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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES
OF SECURITIES PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
VIRCO MFG. CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-1613718
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
2027 HARPERS WAY
TORRANCE, CALIFORNIA 90501
(Address of principal executive offices) (zip code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
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Preferred Stock Purchase Rights American Stock Exchange
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On October 15, 1996 the Board of Directors of Virco Mfg.
Corporation (the "Company") authorized and declared a dividend of one preferred
stock purchase right (a "Right") for each share of common stock, par value $.01
per share, of the Company (the "Common Shares"). The dividend is payable on
October 25, 1996 (the "Record Date") to the holders of record of Common Shares
as of the close of business on such date.
The following is a brief description of the Rights. It is
intended to provide a general description only and is subject to the detailed
terms and conditions of a Rights Agreement (the "Rights Agreement") dated as of
October 18, 1996 by and between the Company and Chase Manhattan Bank as Rights
Agent (the "Rights Agent").
1. COMMON SHARE CERTIFICATES REPRESENTING RIGHTS
Until the Distribution Date (as defined in Section 2
below), (a) the Rights shall not be exercisable, (b) the Rights shall be
attached to and trade only together with the Common Shares and (c) the stock
certificates representing Common Shares shall also represent the Rights attached
to such Common Shares. Common Share certificates issued after the Record Date
and prior to the Distribution Date shall contain a notation incorporating the
Rights Agreement by reference.
2. DISTRIBUTION DATE
The "Distribution Date" is the earliest of (a) the
tenth business day following the date of the first public announcement that any
person (other than the Company or certain related entities, and with certain
additional exceptions) has become the beneficial owner of 20% or more of the
then outstanding Common Shares (such person is a "20% Stockholder" and the date
of such public announcement is the "20% Ownership Date"), (b) the tenth business
day (or such later day as shall be designated by the Board of Directors)
following the date of the commencement of, or the announcement of an intention
to make, a tender offer or exchange offer, the consummation of which would cause
any person to become a 20% Stockholder or (c) the first date, on or after the
20% Ownership Date, upon which the Company is acquired in a merger or other
business combination in which the Company is not the surviving corporation or in
which the outstanding Common Shares are changed into or exchanged for stock or
assets of another person, or upon which 50% or more of the Company's
consolidated assets or earning power are sold (other than in transactions in the
ordinary course of business). In calculating the percentage of outstanding
Common Shares that are beneficially owned by any person, such person shall be
deemed to beneficially own any Common Shares issuable upon the exercise,
exchange or conversion of any options, warrants or other securities beneficially
owned by such person; provided, however, that such Common Shares issuable upon
such exercise shall not be deemed outstanding for the purpose of calculating the
percentage of Common Shares that are beneficially owned by any other person.
Notwithstanding the foregoing, no person shall be deemed a "20% Stockholder"
until such person becomes the beneficial owner of a percentage of the then
outstanding Common Shares that is at least 1% more than the percentage of the
outstanding Common Shares beneficially owned by such person on October 18, 1996.
In addition, if, after October 18, 1996, any person becomes the beneficial owner
of at least 20% of the then outstanding Common Shares as a result of any
increase in the number of Common Shares issuable upon the exercise, exchange or
conversion of outstanding securities, or any decrease in the number of
outstanding Common Shares resulting from any stock repurchase plan or self
tender offer of the Company, then such person shall not be deemed a "20%
Stockholder" until such person thereafter acquires beneficial ownership of, in
the aggregate, a number of additional Common Shares equal to 1% or more of the
then outstanding Common Shares.
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Upon the close of business on the Distribution Date,
the Rights shall separate from the Common Shares, Right certificates shall be
issued and the Rights shall become exercisable to purchase Preferred Shares as
described in Section 5 below.
3. ISSUANCE OF RIGHT CERTIFICATES
As soon as practicable following the Distribution
Date, separate certificates representing only Rights shall be mailed to the
holders of record of Common Shares as of the close of business on the
Distribution Date, and such separate Right certificates alone shall represent
such Rights from and after the Distribution Date.
4. EXPIRATION OF RIGHTS
The Rights shall expire on October 25, 2006 unless
earlier redeemed or exchanged, unless the Distribution Date has previously
occurred and the Rights have separated from the Common Shares, in which case the
Rights will remain outstanding for ten years.
5. EXERCISE OF RIGHTS
Unless the Rights have expired or been redeemed or
exchanged, they may be exercised, at the option of the holders, pursuant to
paragraphs (a), (b) or (c) below. No Right may be exercised more than once or
pursuant to more than one of such paragraphs. From and after the first event of
the type described in paragraphs (b) or (c) below, each Right that is
beneficially owned by a 20% Stockholder or that was attached to a Common Share
that is subject to an option beneficially owned by a 20% Stockholder shall be
void.
(a) Right to Purchase Preferred Shares. From and
after the close of business on the Distribution Date, each Right (other
than a Right that has become void) shall be exercisable to purchase one
one-hundredth of a share of Series A Junior Participating Cumulative
Preferred Stock, par value $.01 per share, of the Company (the
"Preferred Shares"), at an exercise price of $50 (fifty dollars) (the
"Exercise Price"). Prior to the Distribution Date, the Company may
substitute for all or any portion of the Preferred Shares that would
otherwise be issuable upon exercise of the Rights, cash, assets or
other securities having the same aggregate value as such Preferred
Shares. The Preferred Shares are nonredeemable and, unless otherwise
provided in connection with the creation of a subsequent series of
preferred stock, are subordinate to any other series of the Company's
preferred stock, whether issued before or after the issuance of the
Preferred Shares. The Preferred Shares may not be issued except upon
exercise of Rights. The holder of a Preferred Share is entitled to
receive when, as and if declared, the greater of (i) cash and non-cash
dividends in an amount equal to 100 times the dividends declared on
each Common Share or (ii) a preferential annual dividend of $1.00 per
Preferred Share ($.01 per one one-hundredth of a Preferred Share). In
the event of liquidation, the holders of Preferred Shares shall be
entitled to receive a liquidation payment in an amount equal to the
greater of (1) $1.00 per Preferred Share ($.01 per one one-hundredth of
a Preferred Share), plus all accrued and unpaid dividends and
distributions on the Preferred Shares, or (2) an amount equal to 100
times the aggregate amount to be distributed per Common Share. Each
Preferred Share has 100 votes, voting together with the Common Shares.
In the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, the holder of a Preferred Share shall be
entitled to receive 100 times the amount received per Common Share. The
rights of the Preferred Shares as to dividends, voting and liquidation
preferences are protected by antidilution provisions. It is anticipated
that the value of one one-hundredth of a Preferred Share should
approximate the value of one Common Share.
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(b) Right to Purchase Common Shares of the Company.
From and after the close of business on the tenth business day
following the 20% Ownership Date, each Right (other than a Right that
has become void) shall be exercisable to purchase, at the Exercise
Price (initially $50), Common Shares with a market value equal to two
times the Exercise Price. If the Company does not have sufficient
Common Shares available for all Rights to be exercised, the Company
shall substitute for all or any portion of the Common Shares that would
otherwise be issuable upon the exercise of the Rights, cash, assets or
other securities having the same aggregate value as such Common Shares.
(c) Right to Purchase Common Stock of a Successor
Corporation. If, on or after the 20% Ownership Date, (i) the Company is
acquired in a merger or other business combination in which the Company
is not the surviving corporation, (ii) the Company is the surviving
corporation in a merger or other business combination in which all or
part of the outstanding Common Shares are changed into or exchanged for
stock or assets of another person or (iii) 50% or more of the Company's
consolidated assets or earning power are sold (other than in
transactions in the ordinary course of business), then each Right
(other than a Right that has become void) shall thereafter be
exercisable to purchase, at the Exercise Price (initially $50), shares
of common stock of the surviving corporation or purchaser,
respectively, with an aggregate market value equal to two times the
Exercise Price.
6. ADJUSTMENTS TO PREVENT DILUTION
The Exercise Price, the number of outstanding Rights
and the number of Preferred Shares or Common Shares issuable upon exercise of
the Rights are subject to adjustment from time to time as set forth in the
Rights Agreement in order to prevent dilution. With certain exceptions, no
adjustment in the Exercise Price shall be required until cumulative adjustments
require an adjustment of at least 1%.
7. CASH PAID INSTEAD OF ISSUING FRACTIONAL SECURITIES
No fractional securities shall be issued upon
exercise of a Right (other than fractions of Preferred Shares that are integral
multiples of one one-hundredth of a Preferred Share and that may, at the
election of the Company, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash shall be made based on the market price of such
securities on the last trading date prior to the date of exercise.
8. REDEMPTION
At any time prior to the earlier of (a) the tenth
business day (or such later day as shall be designated by the Board of
Directors) following the date of the commencement of, or the announcement of an
intention to make, a tender offer or exchange offer, the consummation of which
would cause any person to become a 20% Stockholder, (b) the tenth business day
after the 20% Ownership Date or (c) the first event of the type giving rise to
exercise rights under Section 5(c) above, the Board of Directors may, at its
option, direct the Company to redeem the Rights in whole, but not in part, at a
price of $.001 per Right (the "Redemption Price"), and the Company shall so
redeem the Rights. Immediately upon such action by the Board of Directors (the
date of such action is the "Redemption Date"), the right to exercise Rights
shall terminate and the only right of the holders of Rights thereafter shall be
to receive the Redemption Price.
9. EXCHANGE
At any time after the 20% Ownership Date and prior to
the first date thereafter upon which a 20% Stockholder shall be the beneficial
owner of 50% or more of the outstanding Common Shares, the Board of Directors
may, at its option, direct the Company to
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exchange all, but not less than all, of the then outstanding Rights for Common
Shares at an exchange ratio per Right equal to that number of Common Shares
which, as of the date of the Board of Directors' action, has a current market
price equal to the difference between the Exercise Price and the current market
price of the shares that would otherwise be issuable upon exercise of a Right on
such date (the "Exchange Ratio"), and the Company shall so exchange the Rights.
Immediately upon such action by the Board of Directors, the right to exercise
Rights shall terminate and the only right of the holders of Rights thereafter
shall be to receive a number of Common Shares equal to the Exchange Ratio.
10. NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as
such, shall have no rights as a stockholder of the Company (other than rights
resulting from such holder's ownership of Common Shares), including, without
limitation, the right to vote or to receive dividends.
11. AMENDMENT OF RIGHTS AGREEMENT
The Board of Directors may, from time to time,
without the approval of any holder of Rights, direct the Company and the Rights
Agent to supplement or amend any provision of the Rights Agreement in any
manner, whether or not such supplement or amendment is adverse to any holder of
Rights, and the Company and the Rights Agent shall so supplement or amend such
provision; provided, however, that from and after the earliest of (a) the tenth
business day (or such later day as shall be designated by the Board of
Directors) following the date of the commencement of, or the announcement of an
intention to make, a tender offer or exchange offer, the consummation of which
would cause any person to become a 20% Stockholder, (b) the 20% Ownership Date,
(c) the first event of the type giving rise to exercise rights under Section
5(c) above, or (d) the Redemption Date, the Rights Agreement shall not be
supplemented or amended in any manner that would materially and adversely affect
any holder of outstanding Rights other than a 20% Stockholder; and provided
further that from and after the first date upon which there shall exist a 20%
Stockholder, the Rights Agreement shall not be supplemented or amended in any
manner without the approval of a majority of the Company's directors who were
directors prior to such date.
ITEM 2. EXHIBITS
Attached hereto as an exhibit and incorporated herein by
reference is the Rights Agreement dated as of October 18, 1996 by and between
the Company and Chase Manhattan Bank, as Rights Agent, and which includes as
Exhibit A thereto the form of Certificate of Designations of Series A Junior
Participating Cumulative Preferred Stock, as Exhibit B thereto the form of
Right Certificate and as Exhibit C thereto the Summary of Rights.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
and Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed by on its behalf by the undersigned, thereto duly
authorized.
VIRCO MFG. CORPORATION
Dated: October 24, 1996 By /s/ JAMES R. BRAAM
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James R. Braam
Vice President - Finance
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EXHIBIT INDEX
Exhibit No.
1 Rights Agreement dated as of October 18, 1996 by and between the
Company and Chase Manhattan Bank, as Rights Agent, and which includes
as Exhibit A thereto the form of Certificate of Designations of Series
A Junior Participating Cumulative Preferred Stock, as Exhibit B
thereto the form of Right Certificate and as Exhibit C thereto the
Summary of Rights.
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Exhibit 1
RIGHTS AGREEMENT
DATED AS OF OCTOBER 18, 1996
BY AND BETWEEN
VIRCO MFG. CORPORATION
AND
THE CHASE MANHATTAN BANK
AS RIGHTS AGENT
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. Certain Definitions........................................................................... 1
Section 2. Appointment of Rights Agent................................................................... 7
Section 3. Issuance of Right Certificates................................................................ 7
Section 4. Form of Right Certificates.................................................................... 9
Section 5. Countersignature and Registration............................................................. 9
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates....................................... 10
Section 7. Exercise of Rights........................................................................... 10
Section 8. Cancellation and Destruction of Right Certificates........................................... 12
Section 9. Reservation and Availability of Capital Stock................................................ 13
Section 10. Securities Record Date...................................................................... 13
Section 11. Adjustment of Exercise Price, Number of Shares Issuable Upon Exercise of Rights or
Number of Rights................................................................... 14
Section 12. Certificate of Adjusted Exercise Price or Number of Shares Issuable Upon Exercise of
Rights............................................................................. 19
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or Earning Power....................... 20
Section 14. Fractional Rights and Fractional Shares..................................................... 22
Section 15. Rights of Action............................................................................ 23
Section 16. Agreement of Right Holders.................................................................. 23
Section 17. Right Holder and Right Certificate Holder Not Deemed a Stockholder.......................... 24
Section 18. Concerning the Rights Agent................................................................. 24
Section 19. Merger or Consolidation or Change of Name of Rights Agent................................... 24
Section 20. Duties of Rights Agent...................................................................... 25
Section 21. Change of Rights Agent...................................................................... 27
Section 22. Issuance of New Right Certificates.......................................................... 27
Section 23. Redemption of Rights........................................................................ 28
Section 24. Exchange of Rights.......................................................................... 29
Section 25. Notice of Certain Events.................................................................... 29
Section 26. Notices .................................................................................... 30
</TABLE>
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<TABLE>
<S> <C>
Section 27. Supplements and Amendments.................................................................. 31
Section 28. Certain Covenants........................................................................... 31
Section 29. Successors.................................................................................. 32
Section 30. Benefits of this Agreement.................................................................. 32
Section 31. Severability................................................................................ 32
Section 32. Governing Law............................................................................... 32
Section 33. Counterparts................................................................................ 32
Section 34. Descriptive Headings........................................................................ 32
</TABLE>
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TABLE OF EXHIBITS
Exhibit A Form of Certificate of Designations
Exhibit B Form of Right Certificate
Exhibit C Form of Summary of the Rights
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RIGHTS AGREEMENT
This Rights Agreement ("Agreement") is made and entered into
as of the 18th day of October, 1996, by and between Virco Mfg. Corporation, a
Delaware corporation (the "Company"), and The Chase Manhattan Bank (the "Rights
Agent").
WHEREAS, the Board of Directors of the Company has authorized
and declared a dividend of one preferred stock purchase right (a "Right") for
each Common Share (as hereinafter defined) of the Company, which dividend is
payable to stockholders of record on October 25th, 1996 (the "Record Date")
holding Common Shares as of the Close of Business (as hereinafter defined) on
such date;
WHEREAS, the Board of Directors of the Company has further
authorized and directed the issuance of one (subject to adjustment of such
number as provided in this Agreement) Right for (A) each Common Share that shall
be issued by the Company at any time after the Record Date and prior to the
earliest of the date of the first Section 11(a)(ii) Event, the date of the first
Section 13(a) Event, the Redemption Date or the Expiration Date (as such terms
are hereinafter defined), and (B) each Common Share that shall be issued by the
Company at any time on or after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
earlier of the Redemption Date or the Expiration Date pursuant to the exercise
of conversion rights, exchange rights, rights (other than Rights), warrants or
options that shall have been issued or granted prior to the earlier of the date
of the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event, unless the Board of Directors shall provide otherwise at the time of the
issuance or grant of such conversion rights, exchange rights, rights (other than
Rights), warrants or options; and
WHEREAS, in connection with the matters referred to herein,
the Company desires to appoint the Rights Agent to act on behalf of the Company
for the benefit of the holders of Rights, and the Rights Agent is willing so to
act;
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual agreements set forth herein, and for the benefit of the holders of
Rights, the parties hereto hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act, as in effect on the date hereof; provided, however, that no individual who
is a descendant of Julian A. Virtue or the spouse of such a descendant (a
"Virtue Family Member") or any estate or trust created by a Virtue Family Member
for estate planning purposes primarily for the benefit of one or more
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Virtue Family Members (a "Virtue Family Trust") shall be deemed to be an
Associate or Affiliate of another Virtue Family Member or Virtue Family Trust.
Nothing herein shall prevent any Virtue Family Member or Virtue Family Trust
from being deemed an Associate or Affiliate of any Person other than a Virtue
Family Member or Virtue Family Trust.
(b) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "Beneficially Own":
(i) any securities that such Person or any of such
Person's Affiliates or Associates beneficially owns, directly or
indirectly, for purposes of Section 13(d) of the Exchange Act and Rule
13d-3 promulgated under the Exchange Act, in each case as in effect on
the date hereof;
(ii) any securities that such Person or any of such
Person's Affiliates or Associates has the right to acquire (whether
such right is exercisable immediately, or only after the passage of
time, compliance with regulatory requirements, the fulfillment of a
condition, or otherwise) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights), warrants or options, or
otherwise, provided that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a
tender offer 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;
(iii) any securities that such Person or any of such
Person's Affiliates or Associates has the right to vote, alone or in
concert with others, pursuant to any agreement, arrangement or
understanding, provided 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 (A)
arises solely from a revocable proxy given to such Person or any of
such Person's Affiliates or Associates in response to a public proxy
solicitation made pursuant to and in accordance with the applicable
rules and regulations of the Exchange Act, and (B) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report);
(iv) any securities that 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 for the purpose of acquiring, holding,
voting (other than voting pursuant to a revocable proxy as described in
the proviso to Section 1(b)(iii) hereof) or disposing of any securities
of the Company; and
(v) on any day on or after the Distribution Date, all
Rights that prior to such date were represented by certificates for
Common Shares that such Person Beneficially Owns on such day.
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Notwithstanding anything to the contrary in this Section 1(b),
a Person engaged in business as an underwriter of securities shall not be deemed
to be the Beneficial Owner of, or to Beneficially Own, any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty (40) days after the date of such
acquisition.
(c) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the States of New York or
California are authorized or obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean 5:00
o'clock p.m., Los Angeles time, on such date; provided, however, that if such
date is not a Business Day, it shall mean 5:00 o'clock p.m., Los Angeles time,
on the next succeeding Business Day.
(e) "Closing Price" of a stock or other security on any day
shall be the last sale price, regular way, per share of such stock or unit of
such other security on such day 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 American Stock
Exchange or, if such stock or other security is not listed or admitted to
trading on the American Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such stock or other security
is listed or admitted to trading or, if such stock or other security is not
listed or admitted to trading on any national securities exchange, the last
quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other system then in use or, if on any such date such stock or other
security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker that makes a market
in such stock or other security and that is selected by the Board of Directors
of the Company.
(f) "Common Share" shall mean one share of the Common Stock,
par value $.01 per share, of the Company, unless used with reference to a Person
other than the Company, in which case it shall mean one share of the class of
capital stock (or equity interest) of such other Person having the greatest
voting power per share or, if such Person is a Subsidiary of another Person, of
the Person that ultimately controls such Person.
(g) "Common Share Equivalent" shall have the meaning ascribed
to it in Section 11(a)(iii) hereof.
(h) "Current Market Price" per share of a stock or unit of any
other security on any date shall mean the average of the daily Closing Prices of
such stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question; provided,
however, that if any event shall have
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caused the Closing Price on any Trading Day during such 30-day period not to be
fully comparable with the Closing Price on the date in question (or, if no
Closing Price is available on the date in question, on the Trading Day
immediately preceding the date in question), then each such noncomparable
Closing Price so used shall be appropriately adjusted by the Board of Directors
of the Company in order to make the Closing Price on each Trading Day during the
period used for the determination of the Current Market Price fully comparable
with the Closing Price on such date in question (or, if applicable, the
immediately preceding Trading Day). "Current Market Price" per share of any
stock or unit of such other security that is not publicly held or so listed or
traded, and "Current Market Price" of any other property, shall mean the fair
value per share of such stock or unit of such other security, or the fair value
of such other property, respectively, as determined in good faith by the Board
of Directors of the Company based upon such appraisals or valuation reports of
such independent experts as the Board of Directors shall in good faith determine
appropriate, which determination shall be described in a statement filed by the
Company with the Rights Agent.
(i) "Distribution Date" shall have the meaning ascribed to it
in Section 3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(k) "Exchange Ratio" shall have the meaning ascribed to it in
Section 24(a) hereof.
(l) "Exempt Person" shall mean the Company, any wholly-owned
Subsidiary of the Company, the Virco Mfg. Corporation Employee Stock Ownership
Plan and any other employee benefit plan of the Company or of a Subsidiary of
the Company, and any Person holding Voting Shares for or pursuant to the terms
of any such employee benefit plan.
(m) "Exercise Price" shall have the meaning ascribed to it in
Section 7(c) hereof.
(n) "Expiration Date" shall mean October 25, 2006, unless the
Distribution Date shall occur on or prior to such date and the Rights shall have
separated from the Common Shares pursuant to the terms of this Agreement, in
which case "Expiration Date" shall mean the date which is the tenth anniversary
of the Distribution Date.
(o) "Person" shall mean any individual, firm, partnership,
corporation, association, group (as such term is used in Rule 13d-5 promulgated
under the Exchange Act as in effect on the date hereof) or other entity, and
shall include any successor (by merger or otherwise) of such entity.
(p) "Preferred Share" shall mean one share of the Series A
Junior Participating Cumulative Preferred Stock, par value $0.01 per share, of
the Company, which
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shall have the rights and preferences set forth in the form of Certificate of
Designation attached hereto as Exhibit A.
(q) "Preferred Share Equivalents" shall have the meaning
ascribed to it in Section 11(b) hereof.
(r) "Record Date" shall have the meaning ascribed to it in the
recitals hereto.
(s) "Redemption Date" shall mean the date of the action of the
Board of Directors of the Company authorizing and directing the redemption of
the Rights pursuant to Section 23(a) hereof or the exchange of the Rights
pursuant to Section 24(a) hereof.
(t) "Redemption Price" shall have the meaning ascribed to it
in Section 23(a) hereof.
(u) "Right" shall have the meaning ascribed to it in the
recitals hereto.
(v) "Rights Agent" shall have the meaning ascribed to it in
the recitals hereto.
(w) "Section 11(a)(ii) Event" shall have the meaning ascribed
to it in Section 11(a)(ii) hereof.
(x) "Section 13(a) Event" shall have the meaning ascribed to
it in Section 13(a) hereof.
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(z) "Subsidiary" of any Person shall mean any corporation or
other Person of which equity securities or equity interests representing a
majority of the voting power are owned, directly or indirectly, or which is
effectively controlled, by such Person.
(aa) "Surviving Person" shall have the meaning ascribed to it
in Section 13(a) hereof.
(bb) "Trading Day" shall mean, as to any stock or other
security, a day on which the principal national securities exchange on which
such stock or other security is listed or admitted to trading is open for the
transaction of business or, if such stock or other security is not listed or
admitted to trading on any national securities exchange, a Business Day.
(cc) "Unavailable Adjustment Shares" has the meaning ascribed
to it in Section 11(a)(iii) hereof.
(dd) "Voting Share" shall mean (i) a Common Share of the
Company and (ii) any other share of capital stock of the Company entitled to
vote generally in the election
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<PAGE> 10
of directors or entitled to vote together with the Common Shares in respect of
any merger, consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up. References in this Agreement to
a percentage or portion of the outstanding Voting Shares shall be deemed a
reference to the percentage or portion of the total votes entitled to be cast by
the holders of the outstanding Voting Shares.
(ee) "20% Ownership Date" shall mean the first date after the
declaration by the Board of Directors referred to in the first recital hereto of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or a 20% Stockholder containing the facts by virtue of which
a Person has become a 20% Stockholder.
(ff) "20% Stockholder" shall mean any Person that, together
with all Affiliates and Associates of such Person, hereafter becomes the
Beneficial Owner of such number of Voting Shares of the Company as constitutes a
percentage of the then outstanding Voting Shares that is (1) equal to or greater
than 20% and (2) at least 1% more than the percentage of the outstanding Voting
Shares that were Beneficially Owned by such Person on October 18, 1996;
provided, however, that the term "20% Stockholder" shall not include: (i) an
Exempt Person; or (ii) any Person if such Person would not otherwise be a 20%
Stockholder but for a reduction in the number of outstanding Voting Shares
resulting from a stock repurchase program or other similar plan of the Company
or from a self-tender offer of the Company, which plan or tender offer commenced
on or after the date hereof, provided, however, that the term "20% Stockholder"
shall include such Person from and after the first date upon which (A) such
Person, since the date of the commencement of such plan or tender offer, shall
have acquired Beneficial Ownership of, in the aggregate, a number of Voting
Shares of the Company equal to 1% or more of the Voting Shares of the Company
then outstanding and (B) such Person, together with all Affiliates and
Associates of such Person, shall Beneficially Own 20% or more of the Voting
Shares of the Company then outstanding. In calculating the percentage of the
outstanding Voting Shares that are Beneficially Owned by a Person for purposes
of this subsection (ff), Voting Shares that are Beneficially Owned by such
Person shall be deemed outstanding, and Voting Shares that are not Beneficially
Owned by such Person and that are subject to issuance upon the exercise or
conversion of outstanding conversion rights, exchange rights, rights (other than
Rights), warrants or options shall not be deemed outstanding. Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith
that a Person that would otherwise be a 20% Stockholder pursuant to the
foregoing provisions of this Section 1(ff) and Section 1(b) hereof has become
such inadvertently, and such Person (a) promptly notifies the Board of Directors
of such status and (b) as promptly as practicable thereafter, either divests of
a sufficient number of Voting Shares so that such Person would no longer be a
20% Stockholder, or causes any other circumstance, such as the existence of an
agreement respecting Voting Shares, to be eliminated such that such Person would
no longer be a 20% Stockholder as defined pursuant to this Section 1(ff) and
1(b), then such Person shall not be deemed to be a 20% Stockholder for any
purposes of this Agreement. Any determination made by the Board of Directors of
the Company as to whether any Person is or is not a 20% Stockholder shall be
6
<PAGE> 11
conclusive and binding upon all holders of Rights.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
Rights 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, upon ten days' prior
written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
such co-Rights Agent.
Section 3. Issuance of Right Certificates.
(a) "Distribution Date" shall mean the date, after the date
hereof, that is the earliest of (i) the tenth Business Day (or such later day as
shall be designated by the Board of Directors of the Company) following the date
of the commencement of, or the first public announcement of the intent of any
Person, other than an Exempt Person, to commence, a tender offer or exchange
offer, the consummation of which would cause any Person to become a 20%
Stockholder, (ii) the date of the first Section 11(a)(ii) Event or (iii) the
date of the first Section 13(a) Event.
(b) Until the Distribution Date, (i) the Rights shall be
represented by certificates for Common Shares (all of which certificates for
Common Shares shall be deemed to be Right Certificates) and not by separate
Right Certificates, (ii) the record holder of the Common Shares represented by
each of such certificates shall be the record holder of the Rights represented
thereby and (iii) the Rights shall be transferable only in connection with the
transfer of Common Shares. Until the earliest of the Distribution Date, the
Redemption Date or the Expiration Date, the surrender for transfer of such
certificates for Common Shares shall also constitute the surrender for transfer
of the Rights represented thereby.
(c) As soon as practicable after the Distribution Date, and
after notification by the Company, the Rights Agent shall send, at the Company's
expense, by first-class, postage-prepaid mail to each record holder of Common
Shares, 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
substantially in the form of Exhibit B hereto representing one Right for each
Common Share so held. From and after the Distribution Date, the Rights shall be
represented solely by such Right Certificates and may only be transferred by the
transfer of such Right Certificates, and the holders of such Right Certificates,
as listed in the records of the Company or any transfer agent or registrar for
such Rights, shall be the record holders of such Rights.
(d) As soon as practicable after the Record Date, the Company
shall send a copy of a Summary of the Rights in substantially the form attached
hereto as Exhibit C by first-class, postage-prepaid mail to each record holder
of Common Shares as of the Close of Business on the Record Date at the address
of such holder shown on the records of the Company.
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<PAGE> 12
(e) Certificates for Common Shares issued at any time after
the Record Date and prior to the earliest of the Distribution Date, the
Redemption Date or the Expiration Date, shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also represents Rights that entitle
the holder hereof to certain rights as set forth in a Rights Agreement
dated as of October 18, 1996 by and between the Corporation and The
Chase Manhattan Bank, as Rights Agent (the "Rights Agreement"), the
terms and conditions of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the Corporation.
Under certain circumstances specified in the Rights
Agreement, such Rights will be represented by separate certificates and
will no longer be represented by this certificate. Under certain
circumstances specified in the Rights Agreement, Rights beneficially
owned by certain persons may become null and void. The Corporation will
mail to the record holder of this certificate a copy of the Rights
Agreement without charge promptly following receipt of a written
request therefor.
(f) Certificates for Common Shares issued at any time on or
after the Distribution Date and prior to the earlier of the Redemption Date or
the Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not represent any Right issued
pursuant to the terms of a Rights Agreement dated as of October 18,
1996 by and between the Corporation and The Chase Manhattan Bank, as
Rights Agent.
(g) In the event that at any time on or after the earlier of
the date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event and prior to the earlier of the Redemption Date or the Expiration
Date, the Company shall issue any Common Shares pursuant to the exercise of
conversion rights, exchange rights, rights (other than Rights), warrants or
options that shall have been issued or granted prior to the earlier of the date
of the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event, then, unless the Board of Directors of the Company shall have provided
otherwise at the time of the issuance or grant of such conversion rights,
exchange rights, rights (other than Rights), warrants or options, the Rights
Agent shall, as soon as practicable after the date of such event, send by
first-class, postage-prepaid mail to the record holder of such Common Shares, at
the address of such holder as shown on the records of the Company, a Right
Certificate substantially in the form of Exhibit B hereto representing one Right
for each Common Share so issued.
(h) Notwithstanding the foregoing provisions of this Section
3, the Rights Agent shall not send any Right Certificate to any 20% Stockholder
or any of its Affiliates or Associates or to any Person if the Rights held by
such Person are Beneficially Owned by a 20% Stockholder or any of its Affiliates
or Associates. Any determination made by the Board of Directors of the Company
as to whether any Common Shares are or were Beneficially
8
<PAGE> 13
Owned at any time by a 20% Stockholder or an Affiliate or Associate of a 20%
Stockholder shall be conclusive and binding upon all holders of Rights.
Section 4. Form of Right Certificates. The Right Certificates
and the form of assignment, including certificate, and the form of election to
purchase, including certificate, printed on the reverse thereof, when, as and if
issued, 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 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 upon which the
Rights or the securities of the Company issuable upon exercise of the Rights may
from time to time be listed, or to conform to usage. Subject to Section 22
hereof, Right Certificates, whenever issued, that are issued in respect of
Common Shares that were issued and outstanding as of the Close of Business on
the Distribution Date, shall be dated as of the Distribution Date.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President, its Chief Executive Officer
or any Vice President, either manually or by facsimile signature, and may have
affixed thereto the Company's seal or a facsimile thereof attested by its
Secretary or any Assistant Secretary, either manually or by facsimile signature.
The Right Certificates shall be countersigned by an authorized signatory of the
Rights Agent (which need not be the same authorized signatory for all of the
Right Certificates) and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the 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 may nevertheless be countersigned by an authorized
signatory of 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. Any Right Certificate may be
signed on behalf of the Company by any person who at the actual date of such
execution shall be a proper officer of the Company to sign such Right
Certificate, even though such person was not such an officer at the date of the
execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall
keep or cause to be kept at its offices in New York, New York books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of Right
Certificates, the number of Rights represented on its face by each Right
Certificate and the date of each Right Certificate.
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<PAGE> 14
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 6(c), 7(d) and 14
hereof, at any time after the Close of Business on the Distribution Date, and so
long as the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split up, combined or exchanged for one or more
Right Certificates representing the same aggregate number of Rights as the Right
Certificates surrendered. Any registered holder desiring to transfer, split up,
combine or exchange one or more Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent with the form of assignment, including certificate, on the
reverse side thereof completed and duly executed, with signature guaranteed and
such other and further documentation as the Rights Agent may reasonably request.
Thereupon, the Rights Agent shall countersign and deliver to the person entitled
thereto one or more Right Certificates, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them and, 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 such Right Certificate, if mutilated, along with signature
guarantees and such other and further documentation as the Rights Agent may
reasonably request, the Company shall issue and deliver to the Rights Agent for
delivery to the record holder of such Right Certificate a new Right Certificate
of like tenor in lieu of such lost, stolen, destroyed or mutilated Right
Certificate.
(c) Notwithstanding anything to the contrary in this Section
6, the Rights Agent shall not countersign and deliver a Right Certificate to any
Person if such Right Certificate represents, or would represent when held by
such Person, Rights that had become or would become null and void pursuant to
Section 7(d) hereof.
Section 7. Exercise of Rights.
(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Section 7(d) and (g) hereof and the other
provisions of this Agreement, at any time after the Close of Business on the
Distribution Date and prior to the Close of Business on the earlier of the
Redemption Date or the Expiration Date, the registered holder of any Right
Certificate may exercise the Rights represented thereby in whole or in part upon
surrender of such Right Certificate, with the form of election to purchase,
including certificate, on the reverse side thereof completed and duly executed,
with signature
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<PAGE> 15
guaranteed, to the Rights Agent at the office or agency of the Rights Agent in
New York, New York, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request, together with payment
of the Exercise Price for each Right exercised. Upon the exercise of an
exercisable Right and payment of the Exercise Price in accordance with the
provisions of this Agreement, the holder of such Right shall be entitled to
receive, subject to adjustment as provided herein, one one-hundredth of a
Preferred Share (or, following the occurrence of a Section 11(a)(ii) Event or a
Section 13(a) Event, Common Shares, other securities, cash and/or other property
in accordance with the provisions of this Agreement).
(c) The Exercise Price for the exercise of each Right shall
initially be $50.00 (Fifty Dollars) and shall be payable in lawful money of the
United States of America in accordance with Section 7(f) hereof. The Exercise
Price and the number of Preferred Shares (or, following the occurrence of a
Section 11(a)(ii) Event or a Section 13(a) Event, Common Shares, cash and/or
other property in accordance with the provisions of this Agreement) to be
acquired upon exercise of a Right shall be subject to adjustment from time to
time as provided in Sections 7(e), 11 and 13 hereof and the other provisions of
this Agreement.
(d) Notwithstanding anything in this Agreement to the
contrary, from and after the earlier of the date of the first Section 11(a)(ii)
Event or the date of the first Section 13(a) Event, any Rights that are or were
Beneficially Owned by a 20% Stockholder or any Affiliate or Associate of a 20%
Stockholder at any time on or after the Distribution Date shall be null and
void, and for all purposes of this Agreement such Rights shall thereafter be
deemed not to be outstanding, and any holder of such Rights (whether or not such
holder is a 20% Stockholder or an Affiliate or Associate of a 20% Stockholder)
shall thereafter have no right to exercise such Rights.
(e) Prior to the Distribution Date, if the Board of Directors
of the Company shall have determined that such action adequately protects the
interests of the holders of Rights, the Company may, in its discretion,
substitute for all or any portion of the Preferred Shares that would otherwise
be issuable (after the Close of Business on the Distribution Date) upon the
exercise of each Right and payment of the Exercise Price, (i) cash, (ii) other
equity securities of the Company, (iii) debt securities of the Company, (iv)
other property or (v) any combination of the foregoing, in each case having an
aggregate Current Market Price equal to the aggregate Current Market Price of
the Preferred Shares for which substitution is made. Subject to Section 7(d)
hereof, in the event that the Company takes any action pursuant to this Section
7(e), such action shall apply uniformly to all outstanding Rights.
(f) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase, including
certificate, completed and duly executed, with signature guaranteed, accompanied
by payment of the Exercise Price for each Right to be exercised and an amount
equal to any applicable transfer tax required to be paid by the holder of such
Right Certificate in accordance with Section 9 hereof by certified check or
cashier's check payable to the order of the Company, the Rights Agent shall
thereupon promptly
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<PAGE> 16
(i) requisition from the transfer agent of the Preferred Shares (or, following
the occurrence of a Section 11(a)(ii) Event or a Section 13(a) Event, Common
Shares, other securities, cash and/or other property in accordance with the
provisions of this Agreement), certificates for the number of Preferred Shares
(or such other securities) to be purchased, and the Company hereby irrevocably
authorizes such transfer agent to comply with all such requests, and/or, as
provided in Section 14 hereof, requisition from the depositary agent described
therein depositary receipts representing such number of one-hundredths of a
Preferred Share (or such other securities) as are to be purchased (in which case
certificates for the Preferred Shares (or such other securities) represented by
such receipts shall be deposited by the transfer agent with such depositary
agent) and the Company hereby directs such depositary 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 Preferred Shares (or such other
securities) in accordance with Section 14 hereof, (iii) after receipt of such
certificates, depositary receipts or cash, 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 thereof, deliver such cash to or upon the order of
the registered holder of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section
7, the exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register the Preferred Shares under
the Securities Act and any applicable securities law of any jurisdiction in
which the Preferred Shares are to be issued pursuant to the exercise of the
Rights; provided, however, that nothing contained in this Section 7 shall
relieve the Company of its obligations under Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate
shall exercise less than all of the Rights represented thereby, a new Right
Certificate representing 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 this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
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<PAGE> 17
Section 9. Reservation and Availability of Capital Stock.
(a) Subject to Section 7(e) hereof, the Company shall cause to
be reserved and kept available out of its authorized and unissued equity
securities (or out of its authorized and issued equity securities held in its
treasury), the number of such equity securities that will from time to time be
sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of
the Rights are listed on any national securities exchange, the Company shall use
its best efforts, from and after such time as the Rights become exercisable, to
cause all such securities issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon
exercise of the Rights, the Company shall use its best efforts, from and after
the Distribution Date, to register such securities under the Securities Act and
any applicable securities laws and to keep such registration effective until the
earlier of the Redemption Date or the Expiration Date.
(d) The Company shall take all such action as may be necessary
to ensure that all securities delivered upon exercise of the Rights shall, at
the time of delivery of the certificates for such securities (subject to payment
of the Exercise Price), be duly and validly authorized and issued and fully paid
and nonassessable securities.
(e) The Company shall pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of
the issuance or delivery of the Right Certificates or of any securities upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax that may be payable in respect of any transfer or delivery of a
Right Certificate to a Person other than, or the issuance or delivery of a
certificate for securities in respect of a name other than that of, the
registered holder of the Right Certificate representing Rights surrendered for
exercise, or to issue or deliver any certificate for securities upon the
exercise of any Right 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 satisfaction that no such tax
is due.
(f) With respect to the Common Shares and/or other securities
issuable pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants
shall be applicable only upon and following the occurrence of a Section
11(a)(ii) Event.
Section 10. Securities Record Date. Each person in whose name
any certificate for securities of the Company is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the securities represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate representing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the securities transfer books of the Company are
closed, such person shall
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<PAGE> 18
be deemed to have become the record holder of such securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
securities transfer books of the Company are open.
Section 11. Adjustment of Exercise Price, Number of Shares
Issuable Upon Exercise of Rights or Number of Rights. The Exercise Price, the
number and kind of securities that may be purchased upon exercise of a 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 that the Company shall at any
time after the Close of Business on the Record Date and prior to the
Close of Business on the earlier of the Redemption Date or the
Expiration Date (A) declare or pay any dividend on the Preferred Shares
payable in Preferred Shares or Voting Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred
Shares into a smaller number of Preferred Shares or (D) issue Preferred
Shares or Voting Shares 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), then, and upon each such event, the number and kind of
Preferred Shares or other securities issuable upon the exercise of a
Right on the date of such event shall be proportionately adjusted so
that the holder of any Right exercised on or after such date shall be
entitled to receive, upon the exercise thereof and payment of the
Exercise Price, the aggregate number and kind of Preferred Shares or
other securities or other property, as the case may be, that, if such
Right had been exercised immediately prior to such date and at a time
when such Right was exercisable and the transfer books of the Company
were open, such holder would have owned upon such exercise and would
have been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs that would require
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event")
that a 20% Ownership Date shall have occurred and neither the
Redemption Date nor the Expiration Date shall have occurred prior to
the tenth Business Day following such 20% Ownership Date, then, and
effective as of the end of such tenth Business Day, proper provision
shall be made so that except as provided in Section 7(d) hereof, each
holder of a Right shall thereafter have the right to receive, upon the
exercise thereof in accordance with the terms of this Agreement and
payment of the then current Exercise Price, in lieu of the securities
or other property otherwise purchasable upon such exercise, such number
of Common Shares of the Company as shall equal the result obtained by
multiplying the then current Exercise Price by the then number of
one-hundredths of a Preferred Share for which a Right was exercisable
(or, if the Distribution Date shall not have occurred prior to the date
of such Section 11(a)(ii) Event, the number of one-hundredths of a
Preferred Share for which a Right would
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<PAGE> 19
have been exercisable if the Distribution Date had occurred on the
Business Day immediately preceding the date of such Section 11(a)(ii)
Event) immediately prior to such Section 11(a)(ii) Event, and dividing
that product by 50% of the Current Market Price (determined pursuant to
Section 11(d) hereof) of a Common Share on the date of occurrence of
the relevant Section 11(a)(ii) Event (such number of shares being
hereinafter referred to as the "Adjustment Shares"). Successive
adjustments shall be made pursuant to this paragraph each time a
Section 11(a)(ii) Event occurs.
(iii) In the event that on the date of a Section
11(a)(ii) Event the aggregate number of Common Shares that are
authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is less than the aggregate number of Adjustment
Shares thereafter issuable upon the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof (the excess of such number of
Adjustment Shares over and above such number of Common Shares being
hereinafter referred to as the "Unavailable Adjustment Shares"), then,
and upon each such event, the Company shall substitute for the pro rata
portion of the Unavailable Adjustment Shares that would otherwise be
issuable thereafter upon the exercise of each Right and payment of the
Exercise Price, (A) cash, (B) other equity securities of the Company
(including, without limitation, shares of preferred stock of the
Company or units of such shares having the same Current Market Price as
one Common Share (a "Common Share Equivalent")), (C) debt securities of
the Company, (D) other property or (E) any combination of the
foregoing, in each case having an aggregate Current Market Price equal
to the aggregate Current Market Price of the Unavailable Adjustment
Shares for which substitution is made. Subject to Section 7(d) hereof,
in the event that the Company takes any action pursuant to this Section
11(a)(iii), such action shall apply uniformly to all outstanding
Rights.
(b) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on the
earlier of the Redemption Date or the Expiration Date, fix a record date prior
to the earlier of the Redemption Date or the Expiration Date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
initially to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("Preferred
Share Equivalents")) or securities convertible into Preferred Shares or
Preferred Share Equivalents, at a price per Preferred Share or Preferred Share
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Shares or Preferred Share Equivalents) less than the Current
Market Price per Preferred Share on such record date, then, and upon each such
event, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be equal to the sum of
the number of Preferred Shares outstanding on such record date plus the number
of Preferred Shares that the aggregate offering price of the total number of
Preferred Shares and/or Preferred Share Equivalents to be so offered (and/or the
aggregate initial conversion price of the convertible
15
<PAGE> 20
securities to be so offered) would purchase at such Current Market Price, and
the denominator of which shall be equal to the number of Preferred Shares
outstanding on such record date plus the number of additional Preferred Shares
and/or Preferred Share Equivalents to be offered for subscription or purchase
(or into which the convertible securities to be so offered are initially
convertible); provided, however, that if such rights, options or warrants are
not exercisable immediately upon issuance but become exercisable only upon the
occurrence of a specified event or the passage of a specified period of time,
then the adjustment to the Exercise Price shall be made and become effective
only upon the occurrence of such event or such passage of time, and such
adjustment shall be made as if the record date for the issuance of such rights,
options or warrants had been the business day immediately preceding the date
upon which such rights, options or warrants became exercisable. 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 to the Exercise Price
shall be made successively whenever such a record date is fixed, and in the
event that such rights or warrants are not so issued, the Exercise Price shall
be adjusted to be the Exercise Price that would then be in effect if such record
date had not been fixed.
(c) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on the
earlier of the Redemption Date or the Expiration Date, 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 surviving corporation) of securities or assets (other than a
distribution of securities for which an adjustment is required under Section
11(a)(i) or (b) hereof or a regular quarterly cash dividend), then the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be equal to the excess of the Current
Market Price per Preferred Share on such record date over and above the fair
market value of the portion of the securities or assets to be so distributed
with respect to one Preferred Share, and the denominator of which shall be equal
to such Current Market Price per Preferred Share. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such a
distribution is not so made, the Exercise Price shall be adjusted to be the
Exercise Price that would then be in effect if such record date had not been
fixed.
(d) For the purpose of any computation under this Section 11,
if the Preferred Shares are not publicly held or traded, the "Current Market
Price" per Preferred Share shall be conclusively deemed to be the Current Market
Price per Common Share multiplied by 100.
(e) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Exercise Price; provided, however, that any adjustments that by reason of
this Section 11(e) are not required to be made shall be cumulated and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-
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<PAGE> 21
hundredth of a Common Share or other share or one-ten thousandth of a Preferred
Share, as the case may be.
(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 securities of the Company other than Preferred Shares, the number
of such other securities 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 Preferred Shares
contained in this Section 11, and the other provisions of this Agreement with
respect to Preferred Shares shall apply on like terms to any such other
securities.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of 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) below, upon each adjustment of the Exercise Price as a
result of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
represent the right to purchase, at the adjusted Exercise Price, that number of
one-hundredths of a Preferred Share (calculated to the nearest one-ten
thousandth of a Preferred Share) obtained by multiplying (i) the number of
one-hundredths of a Preferred Share purchasable upon the exercise of one Right
immediately prior to such adjustment of the Exercise Price by (ii) the Exercise
Price in effect immediately prior to such adjustment, and dividing the product
so obtained by the Exercise Price in effect immediately after such adjustment.
(i) The Company may elect, on or after the date of any
adjustment of the Exercise Price, to adjust the number of Rights instead of
making any adjustment in the number of Preferred Shares 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-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
one-hundredth of a Right) obtained by dividing the Exercise Price in effect
immediately prior to the adjustment of the Exercise Price by the Exercise Price
in effect immediately after such adjustment of the Exercise Price. The Company
shall make a public announcement of its election to adjust the number of Rights
pursuant to this Section 11(i), indicating the record date for the adjustment
and, if known at the time, the amount of the adjustment to be made. Such record
date may be the date on which the Exercise Price is adjusted or any day
thereafter, but, if separate Right Certificates have been issued, it shall be at
least 10 days after the date of such public announcement. If separate 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
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<PAGE> 22
date Right Certificates representing, 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, 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 such adjustment, and upon surrender
thereof if required by the Company, new Right Certificates representing all the
Rights to which such holders shall be entitled after such adjustment. Right
Certificates to be so distributed shall be issued, executed and countersigned in
the manner provided for herein (and may bear, at the option of the Company, the
adjusted Exercise Price) and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Exercise
Price or the number of one-hundredths of a Preferred Share issuable upon the
exercise of one Right, the Right Certificates theretofore and thereafter issued
may continue to express the Exercise Price per one one-hundredth of a Preferred
Share and the number of Preferred Shares issuable upon the exercise of one Right
that were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise 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 that may, in the advice or opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable one one-hundredth of a Preferred Share at such
adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record date
of the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument representing 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 further adjustments
in the number of one-hundredths of a Preferred Share that may be purchased upon
exercise of one Right, and such further adjustments in the Exercise 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 (i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any Preferred Shares at less than the Current Market
Price thereof, (iii) issuance wholly for cash of Preferred Shares or securities
that by their terms are convertible into or exchangeable for Preferred Shares,
(iv) dividends on Preferred Shares payable in Preferred Shares or (v) issuance
of rights, options or warrants referred to Section 11(b) hereof,
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<PAGE> 23
hereafter made by the Company to holders of its Preferred Shares shall not be
taxable to such stockholders.
(n) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on the
earliest of the date of the first Section 11(a)(ii) Event, the date of the first
Section 13(a) Event, the Redemption Date or the Expiration Date, (i) pay any
dividend on the Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, (iii) combine the outstanding Common Shares into a
smaller number of Common Shares or (iv) issue Common Shares in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, and upon each such event, the Exercise Price to
be in effect after such event shall be determined by multiplying the Exercise
Price in effect immediately prior to such event by a fraction, the numerator of
which shall be equal to the number of Common Shares outstanding immediately
prior to such event and the denominator of which shall be equal to the number of
Common Shares outstanding immediately after such event. Successive adjustments
shall be made pursuant to this Section 11(n) each time such a dividend is paid
or such a subdivision, combination or reclassification is effected. If an event
occurs that would require an adjustment under both this Section 11(n) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(n)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
Section 12. Certificate of Adjusted Exercise Price or Number
of Shares Issuable Upon Exercise of Rights. Whenever an adjustment is made as
provided in Section 11 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) file with the Rights Agent and with each
transfer agent for the securities issuable upon exercise of the Rights a copy of
such certificate and (c) mail a brief summary thereof to each holder of Rights
in accordance with Section 25 hereof. Notwithstanding the foregoing sentence,
the failure of the Company to make such certification or to give such notice
shall not affect the validity or the force and effect of such adjustment. Any
adjustment to be made pursuant to Sections 11 or 13 hereof shall be effective as
of the date of the event giving rise to such adjustment.
Section 13. Consolidation, Merger, or Sale or Transfer of
Assets or Earning Power.
(a) In the event (a "Section 13(a) Event") that, at any time
on or after the 20% Ownership Date and prior to the earlier of the Redemption
Date or the Expiration Date, (1) the Company shall, directly or indirectly,
consolidate with or merge with and into any other Person and the Company shall
not be the continuing or surviving corporation in such consolidation or merger,
(2) any Person shall, directly or indirectly, consolidate with or merge with and
into the Company and the Company shall be the continuing or surviving
corporation in such merger and, in connection with such merger, all or part of
the Common Shares shall be changed into or exchanged for stock or other
securities of any Person or cash or any other property, or (3) the Company
and/or any one or more of its Subsidiaries shall, directly or
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<PAGE> 24
indirectly, sell or otherwise transfer, in one or more transactions (other than
transactions in the ordinary course of business), assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons other than the Company
or one or more of its wholly owned Subsidiaries (such Persons, together with the
Persons described in clauses (1) and (2) above shall be collectively referred to
in this Section 13 as the "Surviving Person"), then, and in each such case,
proper provision shall be made so that:
(i) except as provided in Section 7(d) hereof, each
holder of a Right shall thereafter have the right to receive, upon the
exercise thereof in accordance with the terms of this Agreement and
payment of the then current Exercise Price, in lieu of the securities
or other property otherwise purchasable upon such exercise, such number
of validly authorized and issued, fully paid and nonassessable Common
Shares of the Surviving Person as shall be equal to a fraction, the
numerator of which is the product of the then current Exercise Price
multiplied by the number of one-hundredths of a Preferred Share
purchasable upon the exercise of one Right immediately prior to the
first Section 13(a) Event (or, if the Distribution Date shall not have
occurred prior to the date of such Section 13(a) Event, the number of
one-hundredths of a Preferred Share that would have been so purchasable
if the Distribution Date had occurred on the Business Day immediately
preceding the date of such Section 13(a) Event, or, if a Section
11(a)(ii) Event has occurred prior to such Section 13(a) Event, the
product of the number of one-hundredths of a Preferred Share
purchasable upon the exercise of a Right (or, if the Distribution Date
shall not have occurred prior to the date of such Section 11(a)(ii)
Event, the number of one-hundredths of a Preferred Share that would
have been so purchasable if the Distribution Date had occurred on the
Business Day immediately preceding the date of such Section 11(a)(ii)
Event) immediately prior to such Section 11(a)(ii) Event, multiplied by
the Exercise Price in effect immediately prior to such Section
11(a)(ii) Event), and the denominator of which is 50% of the Current
Market Price per Common Share of the Surviving Person on the date of
consummation of such Section 13(a) Event;
(ii) the Surviving Person 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 the Surviving Person; and
(iv) the Surviving Person shall take such steps
(including, but not limited to, the reservation of a sufficient number
of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to ensure that the
provisions hereof shall thereafter be applicable to its Common Shares
thereafter deliverable upon the exercise of Rights.
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<PAGE> 25
(b) Notwithstanding the foregoing, if the Section 13(a) Event
is the sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole), but less than 100% thereof, then each Person
acquiring all or a portion thereof shall assume the obligations of the Company
as to a fraction of each of the Rights equal to the fraction of the assets of
the Company and its Subsidiaries (taken as a whole) acquired by such Person, and
the obligations of the Company as to the remaining fraction of each of the
Rights shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event
unless prior thereto the Company and the Surviving Person shall have executed
and delivered to the Rights Agent a supplemental agreement confirming that such
Surviving Person shall, upon consummation of such Section 13(a) Event, assume
this Agreement in accordance with Section 13 hereof, that all rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of such
Surviving Person upon exercise of outstanding Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving Person
under this Agreement, and further providing that, as soon as practicable after
the date of consummation of such Section 13(a) Event, such Surviving Person
shall:
(i) prepare and file a registration statement under
the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective
as soon as practicable after such filing, use its best efforts to cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
Expiration Date, and similarly comply with all applicable state
securities laws;
(ii) use its best efforts to list (or continue the
listing of) the Rights and the Common Shares of the Surviving Person
purchasable upon exercise of the Rights on a national securities
exchange, or use its best efforts to cause the Rights and such Common
Shares to meet the eligibility requirements for quotation on NASDAQ;
and
(iii) deliver to holders of the Rights historical
financial statements for such Surviving Person that comply in all
respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
(d) In the event that at any time after the occurrence of a
Section 11(a)(ii) Event some or all of the Rights shall not have been exercised
pursuant to Section 11 hereof prior to the date of a Section 13(a) Event, such
Rights shall thereafter be exercisable only in the manner described in Section
13(a) hereof. In the event that a Section 11(a)(ii) Event occurs on or after the
date of a Section 13(a) Event, Rights shall not be exercisable pursuant to
Section 11 hereof but shall instead be exercisable pursuant to, and only
pursuant to, this Section 13.
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(e) The provisions of this Section 13 shall apply to each
successive merger, consolidation, sale or other transfer constituting a Section
13(a) Event.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates that represent fractional Rights. If
the Company shall determine not to issue such fractional Rights, the Company
shall pay to the registered holders of the Right Certificates with respect to
which such fractional Rights would otherwise be issuable, at the time such
fractional Rights would otherwise have been issued as provided herein, an amount
in cash equal to the same fraction of the Current Market Price of a whole Right
on the Business Day immediately prior to the date upon which such fractional
Rights would otherwise have been issuable.
(b) The Company shall not be required to issue fractions of
Common Shares or Preferred Shares (other than fractions that are integral
multiples of one one-hundredth of a Preferred Share) upon exercise of Rights, or
to distribute certificates that represent fractional Common Shares or Preferred
Shares (other than fractions that 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
represented by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
Preferred Shares. If the Company shall determine not to issue fractional Common
Shares or Preferred Shares (or depositary receipts in lieu of Preferred Shares),
the Company shall pay to the registered holders of Right Certificates with
respect to which such fractional Common Shares or Preferred Shares would
otherwise be issuable, at the time such Rights are exercised as provided herein,
an amount in cash equal to the same fraction of the Current Market Price of a
whole Common Share or Preferred Share, as the case may be. For purposes of this
Section 14(b), the Current Market Price of a whole Common Share or Preferred
Share shall be the Closing Price per share for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right,
expressly waives such holder's right to receive any fractional Rights or any
fractional Common Shares or Preferred Shares upon exercise of such Right, except
as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect
of this Agreement, except 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 certificates for Common Shares representing Rights, and any
registered holder of any Right Certificate or of such certificate for Common
Shares, without the consent of the Rights Agent or of the holder of any other
Right Certificate or any other certificate for Common Shares may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain
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<PAGE> 27
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, such holder's right to exercise the Rights represented by such
Right Certificate or by such certificate for Common Shares in the manner
provided in such Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance,
and injunctive relief against actual or threatened violations, of the
obligations of any Person under 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 every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
represented by certificates for Common Shares registered in the name of the
holders of such Common Shares (which certificates for Common Shares shall also
constitute Right Certificates), and each such Right shall be transferable only
in connection with the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall
only be transferable on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer along with a signature guarantee and such other
and further documentation as the Rights Agent may reasonably request; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate is registered as the absolute owner
thereof and of the Rights represented thereby (notwithstanding any notations of
ownership or writing on the Right Certificate 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 Holder and Right Certificate Holder Not
Deemed a Stockholder. No holder, as such, of any Right or Right Certificate
shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the securities of the Company that may at any time be issuable upon
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 or 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, to give or withhold consent to
any corporate action, 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, in each case until such Right or the
Rights represented by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
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<PAGE> 28
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent as
compensation for all services rendered by it hereunder, reasonable and customary
fees and expenses. The Company also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising under this
Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any 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 and executed by the proper person or persons, or otherwise upon
the advice of its counsel as set forth in Section 20 hereof. 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 the action.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. If, at the time such successor Rights Agent
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 if 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 such Right
Certificates, and in this Agreement.
(b) If 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 if at
that time any of the Right Certificates shall not have
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<PAGE> 29
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 such Right Certificates
and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations expressly imposed by this Agreement upon
the following terms and conditions, by all of which the Company and the holders
of Right Certificates, by their acceptance of the Rights, 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 as
to any action taken or omitted by it in good faith and in accordance with 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 or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Vice Chairman of the Board, 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 to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement, or in the
Right Certificates (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 is serving as an administrative agent and
accordingly, shall not be under any responsibility in respect of the legality or
validity of any of the provisions of this Agreement or the execution and
delivery hereof (except the due authorization, execution and delivery 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 any Rights becoming null
and void pursuant to Section 7(d) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in Sections
7, 11, 13 and 23 hereof, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the exercise
of Rights represented by Right Certificates after actual notice that such change
or adjustment is required); nor shall it by any act hereunder be
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<PAGE> 30
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares or Common Shares or other securities to be
issued pursuant to this Agreement or any Right Certificate, or as to whether any
Preferred Shares or Common Shares or other securities 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 President, the Chief Executive
Officer, any Vice President, the Secretary, any Assistant Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided that reasonable care was exercised
in the selection thereof.
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 30 days' notice in writing mailed to the Company. The Company may
remove the Rights Agent or any successor Rights Agent upon 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 and Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting as such, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 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
26
<PAGE> 31
by the Company), then the Company shall become the Rights Agent and the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the States of New York or California (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the States of New York or California), in good standing, having a
principal office in New York or California, that is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and that has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose of this
Agreement and so that the successor Rights Agent may appropriately act as Rights
Agent hereunder. 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 and Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Right
Certificates to the contrary, the Company may, at its option (subject to Section
4 hereof), issue new Right Certificates in such form as may be approved by the
Board of Directors in order to reflect any adjustment or change in the Exercise
Price and the number or kind or class of shares or other securities or property
purchasable upon exercise of the Rights in accordance with the provisions of
this Agreement.
23. Redemption of Rights.
(a) Until the earliest of (i) the date of the first Section
11(a)(ii) Event, (ii) the date of the first Section 13(a) Event or (iii) the
Expiration Date, the Board of Directors of the Company may, at its option,
authorize and direct the redemption of all, but not less than all, of the then
outstanding Rights at a redemption price of $.001 per Right, as such redemption
price shall be appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (the "Redemption Price"),
and the Company shall so redeem the Rights; provided, however, that from and
after the first date upon which there shall exist a 20% Stockholder, any
redemption of the Rights shall require, in addition to the approval of the Board
of Directors of the Company, the approval of a majority of those directors of
the Company who were directors prior to such date.
(b) Immediately upon the action of the Board of Directors of
the Company authorizing and directing the redemption of the Rights pursuant to
subsection (a) of this
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<PAGE> 32
Section 23, or at such time and date thereafter as it may specify, and without
any further action and without any notice, the right to exercise Rights shall
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within 10 Business Days after the date of such
action, the Company shall give notice of such redemption to the holders of
Rights by mailing such notice to all holders of Rights at their last addresses
as they appear upon the registry books of the Rights Agent or, if prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives such notice, but neither the failure
to give any such notice nor any defect therein shall affect the legality or
validity of such redemption. Each such notice of redemption shall 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, directly or indirectly,
redeem, acquire or purchase for value any Rights in any manner other than that
specifically set forth in Section 24 hereof or in this Section 23, and other
than in connection with the purchase of Common Shares prior to the earlier of
the date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event.
(c) The Company may, at its option, pay the Redemption Price
in cash, Common Shares, Preferred Shares, other equity securities of the
Company, debt securities of the Company, other property or any combination of
the foregoing, in each case having an aggregate Current Market Price on the
Redemption Date equal to the Redemption Price.
24. Exchange of Rights.
(a) At any time after the 20% Ownership Date and prior to the
first date thereafter upon which a 20% Stockholder, together with all Affiliates
and Associates of such 20% Stockholder, shall be the Beneficial Owner of 50% or
more of the Voting Shares then outstanding, the Board of Directors of the
Company may, at its option, authorize and direct the exchange of all, but not
less than all, of the then outstanding Rights for Common Shares at an exchange
ratio of one Common Share per Right, as such exchange ratio shall be
appropriately adjusted to reflect any stock split, stock dividend, or similar
transaction involving Preferred Shares or Common Shares that occurs after the
date hereof (the "Exchange Ratio"), and the Company shall so exchange the
Rights.
(b) Immediately upon the action of the Board of Directors of
the Company authorizing and directing the exchange of the Rights pursuant to
subsection (a) of this Section 24, or at such time and date thereafter as it may
specify, and without any further action and without any notice, the right to
exercise Rights shall terminate and the only right thereafter of the holders of
Rights shall be to receive a number of Common Shares equal to the Exchange
Ratio. Within 10 Business Days after the date of such action, the Company shall
give notice of such exchange to the holders of Rights by mailing such notice to
all holders of Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, if prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice that is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives such notice, but neither the failure to give any such
28
<PAGE> 33
notice nor any defect therein shall affect the legality or validity of such
exchange. Each such notice of exchange shall state the method by which the
Rights will be exchanged for Common Shares. Neither the Company nor any of its
Affiliates or Associates may, directly or indirectly, redeem, acquire or
purchase for value any Rights in any manner other than (i) as specifically set
forth in Section 23 hereof, (ii) as specifically set forth in this Section 24 or
(iii) in connection with the purchase of Common Shares prior to the earlier of
the date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute (i) cash, (ii) other equity securities of the
Company (including, but not limited to, Common Share Equivalents), (iii) debt
securities of the Company, (iv) other property or (v) any combination of the
foregoing for the Common Shares exchangeable for Rights, as appropriately
adjusted. Subject to Section 7(d) hereof, in the event that the Company takes
any action pursuant to this Section 24, such action shall apply uniformly to all
outstanding Rights.
Section 25. Notice of Certain Events.
(a) In the event that the Company shall propose (i) to declare
or pay any dividend payable on or make any distribution with respect to its
Common Shares or Preferred Shares (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Common Shares or Preferred Shares
options, rights or warrants to subscribe for or to purchase any additional
shares thereof or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Common Shares or
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding shares), (iv) to effect any consolidation or merger with or into,
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 more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Company, then and in
each such case, the Company shall give to each holder of a Right Certificate and
to the Rights Agent, in accordance with Section 26 hereof, a notice of such
proposed action, that shall specify the record date for the purpose of such
dividend or distribution, or the date upon 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 record of
the Common Shares 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 20 days prior to the record date for determining holders of the
Common Shares or Preferred Shares for purposes of such action, and in the case
of any such other action, at least 20 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 or Preferred Shares, whichever date shall be the earlier. The
failure to give the notice required by this Section 25 or any defect therein
shall not affect the legality or validity of the action taken by the Company or
the vote upon any such action.
(b) Upon the occurrence of each Section 11(a)(ii) Event and
each
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<PAGE> 34
Section 13(a) Event, the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate and to the Rights Agent, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
specifying the event and the consequences of the event to holders of Rights
under Sections 11 and 13 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:
Virco Mfg. Corporation
2027 Harpers Way
Torrance, California 90501
Attention: Secretary
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) to the principal office of
the Rights Agent as follows:
The Chase Manhattan Bank
Stock Transfer Administration
450 West 33rd Street, 15th Floor
New York, New York 10001
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.
(a) The Board of Directors of the Company may, from time to
time, before and after the Distribution Date, without the approval of any
holders of Rights, supplement or amend any provision of this Agreement in any
manner, whether or not such supplement or amendment is adverse to any holder of
Rights, and direct the Rights Agent so to supplement or amend such provision,
and the Rights Agent shall so supplement or amend such provision; provided,
however, that from and after the earliest of (i) the date of the first Section
11(a)(ii) Event, (ii) the date of the first Section 13(a) Event, (iii) the
Redemption Date or (iv) the Expiration Date, this Agreement shall not be
supplemented or amended in any manner that would materially and adversely affect
any holder of outstanding Rights other than a 20% Stockholder or a Surviving
Person; and provided further, however, that from and after the first date upon
which there shall exist a 20% Stockholder, this Agreement shall not be
30
<PAGE> 35
supplemented or amended in any manner without the approval of a majority of
those directors of the Company who were directors prior to such date.
(b) From and after the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a) Event and prior
to the earlier of the Redemption Date or the Expiration Date, the Company shall
not effect any amendment to the Certificate of Designations for the Preferred
Shares that would materially and adversely affect the rights, privileges or
preferences of the Preferred Shares without the prior approval of the holders of
two-thirds or more of the then outstanding Rights.
Section 28. Certain Covenants. Subject to Section 27 hereof
and the other provisions of this Agreement, from and after the earlier of the
date of the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the Expiration Date,
the Company shall not (a) issue or sell, or permit any Subsidiary to issue or
sell, to a 20% Stockholder or a Surviving Person, or any Affiliate or Associate
of a 20% Stockholder or a Surviving Person, or any Person holding Voting Shares
of the Company that are Beneficially Owned by a 20% Stockholder or a Surviving
Person, (i) any rights, options, warrants or convertible securities on terms
similar to, or that materially adversely affect the value of, the Rights or (ii)
Preferred Shares, Common Shares or shares of any other class of capital stock,
if such sale is intended to or would materially adversely affect the value of
the Rights, or (b) take any other action that is intended to or would materially
adversely affect the value of the Rights.
Section 29. 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 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent, the registered holders of the Right Certificates (other than those
representing Rights that have become null and void) and the certificates for
Common Shares representing Rights (other than those Rights that have become null
and void) any legal or equitable right, remedy or claim under this Agreement,
and this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent, such registered holders of Right Certificates and such
certificates for Common Shares representing Rights.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement 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
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<PAGE> 36
of such state applicable to contracts made and performed entirely within such
state; provided, however that with respect solely to matters regarding the
rights and obligations of the Rights Agent hereunder, the laws of the State of
California shall govern.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each such counterpart shall for all purposes be
deemed to be an original and all such counterparts shall together constitute but
one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
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<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
VIRCO MFG. CORPORATION
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
THE CHASE MANHATTAN BANK
as Rights Agent
By:/s/ Eric Leason
-----------------------------
Name: ERIC LEASON
---------------------------
Title: VICE PRESIDENT
--------------------------
33
<PAGE> 38
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING
CUMULATIVE PREFERRED STOCK
$.01 PAR VALUE
OF
VIRCO MFG. CORPORATION
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE
Virco Mfg. Corporation ("the Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, the Board of
Directors on October 15, 1996, adopted the following resolution creating a
series of 200,000 (two hundred thousand) shares of Preferred Stock, par value
$0.01 per share, designated as Series A Junior Participating Cumulative
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation be,
and it hereby is, created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof, are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as Series A Junior Participating Cumulative Preferred Stock,
par value $0.01 per share (the "Series A Preferred Stock"), and the number of
shares constituting such series shall be 200,000 (two hundred thousand).
<PAGE> 39
Section 2. Dividends and Distributions.
(a) The holders of shares of Series A Preferred Stock, in
preference to the holders of shares of Common Stock, par value $.01 per share,
of the Corporation (the "Common Stock") and of any other junior stock of the
Corporation that may be outstanding, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the tenth day of January, April,
July and October in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (i) $.25 per share ($1.00 per annum), or (ii) subject to
the provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock, or a subdivision 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 that the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then and in each such event, the amount to which the holder of
each share of Series A Preferred Stock was entitled immediately prior to such
event under clause (ii) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event, and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, however,
that in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $.25 per
share ($1.00 per annum) on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which cases such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall cumulate but shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and
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<PAGE> 40
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) Each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes (and each one one-hundredth of a share of Series A
Preferred Stock shall entitle the holder thereof to one vote) on all matters
submitted to a vote of the stockholders of the Corporation. In the event that
the Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then and in each such event,
the number of votes per share to which holders of shares of Series 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 in the Certificate of
Incorporation of the Corporation or herein or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(c) In addition, the holders of shares of Series A Preferred
Stock shall have the following special voting rights:
(i) In the event that at any time dividends on Series
A Preferred Stock, whenever accrued and whether or not consecutive,
shall not have been paid or declared and a sum sufficient for the
payment thereof set aside, in an amount equivalent to six quarterly
dividends on all shares of Series A Preferred Stock at the time
outstanding, then and in each such event, the holders of shares of
Series A Preferred Stock and each other series of preferred stock now
or hereafter issued that shall be accorded such class voting right by
the Board of Directors and that shall have the right to elect one
director (or, in the event any such other series is entitled to a
greater number of directors, such number of directors, which shall be
cumulative with and not in addition to the director provided for
herein, such director or directors which the holders of Series A
Preferred Stock and any such other series of preferred stock are
entitled to elect being hereinafter referred to as "Special Directors")
as the result of a prior or subsequent default in payment of dividends
on such series (each such other series being hereinafter called "Other
Series of Preferred Stock"), voting separately as a class without
regard to series, shall be entitled to elect the Special Director at
the next annual meeting of stockholders of the Corporation, in addition
to the directors to be elected by the holders of all shares of the
Corporation entitled to vote for the election of directors, and the
holders of all shares (including the
3
<PAGE> 41
Series A Preferred Stock) otherwise entitled to vote for directors,
voting separately as a class, shall be entitled to elect the remaining
members of the Board of Directors, provided that the Series A Preferred
Stock and each Other Series of Preferred Stock, voting as a class,
shall not have the right to elect more than one Special Director (in
addition to any Special Director to which the holders of any Other
Series of Preferred Stock are then entitled). Such special voting right
of the holders of shares of Series A Preferred Stock may be exercised
until all dividends in default on the Series A Preferred Stock shall
have been paid in full or declared and funds sufficient therefor set
aside, and when so paid or provided for, such special voting right of
the holders of shares of Series A Preferred Stock shall cease, but
subject always to the same provisions for the vesting of such special
voting rights in the event of any such future dividend default or
defaults.
(ii) At any time after such special voting rights
shall have so vested in the holders of shares of Series A Preferred
Stock, the Secretary of the Corporation may, and upon the written
request of the holders of record of 10% or more in number of the shares
of Series A Preferred Stock and each Other Series of Preferred Stock
then outstanding addressed to the Secretary at the principal executive
office of the Corporation shall, call a special meeting of the holders
of shares of Preferred Stock so entitled to vote, for the election of
the Special Directors to be elected by them as herein provided, to be
held within 60 days after such call and at the place and upon the
notice provided by law and in the Bylaws for the holding of meetings of
stockholders; provided, however, that the Secretary shall not be
required to call such special meeting in the case of any such request
received less than 90 days before the date fixed for any annual meeting
of stockholders, and if in such case such special meeting is not called
or held, the holders of shares of Preferred Stock so entitled to vote
shall be entitled to exercise the special voting rights provided in
this paragraph at such annual meeting. If any such special meeting
required to be called as above provided shall not be called by the
Secretary within 30 days after receipt of any such request, then the
holders of record of 10% or more in number of the shares of Series A
Preferred Stock and each Other Series of Preferred Stock then
outstanding may designate in writing one of their number to call such
meeting, and the person so designated may, at the expense of the
Corporation, call such meeting to be held at the place and upon the
notice given by such person, and for that sole purpose shall have
access to the stock books of the Corporation. No such special meeting
and no adjournment thereof shall be held on a date later than 60 days
before the annual meeting of stockholders. If, at any meeting so called
or at any annual meeting held while the holders of shares of Series A
Preferred Stock have the special voting rights provided for in this
paragraph, the holders of not less than 40% of the aggregate voting
power of Series A Preferred Stock and each Other Series of Preferred
Stock then outstanding are present in person or by proxy, which
percentage shall be sufficient to constitute a quorum for the election
of additional directors as herein provided, the then authorized number
of directors of the Corporation shall be increased by the number of
Special Directors to be elected, as of the time of such special meeting
or the time of the first such annual meeting held while such holders
have special voting rights and such quorum is present, and the holders
of shares of Series A Preferred Stock and each Other Series of
Preferred Stock, voting as a class, shall be entitled to elect the
Special Director or Directors so provided for. If the directors of the
Corporation are then divided into classes under provisions of the
Certificate of Incorporation of the
4
<PAGE> 42
Corporation or the Bylaws, the Special Director or Directors shall
belong to each class of directors in which a vacancy is created as a
result of such increase in the authorized number of directors. If the
foregoing expansion of the size of the Board of Directors shall not be
valid under applicable law, then the holders of shares of Series A
Preferred Stock and of each Other Series of Preferred Stock, voting as
a class, shall be entitled, at the meeting of stockholders at which
they would otherwise have voted, to elect a Special Director or
Directors to fill any then existing vacancies on the Board of
Directors, and shall additionally be entitled, at such meeting and each
subsequent meeting of stockholders at which directors are elected, to
elect all of the directors then being elected until by such class vote
the appropriate number of Special Directors has been so elected.
(iii) Upon the election at such meeting by the
holders of shares of Series A Preferred Stock and each Other Series of
Preferred Stock, voting as a class, of the Special Director or
Directors they are entitled so to elect, the persons so elected,
together with such persons as may be directors or as may have been
elected as directors by the holders of all shares (including Series A
Preferred Stock) otherwise entitled to vote for directors, shall
constitute the duly elected directors of the Corporation. Each Special
Director so elected by holders of shares of Series A Preferred Stock
and each Other Series of Preferred Stock, voting as a class, shall
serve until the next annual meeting or until their respective
successors shall be elected and qualified, or if any such Special
Director is a member of a class of directors under provisions dividing
the directors into classes, each such Special Director shall serve
until the annual meeting at which the term of office of such Special
Director's class shall expire or until such Special Director's
successor shall be elected and shall qualify, and at each subsequent
meeting of stockholders at which the directorship of any Special
Director is up for election, said special class voting rights shall
apply in the reelection of such Special Director or in the election of
such Special Director's successor; provided, however, that whenever the
holders of shares of Series A Preferred Stock and each Other Series of
Preferred Stock shall be divested of the special rights to elect one or
more Special Directors as above provided, the terms of office of all
persons elected as Special Directors, or elected to fill any vacancies
resulting from the death, resignation, or removal of Special Directors
shall forthwith terminate (and the number of directors shall be reduced
accordingly).
(iv) If, at any time after a special meeting of
stockholders or an annual meeting of stockholders at which the holders
of shares of Series A Preferred Stock and each Other Series of
Preferred Stock, voting as a class, have elected one or more Special
Directors as provided above, and while the holders of shares of Series
A Preferred Stock and each Other Series of Preferred Stock shall be
entitled so to elect one or more Special Directors, the number of
Special Directors who have been so elected (or who by reason of one or
more resignations, deaths or removals have succeeded any Special
Directors so elected) shall by reason of resignation, death or removal
be reduced the vacancy in the Special Directors may be filled by any
one or more remaining Special Director or Special Directors. In the
event that such election shall not occur within 30 days after such
vacancy arises, or in the event that there shall not be incumbent at
least one Special Director, the Secretary of the Corporation may, and
upon the written request of the holders of record of 10% or more in
number of the shares of Series A Preferred Stock and each Other Series
of Preferred Stock then outstanding addressed to the Secretary at
5
<PAGE> 43
the principal office of the Corporation shall, call a special meeting
of the holders of shares of Series A Preferred Stock and each Other
Series of Preferred Stock so entitled to vote, for an election to fill
such vacancy or vacancies, to be held within 60 days after such call
and at the place and upon the notice provided by law and in the Bylaws
for the holding of meetings of stockholders; provided, however, that
the Secretary shall not be required to call such special meeting in the
case of any such request received less than 90 days before the date
fixed for any annual meeting of stockholders, and if in such case such
special meeting is not called, the holders of shares of Preferred Stock
so entitled to vote shall be entitled to fill such vacancy or vacancies
at such annual meeting. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 30
days after receipt of any such request, then the holders of record of
10% or more in number of the shares of Series A Preferred Stock and
each Other Series of Preferred Stock then outstanding may designate in
writing one of their number to call such meeting, and the person so
designated may, at the expense of the Corporation, call such meeting to
be held at the place and upon the notice above provided, and for that
purpose shall have access to the stock books of the Corporation; no
such special meeting and no adjournment thereof shall be held on a date
later than 60 days before the annual meeting of stockholders.
(d) Nothing herein shall prevent the directors or stockholders
from taking any action to increase the number of authorized shares of Series A
Preferred Stock, or increasing the number of authorized shares of Preferred
Stock of the same class as the Series A Preferred Stock or the number of
authorized shares of Common Stock, or changing the par value of the Common Stock
or Preferred Stock, or issuing options, warrants or rights to any class of stock
of the Corporation as authorized by the Certificate of Incorporation of the
Corporation, as it may hereafter be amended.
(e) Except as set forth herein, holders of shares 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 as set forth in the
Certificate of Incorporation of the Corporation or herein or by law) for taking
any corporate action.
Section 4. Certain Restrictions.
(a) Whenever any dividends or other distributions payable on
the Series A Preferred Stock as provided in Section 2 hereof 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, directly or indirectly:
(i) declare or pay dividends on, or make any other
distributions with respect to, any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions with respect to, any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably on
shares of the Series A Preferred Stock and all such parity stock on
which
6
<PAGE> 44
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) with the
Series A Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) 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, directly or
indirectly, 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, without designation as to series, and may be reissued
as part of any series of preferred stock created by resolution or resolutions of
the Board of Directors (including Series A Preferred Stock), subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made to:
(a) the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received the greater of (i) $1.00 per share ($.001
per one one-hundredth of a share), plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (ii) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate amount to
be distributed per share to holders of shares of Common Stock; or
(b) the holders of shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the Series
A Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all other such parity stock in
7
<PAGE> 45
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 that the Corporation shall at any time declare or
pay any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then and in each such event, the aggregate amount to
which the holder of each share of Series A Preferred Stock was entitled
immediately prior to such event under the proviso in clause (a) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the event that the
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, or otherwise
changed, then and in each such event, the shares of Series A Preferred Stock
shall at the same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 100
times the aggregate 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 that the Corporation shall at
any time declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then and in each such event,
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series 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. Notwithstanding the foregoing, the Corporation
may acquire shares of Series A Preferred Stock in any other manner permitted by
law, the Certificate of Incorporation of the Corporation or herein.
Section 9. Rank. Unless otherwise provided in the Certificate
of Incorporation of the Corporation or a Certificate of Designations relating to
a subsequent series of preferred stock of the Corporation, the Series A
Preferred Stock shall rank junior to all other series of the Corporation's
preferred stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up, and senior to the Common Stock of the
Corporation.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner that would materially and
adversely alter or change the powers, preferences or special rights of the
Series A Preferred Stock 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 series.
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<PAGE> 46
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share (in one one-hundredths (1/100) of a share and
integral multiples thereof) that shall entitle the holder thereof, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and have the benefit of all other rights
of holders of shares of Series A Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation to be signed by its Chief Financial Officer this ____
day of October, 1996.
Virco Mfg. Corporation
-----------------------------------
James R. Braam
Chief Financial Officer
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<PAGE> 47
EXHIBIT B
FORM OF
RIGHT CERTIFICATE
CERTIFICATE NO. R-___________ RIGHTS
NOT EXERCISABLE AFTER OCTOBER 25, 2006, OR EARLIER IF REDEEMED
OR EXCHANGED. THE RIGHTS ARE SUBJECT TO EXPIRATION, REDEMPTION
AND EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT,
RIGHTS BENEFICIALLY OWNED BY CERTAIN PERSONS OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
RIGHT CERTIFICATE
VIRCO MFG. CORPORATION
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 and conditions of a
Rights Agreement (the "Rights Agreement") dated as of October 18, 1996, by and
between Virco Mfg. Corporation, a Delaware corporation (the "Company"), and The
Chase Manhattan Bank (the "Rights Agent"), to purchase from the Company at any
time prior to the earlier of the Redemption Date (as such term is defined in the
Rights Agreement) or 5:00 o'clock p.m., Los Angeles time, on the Expiration Date
(October 25, 2006, unless the Distribution Date (as defined in the Rights
Agreement) shall have occurred on or prior to such date and the Rights shall
have separated from the Common Shares, in which case the Expiration Date is the
date that is the tenth anniversary of the Distribution Date), at the office or
agency of the Rights Agent at Los Angeles, California, or at the office of its
successor as Rights Agent, one one-hundredth of a fully paid and nonassessable
share of Series A Junior Participating Cumulative Preferred Stock, par value
$0.01 per share, of the Company (a "Preferred Share") or, in certain
circumstances, other securities or other property, at a purchase price of $40.00
(Forty Dollars) per one one-hundredth of a Preferred Share (the "Exercise
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase, including Certificate, on the reverse side hereof
completed and duly executed, with signature guaranteed.
The number of Rights represented by this Right Certificate and
the Exercise Price set forth above are the number of Rights and the Exercise
Price as of October 25 1996, based upon the Preferred Shares as constituted on
such date. As provided in the Rights Agreement, the Exercise Price and the
number of Preferred Shares or other securities or other property that may be
purchased upon the exercise of the Rights represented by this Right Certificate
are subject to modification and adjustment upon the occurrence of certain
events.
<PAGE> 48
The Rights Agreement contains a full description of the
rights, limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders of Right Certificates. This Right Certificate
is subject to all the terms and conditions of the Rights Agreement, which terms
and conditions are hereby incorporated herein by reference and made a part
hereof. 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 presentation and surrender at the above-mentioned offices of
the Rights Agent, with the Form of Assignment, including Certificate, on the
reverse side hereof completed and duly executed, with signature guaranteed, may
be exchanged for another Right Certificate or Right Certificates of like tenor
and date representing Rights entitling the holder thereof to purchase a like
aggregate number of Preferred Shares or, in certain circumstances, other
securities or other property, as the Rights represented 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 the surrender hereof with the Form of Election to
Purchase, including Certificate, on the reverse side hereof completed and duly
executed, with signature guaranteed, another Right Certificate or Right
Certificates for the number of whole Rights not exercised. Subject to the
provisions of the Rights Agreement, the Rights represented by this Right
Certificate may be redeemed by the Company, at its option, at a redemption price
of $.001 per Right or, upon the occurrence of certain events, the Company, at
its option, may exchange such Rights for fully paid and nonassessable shares of
Common Stock, par value $.01 per share, of the Company at an exchange ratio, per
Right, of that number of Common Shares (as defined in the Rights Agreement)
which, as of the date of the Board of Directors' action, has a Current Market
Price (as defined in the Rights Agreement) equal to the difference between the
Exercise Price and the Current Market Price of the Common Shares which each
holder of a Right would have a right to receive upon the exercise of a Right on
such date.
No fractional securities shall be issued upon the exercise of
any Right or Rights represented hereby (other than fractions of Preferred Shares
that are integral multiples of one one-hundredth of a Preferred Share, that may,
at the option of the Company, be represented by depository receipts), but in
lieu thereof, a cash payment shall be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
the Preferred Shares or other securities of the Company that may at any time be
issuable on the exercise hereof, nor shall anything contained 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, until the Right or
Rights represented by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
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<PAGE> 49
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _______________________, ____.
Attest: VIRCO MFG. CORPORATION
By___________________________ By________________________________
Name: Name:
Title: Title:
Countersigned:
THE CHASE MANHATTAN BANK
By____________________________
Name:
Title:
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<PAGE> 50
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights represented by this Right
Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
____________________________________________________________________________
____________________________________________________________________________
(Name, address and social security or other
identifying number of transferee)
___________________________________________ (_____________) of the Rights
represented by this Right Certificate, together with all right, title and
interest in and to said Rights, and hereby irrevocably constitutes and appoints
__________________ attorney to transfer said Rights on the books of Virco Mfg.
Corporation with full power of substitution.
Dated: ____________________, ____ _____________________________
(Signature)
Signature Guaranteed:
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<PAGE> 51
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
(CONTINUED)
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights represented by this Right
Certificate)
Virco Mfg. Corporation:
The undersigned hereby irrevocably elects to exercise
___________________________ (_____________) of the Rights represented by this
Right Certificate to purchase the following:
(Check one of the following boxes)
/ / the Preferred Shares or other securities or property issuable
upon the exercise of said number of Rights pursuant to Section
7(c) of the Rights Agreement.
/ / the shares of the Common Stock, par value $.01 per share, of
the Company, or other securities or property issuable upon the
exercise of said number of Rights pursuant to Section
11(a)(ii) of the Rights Agreement.
/ / the securities issuable upon the exercise of said number of
Rights pursuant to Section 13(a) of the Rights Agreement.
The undersigned hereby requests that any such property and a
certificate for any such securities be issued in the name of and delivered to:
______________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of
Rights shall not be all the Rights represented by this Right Certificate, a new
Right Certificate for the remaining balance of such Rights be issued in the name
of and delivered to:
______________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
Dated:________________, ____ __________________________________________
(Signature)
Signature Guaranteed:
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<PAGE> 52
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
(CONTINUED)
CERTIFICATE
(TO BE COMPLETED, IF TRUE)
The undersigned hereby certifies that the Rights represented
by this Right Certificate are not Beneficially Owned by a 20% Stockholder or an
Affiliate or Associate of a 20% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated:___________________, ______ ________________________________________
(Signature)
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
In the event that the foregoing Certificate is not duly
executed, with signature guaranteed, the Company may deem the Rights represented
by this Right Certificate to be Beneficially Owned by a 20% Stockholder or an
Affiliate or Associate of a 20% Stockholder (as such capitalized terms are
defined in the Rights Agreement), and not issue any property or certificate for
securities upon the exercise of this Right Certificate or issue any new Right
Certificate for any remaining balance of unexercised Rights represented by this
Right Certificate.
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<PAGE> 53
EXHIBIT C
FORM OF
SUMMARY OF THE RIGHTS
On October 15, 1996 the Board of Directors of Virco Mfg. Corporation
(the "Company") authorized and declared a dividend of one preferred stock
purchase right (a "Right") for each share of common stock, par value $.01 per
share, of the Company (the "Common Shares"). The dividend is payable on October
25, 1996 (the "Record Date") to the holders of record of Common Shares as of the
close of business on such date.
The following is a brief description of the Rights. It is intended to
provide a general description only and is subject to the detailed terms and
conditions of a Rights Agreement (the "Rights Agreement") dated as of October
18, 1996 by and between the Company and The Chase Manhattan Bank, as Rights
Agent (the "Rights Agent").
1. COMMON SHARE CERTIFICATES REPRESENTING RIGHTS
Until the Distribution Date (as defined in Section 2 below), (a) the
Rights shall not be exercisable, (b) the Rights shall be attached to and trade
only together with the Common Shares and (c) the stock certificates representing
Common Shares shall also represent the Rights attached to such Common Shares.
Common Share certificates issued after the Record Date and prior to the
Distribution Date shall contain a notation incorporating the Rights Agreement by
reference.
2. DISTRIBUTION DATE
The "Distribution Date" is the earliest of (a) the tenth business day
following the date of the first public announcement that any person (other than
the Company or certain related entities, and with certain additional exceptions)
has become the beneficial owner of 20% or more of the then outstanding Common
Shares (such person is a "20% Stockholder" and the date of such public
announcement is the "20% Ownership Date"), (b) the tenth business day (or such
later day as shall be designated by the Board of Directors) following the date
of the commencement of, or the announcement of an intention to make, a tender
offer or exchange offer, the consummation of which would cause any person to
become a 20% Stockholder or (c) the first date, on or after the 20% Ownership
Date, upon which the Company is acquired in a merger or other business
combination in which the Company is not the surviving corporation or in which
the outstanding Common Shares are changed into or exchanged for stock or assets
of another person, or upon which 50% or more of the Company's consolidated
assets or earning power are sold (other than in transactions in the ordinary
course of business). In calculating the percentage of outstanding Common Shares
that are beneficially owned by any person, such person shall be deemed to
beneficially own any Common Shares issuable upon the exercise, exchange or
conversion of any options, warrants or other securities beneficially owned by
such person; provided, however, that such Common Shares issuable upon such
exercise shall not be deemed outstanding for the purpose of calculating the
percentage of Common Shares that are beneficially owned by any other
<PAGE> 54
person. Notwithstanding the foregoing, if any person is the beneficial owner of
at least 20% of the outstanding Common Shares as a result of any increase in the
number of Common Shares issuable upon the exercise, exchange or conversion of
outstanding securities, or any decrease in the number of outstanding Common
Shares resulting from any stock repurchase plan or self tender offer of the
Company, then such person shall not be deemed a "20% Stockholder" until such
person thereafter acquires beneficial ownership of, in the aggregate, a number
of additional Common Shares equal to 1% or more of the then outstanding Common
Shares.
No person who was the beneficial owner of 20% or more of the
outstanding Common Shares on October 18, 1996, shall be deemed a 20% Stockholder
for purposes of the Rights unless and until such person shall have acquired
beneficial ownership of additional Common Shares amounting to 1% or more of the
total Common Shares outstanding. However, if such person sold its shares, the
acquisition by the purchaser would trigger the Rights if the purchaser would
thereby acquire 20% or more of the Common Shares.
Upon the close of business of the Distribution Date, the Rights shall
separate from the Common Shares, Right certificates shall be issued, and the
Rights shall become exercisable to purchase Preferred Shares as described in
Section 5 below.
3. ISSUANCE OF RIGHT CERTIFICATES
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution Date, and such
separate Right certificates alone shall represent such Rights from and after the
Distribution Date.
4. EXPIRATION OF RIGHTS
The Rights shall expire on October 25, 2006, unless earlier redeemed or
exchanged, unless the Distribution Date has previously occurred and the Rights
have separated from the Common Shares, in which case the Rights will remain
outstanding for ten years.
5. EXERCISE OF RIGHTS
Unless the Rights have expired or been redeemed or exchanged, they may
be exercised, at the option of the holders, pursuant to paragraphs (a), (b) or
(c) below. No Right may be exercised more than once or pursuant to more than one
of such paragraphs. From and after the first event of the type described in
paragraphs (b) or (c) below, each Right that is beneficially owned by a 20%
Stockholder or that was attached to a Common Share that is subject to an option
beneficially owned by a 20% Stockholder shall be void.
(a) Right to Purchase Preferred Shares. From and after the close of
business on the Distribution Date, each Right (other than a Right that has
become void) shall be exercisable to purchase one one-hundredth of a share of
Series A Junior Participating Cumulative Preferred Stock, par value $.01 per
share, of the Company (the "Preferred Shares"), at an exercise price of $40.00
(the "Exercise Price"). Prior to the Distribution Date, the Company may
substitute for all or any portion of the Preferred Shares that would otherwise
be issuable upon exercise of the
2
<PAGE> 55
Rights, cash, assets or other securities having the same aggregate value as such
Preferred Shares. The Preferred Shares are nonredeemable and, unless otherwise
provided in connection with the creation of a subsequent series of preferred
stock, are subordinate to any other series of the Company's preferred stock
whether issued before or after the issuance of the Preferred Shares. The
Preferred Shares may not be issued except upon exercise of Rights. The holder of
a Preferred Share is entitled to receive when, as and if declared, the greater
of (i) cash and non-cash dividends in an amount equal to 100 times the dividends
declared on each Common Share or (ii) a preferential annual dividend of $1.00
per Preferred Share ($.01 per one one-hundredth of a Preferred Share). In the
event of liquidation, the holders of Preferred Shares shall be entitled to
receive a liquidation payment in an amount equal to the greater of (1) $1.00 per
Preferred Share ($.01 per one one-hundredth of a Preferred Share), plus all
accrued and unpaid dividends and distributions on the Preferred Shares, or (2)
an amount equal to 100 times the aggregate amount to be distributed per Common
Share. Each Preferred Share has 100 votes, voting together with the Common
Shares. In the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, the holder of a Preferred Share shall be entitled
to receive 100 times the amount received per Common Share. The rights of the
Preferred Shares as to dividends, voting and liquidation preferences are
protected by antidilution provisions. It is anticipated that the value of one
one-hundredth of a Preferred Share should approximate the value of one Common
Share.
(b) Right to Purchase Common Shares of the Company. From and after the
close of business on the tenth business day following the 20% Ownership Date,
each Right (other than a Right that has become void) shall be exercisable to
purchase, at the Exercise Price (initially $40.00), Common Shares with a market
value equal to two times the Exercise Price. If the Company does not have
sufficient Common Shares available for all Rights to be exercised, the Company
shall substitute for all or any portion of the Common Shares that would
otherwise be issuable upon the exercise of the Rights, cash, assets or other
securities having the same aggregate value as such Common Shares.
(c) Right to Purchase Common Stock of a Successor Corporation. If, on
or after the 20% Ownership Date, (i) the Company is acquired in a merger or
other business combination in which the Company is not the surviving
corporation, (ii) the Company is the surviving corporation in a merger or other
business combination in which all or part of the outstanding Common Shares are
changed into or exchanged for stock or assets of another person or (iii) 50% or
more of the Company's consolidated assets or earning power are sold (other than
in transactions in the ordinary course of business), then each Right (other than
a Right that has become void) shall thereafter be exercisable to purchase, at
the Exercise Price (initially $40.00), shares of common stock of the surviving
corporation or purchaser, respectively, with an aggregate market value equal to
two times the Exercise Price.
6. ADJUSTMENTS TO PREVENT DILUTION
The Exercise Price, the number of outstanding Rights and the number of
Preferred Shares or Common Shares issuable upon exercise of the Rights are
subject to adjustment from time to time as set forth in the Rights Agreement in
order to prevent dilution. With certain exceptions, no
3
<PAGE> 56
adjustment in the Exercise Price shall be required until cumulative adjustments
require an adjustment of at least 1%.
7. CASH PAID INSTEAD OF ISSUING FRACTIONAL SECURITIES
No fractional securities shall be issued upon exercise of a Right
(other than fractions of Preferred Shares that are integral multiples of one
one-hundredth of a Preferred Share and that may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
shall be made based on the market price of such securities on the last trading
date prior to the date of exercise.
8. REDEMPTION
At any time prior to the earlier of (a) the tenth business day (or such
later day as shall be designated by the Board of Directors) following the date
of the commencement of, or the announcement of an intention to make, a tender
offer or exchange offer, the consummation of which would cause any person to
become a 20% Stockholder, (b) the tenth business day after the 20% Ownership
Date or (c) the first event of the type giving rise to exercise rights under
Section 5(c) above, the Board of Directors may, at its option, direct the
Company to redeem the Rights in whole, but not in part, at a price of $.001 per
Right (the "Redemption Price"), and the Company shall so redeem the Rights.
Immediately upon such action by the Board of Directors (the date of such action
is the "Redemption Date"), the right of the holders of Rights thereafter shall
be to receive the Redemption Price.
9. EXCHANGE
At any time after the 20% Ownership Date and prior to the first date
thereafter upon which a 20% Stockholder shall be the beneficial owner of 50% or
more of the outstanding Common Shares, the Board of Directors may, at its
option, direct the Company to exchange all, but not less than all, of the then
outstanding Rights for Common Shares at an exchange ratio per Right equal to
that number of Common Shares which, as of the date of the Board of Directors'
action, has a current market price equal to the difference between the Exercise
Price and the current market price of the shares that would otherwise be
issuable upon exercise of a Right on such date (the "Exchange Ratio"), and the
Company shall so exchange the Rights. Immediately upon such action by the Board
of Directors, the right to exercise Rights shall terminate and the only right of
the holders of Rights thereafter shall be to receive a number of Common Shares
equal to the Exchange Ratio.
10. NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, shall have no
rights as a stockholder of the Company (other than rights resulting from such
holder's ownership of Common Shares), including, without limitation, the right
to vote or to receive dividends.
11. AMENDMENT OF RIGHTS AGREEMENT
The Board of Directors may, from time to time, without the approval of any
holder of Rights, direct the Company and the Rights Agent to supplement or amend
any provision of the Rights
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Agreement in any manner, whether or not such supplement or amendment is adverse
to any holder of Rights, and the Company and the Rights Agent shall so
supplement or amend such provision; provided, however, that from and after the
earliest of (a) the tenth business day (or such later day as shall be designated
by the Board of Directors) following the date of the commencement of, or the
announcement of an intention to make, a tender offer or exchange offer, the
consummation of which would cause any person to become a 20% Stockholder, (b)
the 20% Ownership Date, (c) the first event of the type giving rise to exercise
rights under Section 5(c) above, or (d) the Redemption Date, the Rights
Agreement shall not be supplemented or amended in any manner that would
materially and adversely affect any holder of outstanding Rights other than a
20% Stockholder; provided, further that from and after the first date upon which
there shall exist a 20% Stockholder, the Rights Agreement shall not be
supplemented or amended in any manner without the approval of a majority of the
Company's directors who were directors prior to such date.
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