<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): August 19, 1997
CAMERON ASHLEY BUILDING PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
STATE OF GEORGIA 000-23442 581984957
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
11651 Plano Road
Suite 100
Dallas, Texas 75243
(Address of principal executive offices)
(214) 860-5100
(Registrant's Telephone No.)
<PAGE>
ITEM 5. OTHER EVENTS
On August 19, 1997, the Board of Directors of Cameron Ashley Building
Products, Inc. (the "Company") declared a dividend distribution of one Right
for each outstanding share of the Company's common stock, no par value (the
"Common Stock"), to shareholders of record at the close of business on
September 10, 1997. This dividend distribution will be made on or about
September 24, 1997. Each Right entitles the registered holder to purchase
from the Company one ten-thousandth (1/10,000) of a share of Series A
Preferred Stock, no par value (the "Preferred Stock"), at a Purchase Price of
$72.00 per one ten-thousandth (1/10,000) of a share, subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement
(the "Rights Agreement") between the Company and SunTrust Bank, Atlanta, a
Georgia banking corporation, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock upon the earlier
of (i) ten (10) business days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") (which term
does not include an "Exempt Person" as defined in the Rights Agreement) has
acquired, or obtained the right to acquire, beneficial ownership of fifteen
percent (15%) or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) ten (10) business days (or such later date as the
Board of Directors shall determine) following the commencement of a tender or
exchange offer that would result in a person or group beneficially owning
fifteen percent (15%) or more of such outstanding shares of Common Stock. The
date the Rights separate is referred to as the "Distribution Date."
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after September 10, 1997
will contain a notation incorporating the Rights Agreement by reference, and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of
a Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on September 10, 2007, unless earlier redeemed by the
Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates will represent the Rights. Except in connection with shares of
Common Stock issued or sold pursuant to the exercise of stock options under any
employee plan or arrangements, or upon the exercise, conversion or exchange of
securities
Page 2
<PAGE>
hereafter issued by the Company, or as otherwise determined by the Board of
Directors, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that (i) the Company is the surviving corporation in a merger
or other business combination with an Acquiring Person (or any associate or
affiliate thereof) and its Common Stock remains outstanding and unchanged, (ii)
any person shall acquire beneficial ownership of more than fifteen percent (15%)
of the outstanding shares of Common Stock (except pursuant to (A) certain
consolidations or mergers involving the Company or sales or transfers of the
combined assets, cash flow or earning power of the Company and its subsidiaries
or (B) an offer for all outstanding shares of Common Stock at a price and upon
terms and conditions which a majority of the Disinterested Directors (as defined
below) determines to be in the best interests of the Company and its
shareholders), or (iii) there occurs a reclassification of securities, a
recapitalization of the Company or any of certain business combinations or other
transactions (other than certain consolidations and mergers involving the
Company and sales or transfers of the combined assets, cash flow or earning
power of the Company and its subsidiaries) involving the Company or any of its
subsidiaries which has the effect of increasing by more than one percent (1%)
the proportionate share of any class of the outstanding equity securities of the
Company or any of its subsidiaries beneficially owned by an Acquiring Person (or
any associate or affiliate thereof), each holder of a Right (other than the
Acquiring Person and certain related parties) will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the Purchase Price of the Right. However, Rights are not exercisable following
the occurrence of either of the events described above until such time as the
Rights are no longer redeemable by the Company as described below.
Notwithstanding any of the foregoing, following the occurrence of any of the
events described in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
For example, at a Purchase Price of $72.00 per Right, each Right not owned
by an Acquiring Person (or by certain related parties or transferees) following
an event set forth in the preceding paragraph would entitle its holder to
purchase $144.00 worth of Common Stock (or other consideration, as noted above)
for $72.00.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company shall enter into a merger or other business combination transaction
in which the Company is not the surviving corporation, (ii) the Company is the
surviving corporation in a consolidation, merger or similar transaction pursuant
to which all or part of the outstanding shares of Common Stock are changed into
or exchanged for stock or other securities of any other person or cash or any
other property or (iii) more than 50% of the combined assets, cash flow or
earning power of the Company and its subsidiaries is sold or transferred (in
each case other than certain consolidations with, mergers with and into, or
sales of assets, cash flow or earning power by or to subsidiaries of the Company
as specified in the Rights Agreement), each holder of a Right (except Rights
which previously have been voided as set forth above) shall thereafter have the
right to receive,
Page 3
<PAGE>
upon exercise, common stock of the acquiring company having a value equal to
two times the Purchase Price of the Right. The events described in this
paragraph and in the second preceding paragraph are referred to as the
"Triggering Events."
The Purchase Price payable, the number and kind of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights, options or 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 evidences of indebtedness,
cash (excluding regular quarterly cash dividends), assets (other than dividends
payable in Preferred Stock) or subscription rights or warrants (other than those
referred to in (ii) immediately above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least one percent (1%) of the
Purchase Price. No fractional shares of Preferred Stock are required to be
issued (other than fractions which are integral multiples of one ten-thousandth
(1/10,000th) of a share of Preferred Stock) and, in lieu thereof, the Company
may make an adjustment in cash based on the market price of the Preferred Stock
on the trading date immediately prior to the date of exercise.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of fifty percent (50%) or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may,
without payment of the Purchase Price by the holder, exchange the Rights (other
than Rights owned by such person or group, which will become void), in whole or
in part, for shares of Common Stock at an exchange ratio of one-half (1/2) the
number of shares of Common Stock (or in certain circumstances Preferred Stock)
for which a Right is exercisable immediately prior to the time of the Company's
decision to exchange the Rights (subject to adjustment).
At any time until ten (10) business days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a price of
$0.001 per Right (payable in cash, shares of Common Stock or other consideration
deemed appropriate by the Board of Directors). Immediately upon the action of
the Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
$0.001 redemption price.
The term "Disinterested Director" means any member of the Board of
Directors of the Company who was a member of the Board prior to the date of the
Rights Agreement, and any person who is subsequently elected to the Board if
such person is recommended or approved by
Page 4
<PAGE>
a majority of the Disinterested Directors, but shall not include an Acquiring
Person, or an affiliate or associate of an Acquiring Person, or any
representative of the foregoing entities.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of an acquiring company as set forth above or in the event that the
Rights are redeemed.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date; provided, that
any amendments after the Stock Acquisition Date must be approved by a majority
of the Disinterested Directors. After the Distribution Date, the provisions of
the Rights Agreement may be amended by the Board in order to cure any ambiguity,
inconsistency or defect, to make changes which do not adversely affect the
interest of holders of Rights (excluding the interest of any Acquiring Person)
or to shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable; and, provided, that any
amendments after the Stock Acquisition Date must be approved by a majority of
the Disinterested Directors.
A copy of the Rights Agreement specifying the terms of the Rights,
including as Exhibit 1 thereto the Certificate of Designation, Preferences and
Rights of Series A Preferred Stock, as Exhibit 2 thereto the Form of Rights
Certificate, as Exhibit 3 thereto the Letter to Shareholders describing the
Rights Plan as therein defined and as Exhibit 4 thereto the Press Release
announcing the declaration of the Rights, is filed herewith and is incorporated
herein by reference. Copies of the Rights Agreement are also available free of
charge from the Rights Agent. The foregoing description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement.
Page 5
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
4 Rights Agreement, dated as of August 19, 1997, by and
between Cameron Ashley Building Products, Inc. and
SunTrust Bank, Atlanta as Rights Agent, including
exhibits thereto.
99 Press Release, dated August 25, 1997.
Page 6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CAMERON ASHLEY BUILDING PRODUCTS, INC.
Dated: August 29, 1997 By: /s/ John S. Davis
-----------------------------------
Printed Name: John S. Davis
Title: Vice President - General Counsel
and Secretary
Page 7
<PAGE>
EXHIBIT INDEX
Item
Number Description Page
- ------ ----------- ----
4 Rights Agreement, dated as of
August 19, 1997, by and between
Cameron Ashley Building
Products, Inc. and SunTrust
Bank, Atlanta, as Rights Agent,
including exhibits thereto.
99 Press Release, dated August 25, 1997.
Page 8
<PAGE>
EXHIBIT 4
CAMERON ASHLEY BUILDING PRODUCTS, INC.
AND
SUNTRUST BANK, ATLANTA
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF AUGUST 19, 1997
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
Section 1. Certain Definitions........................................... 1
Section 2. Appointment of Rights Agent. ................................. 6
Section 3. Issuance of Rights Certificates............................... 7
(a) Distribution Date; Rights
Certificates.................................................. 7
(b) Common Stock Certificates; Summary of
Rights........................................................ 7
(c) Legend........................................................ 8
Section 4. Form of Rights Certificates................................... 8
(a) Form; Date.................................................... 8
(b) Acquiring Person Legend....................................... 9
Section 5. Countersignature and Registration.............................. 9
(a) Signatures..................................................... 9
(b) Registration and Transfer..................................... 10
Section 6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates............................ 10
(a) Procedure..................................................... 10
(b) Issuance of New Rights Certificates........................... 10
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights................................................ 11
(a) Exercise...................................................... 11
(b) Purchase Price................................................ 11
(c) Rights Agent Actions.......................................... 12
(d) Partial Exercise.............................................. 12
(e) Termination of Acquiring Person's Rights...................... 12
(f) Surrender of Rights Certificates; Identity of
Beneficial Owner.............................................. 13
Section 8. Cancellation and Destruction of Rights Certificates........... 13
Section 9. Reservation and Availability of Capital Stock................. 13
(a) Reservation of Capital Stock.................................. 13
(b) Listing....................................................... 13
(c) Registration under the Act.................................... 13
(d) Covenant Regarding Capital Stock.............................. 14
(e) Transfer Taxes and Charges.................................... 14
i
<PAGE>
Section 10. Preferred Stock Record Date................................... 14
Section 11. Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights.................................... 15
(a) Certain Adjustments........................................... 15
(b) Purchase Price Adjustment -- Capital Stock.................... 18
(c) Purchase Price Adjustment -- Cash, Assets, etc................ 19
(d) Current Market Price.......................................... 19
(e) Purchase Price Adjustment Threshold........................... 20
(f) Equivalent Adjustments........................................ 21
(g) Post-Adjustment Rights Issuances.............................. 21
(h) Preferred Stock Anti-Dilution................................. 21
(i) Adjustment of Number of Rights................................ 21
(j) Rights Certificates........................................... 22
(k) Adjustment Below Par Value.................................... 22
(l) Adjustment Effective as of Future Date; Exercise.............. 22
(m) Tax Adjustments............................................... 23
(n) Restriction on Certain Transactions........................... 23
(o) Restriction Against Diminishing Benefits of the Rights........ 23
(p) Common Stock Adjustments...................................... 23
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares.............................................. 24
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.............................................. 24
(a) Flip-over Event............................................... 24
(b) Principal Party............................................... 25
(c) Supplemental Agreement........................................ 26
(d) Exceptions.................................................... 26
Section 14. Fractional Rights and Fractional Shares....................... 27
(a) Fractional Rights............................................. 27
(b) Fractional Shares of Preferred Stock.......................... 27
(c) Fractional Shares of Common Stock............................. 28
(d) Waiver of Fractional Rights and Shares........................ 28
Section 15. Rights of Action.............................................. 28
Section 16. Agreement of Rights Holders................................... 28
Section 17. Rights Certificate Holder Not Deemed a Shareholder............ 29
Section 18. Concerning the Rights Agent................................... 29
(a) Compensation.................................................. 29
(b) Reliance...................................................... 30
ii
<PAGE>
Section 19. Merger or Consolidation or Change of Name of Rights
Agent......................................................... 30
(a) Successor..................................................... 30
(b) Prior Countersignatures....................................... 30
Section 20. Duties of Rights Agent........................................ 30
(a) Legal Counsel................................................. 30
(b) Certification by the Company.................................. 31
(c) Liability for Negligence, etc................................. 31
(d) Statements of Fact or Recitals................................ 31
(e) Agreement; Adjustments........................................ 31
(f) Further Assurances............................................ 31
(g) Instructions.................................................. 31
(h) Dealing in Rights............................................. 32
(i) Agents; Reasonable Care....................................... 32
(j) Expenses; Repayment Assurances................................ 32
(k) Exercise of Rights; Consultation with Company................. 32
(l) Effect of Supplements and Amendments...........................32
Section 21. Change of Rights Agent........................................ 32
Section 22. Issuance of New Rights Certificates........................... 33
Section 23. Redemption and Termination.................................... 33
(a) Redemption.................................................... 33
(b) Effect of Redemption; Procedure............................... 34
Section 24. Exchange...................................................... 34
(a) Right to Exchange............................................. 34
(b) Effect of Exchange; Procedure................................. 35
(c) Common Stock Equivalents...................................... 35
(d) Insufficient Common Stock..................................... 35
(e) Fractional Shares............................................. 35
Section 25. Notice of Certain Events...................................... 36
(a) Preferred Stock Transactions, etc............................. 36
(b) Other Transactions............................................ 36
Section 26. Notices....................................................... 37
Section 27. Supplements and Amendments.................................... 37
Section 28. Successors.................................................... 38
Section 29. Determinations and Actions by the Board of
Directors, Disinterested Directors, etc....................... 38
iii
<PAGE>
Section 30. Benefits of this Agreement.................................... 39
Section 31. Severability.................................................. 39
Section 32. Governing Law................................................. 39
Section 33. Counterparts.................................................. 39
Section 34. Descriptive Headings.......................................... 39
EXHIBIT 1 Certificate of Designation, Preferences and Rights
of Series A Preferred Stock................................... 41
EXHIBIT 2 Form of Rights Certificate.................................... 49
EXHIBIT 3 Letter to Shareholders........................................ 56
iv
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of August 19, 1997, between Cameron Ashley
Building Products, Inc., a Georgia corporation (the "Company"), and SunTrust
Bank, Atlanta, a Georgia banking corporation (the "Rights Agent").
RECITALS
On August 19, 1997 (the "Rights Dividend Declaration Date"), the Board of
Directors of the Company authorized and declared a dividend distribution of one
Right for each share of Common Stock (as hereinafter defined) of the Company
outstanding at the close of business on September 10, 1997 (the "Record Date"),
and has authorized the issuance of one Right (as such number may hereafter be
adjusted pursuant to the provisions of Section 11(p) (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights -- Common Stock
Adjustments)) for each share of Common Stock of the Company issued between the
Record Date (whether originally issued or delivered from the Company's treasury)
and the Distribution Date, each Right initially representing the right to
purchase one ten-thousandth of a share of Series A Preferred Stock 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 1,
upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
AGREEMENT
In consideration of the premises and the mutual agreements herein set
forth, the parties hereto 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 who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
(as such term is hereinafter defined) of 15% or more of the shares of Common
Stock then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan,
(iv) any Exempt Person (but, in the case of an Exempt Person, only to the extent
of any shares of Common Stock (A) Beneficially Owned by such Exempt Person on
the date of this Agreement or (B) acquired by such Exempt Person after the date
of this Agreement from any other Exempt Person if such shares have been
Beneficially Owned only by Exempt Persons on and after the date of this
Agreement), or (v) any Person who becomes an Acquiring Person solely as a result
of a reduction in the number of shares of Common Stock outstanding due to the
repurchase of shares of Common Stock by the Company, unless and until such
Person shall purchase or otherwise become (as a result of actions taken by such
Person or its Affiliates or Associates) the Beneficial Owner of additional
shares of Common Stock constituting 1% or more of the then outstanding shares of
Common Stock (other than, in the case of an Exempt Person, shares of Common
Stock Beneficial Ownership of which was acquired by such Exempt Person from
1
<PAGE>
another Exempt Person if such shares have been Beneficially Owned only by Exempt
Persons on and after the date of this Agreement); provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Common Stock of
the Company then outstanding by reason of share repurchases by the Company and
shall, after such share repurchases by the Company, become the Beneficial Owner
of any additional Common Stock of the Company (other than, in the case of an
Exempt Person, shares of Common Stock Beneficial Ownership of which was acquired
by such Exempt Person from another Exempt Person if such shares have been
Beneficially Owned only by Exempt Persons on and after the date of this
Agreement), then such Person shall be deemed to be an "Acquiring Person," unless
upon the consummation of the acquisition of such additional shares of Common
Stock such Person does not beneficially own 15% or more of the shares of Common
Stock then outstanding. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an Acquiring Person, as defined pursuant to the foregoing
provisions of this paragraph, has become such inadvertently (including, without
limitation, because (i) such Person was unaware that it beneficially owned a
percentage of Common Stock that would otherwise cause such Person to be an
Acquiring Person, or (ii) such Person was aware of the extent of its Beneficial
Ownership of Common Stock but had no actual knowledge of the consequences of
such Beneficial Ownership under this Agreement) and without any intention of
changing or influencing control of the Company, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an Acquiring Person as defined pursuant to the
foregoing provisions of this paragraph, then such Person shall not be deemed to
be or to have become an Acquiring Person for any purposes of this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as amended as of the
date hereof and in effect from time to time.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments)
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(e) "Agreement" shall mean this Rights Agreement as originally
executed or as it may from time to time be supplemented or amended pursuant to
the applicable provisions hereof.
(f) "Beneficial Owner"; "Beneficial Ownership": A Person shall be
deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any
securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not, for purposes of this
paragraph (i), be deemed the "Beneficial Owner" of or to "beneficially own,"
(A) securities
2
<PAGE>
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or
(C) securities issuable upon exercise of Rights from and after the occurrence of
a Triggering Event, which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates) or Section 22 (Issuance of New Rights Certificates) (the "Original
Rights") or pursuant to Section 11(i) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Adjustment of Number of Rights) in
connection with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on a
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are "beneficially owned," directly or indirectly,
by any other person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
the proviso to subparagraph (ii) of this paragraph (f)) or disposing of any
voting securities of the Company; provided, however, that nothing in this
paragraph (f) shall cause a person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of or to "beneficially own," any
securities acquired through such person's participation in good faith in a firm
commitment underwriting until the expiration of forty (40) calendar days after
the date of such acquisition.
(g) "Board" means the Board of Directors of the Company.
(h) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
(i) "Close of Business" on any given date shall mean 5:00 P.M.,
Dallas, Texas time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Dallas, Texas time, on the next succeeding
Business Day.
(j) "Common Stock" shall mean the common stock, no par value, of the
Company, except that "Common Stock" when used with reference to any Person other
than the
3
<PAGE>
Company shall mean the capital stock of such Person with the greatest voting
power, or the equity securities or other equity interest having power to control
or direct the management, of such Person.
(k) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(l) "Company" shall mean the Person named as the "Company" in the
first paragraph of this Agreement until a successor corporation shall have
become such, or until a Principal Party shall assume, and thereafter be liable
for, all obligations and duties of the Company hereunder, pursuant to the
applicable provisions of this Agreement, and thereafter "Company" shall mean
such successor corporation or Principal Party.
(m) "Current Market Price" shall have the meaning set forth in
Section 11(d) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Current Market Price).
(n) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(o) "Disinterested Director" shall mean (i) any member of the Board,
while such Person is a member of the Board, who is not an Acquiring Person, or
an Affiliate or Associate of an Acquiring Person, or a representative or nominee
of an Acquiring Person or of any such Affiliate or Associate, and was a member
of the Board prior to the date of this Agreement, or (ii) any Person who
subsequently becomes a member of the Board, while such Person is a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an Acquiring Person or of
any such Affiliate or Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a majority of the
Disinterested Directors.
(p) "Distribution Date" shall have the meaning set forth in
Section 3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates).
(q) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Purchase Price Adjustment -- Capital Stock).
(r) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended as of the date hereof and in effect on the date of this Agreement.
(s) "Exchange Number" shall mean one-half of the number of shares of
Common Stock, ten thousandths of a share of Preferred Stock, or shares or other
units of other property for which a Right is exercisable immediately prior to
the time of the action of the Board to exchange the Rights.
4
<PAGE>
(t) "Exempt Person" shall mean CGW Southeast Partners I, L.P., a
Georgia limited partnership.
(u) "Expiration Date" shall have the meaning set forth in
Section 7(a) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Exercise).
(v) "Final Expiration Date" shall mean the Close of Business on
September 10, 2007.
(w) "Flip-in Event" shall mean any event described in
Section 11(a)(ii)(A) or (B) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
(x) "Flip-in Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(y) "Flip-over Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a) (Consolidation, Merger or Sale or Transfer of Assets
or Earning Power -- Flip-over Event).
(z) "Original Rights" shall have the meaning set forth in
Section 1(f)(i) (Certain Definitions).
(aa) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity.
(bb) "Preferred Stock" shall mean shares of Preferred Stock, Series A,
no par value, of the Company (the "Series A Preferred Stock"), and, to the
extent that there is not a sufficient number of shares of Series A Preferred
Stock authorized to permit the full exercise of the Rights, any other series of
Preferred Stock, no par value, of the Company designated for such purpose
containing terms substantially similar to the terms of the Series A Preferred
Stock.
(cc) "Principal Party" shall have the meaning set forth in
Section 13(b) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Principal Party).
(dd) "Purchase Price" shall have the meaning set forth in Section 4(a)
(Form of Rights Certificates -- Form; Date).
(ee) "Record Date" shall have the meaning set forth in the Recitals at
the beginning of the Agreement.
(ff) "Redemption Date" shall have the meaning set forth in
Section 23(a) (Redemption and Termination -- Redemption).
(gg) "Redemption Price" shall have the meaning set forth in
Section 23(a) (Redemption and Termination -- Redemption).
5
<PAGE>
(hh) "Rights" shall have the meaning set forth in the Recitals at the
beginning of the Agreement.
(ii) "Rights Agent" shall mean the Person named as the "Rights Agent"
in the first paragraph of this Agreement until a successor Rights Agent shall
have become such pursuant to the applicable provisions hereof and thereafter
"Rights Agent" shall mean such successor Rights Agent. If at any time there is
more than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, "Rights Agent" shall mean and include
each such Person.
(jj) "Rights Certificates" shall have the meaning set forth in
Section 3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates).
(kk) "Rights Dividend Declaration Date" shall have the meaning set
forth in the Recitals at the beginning of the Agreement.
(ll) "Spread" shall have the meaning set forth in Section 11(a)(iii)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments).
(mm) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(nn) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting power of equity
securities or majority of the equity interest is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such Person.
(oo) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(pp) "Trading Day" shall have the meaning set forth in
Section 11(d)(i) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Current Market Price).
(qq) "Triggering Event" shall mean any Flip-in Event or any Flip-over
Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such additional rights agents (the
"Co-Rights Agents") as it may deem necessary or desirable.
6
<PAGE>
Section 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) DISTRIBUTION DATE; RIGHTS CERTIFICATES. Until the earlier of
(i) the Close of Business on the tenth Business Day after the Stock Acquisition
Date (or, if the tenth Business Day after the Stock Acquisition Date occurs
before the Record Date, the Close of Business on the Record Date), or (ii) the
Close of Business on the tenth Business Day (or such later date as the Board
shall determine prior to such time as any Person becomes an Acquiring Person)
after the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon consummation
thereof such Person would be the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company, except pursuant to
the provision of Section 23 (Redemption and Termination)). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit 2 hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to
Section 11(p) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Common Stock Adjustments) at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) (Fractional Rights and Fractional
Shares -- Fractional Rights)) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) COMMON STOCK CERTIFICATES; SUMMARY OF RIGHTS. With respect to
certificates for the Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates will be evidenced by such certificates alone and the
registered holders of such Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock. On the
Record Date, or as soon as practicable thereafter, the Company will send a copy
of a Summary of Rights to Purchase Preferred Stock, in substantially the form of
Exhibit 3 hereto (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of shares of 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.
7
<PAGE>
(c) LEGEND. Rights shall be issued in respect of all certificates
for shares of Common Stock which are issued (whether originally issued or from
the Company's treasury) after the Record Date but prior to the earliest of the
(i) Distribution Date, (ii) the Expiration Date, or (iii) the Redemption Date,
or, in certain circumstances provided in Section 22 (Issuance of New Rights
Certificates) after the Distribution Date. Certificates representing such
shares of Common Stock shall also be deemed 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 dated as of August
19, 1997, by and between CAMERON ASHLEY BUILDING PRODUCTS, INC. (the
"Company") and SUNTRUST BANK, ATLANTA, as Rights Agent (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of the Rights Agreement,
as in effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain circumstances
set forth in the Rights Agreement, Rights issued to, or held by, any
Person who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or
by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of (i) the Distribution Date, (ii) the Expiration Date, and (iii) the
Redemption Date, (x) the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, (y) the
registered holders of such Common Stock shall also be the registered holders of
the associated Rights and (z) the transfer of any of such certificates shall
also constitute the transfer of the Rights associated with such shares of Common
Stock. In the event that the Company purchases, or acquires any shares of
Common Stock after the Record Date but prior to the Distribution Date, any
rights associated with such shares of Common Stock shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with shares of Common Stock which are no longer outstanding.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) FORM; DATE. The Rights Certificates (and the forms of election
to purchase and of assignment to be printed on the reverse thereof) shall each
be substantially in the form set forth in Exhibit 2 hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed or any securities association on whose
interdealer quotation system the Rights may be from time to time authorized for
quotation, or to conform to usage. Subject to the provisions of Section 11
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights)
and Section 22 (Issuance of New Rights Certificates), the Rights Certificates,
whenever distributed, shall be dated
8
<PAGE>
as of the Record Date and on their face shall entitle the holders thereof to
purchase such number of one ten-thousandths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one ten-thousandth of a share is referred to herein as the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) ACQUIRING PERSON LEGEND. Any Rights Certificate issued pursuant
to Section 3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates) or Section 22 (Issuance of New Rights Certificates) that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Disinterested Directors have determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect avoidance of
Section 7(e) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Termination of Acquiring Person's Rights) and any Rights Certificate issued
pursuant to Section 6 (Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates),
Section 11 (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights) or Section 22 (Issuance of New Rights Certificates) upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement dated as of August 19, 1997, by and between CAMERON ASHLEY
BUILDING PRODUCTS, INC. and SUNTRUST BANK, ATLANTA, as Rights Agent).
Accordingly, this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section 7(e)
(Exercise of Rights; Purchase Price; Expiration Date of Rights --
Termination of Acquiring Person's Rights) of such Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) SIGNATURES. The Rights Certificates shall be executed on behalf
of the Company by its Chairman of the Board, 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 to by
the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature, and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force
9
<PAGE>
and effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights Certificates may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) REGISTRATION AND TRANSFER. Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the 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) PROCEDURE. Subject to the provisions of Section 4(b) (Form of
Rights Certificates -- Acquiring Person Legend), Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) and Section 14 (Fractional Rights and Fractional Shares), at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of one ten-thousandths of a share of Preferred Stock (or,
following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon, the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14,
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) ISSUANCE OF NEW RIGHTS CERTIFICATES. 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
10
<PAGE>
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) EXERCISE. Subject to Section 7(e) (Exercise of Rights; Purchase
Price; Expiration Date of Rights -- Termination of Acquiring Person's Rights),
the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein, including, without
limitation, the restrictions on exercisability set forth in Section 9(c)
(Reservation and Availability of Capital Stock -- Registration under the Act),
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments), Section 23(a) (Redemption and
Termination -- Redemption), and Section 24(b) (Exchange -- Effect of Exchange;
Procedure)) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of one ten-thousandths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable and an amount equal to any applicable
transfer tax, at or prior to the earliest of (i) the Final Expiration Date,
(ii) the Redemption Date, or (iii) the expiration of the Rights pursuant to
Section 13(d) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Exceptions) (the earliest of (i), (ii) and (iii) being herein referred
to as the "Expiration Date"). The payment of the Purchase Price and the
applicable transfer tax, if any (as such amount may be reduced pursuant to
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments)), may be made (x) in cash, (y) by
certified check, cashier's check or money order payable to the order of the
Company, or (z) by delivery of a certificate or certificates (with appropriate
stock powers executed in blank attached thereto) evidencing a number of shares
of Common Stock equal to the then Purchase Price divided by the closing price
(as determined pursuant to Section 11(d) (Adjustment of Purchase Price; Number
and Kind of Shares or Number of Rights -- Current Market Price) per share of
Common Stock on the Trading Day immediately preceding the date of such exercise.
In the event that the Company is obligated to issue other securities (including
Common Stock) of the Company, pay cash and/or distribute other property pursuant
to Section 11(a) the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred
Stock would be issued.
(b) PURCHASE PRICE. The Purchase Price for each one ten-thousandth
of a share of Preferred Stock pursuant to the exercise of a Right shall
initially be $72.00, and shall be subject to adjustment from time to time as
provided in Section 11 (Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights) and Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event) and shall be payable in
accordance with paragraph (a) of this Section 7.
11
<PAGE>
(c) RIGHTS AGENT ACTIONS. Upon receipt of a Rights Certificate
representing exercisable Rights and the compliance by the holder of such Rights
Certificate with paragraph (a) of this Section 7, the Rights Agent shall,
subject to Section 20(k) (Duties of Rights Agent -- Exercise of Rights;
Consultation with Company), thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one ten-thousandths of a share of Preferred Stock to be purchased and
the Company hereby irrevocably authorizes its transfer agent to comply with all
such requests, or (B) if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one ten-thousandths 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 (Fractional Rights and Fractional Shares),
(iii) after receipt thereof, deliver such certificates or depositary receipts to
or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder and
(iv) after receipt thereof, deliver such cash, if any, to or upon the order of
the registered holder of such Rights Certificate.
(d) PARTIAL EXERCISE. In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 14 (Fractional Rights and Fractional Shares).
(e) TERMINATION OF ACQUIRING PERSON'S RIGHTS. Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Flip-in Event, any Rights beneficially owned by (i) an Acquiring Person, or
an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after such Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Disinterested Directors have determined is
part of a plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without
any further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) (Form of Rights Certificates --
Acquiring Person Legend) are complied with, but shall have no liability to any
holder of Rights Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or any of its respective
Affiliates, Associates or transferees hereunder.
12
<PAGE>
(f) SURRENDER OF RIGHTS CERTIFICATES; IDENTITY OF BENEFICIAL OWNER.
Notwithstanding anything in this Agreement to the contrary, neither the Rights
Agent nor the Company shall be obligated to undertake any action with respect to
a registered holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i) completed and
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) RESERVATION OF CAPITAL STOCK. The Company will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares of Common Stock held in its treasury), the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) that, as provided in
this Agreement, including the rights of the Company under Section 11(a)(iii)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments) to otherwise fulfill its obligations, will be sufficient to
permit the exercise in full of all outstanding Rights.
(b) LISTING. So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon the exercise of the Rights may be
listed on any national securities exchange or authorized for quotation on any
interdealer quotation system of any securities association, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
or quoted on such system upon official notice of issuance upon such exercise.
(c) REGISTRATION UNDER THE ACT. The Company will use its best
efforts to (i) file, as soon as practicable following the earliest date after
the first occurrence of a Flip-in Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Certain Adjustments), or as soon as is
required by law following the Distribution Date, as the case may be, a
registration statement on an
13
<PAGE>
appropriate form under the Act with respect to the securities purchasable upon
exercise of the Rights, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) calendar
days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In
addition, if the Company shall determine that a registration statement is
required following the Distribution Date, the Company may temporarily suspend
the exercisability of the Rights until such time as a registration statement has
been declared effective. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective.
(d) COVENANT REGARDING CAPITAL STOCK. The Company will take all such
action as may be necessary to ensure that all one ten-thousandths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) TRANSFER TAXES AND CHARGES. The Company will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of one ten-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one ten-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than,
that of the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one ten-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for a number of one ten-thousandths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or
14
<PAGE>
Common Stock and/or other securities, as the case may be) represented thereby
on, and such certificate shall be dated as of, 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 (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE; NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) CERTAIN ADJUSTMENTS.
(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide or split the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, split,
combination or reclassification, and the number and kind of shares of Preferred
Stock or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the aggregate adjusted
Purchase Price then in effect necessary to exercise a Right in full, the
aggregate number and kind of shares of Preferred Stock or capital stock, as the
case may be, which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock (or other capital stock, as the case
may be) transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, split, combination or reclassification. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
15
<PAGE>
(ii) In the event:
(A) (1) any Acquiring Person or any Associate or Affiliate
of any Acquiring Person, at any time after the date of this Agreement, 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, or (2) subject to Section 23 (Redemption and
Termination), any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any subsidiary of the Company, or
any Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan), alone or together with its Affiliates
and Associates, shall, at any time after the Rights Dividend Declaration Date,
become an Acquiring Person, unless the event causing such Person to become an
Acquiring Person is a Flip-over Event, or is an acquisition of shares of Common
Stock pursuant to a tender offer or an exchange offer for all outstanding shares
of Common Stock at a price and on terms determined by a majority of the
Disinterested Directors after receiving advice from one or more recognized
investment banking firms selected by the Disinterested Directors, to be (a) at a
price which is fair to the shareholders of the Company (taking into account all
factors which the Disinterested Directors deem relevant including, without
limitation, prices which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value) and
(b) otherwise in the best interests of the Company and its shareholders, other
than such Acquiring Person, its Affiliates and its Associates; or
(B) during such time as 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 or any of its Subsidiaries, other than a
transaction or transactions to which the provisions of Section 13(a)
(Consolidation, Merger or Sale or Transfer of Assets or Earning Power --
Flip-over Event) apply (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 which is directly
or indirectly beneficially owned by any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, then, promptly following the occurrence of
any such Flip-in Event (whether described in Section 11(a)(ii)(A) or (B)),
proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights)) shall
thereafter have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu of the
number of one ten-thousandths of a share of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of one
ten-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Flip-in Event, and (y) dividing
that product (which, following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price per share of Common Stock on the
date of such first occurrence (such number of shares being referred to as the
"Adjustment Shares").
16
<PAGE>
(iii) In the event that the number of shares of Common Stock
that are authorized by the Company's Articles of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights is not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess, the "Spread"), and (B) with respect to each Right,
subject to Section 7(e)(Exercise of Rights; Purchase Price; Expiration Date of
Rights -- Termination of Acquiring Person's Rights), make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or
other equity securities of the Company (including, without limitation, shares,
or units of shares, of preferred stock which the Board has deemed to have
essentially the same value or economic rights as shares of Common Stock (such
shares of preferred stock being referred to as "Common Stock Equivalents")),
(4) debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value (less the
amount of any reduction in the Purchase Price), where such aggregate value has
been determined by the Board based upon the advice of a recognized investment
banking firm selected by the Board; provided, however, that if the Company shall
not have made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) calendar days following the later of (x) the first occurrence
of a Flip-in Event and (y) the date on which the Company's right of redemption
pursuant to Section 23(a) (Redemption and Termination -- Redemption) expires
(the later of (x) and (y) being referred to herein as the "Flip-in Trigger
Date"), then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase Price, shares
of Common Stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If the Board
shall determine in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise in full of
the Rights, the thirty (30) calendar day period set forth above may be extended
to the extent necessary, but not more than ninety (90) calendar days after the
Flip-in Trigger Date, in order that the Company may seek shareholder approval
for the authorization of such additional shares (such period, the "Substitution
Period"). To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e), that such action shall
apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Stock shall be the Current Market
Price per share of the Common Stock on the Flip-in Trigger Date and the value of
any Common Stock Equivalent shall be deemed to have the same value as the Common
Stock on such date.
(iv) If the rules of the national securities exchange, registered
as such pursuant to Section 6 of the Exchange Act, or of the national securities
association, registered as such pursuant to Section 15A of the Exchange Act, on
which the Common Stock is principally traded or quoted would prohibit such
exchange or association from listing or continuing to list,
17
<PAGE>
or from authorizing for or continuing quotation and/or transaction reporting
through an inter-dealer quotation system, the Common Stock or other equity
securities of the Company if the Rights were to be exercised for shares of
Common Stock in accordance with subparagraph (ii) of this Section 11(a) because
such issuance would nullify, restrict or disparately reduce the per share voting
rights of holders of Common Stock, the Company shall: (A) determine the Spread,
and (B) with respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) equity securities of the Company,
including, without limitation, Common Stock Equivalents, other than securities
which would have the effect of nullifying, restricting or disparately reducing
the per share voting rights of holders of Common Stock, (4) debt securities of
the Company, (5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value has
been determined by the Board based upon the advice of a recognized investment
banking firm selected by the Board; provided, however, if the Company shall not
have made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) calendar days following the Flip-in Trigger Date, then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, cash having an
aggregate value equal to the Spread. To the extent that the Company determines
that some action need be taken pursuant to the first sentence of this
Section 11(a)(iv), the Company (x) shall provide, subject to Section 7(e)
(Exercise of Rights; Purchase Price; Expiration Date of Rights -- Termination of
Acquiring Person's Rights), that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights, but not
longer than ninety (90) calendar days after the Flip-in Trigger Date, in order
to decide the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iv), the value of the Common Stock shall be the
Current Market Price per share of the Common Stock on the Flip-in Trigger Date
and the value of any Common Stock Equivalent shall be deemed to have the same
value as the Common Stock on such date.
(b) PURCHASE PRICE ADJUSTMENT -- CAPITAL STOCK. 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 (for a
period expiring within forty-five (45) calendar days after such record date)
Preferred Stock (or shares having the same rights, privileges and preferences as
the shares of Preferred Stock ("Equivalent Preferred Stock")) or securities
convertible into Preferred Stock or Equivalent Preferred Stock at a price per
share of Preferred Stock or per share of Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
Equivalent Preferred Stock) less than the Current Market Price per share of
Preferred Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such
18
<PAGE>
record date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price
may be paid by delivery of consideration part or all of which may be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights. Shares of Preferred Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c) PURCHASE PRICE ADJUSTMENT -- CASH, ASSETS, ETC. In case the
Company shall fix a record date for a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Preferred Stock, but including any dividend payable in stock other
than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights Purchase Price Adjustment -- Capital Stock)), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by the Board, 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 a share of Preferred Stock and 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 be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) CURRENT MARKET PRICE.
(i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Certain Adjustments), the
Current Market Price per share of Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii), the Current Market
Price per share of Common Stock on any date shall be deemed to be the average of
the daily closing prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date; provided, however,
that in the event that the Current Market Price per share of the Common Stock is
determined during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of such Common
Stock (other than the Rights), or (B) any subdivision, combination or
reclassification of such
19
<PAGE>
Common Stock and the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification shall not have
occurred prior to the commencement of the requisite thirty (30) Trading Day or
ten (10) Trading Day period, as set forth above, then, and in each such case,
the Current Market Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each Trading Day shall be the last
sale price, regular way, or, in case no such sale takes place on such Trading
Day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, or,
if on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected by the
Board. If on any such date no market maker is making a market in the Common
Stock, the fair value of such shares on such date as determined in good faith by
the Board shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is not publicly held
or not so listed or traded, Current Market Price per share shall mean the fair
value per share as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock shall be determined in the same manner
as set forth above for the Common Stock in clause (i) of this Section 11(d)
(other than the last sentence thereof). If the Current Market Price per share
of Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 10,000 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the Current Market Price per share of
the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, Current Market Price per share of the
Preferred Stock shall mean the fair value per share as determined in good faith
by the Board, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes. For all purposes of
this Agreement, the Current Market Price of one ten-thousandth of a share of
Preferred Stock shall be equal to the Current Market Price of one share of
Preferred Stock divided by 10,000.
(e) PURCHASE PRICE ADJUSTMENT THRESHOLD. Anything herein to the
contrary notwithstanding, no adjustment in the Purchase Price shall be required
unless such adjustment
20
<PAGE>
would require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Section 11 (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights) shall be made to the nearest cent or to the nearest thousandth of a
share of Common Stock or other share or one ten-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) EQUIVALENT ADJUSTMENTS. If as a result of an adjustment made
pursuant to Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments) or Section 13(a)
(Consolidation Merger or Sale or Transfer of Assets or Earning Power --
Flip-over Event) the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 with respect to the Preferred Stock shall apply on like terms to
any such other shares.
(g) POST-ADJUSTMENT RIGHTS ISSUANCES. All Rights originally issued
by the Company subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price, the number
of one ten-thousandths of a share of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) PREFERRED STOCK ANTI-DILUTION. Unless the Company shall have
exercised its election as provided in Section 11(i) (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights -- Adjustment of Number of
Rights), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Purchase Price Adjustment -- Capital
Stock) and Section 11(c) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Purchase Price Adjustment -- Cash, Assets, etc.),
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 ten-thousandths of a share of Preferred Stock (calculated to the
nearest one ten-millionth) obtained by (i) multiplying (x) the number of one
ten-thousandths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) ADJUSTMENT OF NUMBER OF RIGHTS. The Company may elect on or
after the date of any adjustment of the Purchase Price to adjust the number of
Rights, in lieu of any adjustment in the number of one ten-thousandths of a
share of Preferred Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one ten-thousandths of a share of Preferred Stock
21
<PAGE>
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 hundred-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) calendar days later than the date of the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 (Fractional Rights and Fractional Shares) 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.
(j) RIGHTS CERTIFICATES. Irrespective of any adjustment or change in
the Purchase Price or the number of one ten-thousandths of a share of Preferred
Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase Price per
one ten-thousandth of a share and the number of one ten-thousandths of a share
which were expressed in the initial Rights Certificates issued hereunder.
(k) ADJUSTMENT BELOW PAR VALUE. Before taking any action that would
cause an adjustment reducing the Purchase Price below the then par or stated
value, if any, of the number of one ten-thousandths of a share of Preferred
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which is or may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable such
number of one ten-thousandths of a share of Preferred Stock at such adjusted
Purchase Price.
(l) ADJUSTMENT EFFECTIVE AS OF FUTURE DATE; EXERCISE. In any case in
which this Section 11 (Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights) shall require that an adjustment in the Purchase Price be
made effective as of a record date for a specified event, the Company may elect
to defer until the occurrence of such event the issuance to the holder of any
Right exercised after such record date the number of one ten-thousandths of a
share of Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of one
ten-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the
22
<PAGE>
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the event requiring such
adjustment.
(m) TAX ADJUSTMENTS. Anything in this Section 11 (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights) to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board shall
determine to be advisable in order that any (i) consolidation or subdivision of
the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred
Stock at less than the Current Market Price, (iii) issuance wholly for cash of
shares of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such shareholders.
(n) RESTRICTION ON CERTAIN TRANSACTIONS. The Company shall not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Restriction Against Diminishing Benefits of the Rights)),
(ii) merge with or into any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o)), (iii) enter into a
statutory share exchange or similar transaction with any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o)), or (iv) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets, cash
flow or earning power aggregating more than 50% of the assets, cash flow or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)), if
(x) at the time of or immediately after such consolidation, merger, statutory
share exchange or similar transaction, or sale there are any rights, warrants or
other instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger, statutory share exchange or similar transaction, or
sale, the shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) (Consolidation, Merger or Sale
or Transfer of Assets or Earning Power -- Flip-over Event) shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) RESTRICTION AGAINST DIMINISHING BENEFITS OF THE RIGHTS. The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23 (Redemption and Termination) or Section 27
(Supplements and Amendments) take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits intended
to be afforded by the Rights.
(p) COMMON STOCK ADJUSTMENTS. Anything in this Agreement to the
contrary notwithstanding, in the event that the Company shall at any time after
the Rights Dividend
23
<PAGE>
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide or split the outstanding shares of Common Stock, or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event. The adjustments provided for in this
Section 11(p) shall be made successively whenever such a dividend is declared or
paid or such subdivision, combination or consolidation is effected.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights) and Section 13
(Consolidation, Merger or Sale or Transfer of Assets or Earning Power) 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 or cause the
Rights Agent to mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 26
(Notices). The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) FLIP-OVER EVENT. In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, or enter into a statutory stock exchange or
similar transaction with, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)(Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Restriction
Against Diminishing Benefits of the Rights)), and the Company shall not be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction, (y) any Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)) shall
consolidate with, or merge with or into, or enter into a statutory stock
exchange or similar transaction with, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction and, in connection with such
consolidation, merger or statutory share exchange or similar transaction, all or
part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets, cash flow or earning power aggregating
more than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the
24
<PAGE>
Company or any Subsidiary of the Company in one or more transactions each of
which complies with Section 11(o)), then, and in each such case (except as may
be contemplated by Section 13(d) (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power -- Exceptions)), (i) proper provision shall be made so
that each holder of a Right, except as provided in Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the Principal
Party, not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (A) multiplying the
then current Purchase Price by the number of one ten-thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Flip-over Event (or, if a Flip-in Event has occurred prior to
the first occurrence of a Flip-over Event, multiplying the number of such one
ten-thousandths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Flip-in Event by the Purchase Price in effect
immediately prior to such first occurrence), and (B) dividing that product
(which, following the first occurrence of a Flip-over Event, shall be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price per share of the Common Stock of
such Principal Party on the date of consummation of such Flip-over Event;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Flip-over Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights) shall apply only to such Principal Party following
the first occurrence of a Flip-over Event; (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
and (v) the provisions of Section 11(a)(ii) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Certain Adjustments) hereof
shall be of no effect following the first occurrence of any Flip-over Event.
(b) PRINCIPAL PARTY. "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a) (Consolidation, Merger or Sale
or Transfer of Assets or Earning Power -- Flip-over Event), the Person that
is the issuer of any securities into which shares of Common Stock of the
Company are converted in such consolidation, merger or statutory share
exchange or similar transaction, and if no securities are so issued, the
Person that is the other party to such consolidation, merger or statutory
share exchange or similar transaction, and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event), the Person that is
the party receiving the greatest portion of the assets, cash flow or
earning power transferred pursuant to such transaction or transactions;
25
<PAGE>
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve
(12) month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, "Principal Party" shall refer to such other
Person; and (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the total outstanding Common Stock having the greatest
aggregate market value.
(c) SUPPLEMENTAL AGREEMENT. The Company shall not consummate a
Flip-over Event unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power) and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of such Flip-over Event,
the Principal Party will
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to cause
such registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power) shall similarly apply to successive consolidation,
mergers or statutory share exchanges or similar transactions or sales or other
transfers. 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 13(a) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Flip-over Event).
(d) EXCEPTIONS. Notwithstanding anything in this Agreement to the
contrary, Section 13 (Consolidation, Merger or Sale or Transfer of Assets or
Earning Power) shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event) if (i) such transaction
is consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock which satisfies the requirements of Section 11(a)(ii)(A)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments) (or a wholly-owned subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered in such transaction
is not less than the price per share of Common Stock paid to all holders of
shares of Common Stock whose shares were purchased pursuant to such tender or
exchange offer and (iii) the form of consideration being offered in such
transaction is the same as the form of consideration paid to
26
<PAGE>
all holders of shares of Common Stock whose shares were purchased pursuant to
such tender offer or exchange offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) FRACTIONAL RIGHTS. The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as provided in
Section 11(p) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Common Stock Adjustments), 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 value of a whole
Right. For purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any Trading Day shall be the last
sale price, regular way, or, in case no such sale takes place on such Trading
Day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board.
If on any such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by the Board
shall be used.
(b) FRACTIONAL SHARES OF PREFERRED STOCK. The Company shall not be
required to issue fractions of shares of Preferred Stock (other than
fractions which are integral multiples of one ten-thousandth of a share of
Preferred Stock which may at the option of the Company, be evidenced by
depositary receipts) 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 ten-thousandth of a share of
Preferred Stock). Interests in fractions of Preferred Stock in integral
multiples of one ten-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, however, that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and preferences to
which they are entitled as beneficial owners of the Preferred Stock
represented by such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one ten-thousandth 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 value of
one ten-thousandth of a share
27
<PAGE>
of Preferred Stock. For purposes of this Section 14(b), the current market
value of one ten-thousandth of a share of Preferred Stock shall be one
ten-thousandth of the closing price of a share of Preferred Stock (as
determined pursuant to Section 11(d)(ii) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Current Market Price) for
the Trading Day immediately prior to the date of such exercise.
(c) FRACTIONAL SHARES OF COMMON STOCK. Following the occurrence of a
Triggering Event, the Company shall not be required to issue fractions of shares
of Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company 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 value of one (1) share
of Common Stock. For purposes of this Section 14(c), the current market value
of one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d)(i) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Current Market Price) for the
Trading Day immediately prior to the date of such exercise.
(d) WAIVER OF FRACTIONAL RIGHTS AND SHARES. The holder of a Right by
the acceptance of the Right expressly waives his or her right to receive any
fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14 (Fractional Rights and Fractional Shares).
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 Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
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 Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the
28
<PAGE>
Rights Agent designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) subject to Section 6(a) (Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates -- Procedure) and Section 7(f) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Surrender of Rights Certificates; Identity of
Beneficial Owner), the Company and the Rights Agent may deem and treat the
person in whose name a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights), shall be
required to take any action or 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
as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. 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 number of one
ten-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a 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 (except as
provided in Section 25 (Notice of Certain Events)), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) COMPENSATION. The Company shall pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability or expense, incurred without gross negligence, bad faith or
willful
29
<PAGE>
misconduct on the part of the Rights Agent, for anything done or omitted to be
done by the Rights Agent in connection with the acceptance and administration of
this Agreement, including the costs and expenses of defending against or
investigating any claim of liability in the premises.
(b) RELIANCE. The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted to be taken
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, or otherwise upon the advice of counsel as set forth in
Section 20 (Duties of Rights Agent).
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) SUCCESSOR. Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 (Change of Rights Agent). In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in case
at 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.
(b) PRIOR COUNTERSIGNATURES. In case at any time the name of the
Rights Agent shall be changed and at such time any of the Rights Certificates
shall have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) LEGAL COUNSEL. The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and
30
<PAGE>
complete authorization and protection to the Rights Agent as to any action taken
or omitted to be taken by it in good faith and in accordance with such opinion.
(b) CERTIFICATION BY THE COMPANY. 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 and the determination of Current Market Price) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer 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) LIABILITY FOR NEGLIGENCE, ETC. The Rights Agent shall be liable
hereunder only for its own gross negligence, bad faith or willful misconduct.
(d) STATEMENTS OF FACT OR RECITALS. The Rights Agent shall not be
liable for or by reason of any of the statements of fact or recitals contained
in this Agreement or in the 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) AGREEMENT; ADJUSTMENTS. 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); nor shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights) or Section 13 (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power) 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) FURTHER ASSURANCES. The Company 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) INSTRUCTIONS. The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its duties hereunder
from the President, any Vice President, the Secretary, any Assistant Secretary,
the Treasurer or any Assistant Treasurer of the
31
<PAGE>
Company and to apply to such persons 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 the instructions of any such
person.
(h) DEALING IN RIGHTS. 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) AGENTS; REASONABLE CARE. The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct; provided, however,
reasonable care was exercised in the selection and continued employment thereof.
(j) EXPENSES; REPAYMENT ASSURANCES. 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) EXERCISE OF RIGHTS; CONSULTATION WITH COMPANY. If, with respect
to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election
to purchase, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
(l) EFFECT OF SUPPLEMENTS AND AMENDMENTS. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment to this
Agreement which changes the rights and duties of the Rights Agent hereunder
shall be effective without the consent of the Rights Agent.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) calendar days' notice in writing mailed to the Company, and to
each transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) calendar days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty (30) calendar days after
giving notice of such removal or
32
<PAGE>
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) a corporation organized and doing business under the laws of the
United States or of any State of the United States, in good standing, which is
authorized under such laws to exercise stock transfer or corporate trust powers,
is subject to supervision or examination by federal or state authority and has
at the time of its appointment as Rights Agent a combined capital and surplus of
at least $50,000,000 or (b) an Affiliate of a corporation described in
clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common 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 (Change of Rights Agent), 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 the Board to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereafter issued by the Company, in either
case outstanding as of the Distribution Date, and (b) may, in any other case, if
deemed necessary or appropriate by the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material, adverse tax consequences
to the Company or the Person to whom such Rights Certificate would be issued,
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. REDEMPTION AND TERMINATION.
(a) REDEMPTION. The Company may, at its option, at any time prior to
the earlier of (i) the Close of Business on the tenth Business Day following the
Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred
prior to the Record Date, the Close of Business on the tenth Business Day
following the Record Date), or (ii) the Final Expiration
33
<PAGE>
Date, redeem (the date of such redemption being referred to herein as the
"Redemption Date") all but not less than all of the then outstanding Rights at a
redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); provided, however, that any redemption
after the Stock Acquisition Date must be authorized by a majority of the
Disinterested Directors; provided further, however, that if, following the
occurrence of a Stock Acquisition Date and following the expiration of the right
of redemption hereunder but prior to any Triggering Event, (i) a Person who is
an Acquiring Person shall have transferred or otherwise disposed of a number of
shares of Common Stock in one transaction or series of transactions, not
directly or indirectly involving the Company or any of its Subsidiaries, which
did not result in the occurrence of a Triggering Event such that such Person is
thereafter a Beneficial Owner of 15% or less of the outstanding shares of Common
Stock, and (ii) there are not other Persons, immediately following the
occurrence of the event described in clause (i), who are Acquiring Persons, then
the right of redemption shall be reinstated and thereafter be subject to the
provisions of this Section 23. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after the first
occurrence of a Flip-in Event until such time as the Company's right of
redemption hereunder has expired. The redemption of the Rights by the Company
may be made effective at such time, on such basis and with such conditions as
the Board in its sole discretion or the Disinterested Directors in their sole
discretion, as applicable, may establish. The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the Current
Market Price of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board or the Disinterested Directors, as
applicable.
(b) EFFECT OF REDEMPTION; PROCEDURE. Immediately upon the action of
the Company ordering the redemption of the Rights and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the Redemption Date,
the Company shall (i) give notice of such redemption to the Rights Agent,
(ii) give public notice of such redemption; provided, however, that the failure
to give, or any defect in, such notice shall not affect the validity of such
redemption, and (iii) mail notice of such redemption to the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the Transfer Agent for the Common 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. Amounts payable shall
be rounded down to the nearest $0.01.
Section 24. EXCHANGE.
(a) RIGHT TO EXCHANGE. The Company may, at its option, at any time
and from time to time after the first occurrence of a Flip-in Event, exchange
all or part of the then outstanding and exercisable Rights (other than Rights
which have become void as provided in Section 7(e) (Exercise of Rights; Purchase
Price; Expiration Date of Rights -- Termination of Acquiring Person's Rights))
for the Exchange Number of shares of Common Stock, shares or units of Preferred
Stock which the Board has determined to be a Common Stock Equivalent, units of
other property or any combination thereof as determined by the Board.
Notwithstanding the
34
<PAGE>
foregoing, the Company shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary or any entity
holding shares of Common Stock for or pursuant to any such plan), together with
all Affiliates and Associates of such Person, becomes the Beneficial Owner of
50% or more of the shares of Common Stock then outstanding. The exchange of the
Rights by the Company may be made effective at such time, on such basis and with
such conditions as the Board in its sole discretion may establish.
(b) EFFECT OF EXCHANGE; PROCEDURE. Immediately upon the action of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24, evidence of which shall have been filed with the Rights Agent
and without any further action and without any notice, the right to exercise
such Rights will terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock, Common Stock
Equivalents or units of other property equal to the number of such Rights held
by such holder multiplied by the Exchange Number. Promptly after the action of
the Company ordering the exchange of the Rights, the Company shall (i) file
evidence of such action with the Rights Agent, (ii) give public notice of such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange, and (iii) mail notice of
such exchange to the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by
which the exchange 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 as provided in Section 7(e) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights)) held by
each holder of Rights.
(c) COMMON STOCK EQUIVALENTS. In any exchange pursuant to this
Section 24, the Company, at its option, may substitute Common Stock Equivalents
for Common Stock exchangeable for Rights, at the initial rate of one share of
Common Stock Equivalent for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Common Stock
pursuant to the Company's Articles of Incorporation, so that the share of Common
Stock Equivalent delivered in lieu of each share of Common Stock shall have the
same voting rights as one share of Common Stock.
(d) INSUFFICIENT COMMON STOCK. In the event that the number of
shares of Common Stock which are authorized by the Company's Articles of
Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights is not sufficient to permit any exchange of
Rights in accordance with this Section 24, the Company may, at its option, take
all such action as may be necessary to authorize additional shares of Common
Stock for issuance upon such exchange.
(e) FRACTIONAL SHARES. Upon the action of the Company ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 24, the Company
shall not be required to issue fractions of shares or to distribute certificates
which evidence fractional shares. In lieu of such fractional shares, the
Company may pay to the registered holders of the Rights Certificates with regard
to which such fractional shares would otherwise be issuable an amount in cash
equal
35
<PAGE>
to the same fraction of the current market value of one share of Common Stock.
For purposes of this Section 24, the current market value of one share of Common
Stock shall be the closing price of one share of Common Stock (as determined
pursuant to Section 11(d)(i) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Current Market Price)) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24, and the
value of any Common Stock Equivalent shall be deemed to have the same current
market value as the Common Stock on such date.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) PREFERRED STOCK TRANSACTIONS, ETC. In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company);
(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; (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock); (iv) to effect
any consolidation with, merger into or with, or statutory share exchange or
similar transaction with, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Restriction
against Diminishing Benefits of the Rights)), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one transaction or a series of related transactions, of more
than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)); (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the shares
of Common Stock payable in Common Stock or to effect a subdivision, combination
or consolidation of the shares of Common Stock (by reclassification or otherwise
than by payment of dividends in Common Stock), then, in each such case, the
Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 (Notices), a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, statutory share exchange or similar
transaction, sale, transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of the shares of
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least
twenty (20) calendar days prior to the record date for determining holders of
the shares of Preferred Stock for purposes of such action, and in the case of
any such other action, at least twenty (20) calendar 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) OTHER TRANSACTIONS. In case any of the events set forth in
Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments) shall occur, then, in any such case,
(i) the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accordance with
36
<PAGE>
Section 26 (Notices), a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii), and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
Section 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by telecopier
(with receipt confirmed) or by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as follows:
CAMERON ASHLEY BUILDING PRODUCTS, INC.
11651 Plano Road, Suite 100
Dallas, Texas 75243
Attention: President
Telecopier: (214) 860-5148
Subject to the provisions of Section 21 (Change of Rights Agent), any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by telecopier (with receipt confirmed) or by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
SUNTRUST BANK, ATLANTA
58 Edgewood Avenue, Room 225
Atlanta, Georgia 30303
Attention: Sue Hampton, Trust Officer
Telecopier: (404) 332-3875
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock; provided, however, that any supplement or
amendment of this Agreement after the Stock Acquisition Date must be approved by
a majority of the Disinterested Directors. From and after the Distribution Date
and subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and
37
<PAGE>
which shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person); provided, however, this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at such time as
the Rights are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights; provided further, that any
supplement or amendment of this Agreement after the Stock Acquisition Date must
be approved by a majority of the Disinterested Directors. Upon the delivery of
a certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price, or the number of one ten-thousandths
of a share of Preferred Stock for which a right is exercisable; provided,
however, that at any time prior to (i) the existence of an Acquiring Person or
(ii) the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any Subsidiary of the Company, or any Person or entity organized, appointed
or established by the Company for or pursuant to the terms of any such plan or
any Exempt Person (but, in the case of an Exempt Person, only to the extent of
any shares of Common Stock (A) Beneficially Owned by such Exempt Person on the
date of this Agreement or (B) acquired by such Exempt Person after the date of
this Agreement from any other Exempt Person if such shares have been
Beneficially Owned only by Exempt Persons on and after the date of this
Agreement)) is first published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding, the Board may amend this
Agreement to increase the Purchase Price or extend the Final Expiration Date.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
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. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
DISINTERESTED DIRECTORS, ETC. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations under the Exchange Act. The Board (with,
where specifically provided for herein, the concurrence or approval of the
Disinterested Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein, the
concurrence or approval of the Disinterested Directors) or to the Company, or as
may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to
38
<PAGE>
redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board (with, where specifically provided for herein, the concurrence
or approval of the Disinterested Directors) in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board or the Disinterested
Directors to any liability to the holders of the Rights.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 (Redemption and Termination) shall
be reinstated and shall not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board.
Section 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Georgia and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
39
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: CAMERON ASHLEY BUILDING
PRODUCTS, INC.
By: /s/ John S. Davis By: /s/ F. Dixon McElwee
--------------------------- -----------------------------------
John S. Davis F. Dixon McElwee
Vice President-General Counsel Vice President-Chief Financial
and Secretary Officer
SUNTRUST BANK, ATLANTA
By: /s/ Bryan Echols By: /s/ Sue Hampton
--------------------------- -----------------------------------
Bryan Echols Sue Hampton
Vice President Trust Officer
40
<PAGE>
Exhibit 1
to Rights Agreement
CERTIFICATE OF
DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A PREFERRED STOCK
OF
CAMERON ASHLEY BUILDING PRODUCTS, INC.
Pursuant to Section 14-2-602 of the Georgia Business Corporation Code
We, F. Dixon McElwee, Vice President-Chief Financial Officer and John
S. Davis, Vice President-General Counsel and Secretary of Cameron Ashley
Building Products, Inc. (the "Corporation"), a corporation organized and
existing under the Georgia Business Corporation Code (the "Code"), in accordance
with the provisions of Section 14-2-120 of the Code, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
(the "Board") by the Amended And Restated Articles of Incorporation of the
Corporation, as amended, the said Board on August 19, 1997, adopted the
following resolutions creating a series of ten thousand shares of Preferred
Stock, no par value, designated as Series A Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the Board in
accordance with the provisions of its Amended And Restated Articles of
Incorporation, as amended, the Board does hereby create, authorize and provide
for the issuance upon the exercise of the Corporation's Preferred Stock Purchase
Rights, of a series of Preferred Stock of the Corporation, and does hereby fix
and state that the designations, amounts, powers, preferences and relative and
other special rights and the qualifications, limitations or restrictions
thereof are as follows:
SERIES A PREFERRED STOCK
Section 1. DESIGNATION AND AMOUNT. The shares of such series
shall be designated as Series A Preferred Stock and the number of shares
constituting such series shall be 10,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for that
purpose, quarterly dividends payable in cash on the 1st day of November,
February, May and August in each year commencing November 1, 1997 (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly
41
<PAGE>
Dividend Payment Date after the first issuance of a share or fraction of a share
of Series A Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $0.01 or (b) subject to the provision for
adjustment hereinafter set forth, ten thousand (10,000) times the aggregate per
share amount of all cash dividends, and ten thousand (10,000) 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 the common stock of the
Corporation, no par value ("the Common Stock"), or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock, since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
In the event the Corporation shall at any time after August 19, 1997 (the
"Rights Declaration Date") (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $0.01 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than thirty
(30) days prior to the date fixed for the payment thereof.
42
<PAGE>
Section 3. VOTING RIGHTS. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall entitle the holder
thereof to ten thousand (10,000) votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event shall
be adjusted by multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of shareholders of the Corporation. Except as otherwise provided herein or by
law, the holders of the shares of Series A Preferred Stock shall not be entitled
to vote as a separate class on any matters submitted to a vote of the
shareholders.
(C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six (6) quarterly dividends
thereon, the holders of the Series A Preferred Stock, voting as a separate
series from all other series of Preferred Stock and classes of capital stock,
shall be entitled to elect two members of the Board of Directors in addition to
any directors elected by any other series, class or classes of
securities, and the authorized number of directors will automatically be
increased by two. Promptly thereafter, the Board of Directors of this
Corporation shall, as soon as may be practicable, call a special meeting of
holders of Series A Preferred Stock for the purpose of electing such members of
the Board of Directors. Said special meeting shall in any event be held within
45 days of the occurrence of such arrearage.
(ii) During any period when the holders of Series
A Preferred Stock, voting as a separate series, shall be entitled and shall have
exercised their right to elect two directors, then and during such time as such
right continues (a) the then authorized number of directors shall be increased
by two, and the holders of Series A Preferred Stock, voting as a separate
series, shall be entitled to elect the additional directors so provided for, and
(b) each such additional director shall not be a member of any existing class of
the Board of Directors, but shall serve until the next annual meeting of
shareholders for the election of directors, or until his successor shall be
elected and shall qualify, or until his right to hold such office terminates
pursuant to the provisions of this Section 3(C).
(iii) A director elected pursuant to the terms
hereof may be removed with or without cause by the holders of Series A Preferred
Stock entitled to vote in an election of such Director.
43
<PAGE>
(iv) If during any interval between annual meetings of
shareholders for the election of directors and while the holders of Series A
Preferred Stock shall be entitled to elect two directors, there is no such
director in office by reason of resignation, death or removal, then, promptly
thereafter, the Board of Directors shall call a special meeting of the holders
of Series A Preferred Stock for the purpose of filling such vacancy and such
vacancy shall be filled at such special meeting. Such special meeting shall in
any event be held within 90 days of the occurrence of such vacancy, unless an
annual meeting of shareholders is scheduled during such 90-day period.
(v) At such time as the arrearage is fully cured, and
all dividends accumulated and unpaid on any shares of Series A Preferred Stock
outstanding are paid, and, in addition thereto, at least one regular dividend
has been paid subsequent to curing such arrearage, the term of office of any
directors elected pursuant to this Section 3(C), or his successor, shall
automatically terminate, and the authorized number of directors shall
automatically decrease by two, the rights of the holders of the shares of the
Series A Preferred Stock to vote as provided in this Section 3(C) shall cease,
subject to renewal from time to time upon the same terms and conditions, and the
holders of shares of the Series A Preferred Stock shall have only the limited
voting rights elsewhere herein set forth.
(D) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to, the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
junior 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) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of
44
<PAGE>
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
$144.00 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Notwithstanding any provision of the
Amended And Restated Articles of Incorporation, as amended, to the contrary,
following the payment of the full amount of the Series A Liquidation Preference,
no additional distributions shall be made to the holders of shares of Series A
Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference by (ii)
ten thousand (10,000) (as appropriately adjusted as set forth in paragraph (C)
of this Section to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii)
immediately above being referred to as the "Adjustment Number"). Following the
payment of the full amount of the Series A Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series A Preferred Stock and
Common Stock, respectively, holders of Series A Preferred Stock and holders of
shares of Common Stock shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment Number to
one (1) with respect to such Preferred Stock and Common Stock, on a per share
basis, respectively.
45
<PAGE>
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event, however,
that there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock,
securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to ten thousand (10,000) 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 after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (ii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. REDEMPTION. The outstanding shares of Series A Preferred Stock
may be redeemed at the option of the Board of Directors as a whole, but not in
part, at any time, or from time to time, at a cash price per share equal to one
hundred five percent (105%) of (i) the product of the Adjustment Number times
the Average Market Value (as such term is hereinafter defined) of the Common
Stock, plus (ii) all dividends which on the redemption date have accrued on the
shares to be redeemed and have not been paid, or declared and a sum sufficient
for the payment thereof set apart, without interest. The "Average Market Value"
is the average of the closing sale prices of the Common Stock during the thirty
(30) day period immediately preceding the date before the redemption date on the
Composite Tape for New York Stock Exchange Listed Stocks, or, if such stock is
not quoted on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as amended, on
which such stock is listed, or, if such stock is not listed on any such
exchange, the average of the closing sale prices with
46
<PAGE>
respect to a share of Common Stock during such thirty (30) day period, as quoted
on the National Association of Securities Dealers, Inc. Automated Quotations
System or any system then in use, or if no such quotations are available, the
fair market value of the Common Stock as determined by the Board of Directors in
good faith.
Section 9. RANKING. The Series A Preferred Stock shall rank junior to
all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. AMENDMENT. Except as otherwise provided in the Amended And
Restated Articles of Incorporation, as amended, or by law, the Amended And
Restated Articles of Incorporation of the Corporation, as amended, shall not be
further amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of a majority or more
of the outstanding shares of Series A Preferred Stock, voting separately as a
class.
Section 11. FRACTIONAL SHARES. At the Corporation's sole discretion,
Series A Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
47
<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true as of August 19, 1997.
/s/ F. Dixon McElwee
----------------------------------------
F. Dixon McElwee
Vice President-Chief Financial Officer
Attest:
/s/ John S. Davis
- ---------------------------------------
John S. Davis
Vice President-General Counsel
and Secretary
48
<PAGE>
Exhibit 2
to Rights Agreement
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R Rights
---- ------
NOT EXERCISABLE AFTER THE EARLIER OF SEPTEMBER 10, 2007 OR SUCH DATE AS THE
RIGHTS REPRESENTED HEREBY ARE REDEEMED BY CAMERON ASHLEY BUILDING PRODUCTS, INC.
(THE "CORPORATION"). THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, AT $0.001 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT DATED AS OF AUGUST 19, 1997, BY AND
BETWEEN THE CORPORATION AND SUNTRUST BANK, ATLANTA, AS RIGHTS AGENT (THE "RIGHTS
AGREEMENT"). UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) (EXERCISE OF
RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS -- TERMINATION OF ACQUIRING
PERSON'S RIGHTS) OF SUCH AGREEMENT.](1)
RIGHTS CERTIFICATE
CAMERON ASHLEY BUILDING PRODUCTS, INC.
This certifies that ___________________________________, or its, his
or her 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 August 19, 1997
(the "Rights Agreement"), between Cameron Ashley Building Products, Inc., a
Georgia corporation (the "Corporation"), and SunTrust Bank, Atlanta, a Georgia
banking corporation (the "Rights Agent"), to purchase from the Corporation at
any time prior to 5:00 P.M. (Dallas, Texas time) on September 10, 2007 at the
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one ten-thousandth (1/10,000) of a fully paid,
nonassessable share of Series A Preferred Stock (the "Preferred Stock") of the
Corporation, at a purchase price of $72.00 per one ten-thousandth (1/10,000) of
a share (the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced
- --------------------------
(1) The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
49
<PAGE>
by this Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of _____________, ______, based on the
Preferred Stock as constituted at such date. The Corporation reserves the right
to require, prior to the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement), that upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock would be
issued.
Upon the occurrence of a Flip-in Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate or
any such Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of an Acquiring Person or its Associate or Affiliate who becomes a
transferee after such Acquiring Person or its Associate or Affiliate becomes
such, or (iii) under certain circumstances specified in the Rights Agreement, a
transferee of an Acquiring Person or its Associate or Affiliate who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such,
such Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Flip-in Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the Rights Agreement).
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 Corporation and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one ten-thousandths of a share of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights for which this Rights Certificate is not exercised.
50
<PAGE>
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Corporation at its
option at a redemption price of $0.001 per Right at any time prior to the
earlier of (a) the Close of Business (as such term is defined in the Rights
Agreement) on the tenth (10th) Business Day (as such term is defined in the
Rights Agreement) following the Stock Acquisition Date (as such term is defined
in the Rights Agreement) (as such time period may be extended pursuant to the
Rights Agreement) or (b) the Final Expiration Date (as such term is defined in
the Rights Agreement) and (ii) may be exchanged in whole or in part for
Preferred Stock, shares of the Corporation's Common Stock, no par value, other
property or any combination thereof.
In addition, the Rights may be exchanged, in whole or in part, for
shares of the Common Stock, or shares of common stock equivalents of the
Corporation having essentially the same value or economic rights as such shares.
Immediately upon the action of the Board of Directors of the Corporation
authorizing any such exchange, and without any further action or any notice, the
Rights (other than Rights which are not subject to such exchange) will terminate
and the Rights will only enable holders to receive the shares issuable upon such
exchange.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one ten-thousandth (1/10,000) of a share of Preferred
Stock, which may, at the election of the Corporation, be evidenced by depositary
receipts), but a cash payment will be made in lieu thereof, as provided in the
Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Corporation which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Corporation or any right to vote for the
election of directors or upon any matter submitted to shareholders of the
Corporation 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 of the Corporation (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
51
<PAGE>
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal.
Dated as of
-----------------
ATTEST: CAMERON ASHLEY BUILDING
PRODUCTS, INC.
- ------------------------------
Secretary By:
----------------------------------
Title:
Countersigned:
RIGHTS AGENT
By:
-------------------------
Authorized Signature
52
<PAGE>
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, ____________________________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(PLEASE PRINT NAME AND ADDRESS OF TRANSFEREE)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Corporation, with full power of substitution.
Dated:
--------------------------- -----------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:
--------------------------- -----------------------------------
Signature
Signature Guaranteed:
53
<PAGE>
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: Cameron Ashley Building Products, Inc.
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Corporation or of any other person which may be issuable upon
the exercise of the Rights) and requests that certificates for such shares be
issued in the name of and delivered to:
Please insert social security or
other identifying number
- --------------------------------------------------------------------------------
(PLEASE PRINT NAME AND ADDRESS)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or
other identifying number
- --------------------------------------------------------------------------------
(PLEASE PRINT NAME AND ADDRESS)
- --------------------------------------------------------------------------------
Dated:
--------------------------- -------------------------------
Signature
Signature Guaranteed:
54
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being acquired or exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:
--------------------------- -------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
55
<PAGE>
Exhibit 3
to Rights Agreement
[CAMERON ASHLEY BUILDING PRODUCTS, INC. LETTERHEAD]
September , 1997
--
Dear Cameron Ashley Shareholders,
As you may be aware, on August 19, 1997, your Board of Directors approved
and adopted a Shareholder Rights Plan (the "Plan"). The Plan is designed to
prevent a potential acquiror from gaining control of Cameron Ashley Building
Products, Inc. (the "Company") without fairly compensating all of its
shareholders. It provides for a dividend distribution of one preferred stock
purchase right (a "Right") for each outstanding share of common stock of the
Company held on September 10, 1997.
The Rights will initially trade with shares of the Company's common stock
and will have no impact on the way in which the Company's shares are traded. At
the outset of the Plan, there are no separate certificates or market for the
Rights. The Rights will not become exercisable and trade separately from the
common stock until the earlier of (i) ten business days after a public
announcement that a person has acquired 15% or more of the common stock of the
Company or (ii) ten business days (or any later date determined by the Company's
Board of Directors) after a person makes a tender or exchange offer for 15% or
more of the Company's common stock.
Pertinent details of the Plan are described in the attached Summary of
Rights To Purchase Preferred Stock, which we urge you to read carefully.
The adoption of the Plan is intended to help assure that any potential
acquiror seeking to obtain control of the Company will pay full and fair value
to all shareholders. The Rights are not intended to prevent any takeover or
proxy contest for control of the Company, but rather to increase the ability of
your Board effectively to represent the best interests of shareholders in the
event of an unsolicited attempt to acquire the Company. We are not aware of any
effort to acquire the Company, but we remain concerned about the possibility of
a takeover attempt that might include coercive and unfair tactics that do not
result in a fair price being paid to all shareholders. As a prudent response to
such a possibility, your Board has authorized the issuance of the Rights. Since
1985, over 2,500 companies have adopted similar plans, indicating widespread
agreement that such plans can help Directors deflect coercive and inadequate
offers.
56
<PAGE>
Issuance of the Rights will not have a dilutive effect, will not affect
reported earnings per share and should not cause the Company or you to recognize
gain for federal income tax purposes. In addition, the Plan does not weaken the
financial strength of the Company or interfere with its business plans.
A copy of the Plan has been filed with the Securities and Exchange
Commission and is available free of charge from the Company.
Your Board of Directors and management are enthusiastic about the potential
for the Company and are committed to serving the best interests of the Company's
shareholders. The Board believes that the Plan represents a sound and
reasonable means of addressing the complex problems created by the possibility
of unfair takeover attempts. Accordingly, we take great satisfaction in
providing these new Rights to you to preserve the long-term value of your
investment in the Company.
Respectfully,
---------------------------------------------
John S. Davis
Vice President-General Counsel
and Secretary
Attachment
57
<PAGE>
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On August 19, 1997, the Board of Directors of Cameron Ashley
Building Products, Inc. (the "Company") declared a dividend distribution of
one Right for each outstanding share of the Company's common stock, no par
value (the "Common Stock"), to shareholders of record at the close of
business on September 10, 1997. This dividend distribution will be made on
or about September 24, 1997. Each Right entitles the registered holder to
purchase from the Company one ten-thousandth (1/10,000) of a share of Series
A Preferred Stock, no par value (the "Preferred Stock"), at a Purchase Price
of $72.00 per one ten-thousandth (1/10,000) of a share, subject to
adjustment. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and SunTrust
Bank, Atlanta, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Stock upon the earlier of (i) ten (10) business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of fifteen percent (15%) or more of the outstanding shares of Common
Stock (the "Stock Acquisition Date"), or (ii) ten (10) business days (or such
later date as the Board of Directors determines) following the commencement of a
tender or exchange offer that would result in a person or group beneficially
owning fifteen percent (15%) or more of such outstanding shares of Common Stock.
The date the Rights separate is referred to as the "Distribution Date."
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after September
10, 1997 will contain a notation incorporating the Rights Agreement by reference
and (iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of
a Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on September 10, 2007, unless earlier redeemed
by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates will represent the Rights. Except in connection with shares of
Common Stock issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon the exercise, conversion or exchange
of securities hereafter issued by the Company, or as otherwise determined by the
Board of Directors, only shares of Common Stock issued prior to the Distribution
Date will be issued with Rights.
In the event that (i) the Company is the surviving corporation in a
merger or other business combination with an Acquiring Person (or any associate
or affiliate thereof) and its
58
<PAGE>
Common Stock remains outstanding and unchanged, (ii) any person acquires
beneficial ownership of more than fifteen percent (15%) of the outstanding
shares of Common Stock (except pursuant to (A) certain consolidations or mergers
involving the Company or sales or transfers of the combined assets, cash flow or
earning power of the Company and its subsidiaries or (B) an offer for all
outstanding shares of Common Stock at a price and upon terms and conditions
which a majority of the Disinterested Directors (as defined below) determines to
be in the best interests of the Company and its shareholders or (iii) there
occurs a reclassification of securities, a recapitalization of the Company or
any of certain business combinations or other transactions (other than certain
consolidations and mergers involving the Company and sales or transfers of the
combined assets, cash flow or earning power of the Company and its subsidiaries)
involving the Company or any of its subsidiaries which has the effect of
increasing by more than one percent (1%) the proportionate share of any class of
the outstanding equity securities of the Company or any of its subsidiaries
beneficially owned by an Acquiring Person (or any associate or affiliate
thereof), each holder of a Right (other than the Acquiring Person and certain
related parties) will thereafter have the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the Purchase Price of the
Right. However, Rights are not exercisable following the occurrence of any of
the events described above until such time as the Rights are no longer
redeemable by the Company as described below. Notwithstanding any of the
foregoing, following the occurrence of any of the events described in this
paragraph, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.
For example, at a Purchase Price of $72.00 per Right, each Right not
owned by an Acquiring Person (or by certain related parties or transferees
thereof) following an event set forth in the preceding paragraph would entitle
its holder to purchase $144.00 worth of Common Stock (or other consideration, as
noted above) for $72.00.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company enters into a merger or other business combination transaction
in which the Company is not the surviving corporation, (ii) the Company is the
surviving corporation in a consolidation, merger or similar transaction pursuant
to which all or part of the outstanding shares of Common Stock are changed into
or exchanged for stock or other securities of any other person or cash or any
other property or (iii) more than fifty percent (50%) of the combined assets,
cash flow or earning power of the Company and its subsidiaries is sold or
transferred (in each case other than certain consolidations with, mergers with
and into, or sales of assets, cash flow or earning power by or to subsidiaries
of the Company as specified in the Rights Agreement), each holder of a Right
(except Rights which previously have been voided as set forth above) will
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the Purchase Price of the
Right. The events described in this paragraph and in the second preceding
paragraph are referred to as the "Triggering Events."
The Purchase Price payable, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights, options or warrants
to subscribe for Preferred Stock or securities convertible into Preferred Stock
at less
59
<PAGE>
than the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness,
cash (excluding regular quarterly cash dividends), assets (other than dividends
payable in Preferred Stock) or subscription rights or warrants (other than those
referred to in (ii) immediately above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least one percent (1%) of the
Purchase Price. No fractional shares of Preferred Stock are required to be
issued (other than fractions which are integral multiples of one ten-thousandth
(1/10,000) of a share of Preferred Stock) and, in lieu thereof, the Company may
make an adjustment in cash based on the market price of the Preferred Stock on
the trading date immediately prior to the date of exercise.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of fifty percent (50%) or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may,
without payment of the Purchase Price by the holder, exchange the Rights (other
than Rights owned by such person or group, which will become void), in whole or
in part, for shares of Common Stock at an exchange ratio of one-half (1/2) the
number of shares of Common Stock (or in certain circumstances Preferred Stock)
for which a Right is exercisable immediately prior to the time of the Company's
decision to exchange the Rights (subject to adjustment).
At any time until ten (10) business days following the Stock
Acquisition Date, the Company may redeem the Rights in whole, but not in part,
at a price of $0.001 per Right (payable in cash, shares of Common Stock or other
consideration deemed appropriate by the Board of Directors). Immediately upon
the action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the $0.001 redemption price.
The term "Disinterested Director" means any member of the Board of
Directors of the Company who was a member of the Board prior to the date of the
Rights Agreement, and any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of the Disinterested
Directors, but does not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of an acquiring company as set forth above or in the event that the
Rights are redeemed.
Other than those provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date; provided,
that any amendments after the Stock Acquisition Date must be approved by a
majority of the Disinterested Directors. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order
60
<PAGE>
to cure any ambiguity, inconsistency or defect, to make changes which do not
adversely affect the interest of holders of Rights (excluding the interest of
any Acquiring Person) or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption can be made at such time as the Rights are not redeemable;
and, provided, that any amendments after the Stock Acquisition Date must be
approved by a majority of the Disinterested Directors.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
filed on August 29, 1997. A copy of the Rights Agreement is available free
of charge from the Rights Agent. 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 incorporated herein by reference.
61
<PAGE>
Exhibit 99
FOR: CAMERON ASHLEY BUILDING PRODUCTS,
INC.
APPROVED BY: F. Dixon McElwee
Chief Financial Officer
(214) 860-5100
FOR IMMEDIATE RELEASE
CONTACT: Morgen-Walke Associates
June Filingeri/Jonathan Schaffer
Media contact: Leslie Feldman
(212) 850-5600
Ken Pieper (972) 663-9390
CAMERON ASHLEY BUILDING PRODUCTS ADOPTS
SHAREHOLDER PROTECTION PLAN
DALLAS, Texas, August 25, 1997--Cameron Ashley Building Products, Inc.
(Nasdaq: CABP) today announced that it has adopted a shareholder protection plan
designed to assure that all Cameron Ashley shareholders receive fair and equal
treatment in the event of any takeover attempt. The Company's Board of
Directors has declared a dividend distribution of one preferred stock purchase
right for each outstanding share of Cameron Ashley's common stock. Each right
will entitle shareholders to buy one ten-thousandth of a share of the Company's
Series A Preferred Stock for each share of the Company's common stock held at a
price of $72. The rights will be exercisable only if a person or group of
affiliated or associated persons acquires, or has announced the intent to
acquire, 15% or more of the Company's common stock.
The rights will provide for protection against self-dealing transactions by
a controlling shareholder. In case of acquisition through a merger or other
business combination, the rights will entitle holders to purchase a number of
the acquiring company's common shares having the market value at that time of
twice the rights exercise price.
In the event of the acquisition or the announcement of the intention to
acquire 15% or more of the Company's common stock, rights holders may, upon
exercise, receive the Company's common shares having a market value of two times
the exercise price of the rights. Under similar circumstances, the Board of
Directors may exchange each right for shares of the Company's common stock at an
exchange ratio of one half the number of shares of common stock (or in certain
circumstances preferred stock) for which a right is exercisable immediately
prior to the time of the Company's decision to exchange the rights. The Company
is entitled to redeem the rights in whole, but not in part, at a price of $0.001
per right at any time prior to the acquisition of 15% or more of the Company's
common stock.
62
<PAGE>
"The rights issued under this plan are intended to enable all Cameron
Ashley shareholders to realize the long-term value of their investment in the
Company," said Robert R. Ross, Chairman and Chief Executive Officer. "Although
the rights do not prevent a takeover, they should encourage anyone seeking to
acquire Cameron Ashley to negotiate with the Board prior to attempting such an
action. The rights also guard against partial tender offers and other abusive
tactics. This plan has not been adopted in response to any known attempt to
gain control of Cameron Ashley."
The dividend distribution will be made to shareholders of record on
September 10, 1997. The rights will be evidenced by and transferred with the
Company's common stock certificates until such time as the acquisition of, or
the announcement of the intention to acquire, 15% or more of the Company's
common stock. If either event were to occur, separate rights certificates would
be mailed to shareholders as soon as practicable.
Cameron Ashley Building Products, Inc. is a distributor of a broad line of
building products that are used principally in home improvement, remodeling and
repair work and in new residential construction. The Company distributes its
products to independent building material dealers, professional builders, large
contractors and mass merchandisers through a network of 142 branches located
throughout the United States and Canada. Product lines include roofing,
millwork, pool and patio enclosure materials, insulation, siding, steel
products, industrial metals and a variety of other building materials.
63
