles and
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<PAGE> 20
sections of this Agreement and all references herein to annexes or schedules are
to annexes and schedules to this Agreement.
8.12 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and will in no way be
affected, impaired or invalidated thereby. If the economic or legal substance of
the matters contemplated hereby is affected in any manner adverse to any party
as a result thereof, the parties will negotiate in good faith in an effort to
agree upon a suitable and equitable substitute provision to effect the original
intent of the parties.
8.13 Parties in Interest. This Agreement is binding upon and is for the
benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not made for the benefit of any Person not a party
hereto, and no Person other than the parties hereto or their respective
successors and permitted assigns will acquire or have any benefit, right, remedy
or claim under or by reason of this Agreement.
8.14 Schedules. All annexes and schedules attached hereto are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Capitalized terms used in the schedules hereto but not otherwise defined
therein will have the respective meanings assigned to such terms in this
Agreement.
8.15 Waivers; Remedies. No failure or delay on the part of either Crane
or Huttig in exercising any right, power or privilege hereunder will operate as
a waiver thereof, nor will any waiver on the part of either Crane or Huttig of
any right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder, nor will any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. The
rights and remedies herein provided are cumulative and are not exclusive of any
rights or remedies which the parties may otherwise have at law or in equity.
8.16 Further Assurances. As and when requested by either party hereto,
the other party shall execute and deliver, or cause to be executed and
delivered, all such documents and instruments and shall take, or cause to be
taken, all such actions as the requesting party may reasonably request with
respect to the matters described herein.
8.17 Counterparts. This Agreement may be executed in separate
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts will together constitute the same agreement.
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<PAGE> 21
IN WITNESS WHEREOF, the parties have caused this Employee Matters
Agreement to be duly executed as of the day and year first above written.
CRANE CO.
By: /s/ R.S. Evans
-----------------------------------------
Title: Chairman & Chief Executive Officer
--------------------------------------
HUTTIG BUILDING PRODUCTS, INC.
By: /s/ Barry J. Kulpa
-----------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
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<PAGE> 1
Exhibit 10.3
HUTTIG BUILDING PRODUCTS, INC.
EVA INCENTIVE COMPENSATION PLAN
1. Purpose.
Huttig Building Products, Inc., a Delaware corporation (the "Company"),
has adopted an annual incentive compensation program based on the principles of
Economic Value Added ("EVA") throughout the Company. The purpose of the EVA
approach is to maximize stockholder value by aligning management's interests
with those of stockholders and rewarding management for sustainable and
continuous improvement in the business being managed.
The Company has created this EVA Incentive Compensation Plan (the
"Plan") for certain executive officers of the Company subject to the limitations
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and designated general managers and regional managers of the Company and its
subsidiaries (collectively, the "Participants" and individually, the
"Participant"). The Plan is intended to satisfy the specific requirements of
Section 162(m) of the Code, as outlined in regulations issued by the Internal
Revenue Service. This Plan shall become effective on December 16, 1999 (the
"Effective Date"). This Plan is intended to be, and shall be operated as, a
successor to Crane Co.'s EVA Incentive Compensation Plan (the "Prior Plan") with
respect to the participation of employees of the Company who were participating
in the Prior Plan prior to the Effective Date.
2. Administration.
The Plan will be administered by the Organization and Compensation
Committee of the Board of Directors (the "Committee"). The Committee's decisions
in the administration of the Plan shall be final and binding on all parties. The
Committee shall have the sole discretionary authority to interpret the Plan, to
establish and modify administrative rules for the Plan, to designate the
employees eligible to participate in the Plan, to establish and adjust any EVA
formula or calculation as provided in Sections 3 and 4, to impose such
conditions and restrictions on awards under the Plan as it determines
appropriate, and to take such steps in connection with the Plan and awards made
under the Plan as it may deem necessary or advisable. The Committee may employ
attorneys, consultants, accountants or other persons and the Committee and the
Company and its officers and directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All usual and reasonable
expenses of the Committee shall be paid by the Company. No Committee member
shall receive compensation with respect to his or her services for the Committee
except as may be authorized by the Board. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon all employees who have received awards, the Company and
all other interested persons. No member of the Committee shall be personally
liable for any action, determination or interpretation taken or made in good
faith with respect to this Plan or awards made hereunder, and all members of the
Committee shall be fully indemnified and protected by the Company in respect of
any such action, determination or interpretation.
<PAGE> 2
3. Definition of EVA and Description of Formulae.
EVA is defined as the difference between the return on total capital
invested in the business and the cost of capital, multiplied by total capital
employed ("EVA Calculation"). The Plan will be formula driven. The primary EVA
formula shall be for the Company as a whole but particular EVA formulas may be
tailored by the Committee to the size and unique characteristics of the business
unit or units for which a specific executive is responsible. The key elements of
the EVA formula applicable to any executive will be the Cost of Capital
(generally the cost of capital to the Company), the Return on Capital, the
Amount of Capital employed in the business unit, the net operating profit of the
unit after tax, and the prior year's EVA. Awards will be calculated on the basis
of year-end results.
Formulas may utilize both a percentage of the change in the EVA of the
Company or a business unit from the prior year, whether positive or negative,
plus a percentage of the positive EVA, if any, in the current year; the EVA
award may be calculated for the entire Company or an entire business unit and an
executive may receive a percentage of a unit's EVA award. When an executive is
responsible for more than one business unit, a formula may be based on a
percentage of the aggregate EVA, positive or negative, of the units reporting to
the executive or unit. The Committee has the discretion and authority to develop
other EVA based formulae or goals for utilization pursuant to this Plan in
future years. In any instance in which an executive participates in a unit EVA
award in which a group of employees participates, the executive's percentage of
the unit's EVA award will be specified.
4. Procedure.
Before the beginning of each fiscal year, the Committee will establish
and set forth in writing the EVA formula applicable to each Participant for that
year (including the percentage of any business unit EVA award in which he or she
may participate). The Committee will retain discretion to revise formulas or a
Participant's percentage participation in any unit EVA award if the Committee
deems it appropriate as circumstances develop during the year; provided,
however, in the case of an executive officer who is subject to the limitations
of Section 162(m) of the Code, such revision may only have a negative effect on
the amount of such executive officer's award for the year. As soon as is
reasonably practicable after the year ends, the Committee will review the EVA
calculation, calculate the EVA award for each Participant pursuant to the
formula established at the beginning of the year (revised downward if the
Committee so determines), and certify the EVA incentive compensation award for
each Participant to the Board of Directors; provided, however, that no EVA award
with respect to any executive officer who is subject to the limitations of
Section 162(m) of the Code may exceed $2,000,000 for any particular year.
5. Allocations to Participants' Bank Accounts Under the Plan.
a. General. Every year, the EVA award will be credited (if the
award is positive) or debited (if the award is negative) to the
Participant's account. Each
2
<PAGE> 3
Participant's account will consist of a cash subaccount and a stock
subaccount. Each year's EVA award will be allocated to the
Participant's account in accordance with the following provisions of
this Section 5.
b. Prior Plan Transfer. If the Participant has an EVA account
balance (either positive or negative) under the Prior Plan, such
account balance will be transferred to the Plan and become the
Participant's initial account balance under the Plan as of the
Effective Date.
c. 1999 EVA Award Allocation. As soon as administratively
practicable after each Participant's EVA award is determined for the
year ending December 31, 1999, each Participant's award will be
credited or debited, as the case may be, to the Participant's account.
Each Participant who has a positive EVA account balance (consisting of
any amount transferred from the Prior Plan under Section 5(b) and the
Participant's 1999 EVA award) may elect, on a one-time basis under
procedures established by the Committee, to allocate his or her
accumulated account balance as follows:
(i) 100% to the cash subaccount; or
(ii) 50% to the cash subaccount and 50% to the stock
subaccount.
If a Participant fails to make a valid election for the allocation of
his or her EVA account balance, 100% of the Participant's balance will
be allocated to the Participant's cash subaccount. If the Participant
elects to allocate 50% of his or her EVA account to a stock subaccount,
the stock allocated to such account will be subject to the provisions
of Section 7.
d. Subsequent Elections and Allocations. At the beginning of
each fiscal year commencing with fiscal year 2000, each Participant
will be entitled to make an election, on a form provided by the
Committee, with respect to the allocation of the EVA award that will be
determined under the formula established under Section 3 for that
fiscal year. The Participant may elect to allocate his or her EVA award
for that year as follows:
(i) 100% to the cash subaccount; or
(ii) 50% to the cash subaccount and 50% to the stock
subaccount.
If a Participant fails to make a valid election for the allocation of
his or her EVA award for a particular year, 100% of the Participant's
EVA award for that year will be allocated to the Participant's cash
subaccount. After the EVA award for each Participant is determined, the
EVA award will be allocated in accordance with the Participant's
applicable election; provided, however, that if the Participant's EVA
award for a particular year is negative, the award will be debited to
the Participant's cash subaccount only and only in proportion to the
Participant's allocation election. In other words, if the
3
<PAGE> 4
Participant's EVA award is negative and the Participant elected an
allocation of 50% of the award to his or her cash subaccount and 50% to
his or her stock subaccount, 50% of the negative EVA award will be
debited to the Participant's cash subaccount and the remaining 50% will
be ignored. If any of a Participant's EVA award is allocated to the
Participant's stock subaccount under the Participant's election, the
stock allocated to such account will be subject to the provisions of
Section 7.
e. Other Credits and Debits to Participants' Accounts. Each
year, the Company will credit interest to a positive cash subaccount
balance or debit interest on a negative cash subaccount balance at an
appropriate money market rate.
6. Annual Payout.
Each year, as soon as administratively practicable after each Participant's EVA
award has been determined and allocated to his or her account under Section 5,
each Participant with a positive cash subaccount balance will receive a payout
of a specified percentage of his or her cash subaccount, with the standard
payout percentage being one-third (1/3) of such balance. The remainder of the
account balance will represent the Participant's "equity" in his or her EVA cash
subaccount for future years. If EVA awards are or have been negative, a cash
subaccount balance may be negative. In such case, the Participant will receive
no payout under the Plan until the aggregate of subsequent EVA awards results in
a positive cash subaccount balance.
7. Provisions Relating to Stock Subaccounts.
a. Allocation of Stock to the Stock Subaccount. With respect
to each amount allocated to a Participant's stock subaccount under
Section 5(c) or Section 5(d), the Participant's stock subaccount will
be credited with a number of shares of the Company's common stock equal
to the dollar amount of such allocation (i.e., 50% of the Participant's
account balance for allocations under Section 5(c) and 50% of the
Participant's EVA award for a particular year for allocations under
Section 5(d)) divided by the fair market value of the Company's common
stock. For purposes of the Plan, "fair market value" means the average
of the high and low trading prices of the Company's common stock on the
New York Stock Exchange on the ten (10) consecutive trading days ending
on the date of the allocation or the most recent prior date on which
the Company's common stock was traded. No fractional shares will be
credited to a Participant's stock subaccount; rather, any dollar amount
of the Participant's allocation representing a fractional amount of the
per share fair market value of the Company's common stock will be
credited to the Participant's cash subaccount.
b. Restricted Stock. Shares of Company common stock allocated
to a Participant's stock subaccount for a particular year will be
issued as restricted stock issued under and generally subject to the
provisions of the Company's 1999 Stock Incentive Plan. Pursuant to
those provisions, each Participant will be required to enter into a
restricted stock agreement with the Company with respect to stock
allocated to his or her stock subaccount for a particular year.
4
<PAGE> 5
c. Vesting of Restricted Stock. The restricted shares of
Company common stock issued to a Participant under Section 7(b) will
vest over a period of two years as follows:
(i) 50% on the first anniversary of the allocation date;
and
(ii) the remaining 50% on the second anniversary of the
allocation date.
d. Custody. During the period prior to the full vesting of any
common stock allocated to a Participant's stock subaccount, the
Company, or its designee, will hold the share certificates representing
such common stock in custody for the benefit of the Participant.
e. Effect of Negative EVA Awards. In accordance with the
provisions of Section 5(c), negative EVA awards in any year will have
no effect on any Participant's stock subaccount or on the shares of
restricted stock issued under this Section 7.
8. Treatment of Participants' Accounts Upon Termination of Employment or
Other Events.
a. General. If a Participant leaves the Company by reason of
termination or resignation or ceases to be eligible to participate in
the Plan, his or her account balance will be treated as follows:
<TABLE>
<CAPTION>
EVENT DISPOSITION OF ACCOUNT BALANCE/RESTRICTED SHARES
----- ------------------------------------------------
<S> <C>
- Terminate/quit Lose cash subaccount balance; forfeit unvested
restricted shares
- Removed from plan/demotion Cash subaccount balance paid out in two
equal installments on the second and third
succeeding EVA payout dates; restricted
shares continue to vest
- Unit sold by Huttig Receive cash subaccount balance in cash; all
restricted shares become fully vested
- Retirement(1)/death/disability Receive cash subaccount balance in cash; all
restricted shares become fully vested
- Unit spun off No payout; cash subaccount balance continued
with spun off company; all restricted shares
become fully vested
</TABLE>
- -----------------------
(1) Retirement is defined as normal retirement - age 65
5
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
- Huttig acquired Receive cash subaccount balance in cash; all
restricted shares become fully vested
- Transfer to another business unit Cash subaccount balance transfers with
executive; restricted shares continue to vest
</TABLE>
b. Acceleration of Distribution. The Participant's entire cash
subaccount balance will become payable and his or her restricted stock
will fully vest upon normal retirement (age 65), death, or disability,
or a change-in-control. (The Committee will retain the discretion to
pay the entire account balance upon early retirement.).
c. Definition of Change in Control. For purposes of the Plan,
the term "change in control" means (i) the first purchase of shares
pursuant to a tender offer or exchange offer (other than a tender offer
or exchange offer by the Company) for all or part of the Company's
Common Stock or any securities convertible into such Common Stock, (ii)
the receipt by the Company of a Schedule 13D or other advice indicating
that a person is the "beneficial owner" (as that term is defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of 20% or more of the Company's Common Stock
calculated as provided in paragraph (d) of said Rule 13d-3, (iii) the
date of approval by stockholders of the Company of an agreement
providing for any consolidation or merger of the Company in which the
Company will not be the continuing or surviving corporation or pursuant
to which shares of Common Stock of the Company would be converted into
cash, securities or other property, other than a merger of the Company
in which the holders of Common Stock of the Company immediately prior
to the merger would have the same proportion of ownership of Common
Stock of the surviving corporation immediately after the merger, (iv)
the date of the approval by stockholders of the Company of any sale,
lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the
Company or (v) the adoption of any plan or proposal for the liquidation
(but not a partial liquidation) or dissolution of the Company or (vi)
individuals who, as of the Effective Date, constituted the Board of
Directors of the Company (the "Board") generally and as of the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination
for election by the Company's stockholders, was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board
(other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of Company,
as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of this Plan, considered
as though such person were a member of the Incumbent Board.
6
<PAGE> 7
d. Tax Gross-Up. If it is determined that any payment of an
account by the Company to a Participant by reason of a change-in-
control is subject to the excise tax imposed by Section 4999 of the
Code, the Company shall make additional cash payments to the
Participant such that after payment of all taxes including any excise
tax imposed on such payments, the Participant will retain an amount
equal to the excise tax on all the payments.
9. Plan Amendment and Termination.
The Board of Directors may modify, suspend or terminate the Plan at any
time.
7
<PAGE> 1
Exhibit 10.4
RESTRICTED STOCK AGREEMENT-
HUTTIG BUILDING PRODUCTS, INC. 1999 STOCK INCENTIVE PLAN
_______________, 2000
The parties to this Restricted Stock Agreement (the "Agreement") are
Huttig Building Products, Inc., a Delaware corporation (the "Corporation") and
__________, an employee of the Corporation (the "Participant").
Pursuant to the terms of the Huttig Building Products, Inc. EVA
Incentive Compensation Plan (the "EVA Plan"), the Participant has elected to
allocate 50% of the Participant's account balance under the EVA Plan to
restricted Huttig common stock. According to such election and the terms of the
EVA Plan, the Corporation, through the Organization and Compensation Committee
of its Board of Directors (the "Committee"), has determined to award to the
Participant _____ shares of restricted stock subject to the terms of the Huttig
Building Products, Inc. 1999 Stock Incentive Plan (the "Plan"), as of the date
of this Agreement (the "Grant Date").
As a condition to such award and pursuant to Section 8(a) of the Plan,
the Corporation and the Participant hereby enter into this Agreement and agree
to the terms and conditions set forth herein.
1. DEFINITIONS.
Capitalized terms in this Agreement not otherwise defined herein shall
have the meanings contained in the Plan. For purposes of this Agreement, and for
purposes of interpreting the terms of the Plan, the following terms shall have
the following meanings:
(a) "Restriction Period" shall mean a period commencing on the
Grant Date and ending on ____________, 2002.
(b) "Change-in-Control" shall have the meaning set forth in
Section 8(c) of the EVA Plan.
2. AWARD OF HUTTIG SHARES.
Pursuant to the provisions of the Plan and this Agreement and by the
authority of the Committee, the Corporation awards _____ shares (the "Restricted
Stock") of Huttig Building Products, Inc. common stock, par value $.01 per share
("Huttig Shares"), to the Participant.
3. RESTRICTIONS AND RIGHTS.
(a) During the Restriction Period, the Restricted Stock is subject
to forfeiture in the event that the Participant attempts to
sell, transfer, assign or pledge the Restricted Shares (the
"Restrictions") or the Participant violates one of the
covenants contained in Section 6 of this Agreement. Except as
provided under Section 5 of
<PAGE> 2
this Agreement, the Restrictions on the Restricted Stock shall
automatically lapse:
(i) upon expiration of the Restriction Period;
(ii) in the event of the Participant's Retirement,
Permanent Disability, or death or in the event of a
Change-in-Control; provided, however, that in the
event the Participant requests early retirement or
otherwise leaves the employ of the Corporation, the
Committee may, upon the Participant's request and in
the Committee's sole discretion, waive or revise this
provision to permit the lapse of Restrictions on all
or a portion of the Restricted Stock awarded
hereunder on or prior to such early retirement or
other departure from the employ of the Corporation;
or
(iii) with respect to 50% of the Restricted Stock, on the
first anniversary of the Grant Date;
(iv) as may be otherwise provided under the terms of the
Plan or the EVA Plan.
(b) During the Restriction Period, the Participant will be
entitled to all other rights of a shareholder of the
Corporation with respect to the Restricted Stock, including
the right to vote the Restricted Stock and receive dividends
and other distributions thereon.
4. STOCK CERTIFICATE.
Each stock certificate evidencing an award of Restricted Stock shall be
registered in the name of the Participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such award
substantially in the following form (the "Legend"):
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Huttig Building Products, Inc. 1999 Stock Incentive
Plan and an Agreement entered into between the registered owner and
Huttig Building Products, Inc. Copies of such Plan and Agreement are on
file in the offices of Huttig Building Products, Inc., Lakeview Center,
Suite 400, 14500 South Outer Forty Road, Chesterfield, MO 63017."
5. TERMINATION OF EMPLOYMENT.
Except as otherwise provided in Section 8(a) of the EVA Plan, the
Participant's termination of employment during the Restriction Period shall
result in the forfeiture of all Restricted Stock as to which the Restrictions
have not lapsed, and the Participant shall be required to return all applicable
stock certificates to the Corporation.
-2-
<PAGE> 3
6. COVENANTS.
(a) The Participant agrees to be bound by all terms and provisions
of the Plan and the EVA Plan, and all such provisions shall be
deemed a part of this Agreement for all purposes.
(b) The Participant agrees to provide the Corporation, when and if
requested, with any information or documentation which the
Corporation believes necessary or advisable in connection with
the administration of the Plan, including data required to
assure compliance with the requirements of the Securities and
Exchange Commission, of any stock exchange upon which the
Huttig Shares are then listed, or of any applicable federal,
state or other law.
(c) The Participant agrees, upon due notice and demand, to
promptly pay to the Corporation the cash amount of any taxes
which are required to be withheld by the Corporation either at
the time the Restriction Period lapses or at the time of award
(in cases where the Participant duly elects to be taxed at
such earlier time); provided, however, the Corporation, in its
sole discretion, may accept Restricted Stock awarded hereunder
or Huttig Shares otherwise previously acquired in satisfaction
thereof.
7. NO COVENANT OF EMPLOYMENT.
Neither the execution and delivery of this Agreement nor the granting
of any award evidenced by this Agreement shall constitute, or be evidence of,
any agreement or understanding, express or implied, on the part of the
Corporation or any of its subsidiaries to employ the Participant for any
specific period.
8. ADMINISTRATION AND INTERPRETATION OF PLAN AND AGREEMENT.
In the event of any conflict between the terms of this Agreement and
those of the Plan or the EVA Plan, the provisions of the Plan or the EVA Plan,
as the case may be, shall prevail.
The Committee shall have full authority and discretion, subject only to
the terms of the Plan, to decide all matters relating to the administration or
interpretation of the Plan and this Agreement, and all such action by the
Committee shall be final, conclusive, and binding upon the Corporation and the
Participant. The Committee shall have full authority and discretion to modify at
any time the Restriction Period, the Restrictions, the other terms and
conditions of this Agreement, the Legend and any other instrument evidencing
this award, provided that no such modification shall increase the benefit under
such award beyond that which the Committee could have originally granted at the
time of the award, or shall impair the rights of the Participant under such
award except in accordance with the Plan, or any applicable agreement or
applicable law, or with consent of the Participant.
-3-
<PAGE> 4
This Restricted Stock Agreement is deemed to be issued in, the award
evidenced hereby is deemed to be granted in, and both shall be governed by the
laws of, the State of Delaware. There have been no representations to the
Participant other than those contained herein.
9. DELIVERY.
All certificates for Restricted Stock delivered under the Plan shall be
subject to such stop-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which Huttig Shares
are then listed and any applicable federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
The stock certificates evidencing the Restricted Stock shall be held in
custody by the Corporation or its designee until the Restrictions thereon shall
have lapsed and the Committee may require, as a condition of any award, that the
Participant shall have delivered a stock power endorsed in blank relating to the
Restricted Stock covered by such award.
As soon as administratively practicable following the lapse of the
Restrictions with respect to any of the Restricted Stock without a forfeiture,
and upon the satisfaction of all other applicable conditions as to the
Restricted Stock, including, but not limited to, the payment by the Participant
of all applicable withholding taxes, the Corporation shall deliver or cause to
be delivered to the Participant a certificate or certificates for the applicable
Restricted Stock which shall not bear the Legend required under Section 4 of the
Agreement.
10. AMENDMENT.
The terms of this Agreement shall be subject to the terms of the Plan
and the EVA Plan as those Plans may be amended from time to time by the Board of
Directors of the Corporation unless any such amendment by its terms or by its
clear intent is inapplicable to this Agreement.
11. NOTICE.
Any notice to the Corporation provided for in this Agreement shall be
in writing and addressed to it in care of the Secretary of the Corporation, and
any notice to the Participant shall be in writing and addressed to the
Participant at the address contained in payroll records at the time or to such
other address designated in writing by the Participant.
IN WITNESS WHEREOF, the parties have executed this Restricted Stock
Agreement effective the day and year first above written.
HUTTIG BUILDING PRODUCTS, INC.
By:_________________________________
Title:______________________________
PARTICIPANT
____________________________________
-4-
<PAGE> 1
Exhibit 10.6
FORM OF STOCK OPTION AGREEMENT
HUTTIG BUILDING PRODUCTS, INC.
1999 STOCK INCENTIVE PLAN
1. GRANT OF OPTION
Huttig Building Products, Inc. (the "Company") hereby grants to the
recipient of the letter of the Chairman and/or Secretary of the Company
("Letter") to which this Annex A is attached ("Employee"), and the Employee
accepts, an option (the "Option") to purchase from the Company, the number of
shares of Huttig Building Products, Inc. common stock, $.01 par value per share
("Common Stock"), at the option price set forth in the Letter. The Letter and
this Annex A together constitute the stock option agreement between the parties
(the "Agreement"). Except as otherwise expressly provided herein, the Option is
subject to the terms and provisions of the Huttig Building Products, Inc. 1999
Stock Incentive Plan (the "Plan"). The Option is hereby designated as a
non-qualified stock option that does not qualify as an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended.
2. TERM OF OPTION; EXERCISABILITY
The Option shall be exercisable in whole or in part (in lots of ten
shares or any multiple thereof) from time to time beginning from the date
hereof, subject to the provision that an Option may not be exercised by the
Employee, except as provided in paragraphs 4 and 5 hereof, (a) more than 90 days
after the termination of his employment by the Company or a subsidiary, or more
than 10 years from the date the Option is granted, whichever period is shorter,
or (b) prior to the expiration of one year from the date of grant as indicated
in the Letter, and provided further that the Option may not be exercised in
excess of 50% of the total shares subject to the Option during the second year
after the date of grant, 75% during the third year and 100% thereafter during
the remainder of the Option term. Notwithstanding the foregoing, the Option will
be exercisable in full prior to the date indicated in the preceding sentence as
of the date that the average of the high and low sales prices of the Common
Stock over any 10 consecutive trading days equals or exceeds $8.58 PER SHARE.
3. FORM OF EXERCISE
The purchase price of the shares purchased upon the exercise of the
Option shall be paid in full at the time of exercise in cash or in whole or in
part by tendering (either actually or by attestation) shares of Common Stock;
provided, however that if shares acquired pursuant to this Option or any other
option granted under a stock compensation plan of the Company are utilized to
pay such purchase price, such shares must have been acquired by the Employee
more than six months prior to the exercise of this Option (or held for such
other period of time as the Organization and Compensation Committee of the Board
of Directors of the Company (the
<PAGE> 2
"Committee") may establish). The value of each share delivered in payment of all
or part of the purchase price upon the exercise of the Option shall be the Fair
Market Value of the Common Stock on the date the Option is exercised. The Option
may also be exercised in accordance with a cashless exercise program under
which, if so instructed by the Employee, shares of Common Stock may be issued
directly to the Employee's broker or dealer upon receipt of an irrevocable
written notice of exercise from the Employee. The Committee, upon such terms and
conditions as it shall deem appropriate, may (but shall not be obligated to)
authorize the acceptance of the surrender of the right to exercise the Option or
a portion thereof (but only to the extent and in the amounts that the Option
shall then be exercisable) and payment by the Company of an amount equal to the
excess of the Fair Market Value on the date of surrender of the shares of Common
Stock covered by such Option, or portion thereof, over the aggregate option
price of such shares. Such payment shall be made in shares of Common Stock
(valued at such Fair Market Value), or in cash, or partly in cash and partly in
Common Stock, as the Committee shall determine. For the purposes of this
Agreement, the term "Fair Market Value" as of any day shall mean the average of
the highest and lowest prices of the Common Stock on the New York Stock
Exchange-Composite Transaction Tape on the 10 consecutive trading days ending on
such day or, if no sale of such Common Stock has been recorded on such day, on
the next preceding date on which a sale was so made.
4. EXERCISE UPON TERMINATION OF EMPLOYMENT
If the Employee's employment with the Company or one of its
subsidiaries terminates due to permanent disability (as determined by the
Committee) or the Employee's retirement on or after reaching age 65, or after a
Change In Control (as defined below), the Employee may exercise this Option, in
whole or in part, whether or not previously exercisable, and/or the Committee
may authorize the acceptance of the surrender of the right to exercise this
Option or any portion thereof as provided in paragraph 3, at any time within 90
days after such termination due to permanent disability or retirement, or
termination after a Change In Control, but not after the expiration of the term
of this Option.
If the Employee's employment is terminated for any reason other than
death, disability or retirement or after a Change In Control, this Option may be
exercised in whole or in part, at any time within 90 days after such termination
of employment, but only to the extent this Option is vested and exercisable at
the date of termination in accordance with Paragraph 2, and in any event, not
later than the expiration of the term of this Option.
For purposes of this Agreement, the term "Change In Control" shall mean
(i) the first purchase of shares pursuant to a tender offer or exchange offer
(other than a tender offer or exchange offer by the Company) for all or part of
the Company's Common Stock or any securities convertible into such Common Stock,
(ii) the receipt by the Company of a Schedule 13D or other advice indicating
that a person is the "beneficial owner" (as that term is defined in Rule 13d-3
under the Securities Exchange Act of 1934) of 20% or more of the Company's
Common Stock calculated as provided in paragraph (d) of said Rule 13d-3, (iii)
the date of approval by stockholders of the Company of an agreement providing
for any consolidation or merger of the Company in which the Company will not be
the continuing or surviving
-2-
<PAGE> 3
corporation or pursuant to which shares of Common Stock of the Company would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of Common Stock of the Company immediately prior to
the merger would have the same proportion of ownership of common stock of the
surviving corporation immediately after the merger, (iv) the date of the
approval by stockholders of the Company of any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the Company, (v) the adoption of any plan or
proposal for the liquidation (but not a partial liquidation) or dissolution of
the Company or (vi) the date upon which the individuals who constitute the Board
of Directors as of December 16, 1999 (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of Directors, provided
that any person becoming a director subsequent to such date whose election, or
nomination for election by the Company's stockholders, was approved by the vote
of at least three-quarters of the directors comprising the Incumbent Board
(other than an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of
1934) shall, for purposes of the Plan, be considered as though such person were
a member of the Incumbent Board.
5. DEATH
If the Employee shall die while employed by the Company or a subsidiary
or within 90 days of the cessation or termination of such employment due to
permanent disability or retirement, or termination after a Change In Control as
described in paragraph 4, this Option may be exercised, in whole or in part,
whether or not previously exercisable, and/or the Committee may authorize the
acceptance of the surrender of the right to exercise such Option or any portion
thereof as provided in paragraph 3, by the estate of such Employee (or by a
person who shall have acquired the right to exercise such Option by bequest or
inheritance), at any time within one year after the death of such Employee, but
not after the expiration of the term of the Option.
6. DELIVERY OF STOCK CERTIFICATES
The obligation of the Company to sell and deliver shares of Common
Stock under this Option shall be subject to, as deemed necessary or appropriate
by counsel for the Company, (i) all applicable laws, rules and regulations and
such approvals by any governmental agencies as may be required, including,
without limitation, the effectiveness of a Registration Statement under the
Securities Act of 1933, and (ii) the condition that such shares shall have been
duly listed on such stock exchanges as the Common Stock is then listed.
7. ASSIGNMENT AND TRANSFER
The Option shall not be transferable by the Employee otherwise than by
will or the laws of descent and distribution, and shall be exercisable, during
his lifetime, only by him, except that the Option may be transferable, without
payment of consideration, to immediate family members of the Employee or to
trusts or partnerships for the benefit of such family members. Except as
provided herein, neither this Option nor the rights appurtenant hereto shall be
subject to
-3-
<PAGE> 4
execution, attachment or similar process. Any attempt by the Employee to assign,
pledge, hypothecate or otherwise dispose of this Option or of any right or
privilege conferred hereby contrary to the provisions of this Agreement, shall
be null and void, and the Company shall have the right, at its option, to
declare this Agreement and the rights and privileges hereby conferred
immediately terminated.
8. ADJUSTMENT OF OPTION
In the event that there is an increase in the number of issued shares
of Common Stock by reason of any stock dividend, stock split, recapitalization
or other similar event, the total number of shares subject to purchase under
this Option shall be increased and the price per share shall be decreased, in
proportion to such increase in issued shares. Conversely, in case the issued
shares of Common Stock shall be combined into a smaller number of shares, the
total number of shares remaining subject to purchase under this Option shall be
decreased and the price per share of such outstanding Options shall be
increased, in proportion to such decrease in issued shares. In the event of any
merger, consolidation, reorganization or liquidation in part or in whole, the
Committee may make such adjustment in the number of shares subject to this
Option and the price thereof as the Committee, in its reasonable discretion,
deems appropriate. In the event of an exchange of Common Stock, or other
securities of the Company convertible into Common Stock, for the stock or
securities of another corporation, the Committee may, in the exercise of its
sole discretion, equitably substitute such new stock or securities for a portion
or all of the shares of Common Stock then subject to this Option.
9. WITHHOLDING TAXES
The Employee shall pay to the Company in cash the amount of any taxes
which the Company is required to withhold upon the exercise of this Option,
provided that the Company may, in accordance with such rules as the Committee
may from time to time adopt, accept shares of Common Stock received in
connection with the exercise of this Option being taxed or otherwise previously
acquired in satisfaction of such withholding requirements or up to the entire
tax liability arising from the exercise of such Option.
10. GENERAL
Except as otherwise expressly set forth in this Agreement, any notice
required to be given to the Employee shall be sent to the address of the
Employee as the same appears on the records of the Company, or at such other
address as the Employee may hereafter designate in writing, and all notices
required to be given to the Company shall be addressed to the Secretary of the
Company at the address set forth in the Letter. Any such notice shall be deemed
to be duly given if and when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, registered and deposited, postage and registry fee
prepaid, in a post office or branch post office regularly maintained by the
United States.
The Employee shall not be deemed for any purpose to be a stockholder of
the Company in respect of any shares as to which the Option shall not have been
exercised as herein provided.
-4-
<PAGE> 5
Nothing in this Agreement shall confer upon the Employee any right to
continue in the employ of the Company or shall affect the right of the Company
to terminate the employment of the Employee, with or without cause.
Nothing in this Agreement or otherwise shall obligate the Company to
permit the Option to be exercised other than in accordance with the terms hereof
or to grant any waivers of the terms of this Agreement, regardless of what
actions the Company, the Board of Directors or the Committee may take or waivers
the Company, the Board of Directors or the Committee may grant under the terms
of or with respect to any options now or hereafter granted to any other person
or any other options granted to the Employee.
This Agreement shall be governed by the laws of the State of Delaware
applicable to agreements made and performed wholly within the State of Delaware
(regardless of the laws that might otherwise govern under applicable conflicts
of laws principles).
This Agreement sets forth a complete understanding between the parties
with respect to its subject matter and supersedes all prior and contemporaneous
agreements and understandings with respect thereto. Any modification, amendment
or waiver to this Agreement will be effective only if it in writing signed by
the Company and the Employee. The failure of any party to enforce at any time
any provision of this Agreement shall not be construed to be a waiver of that or
any other provision of this Agreement.
In the event of any conflict between the terms of this Agreement and
the terms of the Plan, as amended from time to time, the terms of such Plan
shall be controlling.
-5-
<PAGE> 1
Exhibit 10.7
Schedule to Stock Option Agreement under the Company's Stock Incentive Plan.
<TABLE>
<CAPTION>
Option Holder Number of Shares Exercise Price Date of Grant
<S> <C> <C> <C>
David Dean 6,000 $4.29 per share January 24, 2000
George M. Dickens, Jr. 34,000 $4.29 per share January 24, 2000
R. S. Evans 100,000 $4.29 per share January 24, 2000
Daniel J. Geller 20,000 $4.29 per share January 24, 2000
Clifford T. Gordon 15,500 $4.29 per share January 24, 2000
Barry J. Kulpa 326,000 $4.29 per share January 24, 2000
Gregory D. Lambert 65,000 $4.29 per share January 24, 2000
Carl A. Liliequist 39,000 $4.29 per share January 24, 2000
Paul W. Lyle 34,000 $4.29 per share January 24, 2000
Stokes Ritchie 21,000 $4.29 per share January 24, 2000
</TABLE>
<PAGE> 1
Exhibit 10.9
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of ___________, between Crane Co., a Delaware
corporation (the "Company"), and (NAME) (Indemnitee").
WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors and officers of
public companies at a time when it has become increasingly difficult to obtain
adequate insurance coverage at reasonable costs;
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner, the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses to Indemnitee
to the full extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company's directors' and officers'
liability insurance policies, regardless of any future change in the Certificate
of Incorporation, Bylaws, composition of the Board of Directors, or structure of
the Company;
NOW, THEREFORE, in consideration of the premises and of Indemnitee's
service to the Company, directly or indirectly, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. In the event Indemnitee was, is, or becomes a party to or a witness
or other participant in, or is threatened to be made a party to or a witness or
other participant in, any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether conducted by the Company or
any other party, that Indemnitee in good faith believes might lead to any such
action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise ("Claim") by reason of (or arising in part out of)
the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the Company as
a director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, or by reason of anything done or not done by Indemnitee in any such
capacity (an "Indemnifiable Event"), the Company shall indemnify Indemnitee to
the full extent permitted by law (the determination of which shall be made by
the Reviewing Party referred to below) as soon as practicable but in any event
no later than thirty days after written demand is presented to the Company,
against any and all expenses (including attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with investigating,
preparing for and defending or participating in the defense of (including on
appeal) any Claim relating to any Indemnifiable Event) (collectively
"Expenses"), judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such judgments, fines, penalties or amounts
paid in settlement) of such Claim and, if so requested by Indemnitee, the
Company shall advance (within two business days of such request) any and all
such Expenses to Indemnitee; provided, however, that (i) the foregoing
obligation of the Company shall not apply to a Claim that was commenced by the
Indemnitee
<PAGE> 2
without the prior approval of the Board of Directors of the Company unless the
Claim was commenced after a Change in Control (as defined in Section 5 herein);
(ii) the foregoing obligation of the Company shall be subject to the condition
that an appropriate person or body (the "Reviewing Party") shall not have
determined (in a written opinion in any case in which the special, independent
counsel referred to in Section 4 hereof is involved) that Indemnitee would not
be permitted to be indemnified for such Expenses under applicable law; and (iii)
if, when and to the extent that the Reviewing Party determines that Indemnitee
would not be permitted to be indemnified for such Expenses under applicable law,
the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees
to reimburse the Company) for all such amounts theretofore paid (unless
Indemnitee has commenced legal proceedings in a court of competent jurisdiction
to secure a determination that Indemnitee should be indemnified under applicable
law, in which event Indemnitee shall not be required to so reimburse the Company
until a final judicial determination requiring such reimbursement is made with
respect thereto as to which all rights of appeal therefrom have been exhausted
or lapsed) and the Company shall not be obligated to indemnify or advance any
additional amounts to Indemnitee under this Agreement (unless there has been a
determination by a court of competent jurisdiction that the Indemnitee would be
permitted to be so indemnified or entitled to such expense advances under
applicable law).
2. If there has not been a Change in Control of the Company (as
hereinafter defined), the Reviewing Party shall be (1) a quorum of the Board of
Directors consisting of directors who are not parties to the action, suit or
proceeding acting by majority vote, or (2) if such a quorum is not obtainable,
or, even if obtainable, a quorum of disinterested directors so directs,
independent legal counsel by the use of a written opinion or (3) the
stockholders. If there has been a Change in Control of the Company, the
Reviewing Party shall be the special, independent counsel referred to in Section
4 hereof.
3. If Indemnitee has not been indemnified by the expiration of the
foregoing thirty-day period or received expense advances or if the Reviewing
Party determines that Indemnitee would not be permitted to be indemnified or be
entitled to receive expense advances within two days of the request therefor in
whole or in part under the applicable law, Indemnitee shall have the right to
commence litigation seeking from the court a finding that Indemnitee is entitled
to indemnification and expense advances or enforcement of Indemnitee's
entitlement to indemnification and expense advances or challenging any
determination by the Reviewing Party or any aspect thereof that Indemnitee is
not entitled to be indemnified or receive expense advances and the burden of
proving that indemnification or advancement of expenses is not appropriate shall
be on the Company; any determination by the Reviewing Party in favor of
Indemnitee shall be conclusive and binding on the Company, unless facts supplied
by Indemnitee which form the basis for the determination are subsequently
determined to have been materially incorrect at the time supplied. Indemnitee
agrees to bring any such litigation in any court in the states of New York or
Delaware having subject matter jurisdiction thereof and in which venue is
proper, and the Company hereby consents to service of process and to appear in
any such proceeding.
<PAGE> 3
4. The Company agrees that if there is a Change in Control of the
Company (as hereinafter defined), then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments and expense
advances under this Agreement or any other agreement or Bylaws now or hereafter
in effect relating to Claims for Indemnifiable Events, the Company shall seek
legal advice only from special, independent counsel selected by Indemnitee who a
majority of the disinterested Directors approves (which approval shall not be
unreasonably withheld), and who has not otherwise performed services for the
Company or Indemnitee. Such counsel, among other things, shall determine whether
and to what extent Indemnitee is permitted to be indemnified or is entitled to
expense advances under applicable law and shall render its written opinion to
the Company and Indemnitee to such effect. The Company agrees to pay the
reasonable fees of the special, independent counsel referred to above and to
fully indemnify such counsel against any and all expenses (including attorneys'
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto except for willful misconduct or
gross negligence.
5. For purposes of this Agreement, (a) "Change in Control of the
Company" shall be deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d)(3) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, is or becomes the beneficial owner (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of the
Company's then outstanding securities, or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 80% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or if the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
6. To the extent Indemnitee is successful in such proceeding, the
Company shall indemnify Indemnitee against any and all expenses (including
attorneys' fees) which are incurred by the Indemnitee in connection with any
claim asserted or action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement or Company Bylaws now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined
<PAGE> 4
to be entitled to such indemnification, advance payment of Expenses or insurance
recovery, as the case may be.
7. If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the Expenses, judgments,
fines, penalties and amounts paid in settlement of any Claim but not, however,
for all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in the defense of any
Claim relating in whole or in part to any Indemnifiable Event or in defense of
any issue or matter therein, including dismissal without prejudice, Indemnitee
shall be indemnified against all Expenses incurred in connection therewith.
8. For purposes of this Agreement, the termination of any Claim by
judgment, order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
Indemnitee is not entitled to indemnification or expense advance or that
indemnification or expense advance is not permitted by applicable law.
9. The Company represents that it presently has in force and effect
Directors' and Officers' Liability Insurance on behalf of Indemnitee against
certain customary liabilities which may be asserted against or incurred by
Indemnitee. The Company hereby agrees that, so long as Indemnitee shall continue
to serve in a capacity referred to in Section 1 hereof, and thereafter so long
as Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Indemnitee served in any capacity
referred to in Section 1 hereof, the Company shall purchase and maintain in
effect for the benefit of Indemnitee such insurance providing, in all respects,
coverage at least comparable to that presently provided; provided, however, if,
in the business judgment of the then Board, either (a) the premium cost for such
insurance is substantially disproportionate to the amount of coverage, or (b)
the coverage provided by such insurance is so limited by exclusions that there
is insufficient benefit from such insurance, then and in that event the Company
shall not be required to maintain such insurance but shall and hereby agrees to
the full extent permitted by law to hold harmless and indemnify Indemnitee to
the fullest extent of the coverage which would otherwise have been provided for
the benefit of Indemnitee.
10. (a) In the event of any changes after the date of this Agreement in
any applicable law, statute, or rule which expands the right of the Company to
indemnify a person serving in a capacity referred to in Section 1 hereof, such
change shall be within the purview of Indemnitee's rights, and the Company's
obligations, under this Agreement. In the event of any changes in any applicable
law, statute, or rule which narrow the right of the Company to indemnify a
person serving in a capacity referred to in Section 1 hereof, such changes, to
the extent not otherwise required by such law, statute or rule to be applied to
this Agreement, shall have no effect on this Agreement or the parties' rights
and obligations hereunder.
<PAGE> 5
(b) The indemnification provided by this Agreement shall not
be deemed exclusive of any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of
stockholders or disinterested directors, laws and regulations in effect now or
in the future, or otherwise, both as to action in Indemnitee's official capacity
and as to action in another capacity while holding such office.
11. If the indemnification provided in Section 1 is unavailable and may
not be paid to Indemnitee because such indemnification is not permitted by law,
then in respect of any threatened, pending or completed action, suit or
proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such action, suit or proceeding), the Company shall contribute to
the full extent permitted by law, to the amount of expenses, judgments, fines
(including excise taxes and penalties) and amounts paid in settlement actually
and reasonably incurred and paid or payable by Indemnitee in such proportion as
is appropriate to reflect (i) the relative benefits received by the Company on
the one hand and Indemnitee on the other hand from the transaction from which
such action, suit or proceeding arose, and (ii) the relative fault of the
Company on the one hand and of Indemnitee on the other in connection with the
events which resulted in such expenses, judgments, fines or settlement amounts,
as well as any other relevant equitable considerations. The relative fault of
the Company on the one hand and of Indemnitee on the other shall be determined
by reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such expenses, judgments, fines or settlement amounts. The Company
agrees that it would not be just and equitable if contribution pursuant to this
paragraph were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.
12. All obligations of the Company contained herein shall continue
during the period Indemnitee serves in a capacity referred to in Section 1
hereof of the Company and shall continue thereafter so long as Indemnitee shall
be subject to any possible Claim relating to an Indemnifiable Event.
13. (a) Promptly after receipt by Indemnitee of notice of the
commencement of any Claim relating to an Indemnifiable Event or proceeding in
which Indemnitee is made or is threatened to be made a party or a witness,
Indemnitee shall notify the Company of the commencement of such Claim; but the
omission so to notify the Company shall not relieve the Company from any
obligation it may have to indemnify or advance expenses to Indemnitee otherwise
than under this Agreement.
(b) Indemnitee shall not settle any claim or action in any
manner which would impose on the Company any penalty, constraint, or obligation
to hold harmless or indemnify Indemnitee pursuant to this Agreement without the
Company's prior written consent, which consent shall not be reasonably withheld.
14. If any Claim relating to an Indemnifiable Event, commenced against
Indemnitee is also commenced against the Company, the Company shall be entitled
to participate therein at
<PAGE> 6
its own expense, and, except as otherwise provided hereinbelow, to the extent
that it may wish, the Company shall be entitled to assume the defense thereof.
After notice from the Company to Indemnitee of its election to assume the
defense of any Claim, the Company shall not be obligated to Indemnitee under
this Agreement for any legal or other expenses subsequently incurred by
Indemnitee in connection with the defense thereof other than reasonable costs of
investigation, travel and lodging expenses arising out of Indemnitee's
participation in such Claim. Indemnitee shall have the right to employ
Indemnitee's own counsel in such Claim, but the fees and expenses of such
counsel incurred after notice from the Company to Indemnitee of its assumption
of the defense thereof shall be at the expense of Indemnitee unless (i)
otherwise authorized by the Company, (ii) Indemnitee shall have reasonably
concluded, and so notified the Company, that there may be a conflict of interest
between the Company and Indemnitee in the conduct of the defense of such Claim,
or (iii) the Company shall not in fact have employed counsel to assume the
defense of such Claim, in which cases the fees and expenses of Indemnitee's
counsel shall be at the expense of the Company. The Company shall not be
entitled to assume the defense of any claim brought by or on behalf of the
Company or its stockholders or as to which Indemnitee shall have made the
conclusion set forth in (ii) of this Section 14.
15. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
16. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.
17. The Company shall not be liable under this Agreement to make any
payment in connection with any claim made against Indemnitee to the extent
Indemnitee has otherwise actually received payment (under any insurance policy,
Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder.
18. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors,
assigns, including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business and/or
assets of the Company, spouses, heirs, executors, and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the Company or of any
other enterprise at the Company's request.
19. The provisions of this Agreement shall be severable in the event
that any of the provisions hereof (including any provision within a single
section, paragraph or sentence) are held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable, and the remaining provisions shall
remain enforceable to the full extent permitted by law.
<PAGE> 7
20. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in such state, but excluding any conflicts-of-law rule or
principle which might refer such governance, construction or enforcement to the
laws of another state or country.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
CRANE CO.
By:________________________________
R. S. Evans
Title: Chairman and Chief Executive Officer
INDEMNITEE
__________________________________
[NAME]
<PAGE> 1
Exhibit 10.10
Schedule to Form of Indemnification Agreement for Executive Officers and
Directors.
Indemnitee
E. T. Bigelow, Jr.
R. S. Evans
R. S. Forte
Dorsey R. Gardner
Barry J. Kulpa
Gregory D. Lambert
James L. L. Tullis
<PAGE> 1
Exhibit 10.12
DATED AS OF ________ __, ____
HUTTIG BUILDING PRODUCTS, INC.
____________________________
FORM OF EMPLOYMENT AGREEMENT
____________________________
OF
[EXECUTIVE]
<PAGE> 2
THIS AGREEMENT is made as of the __ day of ________, ____.
BETWEEN:
Huttig Building Products, Inc., a Delaware corporation (the "Company"),
and [EXECUTIVE], whose residence is [insert residence address], (the
"Executive").
WHEREAS the Company desires to employ, or to continue to employ, as the
case may be, the services of the Executive in connection with the
conduct of the Company's business; and
WHEREAS, the Executive desires to be employed, or to continue to be
employed, by the Company, as the case may be; and
WHEREAS the Executive recognizes and acknowledges that the Executive's
position with the Company has provided or will provide the Executive
with access to the Company's customers and/or its confidential and
proprietary business information.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties,
intending to be legally bound, hereby agree, as follows:
1. EMPLOYMENT The Company shall employ the Executive, and the Executive
shall serve the Company in the capacity and on the terms specified in
this Agreement.
<PAGE> 3
2. PERIOD
(A) This Agreement shall commence on the date hereof and, subject
to the other provisions hereof, shall continue unless and
until terminated in accordance with the following:
(i) by the Company giving to the Executive prior written
notice as required in Schedule "B" (the "Schedule B
Notice Period"); provided, however, the Company may
treat the employment of the Executive as terminated
at any time simultaneously with or after receipt of
such written notice, subject to the Company's
continued obligations pursuant to Paragraph 9(A);
(ii) by the Executive giving to the Company not less than
one (1) month's prior written notice (the "One
(1)-Month Notice Period"); provided, however, the
Company may treat the employment of the Executive as
terminated at any time after receipt of such written
notice. Such election to terminate by the Company
shall also terminate the rights of the Executive to
payments pursuant to Paragraph 9(A) for the One
(1)-Month Notice Period or severance elections
related thereto;
(iii) without notice on the Executive's sixty-fifth
birthday; or
(iv) by the Company or Executive in accordance with
Paragraphs 8(D) or 9(B).
(B) The Executive's continuous period of employment by the Company
shall be deemed to have commenced on [insert date of first
employment by Rugby or Huttig, as the case may be].
-2-
<PAGE> 4
3. DUTIES AND PERFORMANCE
During the continuance of this Agreement, the Executive:
(A) shall serve the Company in the position identified in Schedule
"C" attached hereto (or in such capacity as may from time to
time be designated in writing, substituted and attached hereto
as Schedule "C") and shall perform and render such duties and
services as are customarily performed and rendered by one
holding such position;
(B) shall report to the officer or the Board of Directors of the
Company ("Board") as may be noted from time to time on
Schedule "C";
(C) shall perform and render all of the duties and services that
may be required of and from the Executive consistent with the
responsibilities and authority of his position and pursuant to
the terms and conditions hereof, faithfully, industriously, to
the best of his ability, experience and talents, and to the
reasonable satisfaction of the Board and the person to whom
the Executive is responsible pursuant to Paragraph 3(B), shall
comply with the advice, directions, orders, policies,
regulations and standards of the Board of Directors of the
Company as promulgated from time to time;
(D) may be required in pursuance of his employment to be engaged
in work on behalf of the Company or any parent, subsidiary or
affiliate of the Company from time to time (collectively, the
"Group"); and
-3-
<PAGE> 5
(E) shall devote his entire work time, attention, knowledge,
skills, energies and best efforts to the performance and
rendition of his duties and services hereunder, and to the
furtherance of the business and interests of the Company.
4. REMUNERATION
(A) As remuneration for his services hereunder, the Company shall
pay the Executive, and the Executive agrees to accept, a base
salary as set out in Schedule "D" attached hereto, or at such
other rate as may from time to time be agreed in writing,
substituted and attached hereto as Schedule "D". Such base
salary shall be payable in accordance with the Company's usual
payment policy and practices, but not less frequently than
monthly.
(B) The Company shall pay the Executive a bonus calculated in
accordance with the EVA incentive compensation plan of the
Company applicable for employees of the Group at a comparable
position or level to the Executive, as in effect from time to
time. Nothing contained herein shall be deemed or construed to
entitle the Executive to receive any minimum incentive bonus.
Except as otherwise provided herein, the bonus shall accrue
and be payable to the Executive only if he is employed by the
Company under this Agreement as of December 31 of each year.
(C) Base salary and bonuses shall be subject to any applicable
federal, state and local withholding and deductions
-4-
<PAGE> 6
5. EXPENSES
During the continuance of this Agreement, the Executive shall be
entitled:
(A) to be reimbursed for all reasonable out-of-pocket expenses
which he has properly incurred in performing his duties and
obligations under this Agreement upon receipt by the Company
of satisfactory, itemized account and receipts of all such
expenditures which shall not be in excess of any limitation
established for such expenditures by the Company; and
(B) to the use of a company automobile, together with the payment
of operating expenses and insurance related thereto; provided,
however, in lieu of a company automobile, the Company may, at
its option, provide the Executive with an automobile allowance
intended to reimburse the Executive for the expenses of
operating and maintaining his personal automobile to the
extent such are attributable to promoting the business of the
Company.
6. FRINGE BENEFIT PLANS
The Company agrees that the Executive shall be entitled to customary
employee "fringe benefits" afforded by the Company to comparable
personnel upon his qualifications for and in accordance with the terms
and conditions of the plans and programs established and implemented by
the Company. Subject to the terms of such plans or programs and federal
and state laws applicable thereto, the Executive acknowledges that the
Company may change, alter or eliminate, without the Executive's
consent, any and all of such "fringe benefits" at any time.
-5-
<PAGE> 7
7. VACATIONS AND HOLIDAYS
The Executive shall be entitled in each calendar year to the following
vacations and paid holidays:
(A) vacation with full salary and in accordance with the personnel
policies of the Company to be taken at such reasonable time or
times as may be approved by the Company; and
(B) paid holidays in accordance with the personnel policies of the
Company.
8. ILLNESS AND DISABILITY
(A) The Company shall continue to pay the Executive at his normal
rate of pay during any periods of absence resulting from
sickness or injury up to an aggregate maximum of six (6)
months in any twelve (12) month period; provided, however, the
Company may require the Executive to provide medical
certificates in accordance with the personnel policy of the
Company.
(B) The Executive shall be entitled to participate in the
disability plan(s) as operated from time to time by the
Company or the Group upon his qualification therefor. No
warranty is given by the Company or any company in the Group
that any claim made by or on behalf of the Executive under
such disability plan will be accepted and no liability shall
attach to the Company or any such company in the Group in the
event that any claim shall be rejected, in whole or in part.
(C) If the Executive is participating in any short-term disability
program of the Company, it is expressly understood between the
parties that any payments made to the Executive by the Company
during any temporary disability will be reduced by the amount
the Executive is entitled to receive (whether actually
received or
-6-
<PAGE> 8
not) from the disability program of the Company in accordance
with the provisions of the group policy issued to the Company.
(D) In the event that the Executive is permanently disabled, which
shall be conclusively presumed if the Executive shall be
absent from sickness or injury beyond the six (6) month period
specified in Paragraph 8(A) hereof, then either the Company or
the Executive shall have the right to terminate this Agreement
by giving one (1) month's notice in writing.
9. TERMINATION, SUSPENSION AND SEVERANCE PAYMENTS
(A) This Agreement may be terminated by either party giving notice
to the other in accordance with Paragraph 2(A) hereof. Upon
notice of termination pursuant to Paragraphs 2(A)(i) or
2(A)(ii), the Executive shall be paid his salary for the
Schedule B Notice Period ("Notice Salary Amount") or the One
(1)-Month Notice Period, as applicable, and shall continue to
receive all fringe benefits pursuant hereto for and during the
Schedule B Notice Period or the One (1)-Month Notice Period,
as applicable; provided, however, if Executive shall breach or
otherwise violate the terms of this Agreement, including but
not limited to Paragraph 10, during the period of payment
pursuant to this Paragraph 9(A), or if the Company shall elect
to treat the Executive's notice under Paragraph 2(A)(ii) as
having immediate effect, the Company shall immediately have no
further liability under the terms of this Paragraph 9(A) which
shall thereupon become null and void and of no further force
and effect. Any salary payments made during the One (1)-Month
Notice Period, if applicable, shall be made at the same time,
with the same frequency, and subject to the same withholding
obligations as if no notice had
-7-
<PAGE> 9
been given. Any salary payments made for the Schedule B Notice
Period, if applicable, shall be made as follows:
(i) for the first three (3) months of the Schedule B
Notice Period, the Company shall pay the Executive
his salary on the same pay dates, in the same amounts
and subject to the same withholding obligations as if
no notice has been given;
(ii) for the remainder of the Schedule B Notice Period,
the Company shall pay the Executive seventy-five per
cent (75%) of the difference between (a) the Notice
Salary Amount, and (b) the salary paid the Executive
pursuant to Paragraph 9(A)(i), payable in equal
installments on the same pay dates and subject to all
withholding obligations as if no notice had been
given; and
(iii) at the end of the payment period pursuant to
Paragraph 9(A)(ii), the Company shall pay the
Executive the remainder of the unpaid Notice Salary
Amount, subject to all withholding obligations as if
no notice had been given.
It is expressly understood, acknowledged and agreed
that all compensation, including fringe benefits,
payable to the Executive by the Company following
termination of employment and during the Schedule B
Notice Period or the One (1)-Month Notice Period, as
applicable, shall be subject to the duty of the
Executive to use his best efforts to mitigate his
damages under this Paragraph 9(A) by seeking other
employment and shall be offset by any compensation
which the Executive shall receive
-8-
<PAGE> 10
from such other employment or which the Executive
could have received with reasonable efforts. During
the Schedule B Notice Period or the One (1)-Month
Notice Period, as applicable, the Company may request
that the Executive provide information as to the
actions and status of the Executive's efforts to
mitigate damages hereunder by seeking alternative
employment and the Executive shall provide such
requested information. Upon employment by such
alternate employer during the Schedule B Notice
Period or the One (1)-Month Notice Period, as
applicable, the Executive shall notify the Company of
such employment and of the compensation terms related
thereto.
(B) Notwithstanding the other provisions of this Agreement, the
Company shall be entitled to terminate this Agreement
immediately and without notice if, at any time during the term
of this Agreement, the Executive:
(i) commits fraudulent or dishonest acts, gross
negligence, or disloyalty in connection with his
employment, or is convicted of a criminal act
involving dishonesty, whether such conviction is in
connection with his employment or not; or
(ii) violates the terms of this Agreement and fails to
cure such breach within thirty (30) days after the
receipt of written notice by the Company to the
Executive of such violation or breach, which notice
shall state in reasonable detail the facts and
circumstances claimed to be a violation or breach and
of the intent of the Company to terminate this
Agreement upon the failure of the Executive to timely
cure; or
-9-
<PAGE> 11
(iii) dies.
(C) The Company may suspend the Executive with full pay from his
employment hereunder at any time in order to investigate
circumstances which, in the reasonable opinion of the
President and Chief Executive Officer of the Company, might
give rise to termination of this Agreement in accordance with
the provisions of Paragraph 9(B).
(D) Upon termination of this Agreement for any reason, the
Executive shall:
(i) immediately return to the Company all papers,
documents, books, records, computer disks, accounts,
drawings, credit cards, keys, and other property
belonging to, or relating to the business of, the
Company or any company in the Group which are then in
the possession or control of the Executive; and
(ii) within thirty (30) days after the actual termination
date, return to the Company any company automobile;
and
(iii) upon the Company's request, immediately in writing
resign any directorship or other office which the
Executive may hold in the Company or any company in
the Group without compensation for loss thereof and
transfer any nominee or other shares owned by the
Company or any such company in the Group to such
person or company as the Company shall nominate.
(E) If the Executive terminates employment with the Company within
twelve (12) months of the commencement of employment with the
Company, the Executive shall reimburse the Company on the date
of his termination for any moving
-10-
<PAGE> 12
expenses which the Company incurred on behalf of the
Executive. The Company shall have the right to offset the same
against any sums otherwise due to the Executive pursuant to
the terms of this Paragraph 9 or otherwise.
(F) Termination of this Agreement in accordance with the terms
hereof shall not affect any rights or remedies of the parties
hereto which shall have previously accrued.
(G) Notwithstanding the termination of this Agreement for any
reason, the provisions of Paragraphs 9(A), 9(D), 9(E), 10(C),
10(D), (10(E), 10(F), 10(G), and 11, as and if applicable,
shall continue in full force and effect in accordance with
their respective terms.
10. RESTRAINTS ON THE EXECUTIVE ACTIVITIES
(A) During the continuance of this Agreement, the Executive shall
not be, directly or indirectly, engaged, concerned or
interested in any capacity in any other trade, business or
occupation, except:
(i) as the owner of securities which are held for
investment only, which are subject to any recognized
stock exchange, and which do not exceed five per cent
(5%) in nominal value of the securities of that class
("Approved Ownership"); or
(ii) with the prior written consent of the Company, which
consent shall not be unreasonably withheld. A request
for such written consent shall include the detail of
any proposed concern and/or interest.
(B) During the continuance of this Agreement, the Executive shall
comply with all applicable laws, regulations and rules in
force from time to time relating to
-11-
<PAGE> 13
trading of shares of stock of the Company and shall obtain the
prior written consent of the Secretary of the Company before
effecting a trade of shares of stock of the Company. Any
failure to obtain the required consent shall constitute a
breach for the purposes of Paragraph 9(B)(ii) hereof.
(C) During the term of the employment of the Executive with the
Company and at all times thereafter, the Executive shall keep
confidential and shall not at any time use, for his own or
another's advantage or disclose to any person, firm or company
any trade secrets, business methods or confidential
information concerning the business, financial status or
affairs of the Company or any company in the Group, including
but not limited to, customer or supplier lists, trade
processes or materials, price lists, cost data, new products
or business plans ("Confidential Information") which may have
come to the Executive's knowledge during his employment
hereunder or during any previous period of employment with the
Company or any company in the Group; provided, however, this
restriction shall not prevent:
(i) any disclosure or use authorized by the President and
Chief Executive Officer of the Company, required by
law, or made to enable the Executive to perform his
duties hereunder; or
(ii) the use of the personal skills of the Executive in
any business in which he may be lawfully engaged
(subject to the terms of this Paragraph 10), after
termination of this Agreement; or
(iii) the use of Confidential Information that is in or
comes into the public domain in any way without
breach of this Agreement by the Executive.
-12-
<PAGE> 14
(D) During the term of this Agreement and for the period of one
(1) year following termination of this Agreement (the
"Covenant Period"), the Executive shall not, whether alone or
jointly with another, and whether directly or indirectly,
solicit or endeavour to entice away, knowingly offer
employment to, knowingly employ, or offer or conclude any
contract for services with, any person who is employed by the
Company or any company in the Group at the date of termination
of this Agreement and who has been employed in skilled or
managerial work at any time during the period of one (1) year
preceding the termination of this Agreement by the Company or
any company in the Group for which the Executive shall have
had managerial responsibility or with which the Executive
shall have been involved or directly connected during such
preceding two (2)-year period ("Relevant Company").
(E) Recognizing that the Company's business success is dependent
upon the Confidential Information and business relationships
which the Company entrusts to its employees, the Executive
agrees that during the term of his employment and for the
Covenant Period, the Executive shall not, directly or
indirectly;
(i) provide "competitive services" to any person, firm,
corporation or entity with whom or which the
Executive has dealt on behalf of the Company or the
Relevant Company; or
(ii) cause or attempt to cause any customer or prospective
customer of the Company or the Relevant Company as of
the date of termination, to which the Executive had
access to the Confidential Information or had a
business relationship, to divert, terminate, limit or
in any manner modify or fail to
-13-
<PAGE> 15
enter into, any actual or potential business
relationship or contract with the Company or the
Relevant Company.
For purposes of this Agreement, "competitive services" shall
include products, merchandise and/or services which are of the
same general type, perform similar functions or are used for
the same purposes as the products, merchandise and/or services
which have been sold, provided or offered by the Company or
the Relevant Company at any time during the last one (1) year
of the Executive's employment.
(F) Each provision of this Paragraph 10 constitutes an entirely
separate and independent restriction. The Executive
acknowledges and agrees that the duration, extent and
application of each respective restriction of this Paragraph
10 is no greater than is reasonable and necessary for the
protection of the interests of the Company, but that if any
court of competent jurisdiction shall determine that the
period, the scope, or the territory covered by, or any other
provision of, this covenant pursuant to this Paragraph 10 is
unreasonable, such provision shall not be deemed to be null
and void and of no effect but shall be reformed by such court
to impose a reasonable period, reasonable scope, reasonable
geographical limitation or reasonable other provision, as the
case may be.
(G) In the event of a breach or threatened breach by the Executive
of his obligations and covenants hereunder, the Company shall
be entitled to temporary, preliminary and/or permanent
injunctive relief against the Executive, in addition to any
and all other rights or remedies which it may have, including
damages and reasonable attorneys' fees. The Executive hereby
expressly acknowledges that the harm
-14-
<PAGE> 16
which might result to the Company's goodwill or its
relationships with customers, or as a result of the disclosure
or use of the Confidential Information, is irreparable.
(H) In addition to any other rights and remedies which the Company
may have pursuant to Paragraph 10(G), if the Executive
breaches any of his obligations pursuant to this Paragraph 10
at any time during the period of payment under Paragraph 9(A),
the Company shall immediately cease to have any liability for
payments to be made or for provision of fringe benefits during
or for the Schedule B Notice Period or the One (1)-Month
Notice Period, as applicable, under the provisions of
Paragraph 9, which obligations by the Company shall become
null and void and of no further force and effect.
11. INVENTIONS
The Executive has a special obligation to further the interests of the
Company and the Group. Accordingly, if the Executive makes or discovers
any discovery, invention, improvement, or process in the course of his
employment for the Company or the Group (the "Discovery"), he shall:
(A) immediately provide full details of the Discovery to the
Company;
(B) not disclose any details of the Discovery to any third party
without prior written consent of the Company;
(C) if required by the Company during or after the termination of
this Agreement, do all that is necessary to obtain patent or
other protection for the Discovery in any country specified by
the Company; and
(D) hold in trust for the Company all rights in the Discovery.
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<PAGE> 17
12. EXECUTIVE'S REPRESENTATION AND INDEMNITY
The Executive represents to the Company that the execution and delivery
of this Agreement and/or the employment of the Executive with the
Company do not violate any previous employment agreement or other
contractual obligation of the Executive. The Executive agrees to
defend, indemnify and hold harmless the Company and any company in the
Group against any and all claims, demands, losses, damages or expenses,
including reasonable attorneys' fees, suffered or incurred as a result
of any violation of the representations contained in this Paragraph 12.
13. MISCELLANEOUS
(A) This Agreement shall supersede all prior agreements made
between the parties hereto relating to the employment of the
Executive.
(B) Except as stated herein,
(i) this Agreement contains the entire agreement of the
parties as to its subject matter; and
(ii) neither party has entered into this Agreement in
reliance upon any oral representation, warranty or
inducement leading to the signature hereof.
(C) The various provisions of this Agreement are severable and, if
any provision is held to be invalid or unenforceable by any
court of competent jurisdiction, then such invalidity or
unenforceability shall not affect the remaining provisions
hereof.
(D) No modifications or amendment of any of the provisions of this
Agreement shall be effective unless in writing specifically
referring hereto, and signed by the parties.
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<PAGE> 18
14. NOTICE
All notices and other communications hereunder shall be in writing and
shall be sufficient in all respects if given in writing and delivered
or mailed by registered or certified mail postage prepaid, or if sent
by telefax (in which case promptly confirmed by registered or certified
mail postage prepaid) or by overnight courier, addressed to the
addresses set forth above or to such other address as shall be
furnished in writing by either party to the other party. All notices
and other communications hereunder given in the manner provided above
shall be deemed effective upon receipt.
15. NO WAIVER
No failure on the part of either party at any time to require the
performance by the other party of any term hereof shall be taken or
held to be a waiver of such term or in any way affect such party's
right to enforce such term, and no waiver on the part of either party
of any term hereof shall be taken or held to be a waiver of any other
term hereof or the breach thereof.
16. BENEFIT AND ASSIGNMENT
The Executive acknowledges that the duties and services to be performed
and rendered by him are unique and personal; accordingly, the Executive
may not assign any of his rights or delegate any of his duties
hereunder without the prior written consent of the Company which may be
withheld in its sole and absolute discretion. The rights and
obligations of the Company hereunder shall be assignable and shall
inure to the benefit of, and be binding upon, the successors and
assigns of the Company.
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<PAGE> 19
17. CONSTRUCTION
Whenever a singular word is used herein, it shall also include the
plural wherever required by the context, and vice versa; and whenever
any gender is used herein, it shall also include the other genders
wherever required by the context. The terms and conditions hereof shall
be interpreted and construed in accordance with their usual and
customary meanings, and the parties hereby expressly waive and
disclaim, in connection with the interpretation and construction
hereof, any rule of law or procedure requiring otherwise, specifically
including, but not limited to, any rule of law to the affect that
ambiguous or conflicting terms or conditions contained herein shall be
interpreted or construed against the party whose counsel prepared this
Agreement or any earlier draft hereof.
18. ARBITRATION AND GOVERNING LAW
Except for the enforcement of any rights to equitable relief pursuant
to Paragraph 10(G), to which the parties consent to jurisdiction in the
state and federal courts in Missouri, the Executive and the Company
agree that any dispute arising out of, pursuant to, or relating to the
Agreement, including but not limited to any dispute regarding the
provisions of Paragraph 10 of the Agreement, shall be resolved by
binding arbitration in St. Louis, Missouri, before one (1) arbitrator
pursuant to the rules of the American Arbitration Association for
commercial arbitration. This Agreement shall be interpreted in
accordance with and governed by the laws of the State of Missouri. The
sole function of the arbitrator is to interpret and enforce the
Agreement under Missouri law and, except as provided under the law
and/or the provisions of Paragraphs 10(F) and 13(C) herein, the
arbitrator shall have no authority to alter, amend, modify or change
the Agreement. The
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<PAGE> 20
costs of the arbitration (other than each party's own attorneys' fees)
shall be shared equally by the Executive and the Company.
19. CAPTIONS
The captions herein are for convenience and identification purposes
only, are not an integral part hereof, and are not to be considered in
the interpretation of any part hereof.
20. COUNTERPARTS
This Agreement may be executed in separate counterparts, each of which
when so executed shall be an original, but all of such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the Company and the Executive have each executed this
Agreement on the day and in the year first written.
HUTTIG BUILDING PRODUCTS, INC.
By:______________________________________
Name: __________________________
Title:__________________________
_________________________________________
Executive:
PLEASE NOTE
BY SIGNING THIS EMPLOYMENT AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING THAT
THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY
BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT;
(C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT TO ASK ANY
QUESTIONS THE EXECUTIVE MAY HAVE HAD ABOUT THE AGREEMENT AND HAS RECEIVED
SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE EXECUTIVE'S
RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.
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<PAGE> 21
SCHEDULE "A"
THE COMPANY
The employer in, the contracting party to, and the "Company" as defined in, the
Employment Agreement of [Executive] shall be Huttig Building Products, Inc., a
Delaware Corporation having its principal office and place of business at
Lakeview Center, Suite 400, 14500 South Outer Forty Road, Chesterfield, Missouri
63017.
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<PAGE> 22
SCHEDULE "B"
NOTICE PERIOD
For purposes of Paragraph 2(A)(i) of the Employment Agreement of [Executive]
("Executive"), the Company shall be required to give twelve (12) months' prior
written notice to the Executive.
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<PAGE> 23
SCHEDULE "C"
POSITION OF THE EXECUTIVE
Date: ________ __, ____
The position of [Executive] ("Executive") with Huttig Building Products, Inc.,
("Company") shall be [insert title], effective ________ __, ____. As [ ], the
Executive shall report to [inset supervisor's title], until otherwise directed
by the Board of Directors of the Company, the President and Chief Executive
Officer of the Company, the officer to whom Executive reports pursuant hereto,
or until a new Schedule "C" is delivered to Executive.
By:
______________________
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<PAGE> 24
SCHEDULE "D"
COMPENSATION OF THE EXECUTIVE
Date: ________ __, ____
The base salary of [Executive] ("Executive") payable by Huttig Building Products
("Company") for the period commencing from the date hereof and ending 31 January
2001 (or until otherwise changed by the written agreement of Executive and
Company) shall be at the rate of $____________ per annum. The base salary shall
be subject to review at the end of each year. The salary will not be reduced
below its existing level but if changed, a revised Schedule "D" shall be
executed and substituted herefor.
HUTTIG BUILDING PRODUCTS, INC.
By: ______________________________
Name: _______________________
Title: _______________________
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<PAGE> 1
Exhibit 10.13
Schedule to Employment Agreement between Huttig and certain of its executive
officers.
Executive Position of Executive Base Salary
Gregory D. Lambert Vice President, Administration, Chief $200,000
Financial Officer and Secretary
George M. Dickens, Jr. Regional Vice President 180,000
Daniel Geller Regional Vice President 135,000
Carl A. Liliequist Regional Vice President 147,500
Paul Lyle Regional Vice President 150,000
Stokes R. Ritchie Regional Vice President 140,000
<PAGE> 1
Exhibit 10.14
================================================================================
REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN
HUTTIG BUILDING PRODUCTS, INC.
AND
THE RUGBY GROUP PLC
DATED AS OF
DECEMBER 16, 1999
================================================================================
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as
of December 16, 1999, between Huttig Building Products, Inc., a Delaware
corporation (the "Company") and The Rugby Group PLC (the "Purchaser"), a company
registered in England and Wales under company number 206971, with reference to
the shares of common stock, $.01 par value (the "Common Stock") of the Company
acquired on the date hereof by the Purchaser.
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Affiliate" shall have the meaning set forth in Rule 12b-2
under the Exchange Act.
"Beneficial Ownership" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities
Act.
"DECS" shall have the meaning set forth in Section 3(a).
"DECS Offering" shall mean an offering of Registrable
Securities exchangeable for debt securities of a Holder.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Holder" shall mean (i) the Purchaser or (ii) any successor to
or transferee of all of the Registrable Securities Beneficially Owned
by the Purchaser on the date of such succession or transfer; provided,
however, that no successor or transferee of all such Registrable
Securities shall be deemed to be a Holder under this Agreement unless
(a) such Registrable Securities constitute 10% or more of the Common
Stock outstanding at the date hereof and (b) such successor or
transferee agrees in writing to comply in all respects with the
provisions of this Agreement.
"Initial Block" shall mean 3,273,212 Registrable Securities,
as adjusted for stock splits, stock dividends or recapitalizations on
or after the date hereof.
The terms "register", "registered" and "registration" refer to
a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or
ordering of the effectiveness of such registration statement.
<PAGE> 3
"Registrable Securities" shall mean the Shares, but shall not
include any Share (i) that has been registered and disposed of in
accordance with a registration statement covering such security or (ii)
that has been distributed to the public pursuant to Rule 144 (or any
successor provision then in effect) under the Securities Act.
"Registration Expenses" shall mean all expenses incurred by
the Company in connection with a registration under this Agreement,
including, without limitation, all registration, qualification and
filing fees, printing expenses, fees and disbursements of counsel for
the Company, blue sky fees and expenses, accounting fees incident to or
required by any such registration and all internal expenses of the
Company; provided, however, that Registration Expenses shall not
include any Selling Expenses.
"Restricted Securities" shall mean the securities of the
Company required to bear the legend set forth in paragraph (a) of
Section 19 hereof.
"Rights Agreement" shall mean the Rights Agreement dated as of
December 6, 1999 between the Company and ChaseMellon Shareholder
Services, L.L.C., as rights agent.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the Shares
included in a registration by the Holder and all fees and disbursements
of counsel for the Holder.
"Shares" shall mean the 6,546,424 shares of Common Stock
acquired by the Purchaser on the date hereof, as adjusted for stock
splits, stock dividends, or recapitalizations on or after the date
hereof.
"Shelf Registration Statement" shall mean the registration
statement effecting the registration required by Section 4(a).
"Standstill Period" shall have the meaning set forth in
Section 17.
"Underwritten Offering" shall mean a sale of securities of the
Company to an underwriter or underwriters for re-offering to the
public, which shall include a road show and other customary selling
efforts.
"Voting Securities" means the Common Stock and any other
securities issued by the Company having the power to vote in the
election of directors of the Company.
2
<PAGE> 4
2. Notice of Proposed Transfers. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the Holder shall give written notice to the Company of its intention
to effect such transfer, sale, assignment or pledge. Each such notice shall
describe the manner and circumstances of the proposed transfer, sale, assignment
or pledge in sufficient detail, and shall be accompanied by a written opinion of
legal counsel who is, and whose legal opinion shall be, reasonably satisfactory
to the Company, addressed to the Company, to the effect that the proposed
transfer of the Restricted Securities may be effected without registration under
the Securities Act, whereupon the Holder will be entitled to transfer such
Restricted Securities in accordance with the terms of its notice to the Company.
The Company will not require such a legal opinion in any transaction that
complies with Rule 144 (other than in cases where applicability of Rule 144(k)
is asserted). Each certificate evidencing the Restricted Securities transferred
as above provided shall bear, except if such transfer is made pursuant to Rule
144, the appropriate restrictive legend set forth in Section 20 below, except
that such certificate shall not bear such restrictive legend if in the opinion
of counsel for the Holder and the Company such legend is not required in order
to establish compliance with any provisions of the Securities Act. The Holder
will cause any proposed purchaser, assignee, transferee or pledgee of Restricted
Securities to agree to take and hold such Restricted Securities subject to the
provisions of this Section 2. The holder of each certificate representing
Restricted Securities by acceptance thereof agrees to comply in all respects
with the provisions of this Section 2.
3. Registration of Initial Block.
(a) If requested in writing by the Purchaser, not later than
the 120th day after the date hereof, the Company shall file a registration
statement on Form S-1(i) covering the sale of at least the Initial Block by the
Purchaser in a firm commitment Underwritten Offering or (ii) covering the
distribution of all of the Registrable Securities in exchange for debt
securities of the Purchaser ("DECS"). The Company shall use all reasonable
efforts to have such registration statement declared effective so as to permit
the offer and sale of the Initial Block or the commencement of the DECS
Offering, as the case may be, as soon as practicable on or after the 180th day
hereafter and to keep such registration statement effective (x) in the case of
the Underwritten Offering for 60 days or, if earlier, until the date on which
the entire Initial Block has been sold or (y) in the case of the DECS Offering,
for three years or, if earlier, the date that all the Shares registered for
exchange pursuant to the DECS have been so exchanged..
(b) If the portion, if any, of the Initial Block not sold in
the Underwritten Offering provided for in Section 3(a) constitutes more than 2%
of the outstanding shares of Common Stock at the date hereof, the Company shall,
if requested in writing by the Purchaser prior to the twelfth full calendar
month after the date hereof, file as soon as practicable (but no later than 30
days after the date of such request) a registration statement on Form S-1
covering the sale by the Purchaser in a firm commitment Underwritten Offering of
at least those Registrable Securities constituting that portion of the Initial
Block not sold in the Underwritten Offering provided in Section 3(a); provided,
however, that the Company may, in its sole and
3
<PAGE> 5
absolute discretion, delay the filing of the registration statement under this
Section 3(b) for up to 120 days.
(c) Neither the Company nor any other Company shareholder
shall have the right to include securities in the registration statement filed
pursuant to Section 3(a) or Section 3(b) without the Purchaser's consent. Prior
to the earlier to occur of (i) the sale or other disposition of the entire
Initial Block by the Purchaser and (ii) the second anniversary hereof, the
Company will not cause to be offered or sold in a public offering any newly
issued Common Stock or securities convertible or exchangeable for Common Stock,
other than offers or sales (x) solely to employees or directors, (y) pursuant to
a dividend reinvestment plan or (z) in a business combination transaction
meeting the criteria set forth in the parenthetical included in the following
sentence; provided, however, that no more than $15 million in aggregate offering
price of Common Stock issued in any one business combination transaction shall
be permissible under this subsection (z). Prior to the earlier to occur of (i)
the completion of the Underwritten Offering provided in Section 3(a) and (ii)
270 days from the date of this Agreement, the Company will not cause to be
offered or sold in a private offering in connection with a business combination
transaction (including, without limitation, offers or sales in a business
combination transaction that would otherwise qualify as a private placement of
securities under Section 4(2) of the Securities Act and are issued pursuant to a
shelf registration statement on Form S-4 (or any successor form)) any newly
issued Common Stock or securities convertible or exchangeable for Common Stock.
4. Shelf Registration Statement.
(a) If, after the twelfth full calendar month after the date
hereof, the Company receives from the Holder a written request that the Company
effect a shelf registration with respect to the Registrable Securities, the
Company will within 60 days after such request file with the Commission a
registration statement on Form S-3 (or Form S-1 if Form S-3 is not then
available to the Company) and shall use all reasonable efforts to have such
registration statement declared effective in such form as would permit the sale
and distribution of the Registrable Securities then held by the Holder pursuant
to Rule 415 under the Securities Act, and to keep such registration statement
effective until the date the Registrable Securities then Beneficially Owned by
the Holder constitute less than 10% of the then outstanding Common Stock.
(b) Subject to compliance with Section 5 hereof, the Holder
shall be entitled to an aggregate of two Underwritten Offerings and/or DECS
Offerings in connection with a registration under Section 4(a); provided,
however, that if the Company has effected a registration pursuant to Section
3(b) then the Holder shall be entitled to only one Underwritten Offering or DECS
Offering in connection with a registration under Section 4(a). Otherwise, the
distribution of Registrable Securities pursuant to a registration under Section
4(a) shall be effected, from time to time or at one time, only by or through
such investment banking firm or firms (acting as broker, dealer, agent,
principal or otherwise) as may be reasonably acceptable to the Holder and the
Company.
4
<PAGE> 6
(c) At least five days prior to any sale of Registrable
Securities pursuant to a registration under Section 4(a) (other than a sale in
an Underwritten Offering or a DECS Offering), the Holder shall advise the
Company in writing of the terms of its arrangements, if any, with any investment
banking firm or firms agreed upon in accordance with Section 4(b), including the
capacity in which such firm or firms will act, the proposed manner of
distribution of the Registrable Securities and compensation terms.
5. Underwritten Offerings and DECS Offerings.
(a) If the Company receives from the Holder a written notice
that the Holder desires to effect a distribution of a number of Registrable
Securities having a market value on the date of such notice of at least
$20,000,000 in an Underwritten Offering or DECS Offering pursuant to the Shelf
Registration Statement, the Company shall file with the Commission within 60
days after such notice (but, in the case of a DECS Offering, not before the date
a registration statement for the debt securities of the Holder is filed) a
prospectus supplement that satisfies the requirements of Rule 424 under the
Securities Act or a post-effective amendment to the Shelf Registration Statement
so as to permit the sale of such Registrable Securities in an Underwritten
Offering or the offering of such Registrable Securities in a DECS Offering.
Notwithstanding the foregoing, the Company will not be obligated to effect an
Underwritten Offering or a DECS Offering under the Shelf Registration Statement:
(i) If, at such time as a notice of an
Underwritten Offering or DECS Offering is
delivered to the Company pursuant to this
Section 5(a), (A) the Company has effected
(x) a registration pursuant to Section 3(a)
or Section 3(b) or an Underwritten Offering
or DECS Offering under the Shelf
Registration Statement within the four month
period prior to its receipt of such notice
or (y) three Underwritten Offerings and/or
DECS Offerings (including registrations
pursuant to Section 3(a) and Section 3(b))
or (B) a Holder has withdrawn a prior
request for an Underwritten Offering or DECS
Offering within the four month period prior
to the Company's receipt of such notice. For
purposes of Section 4(b) and this subsection
(a)(ii), an Underwritten Offering shall be
deemed to be effected upon the sale of any
Registrable Securities therein, a DECS
Offering shall be deemed to be effected upon
the sale of any debt securities for which
the Registrable Securities are exchangeable,
and any request for an Underwritten Offering
or DECS Offering that is withdrawn prior to
the sale of Registrable Securities or debt
securities therein, as the case may be,
nonetheless shall be deemed to be
5
<PAGE> 7
an Underwritten Offering or DECS Offering,
as the case may be;
(ii) During the period starting with the date 60
days prior to the filing of, and ending on a
date 90 days following the effective date
of, a registration statement filed by the
Company as permitted by this Agreement
(other than a registration statement
relating to a business combination
transaction, an offering solely to employees
or directors or pursuant to a dividend
reinvestment plan or any other registration
which is not appropriate for the
registration of Shares); or
(iii) For a period of up to 30 days if the
Company's Board of Directors determines that
such a delay would be in the best interests
of the Company and its shareholders;
provided, however, that no such delay shall
occur more than once within any twelve month
period.
(b) The Company and the Company's other shareholders shall
have the right to include shares of Common Stock in any Underwritten Offering
effected pursuant to the Shelf Registration Statement, subject to the provisions
of Section 6.
6. Underwriting. If the Holder proposes to distribute Registrable
Securities registered pursuant to the Shelf Registration Statement by means of
an Underwritten Offering or a DECS Offering, and in connection with a
registration effected pursuant to Section 3, the Company and the Holder (and any
other holder of Common Stock participating in an Underwritten Offering) shall
enter into an underwriting agreement in customary form with the managing
underwriter or underwriters selected for such underwriting (i) by the Company in
the case of an Underwritten Offering (which managing underwriter(s) each shall
be a nationally recognized investment banking firm reasonably acceptable to the
Holder) or (ii) by the Holder in the case of a DECS Offering (which managing
underwriter(s) each shall be a nationally recognized investment banking firm
reasonably acceptable to the Company). Notwithstanding any other provision of
Sections 3, 4 or 5, if the lead managing underwriter advises the Holder and the
Company in writing on or before the date five days prior to the date then
scheduled for such offering that, in its opinion, the amount of Common Stock to
be included in such offering exceeds the amount which can be sold in such
offering without adversely affecting the distribution of the Common Stock being
offered, then such offering will include only the amount of Common Stock that
the lead managing underwriter has so advised can be sold in such offering;
provided, however, that the Company shall be required to include first in an
Underwritten Offering pursuant to the Shelf Registration Statement all
Registrable Securities requested to be included by the Holder.
6
<PAGE> 8
7. Incidental Registration.
(a) Notice of Registration. If, at any time or from time to
time (x) prior to the fifth anniversary of the date hereof and (y) after the
fifth anniversary of the date hereof if the Holder is not then eligible to sell
Registrable Securities pursuant to Rule 144(k) under the Securities Act, the
Company shall determine to register any of its Common Stock for sale in an
Underwritten Offering, either for its own account or the account of a security
holder or holders (other than the Holder) exercising their respective demand
registration rights as permitted by this Agreement, other than a registration
relating to a business combination transaction or an offering solely to
employees or directors or pursuant to a dividend reinvestment plan, the Company
will promptly give to the Holder written notice thereof, and include in such
registration (subject to Section 7(b)) all the Registrable Securities specified
in a written request made by the Holder within ten days after its receipt of
such written notice from the Company. The right of the Holder to have
Registrable Securities included in a registration pursuant to this Section 7(a)
shall be conditioned upon its entering into (together with the Company and the
other holders distributing their securities through such underwriting) an
underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting by the Company (or by the
shareholders who have demanded such registration). The registration rights
granted pursuant to the provisions of this Section 7(a) shall be in addition to
the registration rights granted pursuant to the other provisions of this
Agreement.
(b) If the lead managing underwriter of an offering covered by
Section 7(a) shall advise the Company in writing (with a copy to the Holder) on
or before the date five days prior to the date then scheduled for such offering
that, in its opinion, the amount of Common Stock (including Registrable
Securities) requested to be included in such registration exceeds the amount
which can be sold in such offering without adversely affecting the distribution
of the Common Stock being offered, then (i) prior to the earlier to occur of the
second anniversary of this Agreement and the date on which the Registrable
Securities then Beneficially Owned by the Holder constitute less than 10% of the
outstanding Common Stock at the date hereof (the "Threshold Date") the Company
(A) in a registration for its own account, will include in such registration,
first, any shares proposed to be offered by the Company; second, Registrable
Securities requested to be registered by the Holder; and third, the other shares
requested to be included in such registration that the Company is so advised can
be sold in such offering and (B) in a registration for the account of a security
holder or holders other than the Holder exercising its or their respective
demand registration rights to the extent permitted by this Agreement, will
include in such registration, first, any shares requested to be registered by
the requesting security holder or holders; second, any shares (or, in the case
of the Holder, Registrable Securities) proposed to be offered by the Company and
the Holder, allocated evenly between the Company and the Holder; and third, the
other shares requested to be included in such registration that the Company is
so advised can be sold in such offering, allocated, if necessary, pro rata among
the holders thereof requesting such registration on the basis of the number of
the shares Beneficially Owned at the time by the holders requesting inclusion of
their shares and (ii) from and after the Threshold Date, the Company will
include shares of Common Stock (including Registrable Securities) in the same
order of priority set forth in subsection (i) of this Section 7(b), except that
Registrable Securities shall be included in any such registration on a parri
passu basis with any
7
<PAGE> 9
holders of Common Stock including shares in such registration by reason of their
exercise of incidental registration rights (allocated, if necessary, pro rata
among the holders (including the Holder) thereof requesting such registration on
the basis of the number of the shares (including Registrable Securities)
Beneficially Owned at the time by the holders (including the Holder) requesting
inclusion of their shares; provided, however, that in the event the Company will
not, by virtue of this paragraph, include in any such registration all of the
Registrable Securities requested to be included in such registration, the Holder
may, upon written notice to the Company given within three days of the time the
Holder first is notified of such matter, reduce the amount of Registrable
Securities it desires to have included in such registration, whereupon only the
Registrable Securities, if any, it desires to have included will be so included.
(c) The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 7 prior to the effectiveness
of such registration whether or not a Holder has elected to include Registrable
Securities in such registration.
8. Expenses of Registration. All Registration Expenses incurred in
complying with Section 3, Section 4 and Section 7 hereof shall be borne by the
Company. Notwithstanding the foregoing, any registration, qualification and
filing fees that relate to Shares in respect of which the Company has previously
paid a registration, qualification or filing fee shall be borne by the Holder.
All Selling Expenses shall be borne by the Holder.
9. Indemnification.
(a) The Company will indemnify to the fullest extent permitted
by law the Holder, each of its officers, directors, affiliates, employees,
advisors and agents and each person controlling the Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration has been
effected pursuant to this Agreement, against all expenses, claims, losses,
damages or liabilities (or actions in respect thereof), including reasonable
costs of investigation and any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration, or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act or
any other federal, state or common law rule or regulation applicable to the
Company in connection with any such registration, and the Company will reimburse
the Holder, each of its officers, directors, affiliates, employees, advisors and
agents and each person controlling the Holder, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action; provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Holder or other such person and stated to be specifically for use therein.
8
<PAGE> 10
(b) The Holder will, if Shares held by it are included in the
securities as to which such registration is being effected, indemnify the
Company, each of its directors, officers, affiliates, employees, advisors and
agents, each underwriter, if any, of the Company's securities covered by such a
registration statement and each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading and will reimburse the Company, each
underwriter and such directors, affiliates, officers, employees, advisors,
agents and control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by the Holder and stated to be specifically for use
therein; provided, however, that the obligation of the Holder shall be limited
to an amount equal to the net proceeds to the Holder from Shares sold in
connection with such registration.
(c) Each party entitled to indemnification under this Section
9 (the "Indemnified Party") shall give written notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, unless (i) the Indemnifying Party fails to
assume the defense of such action with counsel satisfactory to the Indemnified
Party in its reasonable judgment or (ii) the named parties to any such actions
(including any impleaded parties) have been advised by counsel that either (A)
representation of the Indemnified Party and the Indemnifying Party by the same
counsel would otherwise be inappropriate under applicable standards of
professional conduct or (B) there may be one or more legal defenses available to
the Indemnified Party that are different from or additional to those available
to the Indemnifying Party, in which event the Indemnifying Party shall pay for
one counsel (and any necessary additional local counsel) for the Indemnified
Party; and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect of such claim or litigation.
9
<PAGE> 11
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which any holder of
Shares exercising rights under this Agreement, or any officer, director,
affiliate, employee, advisors, agent or controlling person of any such holder,
makes a claim for indemnification pursuant to this Section 9 but it is
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 9 provides for indemnification in
such case, then, the Company and the Holder will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that the Holder is responsible
for the portion represented by the percentage that the public offering price of
its Shares offered by the registration statement bears to the public offering
price of all securities offered by such registration statement; and the Company
is responsible for the remaining portion; provided, however, that, in any such
case, (A) the Holder will not be required to contribute any amount in excess of
the net proceeds to the Holder from the sale of Shares offered by it pursuant to
such registration statement; and (B) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
10. Certain Restrictions.
(a) The Company will not grant registration rights with
respect to Common Stock that become exerciseable prior to the Threshold Date,
and the Company represents and warrants that is has not previously entered into
any such agreement. Nothing in this Agreement shall prohibit the Company from
granting registration rights that are exercisable from and after the Threshold
Date to any person who becomes an owner of shares of Common Stock after the date
hereof (including granting incidental registration rights with respect to any
Underwritten Offering required to be made hereunder other than pursuant to
Section 3).
(b) If requested by the lead managing underwriter in an
Underwritten Offering pursuant to the Shelf Registration Statement, the Company
agrees not to effect any registered sales in the public markets of Common Stock
for its own account (other than registrations relating to a business combination
transaction or an offering solely to employees or directors or pursuant to a
dividend reinvestment plan) during the period commencing on the date the Company
receives a notice from the Holder pursuant to Section 5(a) and continuing until
90 days after commencement of the Underwritten Offering (or such shorter period
as the lead managing underwriter shall request).
11. Obligations of the Company. Whenever required under this Agreement
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use all reasonable
efforts to have such registration statement declared effective.
10
<PAGE> 12
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement as may be necessary (i) to update and
keep such registration statement effective as provided in Section 11(a) above,
(ii) to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement and (iii)
to reflect a modification in the manner of distribution of the Registrable
Securities and, to the extent that such distribution is modified to employ an
underwriter, to supplement or amend the registration statement in the manner
required by such underwriter. Notwithstanding anything else to the contrary
contained herein, the Company shall not be required to disclose in any
prospectus or any amendment or supplement thereto prepared pursuant to Section 4
or Section 5(a) hereof (x) any confidential information concerning any matter
which is the subject of a notice given under Section 11(f) as to which the
Company has a bona fide interest in withholding disclosure, or (y) historical
financial statements or pro forma financial information required by Regulation
S-X of the Commission in connection with a business acquisition or disposition
prior to the date when such information would otherwise be required to be filed
with the Commission (including extensions pursuant to Item 7(a)(4) of Form 8-K).
(c) Furnish to the Holder such numbers of copies of a
prospectus, including a preliminary prospectus and any amendments or supplements
thereto, in conformity with the requirements of the Securities Act, and such
other documents as it may reasonably request in order to facilitate the
disposition of Registrable Securities owned by it.
(d) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holder, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions unless it is already
subject to such jurisdiction.
(e) In the event of any Underwritten Offering or DECS
Offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter or
underwriters of such offering. The Holder shall also enter into and perform its
obligations under such an agreement.
(f) Notify the Holder, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which the prospectus is used.
(g) Take all such other actions (including, without
limitation, causing representatives of the Company to participate in any "road
show" or "road shows" in connection with an Underwritten Offering or DECS
Offering) as the Holder or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities.
11
<PAGE> 13
(h) In connection with an Underwritten Offering or DECS
Offering, obtain a "cold comfort" letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by "cold comfort" letters, as the Holder's counsel or the managing
underwriter reasonably request.
(i) Cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed.
(j) Use reasonable efforts to take all other steps necessary
to effect the registration of the Registrable Securities contemplated hereby.
12. Information by the Holder. The Holder shall furnish to the Company
such information regarding the Holder, the shares of Common Stock or other
securities of the Company held by it and the distribution proposed by it as the
Company may reasonably request in writing and as shall be reasonably required in
connection with any registration referred to in this Agreement.
13. Securities Law Compliance.
(a) The Holder covenants that it will comply with the
Securities Act and with the Exchange Act with respect to Registrable Securities
included in any registration pursuant to this Agreement, recognizing that under
certain circumstances set forth in Section 11(f) hereof, the Company may notify
the Holder that the registration statement is not then current.
(b) The Holder agrees that, immediately upon receipt of a
notification as referred to in subparagraph (a) of this Section 13, it will
refrain from selling Registrable Securities under the Shelf Registration
Statement until (i) subsequently notified by the Company that the Shelf
Registration Statement is current or (ii) receipt of a favorable opinion of
counsel as hereinbelow provided. The Company agrees that it will consult with
the Holder following the giving of any such notification, and that in the event
the Holder is of the view that its securities could be sold in compliance with
the Securities Act and the Exchange Act without disclosure of the nonpublic
information which is the subject of the notification, the parties hereto agree
to be bound by an opinion of counsel reasonably satisfactory both to the Holder
and to the Company as to whether such sales can be made without violation of the
Securities Act or the Exchange Act.
14. Standoff Agreement. The Holder agrees that, upon request of the
lead managing underwriter of any Underwritten Offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Shares (other than those included in
such registration), except in a private sale or transfer or pursuant to a tender
offer, without the prior written consent of the Company or such underwriter, as
the case may be, for such period of time (not to exceed 90 days) from the
effective date of such registration as may be requested by the Company or such
lead managing underwriter.
15. Rule 144 Requirements. The Company agrees to:
12
<PAGE> 14
(a) comply with the requirements of Rule 144(c) under the
Securities Act with respect to current public information about the Company;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to the Holder upon request (i) a written statement
by the Company as to its compliance with the requirements of said Rule 144(c),
and the reporting requirements of the Securities Act and the Exchange Act, (ii)
a copy of the most recent annual or quarterly report of the Company, and (iii)
such other reports and documents of the Company as the Holder may reasonably
request to avail itself of any similar rule or regulation of the Commission
allowing itself to sell any such securities without registration.
16. Board Representation. The Company and the Purchaser acknowledge
that the nine-member Board of Directors of the Company on the date hereof
includes three designees of the Purchaser, and that it is intended that during
such time as the Registrable Securities Beneficially Owned by the Purchaser and
its Affiliates constitute at least 30%, 20%, or 10%, respectively, of the then
outstanding Common Stock, the Purchaser shall be entitled to designate for
nomination by the Board of Directors three, two and one director(s),
respectively, and to designate a successor in the case of any vacancy resulting
from the death, resignation or removal of any such designee prior to the
expiration of his or her term.
17. Voting
(a) During the period ending on the date that the Registrable
Securities Beneficially Owned by the Purchaser and its Affiliates constitute
less than 10% of the then outstanding Common Stock (the "Standstill Period"),
the Purchaser shall take such action as may be required so that all Voting
Securities owned by the Purchaser and its Affiliates are voted at any annual or
special meeting of the stockholders of the Company for the Board of Directors'
nominees for election to the Board of Directors of the Company (provided that
the Purchaser shall in any case be permitted to vote for its designees to be
nominated pursuant to Section 16 hereof).
(b) During the Standstill Period, the Purchaser, for itself
and its Affiliates, as holders of Voting Securities, agrees to be present, in
person or by proxy, at all meetings of stockholders of the Company so that all
Voting Securities beneficially owned by them may be counted for the purpose of
determining the presence of a quorum at such meetings.
18. Amendment of Rights Agreement. During the Standstill Period,
without the prior written consent of the Purchaser the Company shall not amend
the Rights Agreement so as to reduce below 20% the level at which a Person (as
defined in the Rights Agreement) shall become an Acquiring Person (as defined in
the Rights Agreement).
19. Notices Under Ancillary Agreements. During the Standstill Period
(so long as one designee of Purchaser is a member of the Company Board of
Directors), the Company shall provide copies to Purchaser of each written notice
sent or received by it under the notice
13
<PAGE> 15
provisions of the Distribution Agreement between Crane Co. and the Company dated
December 6, 1999 and the Employee Matters Agreement and Tax Allocation Agreement
each between Crane Co. and the Company dated December 16, 1999.
20. Restrictive Legends.
(a) Each certificate representing Shares or any securities
issued in respect of the Shares upon any stock split, stock dividend,
recapitalization, merger or similar event, shall (unless otherwise permitted by
the provisions of Section 2) be stamped with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR
THE COMPANY) REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.
(b) Each certificate representing Shares shall also be stamped
with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF AN AGREEMENT BETWEEN THE SHAREHOLDER AND
THE COMPANY WHICH INCLUDES CERTAIN RESTRICTIONS ON SALES OF THE
SECURITIES. COPIES OF THE AGREEMENT MAY BE OBTAINED UPON WRITTEN
REQUEST TO THE SECRETARY OF THE COMPANY.
(c) The Holder consents to the Company's making a notation on
its records and giving instructions to any transfer agent of the Shares in order
to implement the restrictions on transfer established in this Agreement. The
legend placed on any certificate pursuant to Section 20(a) and any notations or
instructions with respect to the Shares represented by such certificate will be
promptly removed, and the Company will promptly issue a certificate without such
legend to the Holder (x) if such Shares are registered under the Securities Act
in connection with a sale of such securities and a prospectus meeting the
requirements of Section 10 of the Securities Act is available, or (y) if the
Holder satisfies the requirements of Rule 144(k) and, where deemed necessary by
the Company in its sole discretion, provides the Company with an opinion of
counsel for the Holder who is, and whose legal opinion shall be, reasonably
satisfactory to the Company, to the effect that the Holder meets the
requirements of Rule 144(k).
14
<PAGE> 16
21. Notices, etc. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered (by hand or courier service) with signed confirmation of
receipt, addressed as follows:
if to the Purchaser:
Rugby PLC
Crown House
Rugby
CV212DT
England
Attn: Group Finance Director
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Toby S. Myerson, Esq.
Facsimile No.: (212) 757-3990
if to the Company:
Huttig Building Products, Inc.
Lakeview Center, Suite 400
14500 South Outer Forty Road
Chesterfield, Missouri 63017
Attn: Chief Executive Officer
with a copy to: General Counsel
or to such other address of a party of which such party has given notice to the
other parties pursuant to this Section.
22. Nontransferability. It is acknowledged and agreed by the Purchaser
that, except as expressly provided in this Agreement, its rights and benefits
hereunder may not be assigned or transferred to or held for the benefit of any
other person.
23. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws (other than those with respect to choice of law) of the
State of Delaware. Each of the parties hereto agrees that all claims in any
action or proceeding arising out of or related to this Agreement may be heard
and determined in any Delaware state court or federal court sitting in the State
of Delaware.
15
<PAGE> 17
24. Severability. The provisions of this Agreement are severable, and
in the event that any one or more provisions are deemed illegal or
unenforceable, the remaining provisions shall remain in full force and effect.
25. Successors. This Agreement shall be binding upon, shall be
enforceable against and shall inure to the benefit of any successor of the
Purchaser.
26. Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[remainder of page intentionally left blank]
16
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HUTTIG BUILDING PRODUCTS, INC.
By: Barry J. Kulpa
-------------------------------------
Barry J. Kulpa
President and Chief Executive Officer
THE RUGBY GROUP PLC
By: James J. Jordan
-------------------------------------
James J. Jordan
Solicitor
Group Legal Manager
17
<PAGE> 1
[RESTRICTED STOCK AGREEMENT] Exhibit 10.15
[TIME-BASED]
RESTRICTED STOCK AGREEMENT-
HUTTIG BUILDING PRODUCTS, INC. 1999 STOCK INCENTIVE PLAN
January 24, 2000
The parties to this Restricted Stock Agreement (the "Agreement") are
Huttig Building Products, Inc., a Delaware corporation (the "Corporation") and
Barry J. Kulpa, an employee of the Corporation (the "Participant").
Pursuant to the terms of the Huttig Building Products, Inc. 1999 Stock
Incentive Plan (the "Plan"), the Corporation, through the Organization and
Compensation Committee of its Board of Directors (the "Committee"), has
determined to award to the Participant 65,000 shares of restricted stock subject
to the terms of the Plan, as of the date of this Agreement (the "Grant Date").
As a condition to such award and pursuant to Section 8(a) of the Plan,
the Corporation and the Participant hereby enter into this Agreement and agree
to the terms and conditions set forth herein.
1. DEFINITIONS.
Capitalized terms in this Agreement not otherwise defined herein shall
have the meanings contained in the Plan. For purposes of this Agreement, and for
purposes of interpreting the terms of the Plan, the following terms shall have
the following meanings:
(a) "Restriction Period" shall mean a period commencing on the
Grant Date and ending for 20% of the grant on each subsequent
anniversary date for five years ending January 24, 2000.
2. AWARD OF HUTTIG SHARES.
Pursuant to the provisions of the Plan and this Agreement and by the
authority of the Committee, the Corporation awards 65,000 shares (the
"Restricted Stock") of Huttig Building Products, Inc. common stock, par value
$.01 per share ("Huttig Shares"), to the Participant.
3. RESTRICTIONS AND RIGHTS.
(a) During the Restriction Period, the Restricted Stock is subject
to forfeiture in the event that the Participant attempts to
sell, transfer, assign or pledge the Restricted Shares (the
"Restrictions") or the Participant violates one of the
covenants contained in Section 6 of this Agreement. Except as
provided under Section 5 of
<PAGE> 2
this Agreement, the Restrictions on the Restricted Stock shall
automatically lapse:
(i) upon expiration of the Restriction Period;
(ii) in the event of the Participant's Retirement,
Permanent Disability, or death or in the event of a
Change-in-Control; provided, however, that in the
event the Participant requests early retirement or
otherwise leaves the employ of the Corporation, the
Committee may, upon the Participant's request and in
the Committee's sole discretion, waive or revise this
provision to permit the lapse of Restrictions on all
or a portion of the Restricted Stock awarded
hereunder on or prior to such early retirement or
other departure from the employ of the Corporation;
or
(iii) as may be otherwise provided under the terms of the
Plan.
(b) During the Restriction Period, the Participant will be
entitled to all other rights of a shareholder of the
Corporation with respect to the Restricted Stock, including
the right to vote the Restricted Stock and receive dividends
and other distributions thereon.
4. STOCK CERTIFICATE.
Each stock certificate evidencing an award of Restricted Stock shall be
registered in the name of the Participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such award
substantially in the following form (the "Legend"):
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Huttig Building Products, Inc. 1999 Stock Incentive
Plan and an Agreement entered into between the registered owner and
Huttig Building Products, Inc. Copies of such Plan and Agreement are on
file in the offices of Huttig Building Products, Inc., Lakeview Center,
Suite 400, 14500 South Outer Forty Road, Chesterfield, MO 63017."
5. TERMINATION OF EMPLOYMENT.
The Participant's termination of employment during the Restriction
Period shall result in the forfeiture of all Restricted Stock as to which the
Restrictions have not lapsed, and the Participant shall be required to return
all applicable stock certificates to the Corporation.
6. COVENANTS.
(a) The Participant agrees to be bound by all terms and provisions
of the Plan, and all such provisions shall be deemed a part of
this Agreement for all purposes.
-2-
<PAGE> 3
(b) The Participant agrees to provide the Corporation, when and if
requested, with any information or documentation which the
Corporation believes necessary or advisable in connection with
the administration of the Plan, including data required to
assure compliance with the requirements of the Securities and
Exchange Commission, of any stock exchange upon which the
Huttig Shares are then listed, or of any applicable federal,
state or other law.
(c) The Participant agrees, upon due notice and demand, to
promptly pay to the Corporation the cash amount of any taxes
which are required to be withheld by the Corporation either at
the time the Restriction Period lapses or at the time of award
(in cases where the Participant duly elects to be taxed at
such earlier time); provided, however, the Corporation, in its
sole discretion, may accept Restricted Stock awarded hereunder
or Huttig Shares otherwise previously acquired in satisfaction
thereof.
7. NO COVENANT OF EMPLOYMENT.
Neither the execution and delivery of this Agreement nor the granting
of any award evidenced by this Agreement shall constitute, or be evidence of,
any agreement or understanding, express or implied, on the part of the
Corporation or any of its subsidiaries to employ the Participant for any
specific period.
8. ADMINISTRATION AND INTERPRETATION OF PLAN AND AGREEMENT.
In the event of any conflict between the terms of this Agreement and
those of the Plan, the provisions of the Plan shall prevail.
The Committee shall have full authority and discretion, subject only to
the terms of the Plan, to decide all matters relating to the administration or
interpretation of the Plan and this Agreement, and all such action by the
Committee shall be final, conclusive, and binding upon the Corporation and the
Participant. The Committee shall have full authority and discretion to modify at
any time the Restriction Period, the Restrictions, the other terms and
conditions of this Agreement, the Legend and any other instrument evidencing
this award, provided that no such modification shall increase the benefit under
such award beyond that which the Committee could have originally granted at the
time of the award, or shall impair the rights of the Participant under such
award except in accordance with the Plan, or any applicable agreement or
applicable law, or with consent of the Participant.
This Restricted Stock Agreement is deemed to be issued in, the award
evidenced hereby is deemed to be granted in, and both shall be governed by the
laws of, the State of Delaware. There have been no representations to the
Participant other than those contained herein.
-3-
<PAGE> 4
9. DELIVERY.
All certificates for Restricted Stock delivered under the Plan shall be
subject to such stop-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which Huttig Shares
are then listed and any applicable federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
The stock certificates evidencing the Restricted Stock shall be held in
custody by the Corporation or its designee until the Restrictions thereon shall
have lapsed and the Committee may require, as a condition of any award, that the
Participant shall have delivered a stock power endorsed in blank relating to the
Restricted Stock covered by such award.
As soon as administratively practicable following the lapse of the
Restrictions with respect to any of the Restricted Stock without a forfeiture,
and upon the satisfaction of all other applicable conditions as to the
Restricted Stock, including, but not limited to, the payment by the Participant
of all applicable withholding taxes, the Corporation shall deliver or cause to
be delivered to the Participant a certificate or certificates for the applicable
Restricted Stock which shall not bear the Legend required under Section 4 of the
Agreement.
10. AMENDMENT.
The terms of this Agreement shall be subject to the terms of the Plan
as the Plan may be amended from time to time by the Board of Directors of the
Corporation unless any such amendment by its terms or by its clear intent is
inapplicable to this Agreement.
11. NOTICE.
Any notice to the Corporation provided for in this Agreement shall be
in writing and addressed to it in care of the Secretary of the Corporation, and
any notice to the Participant shall be in writing and addressed to the
Participant at the address contained in payroll records at the time or to such
other address designated in writing by the Participant.
IN WITNESS WHEREOF, the parties have executed this Restricted Stock
Agreement effective the day and year first above written.
HUTTIG BUILDING PRODUCTS, INC.
By: /s/ Gregory Lambert
---------------------------
Title: Vice-President
------------------------
PARTICIPANT
/s/ Barry J. Kulpa
------------------------------
-4-
<PAGE> 1
Exhibit 10.16
[RESTRICTED STOCK AGREEMENT]
RESTRICTED STOCK AGREEMENT-
HUTTIG BUILDING PRODUCTS, INC. 1999 STOCK INCENTIVE PLAN
December 17, 1999
The parties to this Restricted Stock Agreement (the "Agreement") are
Huttig Building Products, Inc., a Delaware corporation (the "Corporation"), and
Barry Kulpa, an employee of the Corporation (the "Participant").
In 1999, 7,500 shares of restricted Crane Co. common stock were awarded
to the Participant. Pursuant to the terms of the Employee Matters Agreement
between the Corporation and Crane Co., dated December 16, 1999, these restricted
shares of Crane Co. common stock were converted into 32,560 restricted shares of
Huttig Building Products, Inc. common stock. As of the date of this Agreement
(the "Grant Date"), the converted restricted shares shall be subject to the
terms of the Huttig Building Products, Inc. 1999 Stock Incentive Plan (the
"Plan"), which is administered by the Organization and Compensation Committee of
the Corporation's Board of Directors (the "Committee").
As a condition to such award and pursuant to Section 8(a) of the Plan,
the Corporation and the Participant hereby enter into this Agreement and agree
to the terms and conditions set forth herein.
1. DEFINITIONS.
Capitalized terms in this Agreement not otherwise defined herein shall
have the meanings contained in the Plan. For purposes of this Agreement, and for
purposes of interpreting the terms of the Plan, the following terms shall have
the following meanings:
(a) "Restriction Period" shall mean a period commencing on the
Grant Date and ending on April 20, 2004.
2. AWARD OF HUTTIG SHARES.
Pursuant to the provisions of the Plan and this Agreement and by the
authority of the Committee, the Corporation awards 32,560 shares (the
"Restricted Stock") of Huttig Building Products, Inc. common stock, par value
$.01 per share ("Huttig Shares"), to the Participant.
3. RESTRICTIONS AND RIGHTS.
(a) During the Restriction Period, the Restricted Stock is subject
to forfeiture in the event that the Participant attempts to
sell, transfer, assign or pledge the Restricted Shares (the
"Restrictions") or the Participant violates one of the
covenants
<PAGE> 2
contained in Section 6 of this Agreement. Except as provided
under Section 5 of this Agreement, the Restrictions on the
Restricted Stock shall automatically lapse:
(i) upon expiration of the Restriction Period;
(ii) in the event of the Participant's Retirement,
Permanent Disability, or death or in the event of a
Change-in-Control; provided, however, that in the
event the Participant requests early retirement or
otherwise leaves the employ of the Corporation, the
Committee may, upon the Participant's request and in
the Committee's sole discretion, waive or revise this
provision to permit the lapse of Restrictions on all
or a portion of the Restricted Stock awarded
hereunder on or prior to such early retirement or
other departure from the employ of the Corporation;
(iii) as may be otherwise provided under the terms of the
Plan.
(b) During the Restriction Period, the Participant will be
entitled to all other rights of a shareholder of the
Corporation with respect to the Restricted Stock, including
the right to vote the Restricted Stock and receive dividends
and other distributions thereon.
4. STOCK CERTIFICATE.
Each stock certificate evidencing an award of Restricted Stock shall be
registered in the name of the Participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such award
substantially in the following form (the "Legend"):
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Huttig Building Products, Inc. 1999 Stock Incentive
Plan and an Agreement entered into between the registered owner and
Huttig Building Products, Inc. Copies of such Plan and Agreement are on
file in the offices of Huttig Building Products, Inc., Lakeview Center,
Suite 400, 14500 South Outer Forty Road, Chesterfield, MO 63017."
5. TERMINATION OF EMPLOYMENT.
The Participant's termination of employment during the Restriction
Period shall result in the forfeiture of all Restricted Stock as to which the
Restrictions have not lapsed, and the Participant shall be required to return
all applicable stock certificates to the Corporation.
6. COVENANTS.
(a) The Participant agrees to be bound by all terms and provisions
of the Plan, and all such provisions shall be deemed a part of
this Agreement for all purposes.
- 2 -
<PAGE> 3
(b) The Participant agrees to provide the Corporation, when and if
requested, with any information or documentation which the
Corporation believes necessary or advisable in connection with
the administration of the Plan, including data required to
assure compliance with the requirements of the Securities and
Exchange Commission, of any stock exchange upon which the
Huttig Shares are then listed, or of any applicable federal,
state or other law.
(c) The Participant agrees, upon due notice and demand, to
promptly pay to the Corporation the cash amount of any taxes
which are required to be withheld by the Corporation either at
the time the Restriction Period lapses or at the time of award
(in cases where the Participant duly elects to be taxed at
such earlier time); provided, however, the Corporation, in its
sole discretion, may accept Restricted Stock awarded hereunder
or Huttig Shares otherwise previously acquired in satisfaction
thereof.
7. NO COVENANT OF EMPLOYMENT.
Neither the execution and delivery of this Agreement nor the granting
of any award evidenced by this Agreement shall constitute, or be evidence of,
any agreement or understanding, express or implied, on the part of the
Corporation or any of its subsidiaries to employ the Participant for any
specific period.
8. ADMINISTRATION AND INTERPRETATION OF PLAN AND AGREEMENT.
In the event of any conflict between the terms of this Agreement and
those of the Plan, the provisions of the Plan shall prevail.
The Committee shall have full authority and discretion, subject only to
the terms of the Plan, to decide all matters relating to the administration or
interpretation of the Plan and this Agreement, and all such action by the
Committee shall be final, conclusive, and binding upon the Corporation and the
Participant. The Committee shall have full authority and discretion to modify at
any time the Restriction Period, the Restrictions, the other terms and
conditions of this Agreement, the Legend and any other instrument evidencing
this award, provided that no such modification shall increase the benefit under
such award beyond that which the Committee could have originally granted at the
time of the award, or shall impair the rights of the Participant under such
award except in accordance with the Plan, or any applicable agreement or
applicable law, or with consent of the Participant.
This Restricted Stock Agreement is deemed to be issued in, the award
evidenced hereby is deemed to be granted in, and both shall be governed by the
laws of, the State of Delaware. There have been no representations to the
Participant other than those contained herein.
- 3 -
<PAGE> 4
9. DELIVERY.
All certificates for Restricted Stock delivered under the Plan shall be
subject to such stop-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which Huttig Shares
are then listed and any applicable federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
The stock certificates evidencing the Restricted Stock shall be held in
custody by the Corporation or its designee until the Restrictions thereon shall
have lapsed and the Committee may require, as a condition of any award, that the
Participant shall have delivered a stock power endorsed in blank relating to the
Restricted Stock covered by such award.
As soon as administratively practicable following the lapse of the
Restrictions with respect to any of the Restricted Stock without a forfeiture,
and upon the satisfaction of all other applicable conditions as to the
Restricted Stock, including, but not limited to, the payment by the Participant
of all applicable withholding taxes, the Corporation shall deliver or cause to
be delivered to the Participant a certificate or certificates for the applicable
Restricted Stock which shall not bear the Legend required under Section 4 of the
Agreement.
10. AMENDMENT.
The terms of this Agreement shall be subject to the terms of the Plan
as the Plan may be amended from time to time by the Board of Directors of the
Corporation unless any such amendment by its terms or by its clear intent is
inapplicable to this Agreement.
11. NOTICE.
Any notice to the Corporation provided for in this Agreement shall be
in writing and addressed to it in care of the Secretary of the Corporation, and
any notice to the Participant shall be in writing and addressed to the
Participant at the address contained in payroll records at the time or to such
other address designated in writing by the Participant.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Restricted Stock
Agreement effective the day and year first above written.
HUTTIG BUILDING PRODUCTS, INC.
By: /s/ Gregory D. Lambert
---------------------------------
Title: Vice President
------------------------------
PARTICIPANT
/s/ Barry J. Kulpa
------------------------------------
- 5 -
<PAGE> 1
Exhibit 10.17
[RESTRICTED STOCK AGREEMENT]
RESTRICTED STOCK AGREEMENT-
HUTTIG BUILDING PRODUCTS, INC. 1999 STOCK INCENTIVE PLAN
December 17, 1999
The parties to this Restricted Stock Agreement (the "Agreement") are
Huttig Building Products, Inc., a Delaware corporation (the "Corporation"), and
Barry Kulpa, an employee of the Corporation (the "Participant").
In 1998, 7,500 shares of restricted Crane Co. common stock were awarded
to the Participant. Pursuant to the terms of the Employee Matters Agreement
between the Corporation and Crane Co., dated December 16, 1999, these restricted
shares of Crane Co. common stock were converted into 32,561 restricted shares of
Huttig Building Products, Inc. common stock. As of the date of this Agreement
(the "Grant Date"), the converted restricted shares shall be subject to the
terms of the Huttig Building Products, Inc. 1999 Stock Incentive Plan (the
"Plan"), which is administered by the Organization and Compensation Committee of
the Corporation's Board of Directors (the "Committee").
As a condition to such award and pursuant to Section 8(a) of the Plan,
the Corporation and the Participant hereby enter into this Agreement and agree
to the terms and conditions set forth herein.
1. DEFINITIONS.
Capitalized terms in this Agreement not otherwise defined herein shall
have the meanings contained in the Plan. For purposes of this Agreement, and for
purposes of interpreting the terms of the Plan, the following terms shall have
the following meanings:
(a) "Restriction Period" shall mean a period commencing on the
Grant Date and ending on April 20, 2003.
2. AWARD OF HUTTIG SHARES.
Pursuant to the provisions of the Plan and this Agreement and by the
authority of the Committee, the Corporation awards 32,561 shares (the
"Restricted Stock") of Huttig Building Products, Inc. common stock, par value
$.01 per share ("Huttig Shares"), to the Participant.
3. RESTRICTIONS AND RIGHTS.
(a) During the Restriction Period, the Restricted Stock is subject
to forfeiture in the event that the Participant attempts to
sell, transfer, assign or pledge the Restricted Shares (the
"Restrictions") or the Participant violates one of the
covenants
<PAGE> 2
contained in Section 6 of this Agreement. Except as provided
under Section 5 of this Agreement, the Restrictions on the
Restricted Stock shall automatically lapse:
(i) upon expiration of the Restriction Period;
(ii) in the event of the Participant's Retirement,
Permanent Disability, or death or in the event of a
Change-in-Control; provided, however, that in the
event the Participant requests early retirement or
otherwise leaves the employ of the Corporation, the
Committee may, upon the Participant's request and in
the Committee's sole discretion, waive or revise this
provision to permit the lapse of Restrictions on all
or a portion of the Restricted Stock awarded
hereunder on or prior to such early retirement or
other departure from the employ of the Corporation;
(iii) as may be otherwise provided under the terms of the
Plan.
(b) During the Restriction Period, the Participant will be
entitled to all other rights of a shareholder of the
Corporation with respect to the Restricted Stock, including
the right to vote the Restricted Stock and receive dividends
and other distributions thereon.
4. STOCK CERTIFICATE.
Each stock certificate evidencing an award of Restricted Stock shall be
registered in the name of the Participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such award
substantially in the following form (the "Legend"):
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Huttig Building Products, Inc. 1999 Stock Incentive
Plan and an Agreement entered into between the registered owner and
Huttig Building Products, Inc. Copies of such Plan and Agreement are on
file in the offices of Huttig Building Products, Inc., Lakeview Center,
Suite 400, 14500 South Outer Forty Road, Chesterfield, MO 63017."
5. TERMINATION OF EMPLOYMENT.
The Participant's termination of employment during the Restriction
Period shall result in the forfeiture of all Restricted Stock as to which the
Restrictions have not lapsed, and the Participant shall be required to return
all applicable stock certificates to the Corporation.
6. COVENANTS.
(a) The Participant agrees to be bound by all terms and provisions
of the Plan, and all such provisions shall be deemed a part of
this Agreement for all purposes.
- 2 -
<PAGE> 3
(b) The Participant agrees to provide the Corporation, when and if
requested, with any information or documentation which the
Corporation believes necessary or advisable in connection with
the administration of the Plan, including data required to
assure compliance with the requirements of the Securities and
Exchange Commission, of any stock exchange upon which the
Huttig Shares are then listed, or of any applicable federal,
state or other law.
(c) The Participant agrees, upon due notice and demand, to
promptly pay to the Corporation the cash amount of any taxes
which are required to be withheld by the Corporation either at
the time the Restriction Period lapses or at the time of award
(in cases where the Participant duly elects to be taxed at
such earlier time); provided, however, the Corporation, in its
sole discretion, may accept Restricted Stock awarded hereunder
or Huttig Shares otherwise previously acquired in satisfaction
thereof.
7. NO COVENANT OF EMPLOYMENT.
Neither the execution and delivery of this Agreement nor the granting
of any award evidenced by this Agreement shall constitute, or be evidence of,
any agreement or understanding, express or implied, on the part of the
Corporation or any of its subsidiaries to employ the Participant for any
specific period.
8. ADMINISTRATION AND INTERPRETATION OF PLAN AND AGREEMENT.
In the event of any conflict between the terms of this Agreement and
those of the Plan, the provisions of the Plan shall prevail.
The Committee shall have full authority and discretion, subject only to
the terms of the Plan, to decide all matters relating to the administration or
interpretation of the Plan and this Agreement, and all such action by the
Committee shall be final, conclusive, and binding upon the Corporation and the
Participant. The Committee shall have full authority and discretion to modify at
any time the Restriction Period, the Restrictions, the other terms and
conditions of this Agreement, the Legend and any other instrument evidencing
this award, provided that no such modification shall increase the benefit under
such award beyond that which the Committee could have originally granted at the
time of the award, or shall impair the rights of the Participant under such
award except in accordance with the Plan, or any applicable agreement or
applicable law, or with consent of the Participant.
This Restricted Stock Agreement is deemed to be issued in, the award
evidenced hereby is deemed to be granted in, and both shall be governed by the
laws of, the State of Delaware. There have been no representations to the
Participant other than those contained herein.
- 3 -
<PAGE> 4
9. DELIVERY.
All certificates for Restricted Stock delivered under the Plan shall be
subject to such stop-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which Huttig Shares
are then listed and any applicable federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
The stock certificates evidencing the Restricted Stock shall be held in
custody by the Corporation or its designee until the Restrictions thereon shall
have lapsed and the Committee may require, as a condition of any award, that the
Participant shall have delivered a stock power endorsed in blank relating to the
Restricted Stock covered by such award.
As soon as administratively practicable following the lapse of the
Restrictions with respect to any of the Restricted Stock without a forfeiture,
and upon the satisfaction of all other applicable conditions as to the
Restricted Stock, including, but not limited to, the payment by the Participant
of all applicable withholding taxes, the Corporation shall deliver or cause to
be delivered to the Participant a certificate or certificates for the applicable
Restricted Stock which shall not bear the Legend required under Section 4 of the
Agreement.
10. AMENDMENT.
The terms of this Agreement shall be subject to the terms of the Plan
as the Plan may be amended from time to time by the Board of Directors of the
Corporation unless any such amendment by its terms or by its clear intent is
inapplicable to this Agreement.
11. NOTICE.
Any notice to the Corporation provided for in this Agreement shall be
in writing and addressed to it in care of the Secretary of the Corporation, and
any notice to the Participant shall be in writing and addressed to the
Participant at the address contained in payroll records at the time or to such
other address designated in writing by the Participant.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Restricted Stock
Agreement effective the day and year first above written.
HUTTIG BUILDING PRODUCTS, INC.
By: /s/ Gregory D. Lambert
---------------------------------
Title: Vie President
------------------------------
PARTICIPANT
/s/ Barry J. Kulpa
------------------------------------
- 5 -
<PAGE> 1
EXHIBIT 21.1
Subsidiaries of the Company.
Name of Subsidiary Jurisdiction of Incorporation
CIPCO Inc. Illinois
Rondel's Inc. Washington
Rugby USA, Inc. Georgia
Rugby Building Products, Inc. Delaware
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statements of
Huttig Building Products, Inc. on Form S-8 (Nos. 333-92495, 333-92497, and
333-92499) of our report dated January 24, 2000 (February 11, 2000 as to Note
14), appearing in the Annual Report on Form 10-K of Huttig Building Products,
Inc. for the year ended December 31, 1999.
/s/ Deloitte & Touche LLP
St. Louis, Missouri
March 2, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1999 CONSOLIDATED BALANCE SHEET, CONSOLIDATED INCOME STATEMENT FOR THE YEAR
ENDED DECEMBER 31, 1999 AND NOTES TO THE FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 6,794
<SECURITIES> 0
<RECEIVABLES> 117,278
<ALLOWANCES> 676
<INVENTORY> 78,133
<CURRENT-ASSETS> 205,564
<PP&E> 72,748
<DEPRECIATION> 33,207
<TOTAL-ASSETS> 301,351
<CURRENT-LIABILITIES> 109,344
<BONDS> 121,017
0
0
<COMMON> 208
<OTHER-SE> 67,095
<TOTAL-LIABILITY-AND-EQUITY> 301,351
<SALES> 800,338
<TOTAL-REVENUES> 800,338
<CGS> 638,760
<TOTAL-COSTS> 777,553
<OTHER-EXPENSES> (609)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,823
<INCOME-PRETAX> 14,353
<INCOME-TAX> 5,889
<INCOME-CONTINUING> 8,464
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,464
<EPS-BASIC> .59
<EPS-DILUTED> .59
</TABLE>
