SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PATRICK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-1057796
(State of in incorporation of organization) (IRS Employer Identification
No.)
1800 South 14th Street, P.O. Box 638, Elkhart, Indiana 46515
(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 of which
to be so registered each class is to be registered
None Not applicable
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
(Title of Class)
Item 1. Description of Registrant's Securities to be Registered
On February 29, 1996, the Board of Directors of Patrick Industries,
Inc., an Indiana corporation (the "COMPANY"), declared a dividend of a right
(a "RIGHT") for each share of Common Stock, without par value, of the Company
(the "COMMON STOCK"). The dividend is payable on April 8, 1996 to
shareholders of record at the close of business on March 20, 1996 (the
"RECORD DATE") and with respect to all shares of Common Stock that become
outstanding after the Record Date and prior to the earliest of the Separation
Date (as defined below), the redemption of the Rights, the exchange of the
Rights and the expiration of the Rights. Except as set forth below and
subject to adjustment as provided in the Rights Agreement (as defined below),
each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of the Company's Preferred Stock, Series A, without
par value (the "PREFERRED STOCK"), at an exercise price of $30 per Right (the
"PURCHASE PRICE"). The description and terms of the Rights are set forth in
a Rights Agreement dated as of March 20, 1996 (the "RIGHTS AGREEMENT"),
between the Company and Harris Trust and Savings Bank, as Rights Agent (the
"RIGHTS AGENT").
The Rights will be evidenced by Common Stock certificates and not
separate certificates until the earlier to occur of (i) 10 days following the
date of public disclosure that a person or group, together with persons
affiliated or associated with it (an "ACQUIRING PERSON"), other than (x)
Mervin D. Lung, his spouse or any trust or partnership established by either
of them, (y) David D. Lung or (z) a person acquiring its stock directly from
the Company and approved by the Company's disinterested directors, has
acquired, or obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding Common Stock (the "STOCK ACQUISITION DATE") and (ii)
10 days following commencement or disclosure of an intention to commence a
tender offer or exchange offer by a person other than the Company and certain
related entities if, upon consummation of the offer, such person or group,
together with persons affiliated or associated with it, could acquire
beneficial ownership of 30% or more of the outstanding Common Stock (the
earlier of such dates being called the "SEPARATION DATE"). Until the
Separation Date (or earlier redemption or expiration of the Rights), the
transfer of Common Stock will also constitute transfer of the associated
Rights. Following the Separation Date, separate certificates will evidence
the Rights.
The Rights will first become exercisable on the Separation Date (unless
sooner redeemed). The Rights will expire at the close of business on March
20, 2006 (the "EXPIRATION DATE"), unless earlier redeemed or exchanged by the
Company as described below.
The Purchase Price and the number of shares of Preferred Stock or other
securities, cash or other property issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend or distribution on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights, options, warrants to subscribe for
Preferred Stock or securities convertible into Preferred Stock at less than
the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of other securities, cash
(excluding regular periodic cash dividends at an annual rate not in excess of
125% of the annualized rate of cash dividends paid during the preceding
fiscal year), property, evidences of indebtedness, or assets.
In the event that, following the Separation Date, the Company is
acquired in a merger or other business combination in which the Common Stock
does not remain outstanding or is changed or 50% or more of its consolidated
assets or earning power is sold, leased, exchanged, mortgaged, pledged or
otherwise transferred or disposed of (in one transaction or a series of
transactions) the Rights will "FLIP OVER" and entitle each holder of a Right,
except the Acquiring Person or as provided below, to purchase, upon the
exercise of the Right at the then-current Purchase Price, that number of
shares of common stock of the acquiring company (or, in certain
circumstances, one of its affiliates) that at the time of such transaction
would have a market value of two times the Purchase Price.
If (i) a person acquires beneficial ownership of 25% or more of the
Common Stock, (ii) the Company is the surviving corporation in a merger with
an Acquiring Person and the Common Stock remains outstanding and unchanged,
or (iii) an Acquiring Person engages in a "SELF-DEALING" transaction
specified in the Rights Agreement, the Rights will "FLIP IN" and entitle each
holder of a Right, except the Acquiring Person or as provided below, to
purchase, upon exercise at the then-current Purchase Price, that number of
shares of Common Stock having a market value of two times the Purchase Price.
Any "flip over" event or "flip in" event is a "TRIGGERING EVENT."
Any Rights beneficially owned at any time on or after the Separation
Date by an Acquiring Person or an affiliate or associate of an Acquiring
Person (whether or not such ownership is subsequently transferred) will
become null and void upon the occurrence of the earlier of the Board of
Director's decision to exchange the Rights and a Triggering Event, and any
holder of such Rights will have no right to exercise such Rights.
Under certain circumstances, the disinterested directors can approve a
transaction with a specific shareholder and freeze the Rights in connection
with that specific transaction.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. Holders will have no right to receive fractional shares
of Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon the exercise of Rights. In
lieu of such fractional shares, an adjustment in cash may be made based on
the market price of the Preferred Stock on the last trading date prior to the
date of exercise.
The number of outstanding Rights and the number of one one-hundredths of
a share of Preferred Stock issuable upon exercise of each Right and the
Purchase Price are also subject to adjustment in the event of a stock split
of the Common Stock or distributions, subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Separation Date.
At any time prior to the earlier of (i) the closing of business on the
tenth day following the time that it becomes public that an Acquiring Person
has become such and (ii) the Expiration Date, the Company may redeem the
Rights in whole, but not in part, at a price of $0.01 per Right. Immediately
upon the action of the Company's Board of Directors electing to redeem the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights thereafter will be to receive the applicable redemption
price.
At any time any person becomes an Acquiring Person and prior to such
time as such person, together with its affiliates becomes the beneficial
owner of at least 50% of the Company's outstanding Common Stock, the Company
may, provided that all necessary regulatory approvals have been obtained,
exchange the Rights (other than Rights owned by such Acquiring Person which
become null and void), in whole or in part, at a ratio of one share of Common
Stock per Right, subject to adjustment.
Until a Right is exercised, the holder has no rights as a shareholder of
the Company, including, without limitation, the right to vote or to receive
dividends or distributions.
The Company may, without the approval of any holder of the Rights, but only
if at that time the Board of Directors consists of a majority of
disinterested directors, supplement or amend any provision of the Rights
Agreement, except the redemption window, the Purchase Price or the redemption
price.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be
entitled to an aggregate dividend of 100 times the dividend declared per
share of Common Stock, if it is greater. In the event of liquidation, the
holders of the Preferred Stock will be entitled to a minimum preferential
liquidation payment of $100.00 per share, but will be entitled to an
aggregate payment of 100 times the payment made per share of Common Stock, if
it is greater. In the event of any merger or other business combination in
which Common Stock is exchanged, each share of Preferred Stock will be
entitled to receive 100 times the amount received per share of Common Stock.
These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one one-hundredth of a share of Preferred
Stock purchasable upon exercise of each Right is intended to approximate the
value of one share of Common Stock.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors, except
pursuant to an offer conditioned upon a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors prior to the time a person or
group has acquired beneficial ownership of 20% or more of the Common Stock,
because until such time, the Rights may be redeemed by the Company at $0.01
per Right.
A copy of the Rights Agreement is hereby filed with the Securities and
Exchange Commission and is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
Item 2. Exhibits.
99.1 Rights Agreement dated as of March 20, 1996 between Patrick
Industries, Inc. and Harris Trust and Savings Bank as Rights
Agent, which includes as Exhibit A the Certificate of
Designations of Preferred Stock, Series A setting forth the
terms of the Preferred Stock; as Exhibit B the form of Rights
Certificate; and as Exhibit C the Summary of Rights. Pursuant
to the Rights Agreement, Rights Certificates will not be
mailed until as soon as practicable after the earlier of the
tenth day after public announcement that a person or group has
acquired beneficial ownership of 20% or more of the Common
Stock or the tenth day after a person commences, or announces
an intention to commence, a tender or exchange offer the
consummation of which could result in a person beneficially
owning 30% or more of the Common Stock.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized.
PATRICK INDUSTRIES, INC.
Date: March 29, 1996 By: /s/ Keith V. Kankel
Name: Keith V. Kankel
Title: Vice President- Treasurer
PATRICK INDUSTRIES, INC.
1800 SOUTH 14TH STREET
ELKHART, INDIANA 46516
April 3, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Patrick Industries, Inc.
Registration Statement on Form 8-A
Ladies and Gentlemen:
The undersigned Registrant hereby requests acceleration of the effective
date of its registration statement on Form 8-A filed today with the
Securities and Exchange Commission, so that it will become effective
immediately upon filing with the Securities and Exchange Commission on April
3, 1996 or as early as possible thereafter.
PATRICK INDUSTRIES, INC.
By:/s/ Keith V. Kankel
Vice President - Treasurer
EXHIBIT 99.1
PATRICK INDUSTRIES, INC.
and
HARRIS TRUST AND SAVINGS BANK
Rights Agent
Rights Agreement
Dated as of March 20, 1996
TABLE OF CONTENTS
PAGE
1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . .
3. Issue of Rights Certificates . . . . . . . . . . . . . . . . . . . . . .
4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . .
5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . .
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates . . . . . . . .
7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . . .
8. Cancellation and Destruction of Rights Certificates . . . . . . . . . . .
9. Reservation and Availability of Preferred Stock . . . . . . . . . . . . .
10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . .
11. The Flip-In . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. The Flip-Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . .
15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . .
17. Rights Holder Not Deemed a Shareholder . . . . . . . . . . . . . . . . .
18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . .
19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . .
20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . .
21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . .
22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . .
23. Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . .
24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . .
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . .
28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . .
30. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBITS
EXHIBIT A -- Certificate of Designation, Preferences and Rights
EXHIBIT B -- Rights Certificates
EXHIBIT C -- Summary of Rights
RIGHTS AGREEMENT
Rights Agreement, dated as of March 20, 1996 (the "Agreement"),
between PATRICK INDUSTRIES, INC., an Indiana corporation (the "COMPANY"), and
HARRIS TRUST AND SAVINGS BANK, (the "RIGHTS AGENT").
W I T N E S S E T H:
WHEREAS, on February 29, 1996, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) payable on April 8, 1996 for each outstanding share of common stock,
without par value, of the Company (the "COMMON STOCK") outstanding on March 20,
1996 (the "RECORD DATE"), and the issuance of one Right for each share of Common
Stock of the Company issued between the Record Date and the Separation Date (as
hereinafter defined) and one Right for each share of Common Stock of the Company
issued upon exercise of stock options granted prior to the Separation Date or
under any employee plan or arrangement established prior to the Separation Date,
each Right representing the right to purchase one one-hundredth of a share of
Preferred Stock, Series A, of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation, Preferences and
Rights attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the "RIGHTS");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as hereinafter
defined) and Associates (as hereinafter defined) of such Person, shall be the
Beneficial Owner (as hereinafter defined) of 20% or more of the shares of Common
Stock then outstanding and shall include all Affiliates and Associates of such
Person, but shall not include (i) the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any Subsidiary of the Company or any
entity holding shares of Common Stock organized, appointed or established by the
Company for or pursuant to the terms of any such plan, or (ii) Mervin D. Lung,
his spouse or any trust or partnership established by either of them, or (iii)
David D. Lung.
(b) "AFFILIATE" shall mean, with respect to a specified Person, a
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the Person specified.
(c) "APPROVED ACQUIRING PERSON" shall mean an Acquiring Person who
becomes such by virtue of the acquisition of Common Stock directly from the
Company, and an Approved Acquiring Person shall cease to be such if thereafter
the Approved Acquiring Person (i) ceases to be the Beneficial Owner of 20% or
more of the shares of Common Stock then outstanding, or (ii) takes any
affirmative action to increase its proportionate share of the outstanding Common
Stock in one transaction or a series of transactions by more than 5% of the
aggregate number of shares of Common Stock then outstanding without the prior
approval of a majority of the Continuing Directors; provided, however, that
except as provided in clause (i) hereof, an Approved Acquiring Person shall not
lose its status as such as a result of any actions taken by the Company that
change the number of shares of Common Stock outstanding.
(d) "ASSOCIATE" shall mean, with respect to a specified Person, (i)
any corporation or organization (other than the Company or a Subsidiary of the
Company) of which such Person is an officer, director or partner or is, directly
or indirectly, the beneficial owner of 10% or more of any class of equity
security as defined in Rule 3a-11 of the General Rules and Regulations under the
Exchange Act (or any successor rule or statutory provision), (ii) any trust or
other estate in which such Person has a substantial beneficial interest or as to
which such Person serves as trustee or in a similar fiduciary capacity, and
(iii) any relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person, or is an officer or director of any
corporation controlling or controlled by such Person.
(e) "BENEFICIAL OWNERSHIP" shall be determined pursuant to Rule 13d-3
of the General Rules and Regulations under Exchange Act (or any successor rule
or statutory provision) or, if Rule 13d-3 shall be rescinded and there shall be
no successor rule or statutory provision thereto, pursuant to Rule 13d-3 as in
effect on the date hereof; provided, however, that a Person shall, in any event,
also be deemed to be the "Beneficial Owner" of any securities:
(i) which such Person or any Affiliate or Associate thereof
beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate thereof,
directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any Affiliate or
Associate thereof until the tendered securities are accepted for
purchase or exchange, or (B) securities issuable upon exercise of the
Rights;
(iii) which such Person or any Affiliate or Associate thereof,
directly or indirectly, has sole or shared voting or investment power
with respect thereto pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (iii) as a
result of an agreement, arrangement or understanding to vote such
security if the agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act; or
(iv) which are beneficially owned, directly or indirectly, by
any other Person or any Affiliate or Associate thereof with which such
Person or any Affiliate or Associate thereof has any agreement,
arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in subparagraph (iii) of this paragraph (e)) or
disposing of any voting securities of the Company.
Nothing in this Section 1(e) shall cause a Person engaged in business
as an underwriter to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of 40 days after the date of such
acquisition.
(f) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of Indiana or Illinois are
authorized or obligated by law or executive order to close.
(g) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.,
Eastern Standard Time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., Eastern Standard Time, on the next
succeeding Business Day.
(h) "CLOSING PRICE" of any security on any given day shall be the
last sale price, regular way, of such security or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
on the principal trading market on which such security is then traded.
(i) "COMMON STOCK" shall mean the common stock, without par value, of
the Company plus, after the Separation Date, the Preferred Stock of the Company,
and "COMMON STOCK" when used with reference to any Person other than the Company
shall mean the capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person.
(j) "CONTINUING DIRECTOR" shall mean any director of the Company who
is not an Acquiring Person or a representative or nominee of an Acquiring
Person, and (i) who was elected by the shareholders or appointed by the Board of
Directors of the Company prior to the date as of which the Acquiring Person
became an Acquiring Person, or (ii) who was designated (before his initial
election or appointment as a director) as a Continuing Director by a majority of
the Continuing Directors.
(k) "CURRENT MARKET PRICE" of any security on any given day shall be
deemed to be the average of the daily Closing Prices per share or other trading
unit of such security for 10 consecutive Trading Days (as hereinafter defined)
immediately preceding such date; provided, however, that with respect to shares
of capital stock, in the event that the current market price per share of the
capital stock is determined during a period following the announcement of (i) a
dividend or distribution on the capital stock payable in shares of such capital
stock or securities convertible into shares of such capital stock (other than
the Rights), or (ii) any subdivision, combination or reclassification of the
capital stock, and prior to the expiration of the requisite 10 Trading Day
period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then and in each such case, the Current Market Price, shall be
properly adjusted to take into account ex-dividend trading; and provided further
that if the security is not publicly held or not so listed or traded, Current
Market Price per share or other trading unit shall mean the fair value per share
or other trading unit as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(l) "EQUIVALENT PREFERRED STOCK" shall mean any class or series of
capital stock of the Company, other than the Preferred Stock, which is entitled
to participate on a proportional basis with the Preferred Stock in dividends and
other distributions, including distributions upon the liquidation, dissolution
or winding up of the Company. In calculating the number of shares any class or
series of Equivalent Preferred Stock for purposes of Section 13 of this
Agreement, the number of shares or fractions of Equivalent Preferred Stock that
are entitled to the same dividend or distribution as a whole share of Preferred
Stock shall be deemed to be one share.
(m) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement, and all references to any
rule or regulation of the General Rules and Regulations under the Exchange Act
shall be, except as otherwise specifically provided herein, to such rule or
regulation as was in effect on the date of this Agreement.
(n) "EXCHANGE DATE" shall mean the date at which the Rights are
exchanged as provided in Section 24 of this Agreement.
(o) "EXPIRATION DATE" shall mean the Close of Business on March 20,
2006 subject to extension as provided in Section 12(c) of this Agreement.
(p) "FLIP-IN EVENT" shall mean any of the events described in Section
11(a) of this Agreement.
(q) "FLIP-OVER EVENT" shall mean any of the events described in
Section 12(a) of this Agreement.
(r) "PERSON" shall mean any individual, firm, corporation,
partnership or other entity and shall include any "group" as that term is used
in Rule 13d-5(b) under the Exchange Act (or any successor rule or statutory
provision).
(s) "PURCHASE PRICE" shall mean with respect to each Right, the price
set forth in Section 7(b) of this Agreement.
(t) "PREFERRED STOCK" shall mean shares of Preferred Stock, Series A,
without par value, of the Company.
(u) "PRINCIPAL PARTY" shall have the meaning set forth in Section
12(b) of this Agreement.
(v) "REDEMPTION DATE" shall mean the time at which the Rights are
ordered to be redeemed pursuant to Section 23 of this Agreement.
(w) "SEPARATION DATE" shall mean the earlier of (i) the tenth day
after the Stock Acquisition Date (as hereinafter defined) or (ii) the tenth day
after the date of the commencement of, or first public announcement of the
intent to commence, a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any Subsidiary of the Company or any entity holding shares of Common Stock
organized, appointed or established by the Company for or pursuant to the terms
of any such plan), if upon consummation thereof, such Person would be the
Beneficial Owner of 30% or more of the shares of Common Stock then outstanding
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights).
(x) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement by the Company, an Acquiring Person or otherwise, that an Acquiring
Person, other than an Approved Acquiring Person, has become such.
(y) "SUBSIDIARY" shall mean, with reference to any Person, any
corporation of which a majority of any class of equity security is Beneficially
Owned, directly or indirectly, by such Person.
(z) "TRADING DAY," with respect to any security shall mean a day on
which the principal national securities exchange on which the security is listed
or admitted to trading is open for the transaction of business or, if the
security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(aa) "TRIGGERING EVENT" shall mean a Flip-In Event or a Flip-Over
Event.
(ab) "WHOLE BOARD" shall mean the total number of directors which the
Company would have if there were no vacancies.
Any determination required by the definitions contained in this
Section 1 shall be made by the Board of Directors of the Company in its good
faith judgment, which determination shall be final and binding on the Rights
Agent.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 of this Agreement, shall prior to the
Separation Date also be the holders of the Common Stock) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the Separation Date, (i) the Rights will be evidenced by
the certificates for the Common Stock registered in the names of the holders of
the Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (ii) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company).
(b) As soon as practicable after the Separation Date, the Rights
Agent will, at the expense of the Company, send by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Separation Date, at the address of such holder shown on the
records of the Company, a Rights certificate (the "RIGHTS CERTIFICATE"),
evidencing one Right (as adjusted from time to time prior to the Separation Date
pursuant to this Agreement) for each share of Common Stock so held. As of and
after the Separation Date, the Rights will be evidenced solely by Rights
Certificates.
(c) As soon as practicable after the Record Date, the Company will
send a copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit C (the "SUMMARY OF RIGHTS"), by first-class, postage prepaid mail to
each record holder of the Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company.
(d) Certificates for the Common Stock issued after the Record Date
but prior the earlier of the Separation Date or the Expiration Date (as
hereinafter defined), shall be deemed also to be certificates for Rights, and
shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Patrick
Industries, Inc. (the "Company") and Harris Trust and Savings Bank,
dated as of March 20, 1996 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which
is on file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances,
Rights beneficially owned by Acquiring Persons (as defined in the
Rights Agreement) become null and void and the holder of such Rights
(including any subsequent holder) shall not have any right to exercise
the Rights.
(e) After the Separation Date but prior to the Expiration Date,
Rights shall be issued in connection with the issuance of Common Stock upon the
exercise of stock options granted prior to the Separation Date or pursuant to
other benefits under any employee plan or arrangement established prior to the
Separation Date; provided, however, that if, pursuant to the terms of any option
or other benefit plan, the number of shares issuable thereunder is adjusted
after the Separation Date, the number of Rights issuable upon issuance of the
shares shall be equal only to the number of shares which would have been
issuable prior to the adjustment.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to purchase
shares and form of assignment) shall be in substantially the form attached
hereto as Exhibit B 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 on which the Rights may from time to time be listed or to conform to
usage. Subject to the provisions of this Agreement, the Rights Certificates,
whenever issued, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of shares of Preferred Stock
which shall be set forth therein at the Purchase Price set forth therein,
subject to adjustment as provided in this Agreement.
(b) Any Rights Certificate issued pursuant to Section 3(a) of this
Agreement that represents Rights beneficially owned by an Acquiring Person or
that represents any Rights owned on or after the Separation Date by any Person
who subsequently becomes an Acquiring Person and any Rights Certificate issued
at any time upon the transfer of any Rights to an Acquiring Person or to any
nominee of such Acquiring Person and any Rights Certificate issued pursuant to
Section 6 or Section 13 of this Agreement upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in this sentence, may
contain the following legend:
The Rights represented by this Rights Certificate were issued to
a Person who was or became an Acquiring Person. This Rights
Certificate and the Rights represented hereby may become void in the
circumstances specified in Section 7(e) of the Rights Agreement.
Provisions of Section 7(e) of this Agreement shall be operative whether or not
the foregoing legend is contained on any such Rights Certificate.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by the Chairman of its Board of Directors, its President or any Vice
President, either manually or by facsimile signature and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. Each Rights Certificate shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so counter-
signed. In case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force
and effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
(b) Following the Separation Date, the Rights Agent will keep or
cause to be kept, at one of its offices, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced by each of the Rights Certificates, and the certificate number
and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14 of this Agreement, at any
time after the Close of Business on the Separation Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase a like
number of shares of Preferred Stock (or other securities, cash or other
property, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a trans-
fer) to purchase. Any registered holder desiring to transfer, split up, combine
or exchange any Rights Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office of the Rights Agent designated for such purpose.
Thereupon, the Rights Agent shall countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Until the Separation Date, no Right may be exercised. Each Right
shall entitle (except as otherwise provided in this Agreement) the registered
holder thereof, upon the exercise thereof as provided in this Agreement, to
purchase, for the Purchase Price, at any time after the Separation Date and
prior to the earliest of the Expiration Date, the Exchange Date or the
Redemption Date, one one-hundredth of a share of Preferred Stock, subject to
adjustment from time to time as provided in Section 13 of this Agreement,
payable in lawful money of the United States of America in accordance with
Paragraph (c) below.
(b) Subject to Section 7(e), Section 23(a) and Section 24 of this
Agreement, the registered holder of any Rights Certificate may exercise the
Rights evidenced thereby in whole or in part at any time after the Separation
Date upon surrender of the Rights Certificate, with the form of election to
purchase on the reverse side thereof including the certificate contained therein
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth share of
Preferred Stock as to which the Rights are exercised prior to the earliest of
the Expiration Date, the Exchange Date or the Redemption Date. The Purchase
Price for each one one-hundredth of a share of Preferred Stock pursuant to the
exercise of a Right shall initially be $30, and shall be payable in lawful money
of the United States of America in accordance with Paragraph (c) below. The
Purchase Price and the number of shares of Preferred Stock to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Section 13 of this Agreement.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase including the certificate
contained therein duly executed, accompanied by payment of the Purchase Price
for the shares (or cash or other assets as the case may be) to be purchased and
an amount equal to any applicable transfer tax in cash, or by certified check or
bank draft payable to the order of the Company, the Rights Agent shall thereupon
promptly:
(i)(A) requisition from any transfer agent for the Preferred Stock
certificates for the number of one one-hundredths of a share of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) requisition from
the depositary agent depositary receipts representing such number of one
one-hundredths of a share of Preferred Stock as are to be purchased (in
which case certificates for the shares of Preferred Stock represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with such
request;
(ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14 of this
Agreement;
(iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be
designated by such holder; and
(iv) after receipt, deliver such cash, if any, to or upon the
order of the registered holder of such Rights Certificate.
In the event that the Company is obligated to issue other securities (including
shares of Common Stock) of the Company, pay cash and/or distribute other
property pursuant to this Agreement, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 6 and Section 14 of this Agreement.
(e) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence of the earlier of (x) the date on which the Board of Directors of
the Company decides to exchange the Rights pursuant to Section 24 of this
Agreement and (y) a Triggering Event, any unexercised Rights that are or were,
at any time on or after the earlier to occur of (i) the Separation Date and (ii)
the Stock Acquisition Date, beneficially owned by an Acquiring Person (other
than an Approved Acquiring Person who is not a party to the Triggering Event) or
owned by any Person who subsequently becomes an Acquiring Person (other than an
Approved Acquiring Person who is not a party to the Triggering Event) shall
immediately become permanently null and void without any further action, and no
holder of such Rights shall have any right whatsoever with respect to such
Rights under this Agreement or otherwise. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and Section 4(b) of
this Agreement are complied with, but shall have no liability to any holder of
Rights Certificates or to any other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Rights Certificate upon the
occurrence of any purported exercise thereof unless such registered holder shall
have (i) completed and signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Rights Certificate surrendered
for such exercise and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former or proposed Beneficial Owner) or Affiliates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificates purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available at all times out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury, free from preemptive rights or any right of first refusal, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all Rights from time to time outstanding.
(b) So long as the shares of Preferred Stock issuable upon the
exercise of the Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after the time the Rights
become exercisable, all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to:
(i) file, as soon as practicable following the earlier of the
Separation Date or as soon as is required by law, a registration statement
under the Securities Act of 1933 (the "Act"), with respect to the Preferred
Stock purchasable upon exercise of the Rights on an appropriate form;
(ii) cause such registration statement to become effective as soon as
practicable after the filing; and
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earliest of (A) the date as of which Rights are no longer exercisable for
such securities, (B) the Expiration Date and (C) the Redemption Date.
The Company will also take all action necessary to ensure compliance with
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed one hundred twenty (120) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statements and permit them
to become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in that jurisdiction shall have been obtained and, if
applicable, until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any shares of Preferred Stock upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of any certificate for shares of Preferred
Stock in respect of a name other than that of, the registered holder of the
Rights Certificate evidencing Rights surrendered for exercise or the issuance or
delivery of any certificates for shares of Preferred Stock, upon the exercise of
any Rights until such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name
any certificate for shares of Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the shares of Preferred Stock represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock transfer books of the Company are open.
Section 11. The Flip-In. (a) In the event:
(i) any Acquiring Person, directly or indirectly, shall merge
into the Company or otherwise combine with the Company and the Company
shall be the continuing or surviving corporation of such merger or
combination and the Common Stock of the Company shall remain
outstanding and unchanged, except pursuant to a merger or other
combination involving an Approved Acquiring Person which was approved
by a majority of the Continuing Directors; or
(ii) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the Company, or any entity organized, appointed or established
pursuant to the terms of such plan) shall become the Beneficial Owner
of 25% or more of the shares of Common Stock then outstanding, except
pursuant to a cash offer for all outstanding shares of Common Stock at
a price and upon such terms and conditions as a majority of the
Continuing Directors determine to be in the best interests of the
Company and its shareholders other than such Acquiring Person; or
(iii) any Acquiring Person shall, in one or a series of related
transactions, directly or indirectly, transfer any assets to the Company or
any of its Subsidiaries in exchange (in whole or in part) for shares of
Common Stock or for securities exercisable or exchangeable for, or
convertible into, shares of Common Stock or otherwise obtain from the
Company or any of its Subsidiaries, with or without consideration, any
additional Common Stock or other securities of the Company or securities of
any of its Subsidiaries or securities exercisable or exchangeable for, or
convertible into, shares of Common Stock or other securities of the Company
or securities of any of its Subsidiaries (other than an issuance upon
conversion of convertible securities of the Company or any such Subsidiary
that were not acquired from the Company or any such Subsidiary) except
pursuant to a transaction or series of transactions approved by a majority
of the Continuing Directors at a time when there are no Acquiring Persons
other than Approved Acquiring Persons; or
(iv) any Acquiring Person shall sell, purchase, lease, exchange,
mortgage, pledge, otherwise transfer or dispose or acquire, from, to,
with or of, the Company or any of its Subsidiaries, assets (including
securities) on terms and conditions less favorable to the Company or
such Subsidiary than the Company or such Subsidiary would be able to
obtain in an arm's-length transaction with an unrelated third party;
or
(v) during the time when there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse
stock split), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company (whether
or not with or into or otherwise involving an Acquiring Person) which
has the effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class of
equity securities of the Company or any of its Subsidiaries that is
directly or indirectly owned by any Acquiring Person, except pursuant
to a transaction or series of transactions approved by a majority of
the Continuing Directors at a time when there are no Acquiring Persons
other than Approved Acquiring Persons; or
(vi) any Acquiring Person shall, directly or indirectly, sell,
purchase, lease, exchange, mortgage, pledge, otherwise transfer or
acquire or dispose, in one transaction or a series of related
transactions, from, to, with or of, the Company or any of its
Subsidiaries, assets having an aggregate fair market value (as
determined in good faith by a majority of the Continuing Directors) in
excess of 10% or more of the total assets of the Company as shown on
its consolidated balance sheet as of the end of the most recent fiscal
quarter ending prior to the time the determination is being made to
the shareholders of the Company, unless such sale or lease has been
approved by a majority of the Continuing Directors; or
(vii) during the time when there is an Acquiring Person, there
shall be any distribution of assets or securities of the Company or of
any of its Subsidiaries to the shareholders of the Company, in one
transaction or a series of transactions, having an aggregate fair
market value (as determined in good faith by a majority of the
Continuing Directors) in excess of 10% or more of the total assets of
the Company as shown on its consolidated balance sheet as of the end
of the most recent fiscal quarter ending prior to the time the
determination is being made, unless the distribution is approved by a
majority of the Continuing Directors; or
(viii) any Acquiring Person, directly or indirectly, shall
receive management fees or other compensation from the Company or any
of its Subsidiaries other than compensation for full-time employment
as a regular employee or directors' fees on the same basis as the
other directors of the Company or any of its Subsidiaries, or receive
the benefit of guarantees or other financial assistance or tax credits
or other tax advantages from the Company or any of its Subsidiaries,
unless those transactions are approved by a majority of the Continuing
Directors; or
(ix) during the time when there is an Acquiring Person, (1) there
shall be any reduction in the annual rate of dividends paid on the Common
Stock, except as necessary or appropriate, in the opinion of a majority of
the Continuing Directors, for valid business reasons, to reflect any
subdivision of the Common Stock or as required under the laws of the
jurisdiction of incorporation of the Company, or (2) there shall be a
failure to increase the annual rate of dividends as necessary to reflect
any reclassification (including any reverse stock split), recapitalization,
combination, reorganization or any similar transaction which has the effect
of reducing the number of shares of outstanding Common Stock, except as
necessary or appropriate, in the opinion of a majority of the Continuing
Directors, for valid business reasons or to the extent such increase in the
rate of dividends would be prohibited under the laws of the jurisdiction of
incorporation of the Company;
then, and in each case, subject to the provisions of Section 24 of this
Agreement, each holder of a Right, except as provided below and in Section 7(e)
of this Agreement, shall thereafter have a right to receive, upon exercise of
the Right at the then current Purchase Price, in accordance with the terms of
this Agreement, in lieu of shares of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of one
one-hundredths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (y) 50% of the Current Market Price per
share of the Common Stock on the date on which the first of the events listed
above in this subparagraph (a) occurs (such number of shares being herein
referred to as the "ADJUSTMENT SHARES").
(b) In the event that there shall not be sufficient treasury shares
or authorized but unissued shares of Common Stock to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph (a), the Company
shall take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exercise of the Rights; provided, however, that
if the Company is unable to cause the authorization of a sufficient number of
additional shares of Common Stock, then, in the event the Rights become so
exercisable, the Company, with respect to each Right and to the extent necessary
and permitted by applicable law and any agreements or instruments in effect on
the date hereof to which the Company is a party, shall, upon the exercise of
such Rights,
[(i) pay an amount in cash equal to the excess of (A) the
product of (1) the number of Adjustment Shares, multiplied by (2) the
Current Market Price of the Common Stock (such product being herein
referred to as the "CURRENT VALUE"), over (B) the Purchase Price, in lieu
of issuing shares of Common Stock and requiring payment therefor, or]
(ii) issue debt or equity securities, or a combination thereof,
having a value equal to the Current Value, where the value of such
securities shall be determined by a nationally recognized investment
banking firm selected by the Board of Directors of the Company, and require
the payment of the Purchase Price, or
(iii) deliver any combination of cash, property, Common Stock
and/or other securities having the requisite value, and require payment of
all or any requisite portion of, the Purchase Price.
To the extent that the Company determines that some action need be
taken pursuant to clauses (i), (ii), or (iii) of the proviso of this Section
11(b), a majority of the Continuing Directors may suspend the exercisability of
the Rights for a period of up to 60 days following the date on which the first
of the events listed in Section 11 of this Agreement shall have occurred, in
order to decide the appropriate form of distribution to be made pursuant to the
above proviso and to determine the value thereof. In the event of any
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at the time the suspension is no longer in effect.
Section 12. The Flip-Over
(a) In the event that, following the Separation Date, directly or
indirectly:
(w) the Company shall consolidate with, or merge with and into, any
other Person; or
(x) any Person shall consolidate with the Company, or merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such consolidation or
merger, all or part of the shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any
other property; or
(y) the Company shall effect a share exchange in which all or part of
the Common Stock of the Company shall be changed into (including, without
limitation, any conversion into or exchange for) securities of any other
Person, cash or any other property; or
(z) the Company shall sell, lease, exchange, mortgage, pledge or
otherwise transfer (or one or more of its Subsidiaries shall sell, lease,
exchange, mortgage, pledge or otherwise transfer), in one or more
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons
then, and in each such case, subject to the provisions of Section 24 of this
Agreement, except where (a) the Person involved in the transaction is an
Approved Acquiring Person and (b) the transaction was approved by a majority of
the Continuing Directors,
(i) each holder of a Right, except as provided in Section 7(e)
of this Agreement, shall thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, such number of shares of freely
tradeable common stock of the Principal Party, free and clear of any
lien, encumbrance or other adverse claim, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by
the then number of one one-hundredths of a share of Preferred Stock
for which a Right is then exercisable (or the number of one
one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the occurrence of the Flip-In Event
if a Flip-In Event has previously occurred) and dividing that product
by (2) 50% of the Current Market Price per share of the common stock
of such Principal Party on the date of consummation of the Flip-Over
Event;
(ii) all common stock of any Person for which any Right may be
exercised after consummation of a business combination or similar
transaction as provided in this Section 12(a) shall, when issued upon
exercise thereof in accordance with this Agreement, be duly and validly
authorized and issued and fully paid and nonassessable;
(iii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of the Flip-Over Event, all the obligations
and duties of the Company pursuant to this Agreement;
(iv) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of Section 13 hereof shall apply to such Principal Party;
(v) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of
its common stock) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares
of common stock thereafter deliverable upon the exercise of the
Rights; and
(vi) the provisions of Section 11 of this Agreement shall be of
no effect following the first occurrence of any Flip-Over Event.
(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in (w), (x) or (y)
of the first sentence of Section 12(a), the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted or exchanged in such merger, consolidation or other business
combination, and if no securities are so issued, the Person that is
the other party to the merger, consolidation or other business
combination; and
(ii) in the case of any transaction described in (z) of the
first sentence in this Section 12(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the common stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under the Exchange Act, as then in effect, and such Person is
a direct or indirect Subsidiary of another Person the common stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
or (2) such Person is a Subsidiary, directly or indirectly, of more than one
Person, the common stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the common stock having the greatest aggregate market value.
(c) The Company shall not consummate any Flip-Over Event unless prior
thereto the Company and each Principal Party and each other Person who may
become a Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 12 and further providing that, as soon as practicable after
the date of any Flip-Over Event, the Principal Party will:
(i) prepare and file at its own expense a registration statement
under the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, will
use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and will use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Act)
until the earliest of the Expiration Date, the Exchange Date or the
Redemption Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The Principal Party shall temporarily suspend, for a period of time not to
exceed 90 days following the occurrence of a Flip-Over Event, the exercisability
of the Rights in order to prepare and file the registration statement referred
to in clause (i) above, and the Expiration Date shall be extended by the number
of days of such suspension. The provisions of this Section 12 shall similarly
apply to successive Flip-Over Events. In the event that a Flip-Over Event shall
occur at any time after the occurrence of a Flip-In Event, the Rights which have
not theretofore been exercised shall thereafter become exercisable in the manner
described in Section 12(a).
Section 13. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 13.
(a) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend or make a distribution on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred
Stock into a larger number of shares, (C) combine the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then in each such event,
except as otherwise provided in this Section 13(a), the Purchase Price in effect
at the time of the record date for such dividend or distribution, or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or capital stock issuable on such
date, shall be proportionately adjusted so that the holder of any Rights (except
as provided in Section 7(e) of this Agreement) exercised on or after such time
shall be entitled to receive upon payment of the Purchase Price in effect
immediately prior to such date, the aggregate number and kind of shares of
Preferred Stock or capital stock which, if such Rights had been exercised
immediately prior to such date and at a time when the Preferred Stock transfer
books of the Company were open, that holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, distribution,
subdivision, combination or reclassification. If an event occurs that would
require an adjustment under both Section 11(a) of this Agreement and this
Section 13(a), the adjustment provided for in this Section 13(a) shall be in
addition to, and shall be made prior to any adjustment required pursuant to
Section 11(a).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase Preferred Stock (or Equivalent Preferred Stock) or
securities convertible into Preferred Stock or Equivalent Preferred Stock at a
price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) of less than the Current Market
Price per share of Preferred Stock on such record date, the Purchase Price to be
in effect after the record date shall be determined by multiplying the Purchase
Price in effect immediately prior to the record date by a fraction,
(1) the numerator of which shall be the number of shares of Preferred
Stock and Equivalent Preferred Stock (if any) outstanding on the record
date, plus the number of shares of Preferred Stock and Equivalent Preferred
Stock which the aggregate exercise price of the total number of shares of
Preferred Stock and/or Equivalent Preferred Stock which are obtainable upon
the exercise of the rights, options or warrants (and/or the aggregate
initial conversion price of the convertible securities so offered) would
purchase at the Current Market Price; and
(2) the denominator of which shall be the number of shares of
Preferred Stock and Equivalent Preferred Stock (if any) outstanding on the
record date, plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock which may be obtained upon exercise of the
rights, options or warrants (or into which the convertible securities so
offered are initially convertible).
If the subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent. Shares of Preferred Stock or Equivalent
Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that rights, options or warrants are not issued following an adjustment,
the Purchase Price shall again be adjusted to be the Purchase Price which would
be in effect if the record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the surviving
corporation) of evidences of indebtedness, cash (other than a regular periodic
cash dividend at an annual rate not in excess of 125% of the annual rate of the
cash dividend paid on the Preferred Stock during the immediately preceding
fiscal year), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 13(b)),
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction,
(1) the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to
one share of Preferred Stock; and
(2) the denominator of which shall be such Current Market Price per
share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would be in effect
if such record date had not been fixed.
(d) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 13(d) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 13 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or other share
or one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 13(d), any adjustment
required by this Section 13 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates the adjustment or (ii) the
earliest of the Expiration Date, the Exchange Date and the Redemption Date.
(e) If as a result of an adjustment made pursuant to Section 11(a),
the holder of any Rights thereafter exercised shall become entitled to receive
any securities of the Company other than shares of Preferred Stock, thereafter
the number of such other securities so receivable upon exercise of any Rights
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares
contained in Section 13(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 12 and 14 of this Agreement with respect to the Preferred
Stock shall apply on like terms to any such other securities.
(f) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided in this Agreement.
(g) Unless the Company shall have exercised its election as provided
in Section 13(h), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 13(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share of
Preferred Stock covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(h) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one-millionth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 13(h), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number of
shares which were expressed in the initial Rights Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par value of the shares of Preferred Stock issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Preferred Stock
at such adjusted Purchase Price.
(k) In any case in which this Section 13 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Rights exercised after such record date
the shares of Preferred Stock and other capital stock or securities, cash or
property of the Company, if any, issuable upon such exercise over and above the
shares of Preferred Stock and other capital stock or securities, cash or
property of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares and other
capital stock or securities, cash or property upon the occurrence of the event
requiring such adjustment.
(l) Anything in this Section 13 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 13, as and to
the extent that in its sole discretion the Company shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less
than the Current Market Price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable or exercisable for shares of Preferred Stock, (iv) stock dividends,
or (v) issuance of rights, options or warrants referred to in this Section 13,
hereafter made by the Company to holders of its Preferred Stock shall, if
practicable, not be taxable to such shareholders.
(m) The Company covenants and agrees that it shall not (i)
consolidate with, (ii) merge with or into, or (iii) directly or indirectly sell,
lease or otherwise transfer or dispose of, in one or more transactions, assets
or earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries taken as a whole, to any other Person, if at the
time of or immediately after such consolidation, merger, sale, lease, transfer
or disposition there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(n) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Section 23 or Section 27
of this Agreement, take any action the purpose or effect of which is to diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights, unless such action is approved by a majority of the Continuing
Directors.
(o) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time prior to the Separation Date (i)
declare a dividend or distribution on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter but prior to
the Separation Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction, (1) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to the occurrence of the event and
(2) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(p) Whenever an adjustment is made as provided in Sections 11, 12 and
13 of this Agreement, the Company shall (a) promptly prepare a certificate
setting forth such adjustment and a brief statement of the facts accounting for
such adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Rights Certificate in
accordance with Section 26 of this Agreement. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be obligated or responsible for calculating any
adjustment nor shall it be deemed to have knowledge of such an adjustment unless
and until it shall have received such certificate.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the Current Market
Price of a whole Right as of the date on which such fractional Rights would have
been otherwise issuable.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates, at the
time such Rights are exercised as herein provided, an amount in cash equal to
the same fraction of the Current Market Price of one one-hundredth of a share of
Preferred Stock as of the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock upon the exercise of Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares, the
Company may pay to the registered holders of Rights Certificates, at the time
such Rights are exercised as herein provided, an amount in cash equal to the
same fraction of the Current Market Price of one share of Common Stock as of the
date of such exercise.
(d) The holder of a Right by its acceptance thereof expressly waives
any right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Separation Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Separation Date, of the Common Stock) without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Separation Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his rights
pursuant to this Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach of
this Agreement and shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Separation Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Separation Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name a Rights Certificate (or, prior to the Separation Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned.
Section 17. Rights Holder Not Deemed a Shareholder. Except as
otherwise expressly provided in this Agreement, no holder, as such, of any
Rights Certificate shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the shares of Preferred Stock or any other securities
of the Company that may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders, or to
receive dividends or subscription rights, or otherwise, until and only to the
extent that the Right or Rights evidenced by such Rights Certificate shall have
been exercised in accordance with the provisions of this Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises. The
indemnification provided for hereunder shall survive the expiration of the
Rights and the termination of this Agreement. The costs and expenses of
enforcing this right of indemnification shall also be paid by the Company.
The Rights Agent may conclusively rely upon and shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. 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 business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 of this
Agreement. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, it may
consult with legal counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full authorization to the
Rights Agent, for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of facts or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Sections 11
or 13 of this Agreement or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to
whether.any shares of Common Stock or Preferred Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) The Rights Agent shall not be required to take notice or be
deemed to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any Person as an Acquiring Person, Affiliate, Approved Acquiring Person,
Associate or Subsidiary) under the Rights Agreement unless and until the Rights
Agent shall be specifically notified in writing by the Company of such fact,
event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and, at the expense of the Company, to the holders of the Rights
Certificates by first-class mail. 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 Stock and Preferred Stock, by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of the State of Indiana (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of Indiana), in good standing,
which is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any
notice provided for in this Section 21, 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 Rights Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in
accordance with the provision of this Agreement.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any
time prior to 5:00 P.M., Eastern Standard Time, on the earlier of (i) the tenth
day following the Stock Acquisition Date, or (ii) the Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption price of
$0.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "REDEMPTION PRICE"); provided,
however, that at the time of the redemption, the Company's Board of Directors
must consist of a majority of Continuing Directors. Notwithstanding anything in
this Agreement to the contrary, no Rights may be exercised at any time that the
Rights are subject to redemption in accordance with the terms of this Agreement.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
Within 10 days after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or prior to the Separation Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made. In any case,
failure to give such notice to any particular holder of Rights shall not affect
the sufficiency of the notice to other holders of Rights. Neither the Company
nor any of its Affiliates or Associates may redeem for value any Rights at any
time, in any manner, other than that specifically set forth in this Section 23,
and neither the Company nor any of its Affiliates or Associates may acquire or
purchase for value any Rights at any time, in any manner, other than in
connection with the purchase of shares of associated Common Stock prior to the
Separation Date.
Section 24. Exchange.
(a) The Company may, at its option but subject to receipt of any
required regulatory approvals, by action of the Board of Directors, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e)) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being herein referred to as
the "EXCHANGE RATIO"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company any employee plan of the
Company or of a Subsidiary of the Company or any Person holding Common Shares
for or pursuant to the terms of any such employee plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50
percent or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e)) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or Equivalent Preferred Stock) for
shares of Common Stock exchangeable for Rights, at the initial rate of one one-
hundredth of a share of Preferred Stock (or Equivalent Preferred Stock) for each
share of Common Stock, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Stock pursuant to the terms thereof, so that the
fraction of a share of Preferred Stock delivered in lieu of each share of Common
Stock shall have at least the same voting rights as one share of Common Stock.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional Common
Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the Current Market Value of a whole share of Common Stock.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend payable
in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly
cash dividend at a rate not in excess of $1 per share), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any
Flip-Over Event, or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, Flip-Over Event, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the holders of the shares of
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 20
days prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock
whichever shall be the earlier.
(b) Upon the occurrence of a Flip-In Event or a Flip-Over Event, the
Company or Principal Party, as the case may be, shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26, a notice of the occurrence of such event and
the consequences thereof to holders of Rights under Sections 11 or 12 of this
Agreement, as the case may be.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sent by registered or certified mail
and shall be deemed given upon receipt and addressed (until another address is
filed in writing with the Rights Agent) as follows:
Patrick Industries, Inc.
1800 South 14th Street
P.O. Box 638
Elkhart, Indiana 46515
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sent by registered or certified
mail and shall be deemed given upon receipt and addressed (until another address
is filed in writing with the Company) as follows:
Harris Trust and Savings Bank
311 West Monroe Street
14th Floor
Chicago, Illinois 60606
Attn: Corporate Trust
Tom Grady
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate 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. The Company shall deliver a copy of any notice or demand
it delivers to the holder of any Rights Certificate to the Rights Agent and the
Rights Agent shall deliver a copy of any notice or demand it delivers to the
holder of any Rights Certificate to the Company.
Section 27. Supplements and Amendments. The Company and the Rights
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order to cure any ambiguity,
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein or to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates other than an Acquiring Person; provided, however, that this
Agreement may not be supplemented or amended in any way unless the Company's
Board of Directors consists of a majority of Continuing Directors at the time of
such amendment or supplement and provided further that no amendment or
supplement may be made if the effect would be to extend or shorten the
redemption period after the Stock Acquisition Date or change the Purchase Price
or the Redemption Price.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Separation Date, the Common Stock) any legal or equitable right, remedy or claim
under this Agreement; this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Separation Date, the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Indiana and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
HARRIS TRUST AND SAVINGS BANK, PATRICK INDUSTRIES, INC.
as Rights Agent
By: /s/ Thomas Grady By: /s/ Thomas G. Baer
Name: Thomas Grady Name: Thomas G. Baer
Title: Title: Vice President
Attest: Attest:
By: /s/ Donald Koslow By: /s/ Keith V. Kankel
Name: Donald Koslow Name: Keith V. Kankel
Title: Title: Vice President -
Treasurer
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF PREFERRED STOCK
of
PATRICK INDUSTRIES, INC.
Pursuant to Section 23-1-25-2
Business Corporation Law of the State of Indiana
We, the President and Secretary of Patrick Industries, Inc., a corporation
organized and existing under the Business Corporation Law of the State of
Indiana, in accordance with the provisions of Section 23-1-25-2 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Articles of Incorporation of the said Corporation, the said Board of Directors
on February 29, 1996, adopted the following resolution creating a series of
100,000 shares of Preferred Stock designated as "Preferred Stock, Series A":
NOW BE IT 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, as amended, 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 "Preferred Stock, Series
A" (the "Preferred Stock") and the number of shares constituting such series
shall be 100,000. The Preferred Stock may be issued in fractional amounts that
are integral multiples of one one-hundredth.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of preferred stock ranking prior and superior to the shares of
Preferred Stock with respect to dividends, the holders of shares of Preferred
Stock, in preference to the holders of common stock, without par value, of
the Corporation (the "Common Stock") and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in
cash on the fifteenth day of March, June, September and December in each year
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of Preferred Stock. In the event the Corporation
shall at any time on or after March 20, 1996 declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision of
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount to which holders of shares of Preferred Stock
were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Preferred Stock as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other than
a dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of 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 Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders of
shares of 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 Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Preferred Stock shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the shareholders of the Corporation. In the
event the Corporation shall at any time on or after March 20, 1996 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 in each such case the number of votes per share to which
holders of shares of Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares
of Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of shareholders of
the Corporation.
(C) Except as set forth herein, holders of Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Preferred Stock, except
dividends paid ratably on the Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Preferred Stock, or any shares of stock ranking on a parity with the
Preferred Stock, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares.
Any shares of Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of preferred stock and may be reissued as
part of a new series of preferred stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Preferred Stock unless, prior thereto, the holders of shares of Preferred Stock
shall have received $100.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, provided that the holders of shares of Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Preferred Stock, except distributions made ratably on the
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time on or after March 20, 1996 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 in each such case the
aggregate amount to which holders of shares of Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Preferred Stock then outstanding
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 the Corporation shall at any
time on or after March 20, 1996 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 in
each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of 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 Preferred Stock shall not be redeemable. The preceding
sentence shall not limit the ability of the Corporation to purchase or otherwise
deal in such shares of stock to the extent permitted by law.
Section 9. Amendment.
The Articles of Incorporation of the Corporation shall not be amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds or more of the outstanding shares
of Preferred Stock, voting as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury as of this
____ day of __________, 1996.
By:
ATTEST:
Exhibit B
[Form of Rights Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER MARCH 20, 2006 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
[THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECAME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]
RIGHTS CERTIFICATE
PATRICK INDUSTRIES, INC.
This certifies that or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of March 20, 1996 (the "RIGHTS AGREEMENT") between
Patrick Industries, Inc., an Indiana corporation (the "COMPANY"), and Harris
Trust and Savings Bank (the "RIGHTS AGENT"), unless notice of redemption shall
have been previously given by the Company, to purchase from the Company at any
time after the Separation Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (Eastern Standard Time) on March 20, 2006 at the
principal corporate trust office of the Rights Agent, or at the office of its
successor as Rights Agent, one one-hundredth of a fully paid nonassessable share
of the Preferred Stock, Series A (the "PREFERRED STOCK"), without par value, of
the Company, at a purchase price of $30.00 per one one-hundredth share (the
"PURCHASE PRICE") upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase duly executed. The Purchase Price may be
paid in cash or by certified bank check or money order payable to the order of
the Company.
The number of Rights evidenced by this Rights Certificate (and the number
of shares of Preferred Stock which may be purchased upon exercise thereof) and
the Purchase Price set forth above have been determined as of March 10, 1996,
based on the Common Stock of the Company as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of shares of
Preferred Stock or other securities, cash or other property which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events.
If the Rights evidenced by this Rights Certificate are or were formerly
beneficially owned, on or after the earlier of the Separation Date (as defined
in the Rights Agreement) and the Stock Acquisition Date (as defined in the
Rights Agreement), by an Acquiring Person or an Affiliate, Associate or direct
or indirect transferee of an Acquiring Person, such Rights shall become null and
void and the holder of any such Right (including any subsequent holder) shall
not have any right with respect to such Right.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used in this Rights Certificate have the same meanings as such
terms are defined in the Rights Agreement. Copies of the Rights Agreement are
on file at the principal executive offices of the Company and the office of the
Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $0.01 per Right at any time prior to the earlier of (i) the close of
business on the tenth day following the time it becomes public that an Acquiring
Person has become such and (ii) the Expiration Date.
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-hundredth of share of Preferred Stock, which may,
at the election of the Company, be evidenced by depository receipts) are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
but in lieu thereof the Company may elect to make a cash payment, as provided in
the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
to receive dividends or shall be deemed, for any purpose, the holder of
Preferred Stock or of any other securities, cash or property which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or this Rights Certificate be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company,
including, without limitation, any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or to institute, as
a holder of Preferred Stock or other securities issuable on the exercise of the
Rights represented by this Certificate, any derivative action, or otherwise,
until and only to the extent the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of __________, 19__.
PATRICK INDUSTRIES, INC.
By:
Title:
ATTEST:
Secretary
Countersigned:
By
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificates.)
FOR VALUE RECEIVED, _________________________________ hereby sells, assigns
and transfers unto ____________________________ (Please print name and address
of transferee) this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
_____________________ Attorney to transfer the within Rights Certificate on the
books of the within-named Company, with full power of substitution.
Dated: , 19__
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: , 19__ Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment is
not completed, the Company will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and, in the case of an
Assignment, will affix a legend to that effect on any Rights Certificate issued
in exchange for this Rights Certificate.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights represented by
this Rights Certificate)
To: Patrick Industries, Inc.
The undersigned hereby irrevocably elects to exercise __________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock, Series A, or other securities, cash or other property issuable
upon the exercise of such Rights and requests that certificates for such shares
or other securities be issued in the name of, and such cash or other property be
paid to:
Please insert social security or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the remaining balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
(Please print name and address)
Dated: ,19__
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Rights
Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being exercised by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: , 19__ Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
NOTICE
The signature on the foregoing Form of Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Election is
not completed, the Company will deem the beneficial owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and, in the case of an
Assignment, will affix a legend to that effect on any Rights Certificate issued
in exchange for this Rights Certificate.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On February 29, 1996, the Board of Directors of Patrick Industries, Inc., an
Indiana corporation (the "COMPANY"), declared a dividend of a right (a "RIGHT")
for each share of Common Stock, without par value, of the Company (the "COMMON
STOCK"). The dividend is payable on April 8, 1996 to shareholders of record at
the close of business on March 20, 1996 (the "RECORD DATE") and with respect to
all shares of Common Stock that become outstanding after the Record Date and
prior to the earliest of the Separation Date (as defined below), the redemption
of the Rights, the exchange of the Rights and the expiration of the Rights.
Except as set forth below and subject to adjustment as provided in the Rights
Agreement (as defined below), each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of the Company's
Preferred Stock, Series A, without par value (the "PREFERRED STOCK"), at an
exercise price of $30 per Right (the "PURCHASE PRICE"). The description and
terms of the Rights are set forth in a Rights Agreement dated as of March 20,
1996 (the "RIGHTS AGREEMENT"), between the Company and Harris Trust and Savings
Bank, as Rights Agent (the "RIGHTS AGENT").
The Rights will be evidenced by Common Stock certificates and not separate
certificates until the earlier to occur of (i) 10 days following the date of
public disclosure that a person or group, together with persons affiliated or
associated with it (an "ACQUIRING PERSON"), other than (x) Mervin D. Lung, his
spouse or any trust or partnership established by either of them, (y) David D.
Lung or (z) a person acquiring its stock directly from the Company and approved
by the Company's disinterested directors, has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of the outstanding Common Stock
(the "STOCK ACQUISITION DATE") and (ii) 10 days following commencement or
disclosure of an intention to commence a tender offer or exchange offer by a
person other than the Company and certain related entities if, upon consummation
of the offer, such person or group, together with persons affiliated or
associated with it, could acquire beneficial ownership of 30% or more of the
outstanding Common Stock (the earlier of such dates being called "SEPARATION
DATE"). Until the Separation Date (or earlier redemption or expiration of the
Rights), the transfer of Common Stock will also constitute transfer of the
associated Rights. Following the Separation Date, separate certificates will
evidence the Rights.
The Rights will first become exercisable on the Separation Date (unless
sooner redeemed). The Rights will expire at the close of business on March 20,
2006 (the "EXPIRATION DATE"), unless earlier redeemed or exchanged by the
Company as described below.
The Purchase Price and the number of shares of Preferred Stock or other
securities, cash or other property issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend or distribution on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights, options, warrants to subscribe for Preferred
Stock or securities convertible into Preferred Stock at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to holders
of the Preferred Stock of other securities, cash (excluding regular periodic
cash dividends at an annual rate not in excess of 125% of the annualized rate of
cash dividends paid during the preceding fiscal year), property, evidences of
indebtedness, or assets.
In the event that, following the Separation Date, the Company is acquired in
a merger or other business combination in which the Common Stock does not remain
outstanding or is changed or 50% or more of its consolidated assets or earning
power is sold, leased, exchanged, mortgaged, pledged or otherwise transferred or
disposed of (in one transaction or a series of transactions) the Rights will
"FLIP OVER" and entitle each holder of a Right, except the Acquiring Person or
as provided below, to purchase, upon the exercise of the Right at the then-
current Purchase Price, that number of shares of common stock of the acquiring
company (or, in certain circumstances, one of its affiliates) that at the time
of such transaction would have a market value of two times the Purchase Price.
If (i) a person acquires beneficial ownership of 25% or more of the Common
Stock, (ii) the Company is the surviving corporation in a merger with an
Acquiring Person and the Common Stock remains outstanding and unchanged, or
(iii) an Acquiring Person engages in a "SELF-DEALING" transaction specified in
the Rights Agreement, the Rights will "FLIP IN" and entitle each holder of a
Right, except the Acquiring Person or as provided below, to purchase, upon
exercise at the then-current Purchase Price, that number of shares of Common
Stock having a market value of two times the Purchase Price.
Any "flip over" event or "flip in" event is a "TRIGGERING EVENT."
Any Rights beneficially owned at any time on or after the Separation Date by
an Acquiring Person or an affiliate or associate of an Acquiring Person (whether
or not such ownership is subsequently transferred) will become null and void
upon the occurrence of the earlier of the Board of Directors decision to
exchange the Rights and a Triggering Event, and any holder of such Rights will
have no right to exercise such Rights.
Under certain circumstances, the disinterested directors can approve a
transaction with a specific shareholder and freeze the Rights in connection with
that specific transaction.
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price. Holders will have no right to receive fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock) upon the exercise of Rights. In lieu
of such fractional shares, an adjustment in cash may be made based on the market
price of the Preferred Stock on the last trading date prior to the date of
exercise.
The number of outstanding Rights and the number of one one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right and the Purchase
Price are also subject to adjustment in the event of a stock split of the Common
Stock or distributions, subdivisions, consolidations or combinations of the
Common Stock occurring, in any such case, prior to the Separation Date.
At any time prior to the earlier of (i) the closing of business on the tenth
day following the time that it becomes public that an Acquiring Person has
become such and (ii) the Expiration Date, the Company may redeem the Rights in
whole, but not in part, at a price of $0.01 per Right. Immediately upon the
action of the Company's Board of Directors electing to redeem the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights thereafter will be to receive the applicable redemption price.
At any time any person becomes an Acquiring Person and prior to such time as
such person, together with its affiliates becomes the beneficial owner of at
least 50% of the Company's outstanding Common Stock, the Company may, provided
that all necessary regulatory approvals have been obtained, exchange the Rights
(other than Rights owned by such Acquiring Person which become null and void),
in whole or in part, at a ratio of one share of Common Stock per Right, subject
to adjustment.
Until a Right is exercised, the holder has no rights as a shareholder of the
Company, including, without limitation, the right to vote or to receive
dividends or distributions. The Company may, without the approval of any holder
of the Rights, but only if at that time the Board of Directors consists of a
majority of disinterested directors, supplement or amend any provision of the
Rights Agreement, except the redemption window, the Purchase Price or the
redemption price.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per share of Common
Stock, if it is greater. In the event of liquidation, the holders of the
Preferred Stock will be entitled to a minimum preferential liquidation payment
of $100.00 per share, but will be entitled to an aggregate payment of 100 times
the payment made per share of Common Stock, if it is greater. In the event of
any merger or other business combination in which Common Stock is exchanged,
each share of Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one one-hundredth of a share of Preferred Stock
purchasable upon exercise of each Right is intended to approximate the value of
one share of Common Stock.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned upon a substantial number of Rights being acquired. The
Rights should not interfere with any merger or other business combination
approved by the Board of Directors prior to the time a person or group has
acquired beneficial ownership of 20% or more of the Common Stock, because until
such time, the Rights may be redeemed by the Company at $0.01 per Right.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission and is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
