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): December 15, 1999
CONSOLIDATED GRAPHICS, INC.
(Exact name of registrant as specified in its charter)
Texas
(State or other Commission 76-0190827
jurisdiction of File No. (IRS Employer
incorporation) 0-20468 Identification No.)
5858 Westheimer, Suite 200, Houston, Texas 77057
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 787-0977
Page 1 of 7 Pages
Exhibit Index on Page 7
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ITEM 5. OTHER EVENTS
ADOPTION OF SHAREHOLDER RIGHTS PLAN
On December 15, 1999, the Board of Directors of Consolidated Graphics,
Inc. (the "Company") declared a dividend on each outstanding share of common
stock, $.01 par value per share (the "Common Stock"), of the Company of one
right to purchase (individually a "Right" and collectively the "Rights") Series
A Junior Participating Preferred Stock, par value $1.00 per share (the
"Preferred Stock"). The dividend is payable as of December 28, 1999 (the "Record
Date"), to shareholders of record on that date. Each Right will, upon the
occurrence of events, described below, that make it exercisable, entitle the
registered holder to purchase from the Company 1/100th of one share of the
Preferred Stock at a price of $160.00 (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of December 15, 1999 (the "Rights Agreement"), between the
Company and American Stock Transfer and Trust Company, as the rights agent (the
"Rights Agent").
Initially, the Rights will be represented by all certificates representing
outstanding shares of Common Stock and no separate certificates for the Rights
will be distributed. Until the Distribution Date (as defined below) or earlier
redemption, exchange, expiration or termination of the Rights, (a) new
certificates representing shares of Common Stock issued after the Record Date
will contain a legend incorporating the Rights Agreement by reference and (b)
the surrender for transfer of any certificates representing shares of Common
Stock outstanding as of the Record Date will constitute the surrender for
transfer of the Rights associated with the shares of Common Stock represented by
such certificate.
The Rights will separate from the Common Stock on the Distribution Date,
which is defined in the Rights Agreement as the earlier of (i) the tenth
business day following the date of a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the Company's Common Stock (the date of
the announcement of such acquisition being the "Share Acquisition Date"), or
(ii) the tenth business day (or such later date as may be determined by the
Board of Directors before the Distribution Date occurs) following the
commencement or public announcement of a tender or exchange offer that would, if
consummated, result in a person becoming an Acquiring Person, whether any
purchases actually occur pursuant to such offer or not. The definition of
Acquiring Person under the Rights Agreement excludes (A) the Company, (B) any
subsidiary of the Company, (C) any employee benefit plan or employee stock plan
of the Company or of any subsidiary of the Company or any person organized,
appointed, established, or holding Common Stock for or pursuant to the terms of
any such plan or (D) any person whose ownership of 15% or more of the shares of
Common Stock of the Company then outstanding results solely from (i) any action
or transaction approved by the Board of Directors before such person acquires
such 15% beneficial ownership or (ii) a reduction in the number of issued and
outstanding shares of Common Stock pursuant to a transaction or transactions
approved by the Board of Directors. Any person excluded from becoming an
Acquiring Person by reason of clause (i) or (ii) above will nevertheless become
an Acquiring Person if it acquires any additional shares of Common Stock, unless
such acquisition of additional shares of Common Stock occurs by reason of a
transaction falling within the scope of such clause (i) or (ii). As soon as
practicable following the Distribution Date, the Rights will separate from the
Common Stock, and separate certificates evidencing the Rights will be mailed to
holders of record of the Common Stock
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as of the close of business on the Distribution Date. From and after the
Distribution Date, such separate certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 15, 2009, unless earlier redeemed,
exchanged or terminated by the Company, in each case as described below.
If a person becomes an Acquiring Person (a "Flip-In Event") in a manner
other than pursuant to a tender or exchange offer for all outstanding shares of
Common Stock at a price and on terms that a majority of the Continuing Directors
(as defined in the Rights Agreement) determines to be fair to and otherwise in
the best interests of the Company and its shareholders (a "Permitted Offer"),
each holder of a Right will thereafter have the right to receive, upon exercise
of such Right and payment of the Purchase Price, that number of shares of
Preferred Stock (or, in certain circumstances, Common Stock, cash, property or
other securities) of the Company having a Current Market Price (as defined in
the Rights Agreement) equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any Flip-In Event,
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person (or by certain
related parties) will be null and void in the circumstances set forth in the
Rights Agreement. Rights do not become exercisable following the occurrence of a
Flip-In Event until they are no longer redeemable by the Company, as set forth
below.
If, at any time on or after the Share Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction (other than
certain mergers that follow a Permitted Offer), or (ii) 50% or more of the
assets or earning power of the Company and its subsidiaries (taken as a whole)
is sold or transferred in one or a series of related transactions (each of the
events described in (i) and (ii) above being a "Flip-Over Event"), each holder
of a Right (except Rights that previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise, a number of shares of
Common Stock of the acquiring company having a Current Market Price equal to two
times the exercise price of the Right.
The Purchase Price payable and the number of shares of Preferred Stock or
other securities, including without limitation Common Stock, or property
issuable upon exercise of the Rights are subject to adjustment from time to time
to prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) upon the grant to
holders of the Preferred Stock of certain rights or warrants to subscribe for or
purchase at less than the Current Market Price shares of Preferred Stock or
securities convertible into Preferred Stock or (iii) upon the distribution to
holders of Preferred Stock of evidences of indebtedness or assets (excluding
regular periodic cash dividends) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights is also subject to certain adjustments
from time to time in the event of, among other things, a stock split of the
Common Stock or a stock dividend on the Common Stock payable in shares of Common
Stock or subdivisions, consolidations or combinations of the Common Stock
occurring, in any such case, before the Distribution Date.
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With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. Fractions of shares of Preferred Stock (other than integral multiples of
1/100th of a share) which would otherwise be issued upon exercise or redemption
of the Rights may, at the election of the Company, be evidenced by depositary
receipts. The Rights Agreement also provides that the Company may pay cash in
lieu of fractional shares.
Shares of Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each share of Preferred Stock will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of $1.00 per
share or, at the most, an aggregate dividend of 100 times the dividend declared
per share of Common Stock. In the event of liquidation, the holders of the
Preferred Stock will be entitled to a minimum preferential liquidation payment
of $100.00 per share (plus any accrued but unpaid dividends) but will be
entitled to an aggregate payment of 100 times the payment made per share of
Common Stock. Each share of Preferred Stock will have 100 votes, voting together
with the Common Stock. Finally, in the event of any merger, consolidation or
other transaction in which shares of Common Stock are converted or exchanged,
each share of Preferred Stock will be entitled to receive times the amount
received per share of Common Stock. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one 1/100th interest in a share of Preferred
Stock purchasable upon exercise of each Right should approximate the value of
one share of Common Stock.
At any time on or before the close of business on the tenth business day
following a Share Acquisition Date (or such later date as may be authorized by
the Board of Directors and a majority of the Continuing Directors), the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"), payable at the election of the Company in cash or
shares of Common Stock. The Rights may be redeemed after the time that any
person has become an Acquiring Person only if such redemption is approved by a
majority of the Continuing Directors. Immediately upon the action of the Board
of Directors of the Company authorizing redemption of the Rights and without any
further action or notice, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
After the occurrence of a Flip-In Event and before a person becomes the
beneficial owner of 50% or more of the Common Stock then outstanding, the
Company may, if authorized by the Board of Directors, such authorization having
been approved by a majority of the Continuing Directors, exchange the Rights
(other than Rights owned by an Acquiring Person or an affiliate or an associate
of an Acquiring Person, which will have become void), in whole or in part, at an
exchange ratio per Right of one share of Common Stock, and/or other equity
securities deemed to have the same value as one share of Common Stock subject to
adjustment.
During any such time as the Rights are redeemable, the Company may amend
the Rights in any manner, including without limitation an amendment to extend
the time period during which the Rights may be redeemed, except that the Company
may not, during such time, amend the Rights to decrease the Redemption Price or
move forward the expiration date of the Rights. During any such
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time as the Rights are not redeemable, the Company may amend the Rights
Agreement (a) to cure any ambiguity, defect, or inconsistency, (b) to make
changes that do not materially adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person), or (c) to shorten or
lengthen any time period under the Rights Agreement, except that the Company may
not amend the Rights Agreement to lengthen the time period governing redemption
during any such time as the rights are not redeemable. Amendments to the Rights
Agreement from and after the time that any person or other entity becomes an
Acquiring Person require that at least two Continuing Directors be then in
office and a majority of the Continuing Directors approve such amendment.
Until a Right is exercised, the holder thereof, as such, will not have any
rights as a shareholder of the Company, including without limitation rights to
vote or receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group who attempts to acquire the Company
without the approval of the Company's Board of Directors. As a result, the
overall effect of the Rights may be to render more difficult or discourage any
attempt to acquire the Company even if such acquisition may be favorable to the
interests of the Company's shareholders. Because the Company's Board of
Directors can redeem the Rights or approve a Permitted Offer, the Rights should
not interfere with any merger or other business combination approved by the
Company's Board of Directors.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit A the Certificate
of Designations of Series A Preferred Stock, as Exhibit B the form of Right
Certificate, and as Exhibit C the form of Summary of Rights to Purchase Shares,
is attached hereto as Exhibit 4.1 and is incorporated herein by reference. The
foregoing description of the Rights does not purport to be complete and is
qualified by reference to such Exhibits, which are incorporated herein by
reference.
Also on December 15, 1999, the Company's Board of Directors adopted
certain amendments to the Company's Bylaws to add and clarify provisions
regarding advanced notice requirements for shareholder nominations, the division
of the Board of Directors into three classes and the removal of directors only
for cause and by a vote of the holders of not less than sixty-six and two-thirds
percent of the shares entitled to vote at an election of directors. These
provisions could render more difficult or discourage an attempt to obtain
control of the Company through a proxy contest or a consent solicitation. This
description of the Company's amended Bylaws is not complete and is qualified in
its entirety by reference to the Company's December 15, 1999 Bylaw Amendments
attached as Exhibit 3.2 hereto which Exhibit is incorporated herein by
reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
3.2 Consolidated Graphics, Inc. December 15, 1999 Bylaw
Amendments.
4.1 Rights Agreement dated as of December 15, 1999 between
Consolidated Graphics, Inc. and American Stock Transfer and
Trust Company, as Rights Agent, which includes as Exhibit A
the Certificate of Designations of Series A Preferred Stock,
as Exhibit B the form of Right Certificate and as Exhibit C
the form of Summary of Rights to Purchase Shares.
99.1 Press Release, dated December 16, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duty caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 22, 1999
CONSOLIDATED GRAPHICS, INC.
By: /s/ G. CHRISTOPHER COLVILLE
G. Christopher Colville
Executive Vice President
Merger & Acquisitions
Chief Financial & Accounting Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ---------- ----------- ----
3.2 Consolidated Graphics, Inc. December 15,
1999 Bylaw Amendments.
4.1 Rights Agreement dated as of December 15,
1999 between Consolidated Graphics, Inc.
and American Stock Transfer and Trust
Company, as Rights Agent, which includes
as Exhibit A the Certificate of Designations
of Series A Preferred Stock, as Exhibit B
the form of Right Certificate and as Exhibit
C the form of Summary of Rights to Purchase
Shares.
99.1 Press Release, dated December 16, 1999.
7
Exhibit 3.2
AMENDMENTS TO THE BYLAWS
OF
CONSOLIDATED GRAPHICS, INC.
By resolution dated December 15, 1999, the Board of Directors of
Consolidated Graphics, Inc. (the "Corporation") adopted the following Bylaw
amendments:
1. The following provision is added to the end of Article I, Section 1 of
the Corporation's existing Bylaws:
Nominations for the election of directors, other than by the Board
of Directors or a duly authorized committee thereof or any authorized
officer of the Corporation to whom the Board of Directors shall have
delegated such authority, and information concerning such nominees, shall
be made in compliance with the time periods set forth for shareholder
proposals in and with all other applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
2. Article II, Section 2 of the Corporation's existing Bylaws is deleted
in its entirety and is replaced with the following provision:
SECTION 2. NUMBER, QUALIFICATIONS AND TERM. The Board of Directors shall
be seven (7) members unless otherwise determined from time to time by
resolution adopted by the Board of Directors, but shall never be less than
one (1). No decrease in the number of directors shall shorten the term of
any incumbent director. Directors need not be shareholders of the
Corporation or residents of Texas. Effective immediately, except as
otherwise provided in Article II, Section 10 of these Bylaws, the Board of
Directors shall be divided into three classes, each class to be as nearly
equal in number as possible and the existing directors shall be allocated
to such classes by resolution adopted by the Board of Directors. The terms
of office of directors of Class I are to expire at the first annual
meeting of shareholders after the first appointment of directors to such
class, that of Class II is to expire at the second annual meeting of
shareholders after the first appointment of directors to such class, and
that of Class III is to expire at the third annual meeting of shareholders
after the first appointment of directors to such class. Following each
applicable expiration date, each director then reelected shall serve for a
term ending on the date of the third annual meeting of shareholders
following the annual meeting at which such director was reelected. Each
person elected a director shall hold office until his successor is duly
elected and qualified or until his earlier resignation or removal.
3. Article II, Section 11 of the Corporation's existing Bylaws is deleted
in its entirety and is replaced by the following provision:
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SECTION 11. REMOVAL. Any director may be removed, but only with cause, by
a vote of the holders of not less than a sixty-six and two-thirds (66 2/3)
majority of shares then entitled to vote at an election of directors.
Except as may otherwise be provided by law, cause for removal shall be
construed to exist only if the director whose removal is proposed (i) has
been convicted of a felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal, (ii) has been declared
of unsound mind by order of a court of competent jurisdiction and such
determination is no longer subject to direct appeal, (iii) has committed a
gross dereliction of duty or (iv) has committed an action which
constitutes intentional misconduct or a knowing violation of the law if
such action in either event results both in an improper substantial
personal benefit to the director and a material injury to the Corporation.
If the entire Board of Directors or any one (1) or more of the directors
is removed for cause, new directors may be elected at the same meeting for
the unexpired term of the director or directors so removed. Failure to
elect directors to fill the unexpired term of the director or the
directors so removed for cause shall be deemed to create a vacancy or
vacancies in the Board of Directors.
4. Pursuant to the authority granted in the Bylaws as amended, the
following directors are appointed to the classes indicated:
EXPIRATION
CLASS OF TERM DIRECTOR
Class I 2000 Larry J. Alexander
Brady F. Carruth
Class II 2001 Clarence C. Comer
Gary L. Forbes
Class III 2002 James H. Limmer
Hugh N. West
Joe R. Davis
9
Exhibit 4.1
================================================================================
Consolidated Graphics, Inc.
and
American Stock Transfer and Trust Company
as Rights Agent
--------------
Rights Agreement
Dated as of December 15, 1999
================================================================================
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TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions..............................................1
Section 2. Appointment of Rights Agent......................................6
Section 3. Issuance of Right Certificates...................................6
Section 4. Form of Right Certificates.......................................7
Section 5. Countersignature and Registration................................8
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates...............................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights....9
Section 8. Cancellation and Destruction of Right Certificates..............11
Section 9. Reservation and Availability of Preferred Stock.................12
Section 10. Preferred Stock Record Date.....................................13
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares and Number of Rights.....................................13
Section 12. Certification of Adjusted Purchase Price or Number of Shares....21
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.........................................22
Section 14. Fractional Rights and Fractional Shares.........................26
Section 15. Rights of Action................................................27
Section 16. Agreement of Right Holders......................................27
Section 17. Right Certificate Holder Not Deemed a Shareholder...............27
Section 18. Concerning the Rights Agent.....................................28
Section 19. Merger or Consolidation of, or Change in
Name of, the Rights Agent.......................................28
Section 20. Duties of Rights Agent..........................................29
-i-
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Section 21. Change of Rights Agent..........................................31
Section 22. Issuance of New Right Certificates..............................32
Section 23. Redemption and Termination......................................32
Section 24. Exchange........................................................33
Section 25. Notice of Certain Events........................................34
Section 26. Notices.........................................................35
Section 27. Supplements and Amendments......................................36
Section 28. Successors......................................................36
Section 29. Determinations and Actions by the Board of Directors, etc.......37
Section 30. Benefits of this Rights Agreement...............................37
Section 31. Severability....................................................37
Section 32. Governing Law...................................................38
Section 33. Counterparts....................................................38
Section 34. Descriptive Headings............................................38
EXHIBITS
A Certificate of Designations of Series A Preferred Stock
B Form of Right Certificate
C Summary of Rights to Purchase Stock
-ii-
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of December 15, 1999 is by and between
Consolidated Graphics, Inc., a Texas corporation (the "Company"), and American
Stock Transfer and Trust Company, a New York corporation) (the "Rights Agent").
The Board of Directors of the Company authorized and declared a dividend
of one right (a "Right") for each share of Common Stock (as hereinafter defined)
of the Company outstanding as of the close of business on December 28, 1999 (the
"Record Date"), each such Right representing the right to purchase one
one-hundredth (subject to adjustment) of one share of Preferred Stock (as
hereinafter defined), upon the terms and subject to the conditions hereinafter
set forth, and has further authorized and directed the issuance of one Right
with respect to each share of Common Stock that shall become outstanding between
the Record Date and the earliest of the Distribution Date and the Expiration
Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
"Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the shares of the Common
Stock of the Company then outstanding, but shall not include (i) any Exempt
Person (as hereinafter defined), or (ii) any Person who or which, together with
all Affiliates and Associates of such Person, would be an Acquiring Person
solely by reason of (A) being the Beneficial Owner of shares of Common Stock,
the Beneficial Ownership of which was acquired by such Person pursuant to any
action or transaction or series of related actions or transactions approved by
the Board of Directors (provided that at the time of such approval of the Board
of Directors there are then in office not less than two Continuing Directors (as
such term is hereinafter defined) and such action or transaction or series of
related actions or transactions are approved by a majority of the Continuing
Directors then in office) before such Person otherwise became an Acquiring
Person or (B) a reduction in the aggregate number of issued and outstanding
shares of Common Stock pursuant to a transaction or a series of related
transactions approved by the Board of Directors (provided that at the time of
such approval of the Board of Directors there are then in office not less than
two Continuing Directors and such transaction or series of related transactions
are approved by a majority of the Continuing Directors then in office);
PROVIDED, HOWEVER, THAT if a Person shall become the Beneficial Owner of 15% or
more of the shares of Common Stock of the Company then outstanding by reason of
subclause (A) or (B) of clause (ii) above and shall thereafter become the
Beneficial Owner of any additional shares of the Common Stock of the Company,
then such Person shall be deemed to be an "Acquiring Person" unless upon
consummation of the acquisition of such additional shares such Person does not
own 15% or more of the Common Stock then outstanding. Notwithstanding the
foregoing, if the Board of Directors
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of the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person" became 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 if such Person as promptly as
practicable divested or divests itself of Beneficial Ownership of a sufficient
number of shares of Common Stock so that such Person would no longer be an
"Acquiring Person," then such Person shall not be deemed to be or to have become
an "Acquiring Person" for any purposes of this Agreement.
"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, as in effect on the date of this Rights Agreement.
A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
"beneficially own" and shall be deemed to have "Beneficial Ownership" of, any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, is the "beneficial owner" of (as
determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this
Rights Agreement) or otherwise has the right to vote or dispose of,
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 (i) as a result of any
agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (A) arises solely from
a revocable proxy or consent given in response to a 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 then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report);
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right or obligation to
acquire (whether such right or obligation is exercisable or
effective immediately or only after the passage of time or the
occurrence of an event or both) pursuant to any agreement,
arrangement, or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, other rights,
warrants or options, or otherwise; PROVIDED, HOWEVER, THAT a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," (A) securities tendered pursuant to a tender or exchange offer
made by 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
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(iii) that 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 as set forth
in the proviso to subparagraph (i) of this definition) or disposing
of any voting securities of the Company;
PROVIDED, HOWEVER, THAT nothing in this definition 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 days after the date of such acquisition.
"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.
"Close of Business" on any given date shall mean 5:00 P.M., Houston, Texas
time, on such date; PROVIDED, HOWEVER, THAT if such date is not a Business Day,
it shall mean 5:00 P.M., Houston, Texas time, on the next succeeding Business
Day.
"Closing Price" of a security for any day shall mean the last sales price,
regular way, on such day or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, on such day, in either
case as reported in the principal transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange, or, if
such security is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which such security
is listed or admitted to trading, or, if such security is not listed or admitted
to trading on any national securities exchange but sales price information is
reported for such security, the last quoted sales price as reported by NASDAQ or
such other self-regulatory organization or registered securities information
processor (as such terms are used under the Exchange Act) that then reports
information concerning such security, or, if sales price information is not so
reported, the average of the high bid and low asked prices in the
over-the-counter market on such day, as reported by NASDAQ or such other entity,
or, if on such day such security is not quoted by any such entity, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in such security selected by the Board of Directors of the
Company. If on such day no market maker is making a market in such security, the
fair value of such security on such day as determined in good faith by the Board
of Directors of the Company shall be used.
"Common Stock" when used with reference to the Company (and unless
otherwise specified herein, shall be deemed to refer to the Company) shall mean
the shares of the Company's common stock, $.01 par value per share. "Common
Stock" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
Person or, if such other person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
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"Continuing Director" shall mean any member of the Board of Directors,
while such person is a member of the Board of Directors, who is not an Acquiring
Person, or a nominee, representative, Affiliate or Associate of an Acquiring
Person, and who either (i) was a member of the Board of Directors prior to the
time that any Person became an Acquiring Person (other than pursuant to a
Permitted Offer), or (ii) subsequently became a member of the Board of
Directors, and whose nomination for election or election to the Board of
Directors was recommended or approved by a majority of the Continuing Directors
then on the Board of Directors.
"Current Market Price" shall have the meaning set forth in Section 11(d)
hereof.
"Distribution Date" shall mean the earlier of (i) the Close of Business on
the tenth Business Day (or, if such Share Acquisition Date results from the
consummation of a Permitted Offer, such later date as may be determined by the
Company's Board of Directors before the Distribution Date occurs) after the
Share Acquisition Date or, if the tenth day after the Share 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 may be
determined by the Company's Board of Directors before the Distribution Date
occurs) after the date that a tender offer or exchange offer by any Person
(other than any Exempt Person) 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 an Acquiring Person. The
Board of Directors of the Company may, to the extent set forth in the preceding
sentence, defer the date set forth in clause (i) or (ii) of the preceding
sentence to a specified later date or to an unspecified later date to be
determined by a subsequent action or event.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Ratio" shall have the meaning set forth in Section 24 hereof.
"Exempt Person" shall mean the Company, any Subsidiary of the Company, any
employee benefit plan or employee stock plan of the Company or of any Subsidiary
of the Company, and any Person organized, appointed, or established by the
Company for or pursuant to the terms of any such plan.
"Expiration Date" shall mean the earliest of (i) the Final Expiration
Date, (ii) the time at which the Rights are redeemed as provided in Section 23
hereof, (iii) the time at which the Rights expire pursuant to Section 13(d)
hereof and (iv) the time at which all Rights then outstanding and exercisable
are exchanged pursuant to Section 24 hereof.
"Final Expiration Date" shall mean the close of business on December 15,
2009.
"Flip-In Event" shall mean an event described in Section 11(a)(ii) hereof.
"Flip-Over Event" shall mean any event described in clause (x), (y) or (z)
of Section 13(a) hereof.
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"NASDAQ" shall mean The NASDAQ Stock Market.
"Permitted Offer" shall mean a tender offer or an exchange offer for all
outstanding Common Stock at a price and on terms determined by at least a
majority of the members of the Board of Directors (provided that at the time of
such approval of the Board of Directors there are then in office not less than
two Continuing Directors and such offer is approved by a majority of the
Continuing Directors then in office), after receiving advice from one or more
investment banking firms, to be (a) at a price and on terms that are fair to
shareholders (taking into account all factors that such members of the Board
deem relevant including, without limitation, prices that 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.
"Person" shall mean any individual, firm, corporation, partnership,
association, trust or other entity, and shall include any successor (by merger
or otherwise) of such entity.
"Preferred Stock" shall mean the Series A Junior Participating Preferred
Stock, par value $1.00 per share, of the Company, having the rights, powers and
preferences set forth in the Form of Certificate of Designations attached to
this Rights Agreement as EXHIBIT "A" and, to the extent that there is not a
sufficient number of shares of Series A Junior Participating preferred stock
authorized to permit the full exercise of the Rights, any other series of
preferred stock, par value $1.00 per share, of the Company designated for such
purpose containing terms substantially similar to the terms of the Series A
Junior Participating Preferred Stock.
"Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
"Purchase Price" shall have the meaning set forth in Sections 4 and 7(b)
hereof.
"Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
"Right Certificate" shall have the meaning set forth in Section 3(a)
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Share Acquisition Date" shall mean the first date of public announcement
by the Company or an Acquiring Person that an Acquiring Person has become such
or such earlier date as a majority of the Board of Directors shall become aware
of the existence of an Acquiring Person.
"Subsidiary" of a Person shall mean any corporation or other entity of
which securities or other ownership interests having voting power sufficient to
elect a majority of the Board of Directors or other persons performing similar
functions are beneficially owned, directly or indirectly, by such Person or by
any corporation or other entity that is otherwise controlled by such Person.
"Summary of Rights" shall have the meaning set forth in Section 3(b)
hereof.
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"Trading Day" with respect to a security shall mean a day on which the
principal national securities exchange on which such security is listed or
admitted to trading is open for the transaction of business, or, if such
security is not listed or admitted to trading on any national securities
exchange but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, if
such security is not so quoted, a Business Day.
"Transfer Tax" shall mean any tax or charge, including any documentary
stamp tax, imposed or collected by any governmental or regulatory authority in
respect of any transfer of any security, instrument or right, including Rights,
Preferred Stock or Common Stock.
"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 and the holders of the Rights (who
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the shares of Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) Until the Distribution Date, (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates for
shares of Common Stock registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not
by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of
the underlying shares of Common Stock. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, insured
postage-prepaid mail, to each record holder of shares of 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, a Right Certificate, in
substantially the form of EXHIBIT "B" hereto (a "Right Certificate"),
evidencing one Right (subject to adjustment as provided herein) for each
share of Common Stock so held. As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, for
informational purposes, the Company will send a copy of a Summary of
Rights to Purchase Shares in substantially the form of EXHIBIT "C" 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. With respect to certificates for shares of Common Stock
outstanding as of the Record Date, until the earlier of the Distribution
Date or the Expiration Date, the Rights will be evidenced by such Common
Stock certificates registered in the names of the holders thereof. Until
the earlier of the Distribution Date or the Expiration Date, the surrender
for
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transfer of any certificate for shares of Common Stock outstanding on the
Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with
the shares of Common Stock represented thereby.
(c) Certificates issued for shares of Common Stock which become
outstanding (including, without limitation, upon the transfer or exchange
of outstanding shares of Common Stock, shares of Common Stock originally
issued or delivered from the Company's treasury or reacquired shares of
Common Stock referred to in the last sentence of this paragraph (c)) after
the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights
Agreement between Consolidated Graphics, Inc. (the
"Company") and American Stock Transfer and Trust Company
(the "Rights Agent"), dated as of December 15, 1999, as
it may from time to time be supplemented or amended (the
"Rights Agreement"), the terms of which are incorporated
herein by reference and a copy of which is on file at the
Company's principal executive offices. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, may be exchanged, may expire
or may be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Company will
mail to the registered holder of this certificate a copy
of the Rights Agreement without charge after receipt of a
written request therefor. As described in the Rights
Agreement, Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement)
whether currently held by or on behalf of such Person or
by any subsequent holder will become null and void and
may not be transferred to any Person.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the expiration or redemption of the
Rights, the Rights associated with the shares of Common Stock represented by
such certificates shall be evidenced by such certificates alone, and surrender
for transfer of any such certificates shall also constitute the transfer of the
Rights associated with the shares of Common Stock represented thereby. 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 cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the shares
of Common Stock which are no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase and assignment to be printed on the reverse
thereof), shall be substantially in the form set forth in Exhibit "B" hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and
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<PAGE>
as are not inconsistent with the provisions of this Rights 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 or
interdealer quotation system on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Sections 11, 13 and
22 hereof, Right Certificates shall entitle the holders thereof to purchase such
number of one one-hundredths of a share of Preferred Stock as shall be set forth
therein at the price per such one one-hundredth of a share of Preferred Stock
set forth therein (the "Purchase Price"), but the number of such shares of
Preferred Stock and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
President, or any of its Vice Presidents, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile
thereof, and shall be attested to by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Right Certificates shall be countersigned by the Rights Agent either
manually or by facsimile signature and shall not be valid for any purpose
unless countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any
Right Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right Certificate, shall
be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such
person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or one or more offices
designated as the appropriate place for surrender of Rights Certificates
upon exercise or transfer, and in such other locations as may be required
by law, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 7(e), 7(f), 14 and 24
hereof, 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 Right
Certificate or Right Certificates may be transferred or split up, combined
or exchanged for one or more other Right Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of a
share
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<PAGE>
of Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Right
Certificate or Rights Certificates surrendered then entitled such holder
to purchase. Any registered holder desiring to transfer any Right
Certificate shall surrender the Right Certificate at the principal office
of the Rights Agent with the certificate and form of assignment on the
reverse side thereof duly endorsed (or enclose with such Right Certificate
a written instrument of transfer in form satisfactory to the Company and
the Rights Agent), duly executed by the registered holder thereof or his
attorney duly authorized in writing, and with such signature duly
guaranteed. Any registered holder desiring to split up, combine or
exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent and shall surrender the
Right Certificate or Right Certificates to be split up, combined or
exchanged at the principal office of the Rights Agent. Thereupon, the
Rights Agent shall, subject to the provisions hereof, countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any Transfer Tax that may be imposed
in connection with any transfer, split up, combination or exchange of any
Right Certificates.
(b) Subject to the provisions of Section 7(e) hereof, at any time
after the Distribution Date and prior to the Expiration Date, upon receipt
by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will issue
and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Except, as otherwise provided herein, the registered holder of
any Right Certificate may exercise the Rights evidenced thereby in whole
or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed (with signatures
duly guaranteed), to the Rights Agent at the principal office of the
Rights Agent, together with payment of the Purchase Price for each one
one-hundredth of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which the surrendered Rights are
then being exercised, at or prior to the Expiration Date.
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock issued pursuant to the exercise of a Right shall initially
be $160.00, shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof and shall be payable in lawful money of the
United States of America, in accordance with paragraph 7(c) below.
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(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied
by payment of the aggregate Purchase Price applicable to the number of one
one-hundredths of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) to be purchased and an amount equal to
any applicable Transfer Tax required to be paid by the holder of such
Right Certificate in accordance with Section 9 hereof in cash or by
certified check, cashier's check, bank draft or money order payable to the
order of the Company or the Rights Agent, the Rights Agent shall, subject
to Section 20(j) hereof, thereupon promptly (i)(A) requisition from any
transfer agent of the Preferred Stock certificate(s) representing the
total number of one one-hundredths of a share of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Company shall have elected
to deposit the total number of one one-hundredths of a share 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 one-hundredths of a share of Preferred
Stock as are to be purchased (in which case certificates for the shares of
Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) as provided in Section
14(b), at the election of the Company, cause depositary receipts to be
issued in lieu of fractional shares of Preferred Stock, (iii) if the
election provided for in the immediately preceding clause (ii) has not
been made, requisition from the Company the amount of cash to be paid in
lieu of the issuance of fractional shares of Preferred Stock in accordance
with Section 14(b) hereof, (iv) after receipt of such certificates and/or
depositary receipts, cause the same to be delivered to or upon the order
of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, and (v) when
appropriate, after receipt thereof, deliver such cash to or upon the order
of the registered holder of such Right Certificate; PROVIDED, HOWEVER,
THAT in the case of a purchase of securities, other than shares of
Preferred Stock, pursuant to Section 13 hereof, the Rights Agent shall
promptly take the appropriate actions corresponding in such case to that
referred to in the foregoing clauses (i) through (v) of this Section 7(c).
Notwithstanding the foregoing provisions of this Section 7(c), the Company
may suspend the issuance of shares of Preferred Stock or other securities
upon exercise of a Right for a reasonable period, not in excess of 90
days, during which the Company seeks to register under the Securities Act
and any applicable securities law of any other jurisdiction, the shares of
Preferred Stock or such other securities to be issued pursuant to the
Rights; PROVIDED, HOWEVER, THAT nothing contained in this Section 7(c)
shall relieve the Company of its obligations under Section 9(c) hereof.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the exercisable Rights
remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or his duly authorized assign,
subject to the provisions of Section 14 hereof.
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(e) Notwithstanding any provision of this Rights Agreement to the
contrary, from and after the first occurrence of a Flip-In Event, any
Rights that are beneficially owned by (i) an Acquiring Person (or an
Associate or Affiliate of an Acquiring Person), (ii) a direct or indirect
transferee of such Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a direct or indirect transferee of such Acquiring Person
(or any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person's 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 such Affiliate or Associate) or to any Person
with whom such Acquiring Person (or such Affiliate or Associate) has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer that the Board of Directors has
determined is part of a plan, arrangement or understanding that 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 Rights Agreement or otherwise. The Company
shall use all reasonable effort to ensure that the provisions of this
Section 7(e) are complied with, but shall have no liability to any holder
of Right Certificates or any other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder. No Right Certificate
shall be issued pursuant to Section 3 hereof that represents Rights
beneficially owned by an Acquiring Person (or any Associate or Affiliate
thereof) and no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person (or any Associate or
Affiliate thereof) or to any nominee of such Acquiring Person, Associate
or Affiliate. Any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person (or any Associate or Affiliate thereof)
shall be canceled.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder 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
Right 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 RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written
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request of the Company, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any shares of Preferred Stock held in its treasury, a
number of shares of Preferred Stock as will from time to time be
sufficient to permit the exercise in full of all outstanding Rights;
PROVIDED, HOWEVER, THAT the Company shall not be required to reserve and
keep available shares or other securities sufficient to permit the
exercise in full of all outstanding Rights pursuant to the adjustments set
forth in Section 11(a)(ii) or Section 13 hereof unless the Rights become
exercisable pursuant to such adjustments, and then only to the extent the
Rights become exercisable pursuant to such adjustments.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Shares of Common Stock and/or other
securities) issuable and deliverable upon the exercise of the Rights may
be listed on any national securities exchange, or quoted on NASDAQ, the
Company shall use its best efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for upon exercise of
the Rights issuance to be listed on such exchange, or quoted on NASDAQ,
upon official notice of issuance.
(c) The Company shall use its best efforts to (i) prepare and file,
as soon as practicable following the first occurrence of a Flip-In Event,
a registration statement on an appropriate form under the Securities 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 meeting the requirements of the
Securities 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 exercise of the Rights. The Company
may temporarily suspend, for a period of time not to exceed 90 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 a
registration statement and permit it to become effective. In addition, if
the Company shall determine that the Securities Act requires an effective
registration statement under the Securities Act following the Distribution
Date, the Company may temporarily suspend the exercisability of the Rights
until such time as such a registration statement has been declared
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not
have been obtained,
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the exercise thereof shall not be permitted under applicable law or any
required registration statement shall not have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock
(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 therefor (subject to payment of the Purchase
Price in respect thereof), be duly and validly authorized and issued and
fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any Transfer Tax which may be payable with respect to the
issuance or delivery of the Right Certificates and of any certificates for
a number of one one-hundredths 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 a Right
Certificate to a person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Stock (or Common
Stock and/or other securities, as the case may be) in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or
depositary receipts for Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of any Rights until any
such Transfer Tax shall have been paid (any such Transfer Tax being
payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no
such Transfer Tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for Preferred Stock is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares
(fractional or otherwise) of Preferred Stock represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and any
applicable Transfer Taxes) was made; PROVIDED, HOWEVER, THAT, if the date of
such surrender and payment is a date upon which the Preferred Stock transfer
books of the Company are closed, such person shall be deemed to have become the
record holder of such shares (fractional or otherwise) of Preferred Stock on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Stock transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate, as
such, shall not be entitled to any rights of a holder of shares of Preferred
Stock 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 AND
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares or other
securities subject to purchase upon the exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
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(a) (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 into a greater number of shares of Preferred Stock,
(C) combine the outstanding shares of 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), the Purchase
Price in effect at the time of the record date for such dividend or
the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable upon exercise of a Right 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
Purchase Price then in effect, the aggregate number and kind of
shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; PROVIDED,
HOWEVER, THAT in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of
one Right. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) Subject to Sections 23(a) and 24 of this Rights Agreement
and except as otherwise provided in this Section 11, in the event
that any Person shall become an Acquiring Person (the first
occurrence of such event being referred to herein as a
"Flip-In-Event"), unless the event causing such Person to become an
Acquiring Person is (1) a transaction set forth in Section 13(a)
hereof or (2) an acquisition of shares of Common Stock pursuant to a
Permitted Offer, then, promptly following the occurrence of such
event, (A) the Purchase Price shall be adjusted to be the Purchase
Price in effect immediately prior to the Flip-In-Event multiplied by
the number of one one-hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to such
Flip-In-Event, whether or not such Right was then exercisable, and
(B) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive upon exercise
thereof at a price equal to the then current Purchase Price (as so
adjusted), in accordance with the terms of this Rights Agreement and
in lieu of a number of one one-hundredths of a share of Preferred
Stock, such number of shares of Common Stock of the Company as shall
equal the result obtained by dividing the Purchase Price (as so
adjusted) by 50% of the Current Market Price per share of Common
Stock on the date such Person became an Acquiring Person (such
number of shares being referred to herein as the "Adjustment
Shares"); PROVIDED, HOWEVER, THAT the Purchase Price (as so
adjusted) and the number of Adjustment Shares so receivable upon
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exercise of a Right shall following the date such Person became an
Acquiring Person be subject to further adjustment as appropriate in
accordance with Section 11(f) of this Rights Agreement to reflect
any events occurring after the date of such first occurrence.
(iii) The Company may at its option substitute for a share of
Common Stock issuable upon exercise of Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a) such number or
fractions of shares of Preferred Stock having an aggregate current
market value equal to the Current Market Price per share of Common
Stock. In the event that the number of shares of Common Stock that
are authorized by the Company's restated 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, to the extent
permitted by applicable law and regulation and material agreements
then in effect to which the Company is a party, (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (computed using the Current Market Price used to
determine the number of Adjustment Shares) (the "Current Value")
over (2) the Purchase Price, as adjusted in accordance with the
foregoing subparagraph (ii) (such excess is herein referred to as
the "Spread"), and (B) with respect to each Right (other than Rights
which have become void under this Agreement), make adequate
provision to substitute for the Adjustment Shares, upon the exercise
of the Rights and payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) shares of Preferred
Stock or other equity securities of the Company (including, without
limitation, shares or fractions of shares, or units of shares, of
preferred stock that the Board of Directors of the Company has
determined to have the same value as shares of Common Stock (such
shares of preferred stock and shares or fractions of shares of
preferred stock are herein referred to as "Share Equivalents")), (4)
debt securities of the Company, (5) other assets or (6) any
combination of the foregoing, having a value which when added to the
value of the shares of Common Stock actually issued upon exercise of
such Right, shall have an aggregate value equal to the Current Value
(less the amount of any reduction in such Purchase Price), where
such aggregate value has been determined by the Board of Directors
of the Company based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors of the
Company; PROVIDED, HOWEVER, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above
within 30 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) 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, to the extent permitted
by applicable law and any material agreements then in effect to
which the Company is a party, 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, such
number or fractions of shares of
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Preferred Stock (to the extent available) and then, if necessary,
cash, which shares of Preferred Stock and/or cash have an aggregate
value equal to the Spread. If, upon the occurrence of a
Flip-in-Event, the Board of Directors of the Company 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 30-day period set forth above may be extended to
the extent necessary, but not more than 90 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, as it may be extended, the "Substitution Period"). To the
extent that the Company determines that some action needs to be
taken pursuant to the second and/or third sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, 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 second 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 a
share of 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
Share Equivalent shall be deemed to have the same value as the
Common Stock on such date. The Board of Directors of the Company
may, but shall not be required to, establish procedures to allocate
the right to receive Common Stock upon the exercise of the Rights
among holders of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling
them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Stock (or shares having the
same rights, privileges and preferences as the Preferred Stock
("equivalent preferred shares")) or securities convertible into Preferred
Stock or equivalent preferred shares at a price per share of Preferred
Stock or equivalent preferred shares (or having a conversion price per
share, if a security convertible into shares of Preferred Stock or
equivalent preferred shares) less than the Current Market Price per share
of the 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 and equivalent preferred shares outstanding on such record
date plus the number of shares of Preferred Stock and equivalent preferred
shares which the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market Price,
and the denominator of which shall be the number of shares of Preferred
Stock and equivalent preferred shares outstanding on such record date plus
the number of additional shares of Preferred Stock and/or equivalent
preferred shares to be offered for subscription or purchase (or into which
the convertible
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<PAGE>
securities so to be offered are initially convertible); PROVIDED, HOWEVER,
THAT in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent. Shares of Preferred Stock and equivalent preferred shares
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness, cash or other assets (other than a regular quarterly cash
dividend not in excess of 150% of the next previous regular quarterly cash
dividend or a dividend payable in Preferred Stock) or subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Current
Market Price per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one share of Preferred Stock and the
denominator of which shall be such Current Market Price per share of the
Preferred Stock; PROVIDED, HOWEVER, THAT in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date
had not been fixed.
(d) For the purpose of any computation hereunder, the "Current
Market Price" per share of any security (a "Security" for the purpose of
this Section 1l(d)) on any date shall be determined as provided in this
Section 11(d). In the case of a publicly traded stock or other security,
the Current Market Price on any date shall be deemed to be the average of
the daily Closing Prices per share of such Security for the 30 consecutive
Trading Days immediately prior to such date; PROVIDED, HOWEVER, THAT in
the event that the Current Market Price per share of the Security is
determined during a period following the announcement by the issuer of
such Security of (A) a dividend or distribution on such Security payable
in shares of such Security or securities convertible into such shares or
(B) any subdivision, combination, consolidation, or reclassification of
such Security and prior to the expiration
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<PAGE>
of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Market Price
shall be appropriately adjusted to take into account ex-dividend trading.
For the purpose of any computation hereunder, if the Preferred Stock is
not publicly traded but the shares of Common Stock are publicly traded,
the "Current Market Price" per share of the Preferred Stock shall be
conclusively deemed to be the Current Market Price per share of Common
Stock multiplied by 100 (appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof. If the Security is not publicly held or not so listed or traded
(or in the case of Preferred Stock, if neither the Preferred Stock nor the
Common Stock are publicly traded), "Current Market Price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% of
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 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Preferred Stock or Common Stock
or any other share or security, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from
the date of the transaction which requires such adjustment or (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the Purchase Price and the number of such
other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Preferred Stock
contained in Sections 11(a), (b), (c), (e), (h), (i) and (m), as
applicable, 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) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a share of Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, each subject to further adjustment
as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result
of the calculation made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-hundredths of a share of Preferred Stock (calculated to
the
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<PAGE>
nearest one ten-thousandth of a share of Preferred Stock) obtained by (i)
multiplying (x) the number of one-hundredths of a share of Preferred Stock
covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-hundredths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have been
issued, shall be at least ten (10) days later than the date of the public
announcement. If the Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for
herein and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the
number of one one-hundredths of a share of Preferred Stock which were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the number of one
one-hundredths of a share of Preferred Stock or of the number of shares of
Common Stock or other securities issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and
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<PAGE>
legally issue fully paid and nonassessable one one-hundredths of a share
of Preferred Stock or other such number of shares of Common Stock or other
securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date of the shares of Preferred Stock, cash and other capital stock
or securities of the Company, if any, issuable upon such exercise over and
above the shares of Preferred Stock, cash and other capital stock or
securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, THAT the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) of Preferred Stock, Common
Stock or other capital stock or securities upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as
and to the extent that it in its sole discretion shall determine to be
advisable in order that any (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 Preferred Stock or securities which by their terms are convertible
into or exchangeable for Preferred Stock, (iv) dividends on Preferred
Stock payable in shares of Preferred Stock or (v) issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter
made by the Company to holders of its Preferred Stock shall not be taxable
to such holders.
(n) The Company covenants and agrees that it shall not, at any time
after the earlier of the Distribution Date or the Share Acquisition Date,
(i) consolidate with any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o) hereof), (ii)
merge with or into any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o) hereof), or
(iii) sell, lease or transfer (or permit one or more Subsidiaries to sell,
lease or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any
of its Subsidiaries in one or more transactions each of which complies
(and all of which together comply) with Section 11(o) hereof), if (x) at
the time of or immediately after such consolidation, merger, sale, lease
or transfer there are any rights, warrants or other instruments or
securities of the Company or any other Person outstanding or agreements,
arrangements or understandings in effect that would substantially diminish
or otherwise eliminate the benefits intended to be afforded by the Rights,
(y) prior to, simultaneously with or immediately after such consolidation,
merger, sale, lease or transfer, the shareholders or other equity owners
of the Person who constitutes, or would constitute, the "Principal Party"
for purposes of Section 13(a) hereof shall have received a distribution of
Rights previously owned by such
20
<PAGE>
Person or any of its Affiliates or Associates, or (z) the identity, form
or nature of organization of the Principal Party (including without
limitation the selection of the Person that will be the Principal Party as
a result of the Company's entering into one or more consolidations,
mergers, sales, leases, transfers or transactions with more than one
party) would preclude or limit the exercise of Rights or otherwise
diminish substantially or eliminate the benefits intended to be afforded
by the Rights.
(o) The Company covenants and agrees that, after the earlier of the
Distribution Date or the Share Acquisition Date, it will not, except as
permitted by Section 23, 24 or Section 27 hereof, take (or permit any
Subsidiary to take) any action if the purpose of such action is to, or if
at the time such action is taken it is reasonably foreseeable that such
action will, diminish substantially or eliminate the benefits intended to
be afforded by the Rights.
(p) Anything in this Rights Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Record 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 the outstanding shares of Common Stock, (iii) combine the
outstanding shares of Common Stock into a smaller number of shares of
Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock, 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.
Section 12. CERTIFICATION OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11, 13 or 23(c) hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Preferred
Stock and the Common Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
26. Notwithstanding the foregoing sentence, the failure of the Company to make
such certification or give such notice shall not affect the validity of or the
force or effect of the requirement for such adjustment. Any adjustment to be
made pursuant to Sections 11, 13 or 23(c) of this Rights Agreement shall be
effective as of the date of the event giving rise to such adjustment. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such certificate.
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Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, on or after the Share Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person or Persons and the Company shall not be
the continuing or surviving corporation of such consolidation or merger,
(y) any Person or Persons shall consolidate with, or merge with or into,
the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of
the Company or any other Person or cash or any other property, or (z) the
Company shall sell, lease or otherwise transfer (or one or more of its
Subsidiaries shall sell, lease or otherwise transfer) in one transaction
or a series of related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than to
the Company or any Subsidiary of the Company (any event described in (x),
(y) or (z) a "Flip-Over-Event")), then, and in such case, proper provision
shall be made so that (i) each holder of record of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the Purchase Price (as theretofore
adjusted in accordance with Section 11(a)(ii) hereof) in accordance with
the terms of this Rights Agreement and in lieu of shares of Preferred
Stock or Common Stock of the Company, such number of shares of validly
issued, fully paid and nonassessable and freely tradeable shares of Common
Stock of the Principal Party (as defined herein), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by dividing the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof) 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;
PROVIDED that the Purchase Price (as theretofore adjusted in accordance
with Section 11(a)(ii) hereof) and the number of shares of Common Stock of
such Principal Party so receivable upon exercise of each Right shall be
further adjusted as provided in this Agreement to reflect any events
occurring after the date of the first occurrence of a 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 Rights 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 hereof 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;
PROVIDED, HOWEVER, THAT, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets,
recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder
of a Right shall thereupon be entitled to receive, upon exercise of a
Right and payment of the Purchase Price, such cash, shares, rights,
warrants and other property which such holder would have
22
<PAGE>
been entitled to receive had it, at the time of such transaction, owned
the shares of Common Stock of the Principal Party purchasable upon the
exercise of a Right, and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of its stock) as may
be necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property and (v) the provisions of Section 11(a) (ii) hereof shall be of
no effect following the first occurrence of any Flip-Over Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof: (A) the Person that is
the issuer of the securities into which shares of Common Stock of
the Company are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer the outstanding
Common Stock of which has the greatest aggregate market value or (B)
if no securities are so issued, (x) the Person that survives such
consolidation or is the other party to the merger and survives such
merger or, if there is more than one such Person, the Person the
Common Stock of which has the greatest aggregate market value, (y)
if the Person that is the other party to the merger does not survive
the merger, the Person that does survive the merger (including the
Company if it survives), or (z) the Person resulting from the
consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence in Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if
each Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, the Person the
outstanding Common Stock of which has the greatest aggregate market
value;
PROVIDED HOWEVER, THAT in any such case described in Section 13(b)(i) or
(b)(ii) above, if the Common Stock of such Person is not at such time and
has not been continuously over the preceding twelve-month period
registered under Section 12 of the Exchange Act, and if (1) such Person is
a direct or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, the term "Principal Party" shall
refer to such other Person; (2) such Person is a Subsidiary, directly or
indirectly; of more than one Person, the Common Stock of each of which is
and has been so registered, the term "Principal Party" shall refer to
whichever of such Persons is the issuer whose outstanding Common Stock has
the greatest aggregate market value; and (3) such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules
set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal
Parties in each such chain shall bear
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the obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any Flip-Over Event unless each
Principal Party (or Person that may become a Principal Party as a result
of such Flip-Over Event) shall have a sufficient number of authorized
shares of its Common Stock that have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and each Principal
Party involved therein shall have executed and delivered to the Rights
Agent an agreement confirming that the Principal Party shall, upon
consummation of such consolidation, merger or sale or transfer of assets
or earning power, assume this Rights Agreement in accordance with Sections
13(a) and (b) hereof, that the requirements of Section 13(a) or (b) shall
be promptly performed in accordance with these terms, that all rights of
first refusal or preemptive rights in respect of the issuance of shares of
Common Stock of the Principal Party upon exercise of outstanding Rights
have been waived and that such Flip-Over Event shall not result in a
default by the Principal Party under this Rights Agreement, and further
providing that, as soon as practicable after the date of such Flip-Over
Event, the Principal Party at its own expense will:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, 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;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the
"blue sky" laws of such jurisdictions as may be necessary or
appropriate;
(iii) use its best efforts, if the shares of Common Stock of
the Principal Party is or shall become listed on a national
securities exchange, to list (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on such
securities exchange and, if the shares of Common Stock of the
Principal Party shall not be listed on a national securities
exchange, to cause the Rights and the securities purchasable upon
exercise of the Rights to be reported by NASDAQ or such other
transaction reporting system then in use; and
(iv) 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 (or any successor form) under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Flip-Over Event
shall occur at any time after the
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occurrence of a Flip-In Event, the Rights that have not theretofore been
exercised shall, subject to the provisions of Section 7(e) hereof, thereafter be
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Rights Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13 (a) if (i) such transaction is
consummated with a Person or Persons (or a wholly owned subsidiary of any
such Person or Persons) who acquired shares of Common Stock of the Company
pursuant to a Permitted Offer, (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 Permitted Offer, and (iii) the form of
consideration being offered to the remaining holders of shares of Common
Stock pursuant to such transaction is the same as the form of
consideration paid to holders of shares of Common Stock pursuant to such
Permitted Offer. Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.
(e) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has provision in any of its
authorized securities or in its Certificate or Articles of Incorporation
or By-laws or other instrument governing its corporate affairs, which
provision would have the effect of (i) causing such Principal Party to
issue, in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, Common Stock of such Principal
Party at less than the then Current Market Price per share or securities
exercisable for, or convertible into, Common Stock of such Principal Party
at less than such then Current Market Price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special
payment, tax or similar provisions in connection with the issuance of the
shares of Common Stock of such Principal Party pursuant to the provisions
of this Section 13, then, in such event, the Company shall not consummate
any such transaction unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such Principal Party
shall have been canceled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision will have
no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(f) The Company covenants and agrees that it shall not, at any time
after the occurrence of a Flip-In Event, enter into any transaction that
would constitute a Flip-Over Event if (i) at the time of or immediately
after such Flip-Over Event 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, (ii) prior to, simultaneously with or immediately
after such Flip-Over Event, the shareholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates or
(iii) the form or nature of organization of the Principal Party would
preclude or limit the exercisability of the Rights.
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Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same
fraction of the Current Market Price of a whole Right. For the purposes of
this Section 14(a), the then-Current Market Price of a Right shall be the
Closing Price of the Rights for the Trading Day immediately prior to the
date on which fractional Rights would have been issuable, determined in
the same manner as the Current Market Price of a share of Common Stock
shall be determined pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock, Common Stock, or other securities of the Company upon
exercise of the Rights (other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock) or to distribute
certificates which evidence interests in fractional shares (other than
fractions of shares which are integral multiples of one one-hundredth of a
share of Preferred Stock); PROVIDED that in lieu of issuing fractions of
shares of Preferred Stock, the Company may, at its election, issue
depositary receipts evidencing fractions of shares pursuant to an
appropriate agreement between the Company and a depositary selected by it,
but only if such agreement shall provide that the holders of such
depositary receipts shall have all of the rights, privileges and
preferences to which they would be entitled as beneficial owners of the
Preferred Stock. With respect to fractional shares that are not integral
multiples of one one-hundredth of a share of Preferred Stock, if the
Company does not issue such fractional shares or depositary receipts in
lieu thereof, there shall be paid to the holders of record of Right
Certificates at the time such Right Certificates are exercised as herein
provided an amount in cash equal to the same fraction of the then Current
Market Price of a share of Preferred Stock or other securities of the
Company. For purposes of this Section 14(b), the then Current Market Price
of a share of Preferred Stock or other securities of the Company shall be
the closing price thereof for the Trading Day immediately prior to the
date of such exercise, as determined pursuant to Section 11(d) hereof.
(c) 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 Price of
one share of Common Stock. For purposes of this Section 14(c), the Current
Market Price of one share of Common Stock shall be the closing price of
one share of Common Stock (as determined pursuant to Section 11(d) hereof)
for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares
of Preferred Stock, Common Stock,
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or other securities of the Company upon exercise of a Right, except as
provided by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Rights Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock in their capacity as holders of Rights); and any registered holder
of any Right Certificate (or, prior to the Distribution Date, any holder of
record of the Common Stock, in its capacity as a holder of Rights), without the
consent of the Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, any holder of record of Common Stock in its
capacity as a holder of Rights), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate (or, prior to the Distribution
Date, evidenced by such Common Stock) in the manner provided therein and in this
Rights 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 Rights
Agreement and, accordingly, that they will be entitled to specific performance
of the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Rights Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Each 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 shall be evidenced by
the certificates for shares of Common Stock registered in the name of the
holders of the shares of Common Stock and not by separate Right
Certificates, and each Right shall be transferable only simultaneously and
together with the transfer of the shares of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered
at the designated office of the Rights Agent, duly endorsed or accompanied
by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the
associated Common Stock certificate made by anyone other than the Company
or the Rights Agent or the transfer agent of the Common Stock) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of Preferred Stock, Common Stock or any
other securities of the Company which may at
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any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a
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 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution
of this Rights Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Rights
Agreement, including the cost and expenses of defending against any claim
of liability relating to the Rights or this Rights Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Rights Agreement in reliance
upon any Right Certificate or certificate for shares of Preferred Stock,
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, guaranteed, verified or acknowledged, by the proper
Person or Persons or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OF, OR CHANGE IN NAME OF, THE RIGHTS
AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Rights Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to the agency
created by this Rights Agreement any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the
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predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver such Right Certificates
so countersigned; in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; in all such
cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties
and obligations imposed by this Rights Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this Rights
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 any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Executive Vice
President, any Vice President, the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Company only.
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(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or
in respect of the validity or execution of any Right Certificate (except
its countersignature thereof); nor shall it be responsible for any breach
by the Company of any covenant or condition contained in this Rights
Agreement or in any Right Certificate; nor shall it be responsible for any
adjustment required under the provisions of Sections 11, 13, 23 or 24
hereof 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 Right Certificates after receipt of actual written
notice that such change or adjustment is required); 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 Preferred Stock or Common
Stock to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Preferred Stock or Common Stock
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the Chief Executive Officer, the President, any
Executive Vice President, any Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though
it were not the Rights Agent under this Rights Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) 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
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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.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Preferred Stock and the Common Stock by registered or
certified mail and to the holders, if any, of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent (with or without cause) upon 30 days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Preferred Stock and the Common 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.
Notwithstanding the foregoing provisions of this Section 21, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the incumbent Rights Agent or
the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of the State of Texas or of any other state of the United States (so long as
such corporation is authorized to conduct a stock transfer or corporate trust
business), in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination in the conduct of its corporate trust or stock transfer business by
federal or state authorities and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an
Affiliate controlled by 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 Preferred Stock
and the Common Stock, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be. Notwithstanding the foregoing
provisions, in the event of resignation, removal or incapacity of the Rights
Agent, the Company shall have the authority to act as the Rights Agent until a
successor Rights Agent shall have assumed the duties of the Rights Agent
hereunder.
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Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares of
stock or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Rights Agreement.
Section 23. REDEMPTION AND TERMINATION.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors, at any time prior to the earlier of
(i) the Close of Business on the tenth Business Day following the Close of
Business on the Share Acquisition Date, subject to extension by the
Company as provided in Section 27 hereof or (ii) the Close of Business on
the Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right, subject to
adjustments as provided in subsection (c) below (the "Redemption Price");
PROVIDED, HOWEVER, THAT from and after the time that any Person shall
become an Acquiring Person (other than pursuant to a Permitted Offer), the
Company may redeem the Rights only if at the time of the action of the
Board of Directors there are then in office not less than two Continuing
Directors and such redemption is approved by a majority of the Continuing
Directors then in office. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable pursuant to
Section 11(a)(ii) prior to the expiration of the Company's right of
redemption hereunder.
(b) Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the redemption of the Rights (which
action may be conditioned on the occurrence of one or more events or on
the existence of one or more facts or may be effective at some future
time), evidence of which shall have been filed with the Rights Agent, and
without any further action and without any notice, the Right to exercise
the Rights will terminate, and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price for each Right so held.
Promptly after the effectiveness of the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of
such redemption to the holders of the then outstanding Rights by mailing
such notice to each such holder at its last address as such appears 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 notice of
redemption will state the effective time of the redemption, the method by
which the payment of the Redemption Price will be made and the time for
such payment. The failure to give notice required by this Section 23(b) or
any defect therein shall not affect the legality or validity of the action
taken by the Company. At the option of the Board of Directors, the
Redemption Price may be paid in cash to each Rights holder or by the
issuance of shares of Common Stock (and, at the Company's election
pursuant to Section 14(b) hereof, cash or depositary receipts in lieu of
fractions of shares) having a Current Market Price equal to such cash
payment.
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(c) In the event the Company shall at any time after the Record Date
(A) pay any dividend on its Common Stock in shares of its Common Stock,
(B) subdivide or split the outstanding shares of its Common Stock into a
greater number of shares or (C) combine or consolidate the outstanding
shares of its Common Stock into a smaller number of shares of its Common
Stock or effect a reverse split of the outstanding shares of its Common
Stock, then and in such event the Redemption Price shall be appropriately
adjusted to reflect such event.
Section 24. EXCHANGE.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors, 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 (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof)
for shares of its Common Stock at an exchange ratio of one share of its
Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange
Ratio"); PROVIDED, HOWEVER, THAT the Company may exchange the Rights only
if at the time of the action of the Board of Directors there are then in
office not less than two Continuing Directors and such exchange is
approved by a majority of the Continuing Directors then in office.
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than
an Exempt Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Company's
Common Stock then outstanding.
(b) Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
and in accordance with subsection (a) of this Section 24 (which action may
be conditioned upon the occurrence of one or more events or on the
existence of one or more facts or may be effective at some time in the
future) and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of the
Company's Common Stock equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; PROVIDED, HOWEVER, THAT the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear
upon the registry books of 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 for exchange will state the
method by which the exchange of the shares of the Company's Common Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than rights which
have become void pursuant to the provisions of Sections 7(e) hereof) held
by each holder of Rights.
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(c) In the event that the number of shares of Common Stock which are
authorized by the Company's articles of incorporation (as then restated or
amended), 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 as contemplated in accordance with this Section 24, the Company
shall take all such action as may be necessary to authorize additional
shares of its Common Stock for issuance upon exchange of the Rights.
(d) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute shares of Preferred Stock (or equivalent preferred
shares, for shares of Common Stock exchangeable for Rights, at the initial
rate of one one-hundredth of a share of Preferred Stock (or equivalent
preferred shares) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred
Stock pursuant to the terms thereof, so that the fraction of a share of
Preferred Stock delivered in lieu of each share of Common Stock shall have
the same voting rights as one share of Common Stock.
(e) The Company shall not be required to issue fractions of shares
of Common Stock (or pursuant to Section 24(d) fractional shares of
Preferred Stock (in other than integral multiples of one one-hundredth of
a share)), or to distribute certificates which evidence fractional shares
of Common Stock (or nonintegral multiples of one one-hundredth of a share
of Preferred Stock). In lieu thereof, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock (or nonintegral multiples of one
one-hundredth of a share of Preferred Stock) would otherwise be issuable
an amount in cash equal to the same fraction of the Current Market Price
of a whole share of Common Stock or Preferred Stock. For the purposes of
this Section 24(e), the applicable Current Market Price of a whole share
of Common Stock or Preferred Stock shall be determined pursuant to Section
11(d) hereof for the Trading Day immediately prior to the effective date
of exchange pursuant to Section 24(b) hereof.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the earlier
of the Distribution Date or the Share Acquisition Date, (i) to effect any
of the transactions referred to in Section 11(a) (i) hereof or to pay any
dividend to the holders of record of its Preferred Stock payable in stock
of any class or to make any other distribution to the holders of record of
its Preferred Stock (other than a regular quarterly cash dividend), (ii)
to offer to the holders of record of its Preferred Stock, options,
warrants or other rights to subscribe for or to purchase (including any
security convertible into or exchangeable for Preferred Stock) any shares
of Preferred Stock or shares of stock of any class or any other
securities, options, warrants, convertible or exchangeable securities or
other rights, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any
consolidation or merger with or into, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50 % of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole)
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to, any other Person or Persons, or (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 shares of Common Stock
or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in
shares of Common Stock), then, in each such case, the Company shall give
to each holder of record of a Right Certificate, in accordance with
Section 26, a notice of such proposed action, which shall specify the
record date for the purposes of such dividend or distribution of rights or
warrants, or the date on which such reclassification, consolidation,
merger, sale, lease, transfer, liquidation, dissolution, or winding up is
to take place and the record date for determining participation therein by
the holders of record of the Common Stock and/or Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of record of the Preferred Stock
for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of record of the Common
Stock and/or Preferred Stock, whichever shall be the earlier. The failure
to give notice required by this Section 25 or any defect therein shall not
affect the legality or validity of the action taken by the Company or the
vote upon any such action.
(b) In case any Flip-In Event shall occur, then, (i) the Company
shall as soon as practicable thereafter give to each holder of a Rights
Certificate, in accordance with Section 26 hereof, 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)
hereof, 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 Rights
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
Consolidated Graphics, Inc.
5858 Westheimer, Suite 200
Houston, Texas 77057
Attention: Joe R. Davis, Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of record
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Co.
6201 15th Avenue
Brooklyn, New York 11219
Attn: Mr. Wilbert Myles
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Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right (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. For as long as the Rights are then
redeemable and except as provided in the last sentence of this Section 27, the
Company may in its sole and absolute discretion and the Rights Agent shall, if
the Company so directs, supplement or amend any provision of this Agreement in
any respect without the approval of any holders of the Rights or the shares of
Common Stock. At any time when the Rights are not then redeemable and except as
provided in the last sentence of this Section 27, the Company may 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 (a) to cure
any ambiguity, (b) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (c) to
shorten or lengthen any time period hereunder or (d) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and that shall not materially adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of any Acquiring Person); PROVIDED, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (c) 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 (other than any Acquiring
Person and its Affiliates and Associates). 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 Rights Agreement to the contrary, no supplement or
amendment shall be made which decreases the Redemption Price or shortens the
Final Expiration Date and supplements or amendments may be made after the time
that any Person becomes an Acquiring Person (other than pursuant to a Permitted
Offer) only if at the time of the action of the Board of Directors approving
such supplement or amendment there are then in office not less than two
Continuing Directors and such supplement or amendment is approved by a majority
of the Continuing Directors then in office.
Section 28. SUCCESSORS. All of the covenants and provisions of this Rights
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, ETC. For
all purposes of this Rights Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including without limitation
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 as in effect on the date hereof. The
Board of Directors of the Company (or, as set forth herein, certain specified
members thereof) shall have the
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exclusive power and authority to administer this Rights Agreement and to
exercise all rights and powers specifically granted to the Board of Directors of
the Company or to the Company, or as may be necessary or advisable in the
administration of this Rights Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Rights Agreement, and
(ii) make all determinations deemed necessary or advisable for the
administration of this Rights Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend this Rights
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) that are done or made by the Board of Directors of the Company in
good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights, as such, and all other parties, and (y)
not subject the Board of Directors to any liability to the holders of the
Rights.
Section 30. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the registered holders of the shares of
Common Stock) any legal or equitable right, remedy or claim under this Rights
Agreement; but this Rights Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
shares of Common Stock in their capacity as holders of Rights).
Section 31. SEVERABILITY. If any term, provision, covenant or restriction
of this Rights 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 Rights Agreement sh all remain in
full force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, THAT notwithstanding anything in this Rights 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 of
Directors of the Company 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 hereof
shall be reinstated and shall not expire until the Close of Business on the
tenth day following the date of such determination by the Board of Directors of
the Company. Without limiting the foregoing, if any provision requiring that a
determination be made by less than the entire Board of Directors of the Company
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, such determination shall then be made by the entire Board
of Directors of the Company.
Section 32. GOVERNING LAW. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Texas and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
Section 33. COUNTERPARTS. This Rights 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.
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Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
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IN WITNESS WHEREOF, the parties hereto have cause this Rights Agreement to
be duly executed, all as of the day and year first above written.
CONSOLIDATED GRAPHICS, INC.
By:/s/ JOE R. DAVIS
Joe R. Davis
Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST CO.
By: /s/ WILBERT MYLES
Wilbert Myles
Title: Vice President
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EXHIBIT A
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
CONSOLIDATED GRAPHICS, INC.
Pursuant to Article 213
of the Texas Business Corporation Act
Consolidated Graphics, Inc., a corporation organized and existing under
the laws of the State of Texas (the "Company"), DOES HEREBY CERTIFY:
ARTICLE I That by resolution of the Board of Directors of the Company
dated December 15, 1999, and by a Certificate of Designations filed in the
office of the Secretary of State of Texas on December 20, 1999, the Company
authorized the issuance of a series of 500,000 shares of Series A Junior
Participating Preferred Stock of the Company (the "Series A Preferred Stock")
and established the voting powers, designations, preferences and relative,
participating and other rights, and the qualifications, limitations or
restrictions thereof.
ARTICLE II That as of the date hereof no shares of such Series A Preferred
Stock are outstanding and no shares of such Series A Preferred Stock have been
issued.
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Company by its Restated Articles of Incorporation and by the
provisions of Article 213 of the Business Corporation Act of the State of Texas
the designations, preferences, limitations and relative rights, including voting
rights, of the Series A Preferred Stock of the Company, and the qualifications,
limitations or restrictions thereof, be and the same hereby are, established in
their entireties to be as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting such series shall be
five hundred thousand (500,000).
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the provisions for adjustment hereinafter set forth,
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 the purpose, (i) cash dividends in an amount per share (rounded to
the nearest cent) equal to 100 times the aggregate per share amount of all cash
dividends declared or paid on the Common Stock, $0.01 par value per share, of
the Company (the "Common Stock") and (ii) a preferential cash dividend (the
"Preferential Dividends"), if any, on the first day of April, July, October and
January of each year (each a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount equal to $1.00 per
share
<PAGE>
of Series A Preferred Stock less the per share amount of all cash dividends
declared on the Series A Preferred Stock pursuant to clause (i) of this sentence
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
Company shall, at any time after the issuance of any share or fraction of a
share of Series A Preferred Stock, make any distribution on the shares of Common
Stock of the Company, whether by way of a dividend or a reclassification of
stock, a recapitalization, reorganization or partial liquidation of the Company
or otherwise, which is payable in cash or any debt security, debt instrument,
real or personal property or any other property (other than cash dividends
subject to the immediately preceding sentence, a distribution of shares of
Common Stock or other capital stock of the Company or a distribution of rights
or warrants to acquire any such share, including any debt security convertible
into or exchangeable for any such share, at a price less than the Fair Market
Value of such share), then and in each such event the Company shall
simultaneously pay on each then outstanding share of Series A Preferred Stock of
the Company a distribution, in like kind, of 100 times such distribution paid on
a share of Common Stock (subject to the provisions for adjustment hereinafter
set forth). The dividends and distributions on the Series A Preferred Stock to
which holders thereof are entitled pursuant to clause (i) of the first sentence
of this paragraph and pursuant to the second sentence of this paragraph are
hereinafter referred to as "Participating Dividends" and the multiple of such
cash and non-cash dividends on the Common Stock applicable to the determination
of the Participating Dividends, which shall be 100 initially but shall be
adjusted from time to time as hereinafter provided, is hereinafter referred to
as the "Dividend Multiple". In the event the Company shall at any time after
December 15, 1999 declare or pay any dividend or make any distribution on Common
Stock payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Dividend Multiple thereafter applicable to the determination of
the amount of Participating Dividends which holders of shares of Series A
Preferred Stock shall be entitled to receive shall be the Dividend Multiple
applicable immediately prior to such event multiplied 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 Company shall declare each Participating Dividend at the
same time it declares any cash or non-cash dividend or distribution on the
Common Stock in respect of which a Participating Dividend is required to be
paid. No cash or non-cash dividend or distribution on the Common Stock in
respect of which a Participating Dividend is required to be paid shall be paid
or set aside for payment on the Common Stock unless a Participating Dividend in
respect of such dividend or distribution on the Common Stock shall be
simultaneously paid, or set aside for payment, on the Series A Preferred Stock.
(C) Preferential Dividends shall begin to accrue on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issuance of any shares of Series A Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series A Preferred Stock
in an amount less than the total amount of such dividends at the time accrued
and
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payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the shareholders of the Company. The
number of votes which a holder of Series A Preferred Stock is entitled to cast,
as the same may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Vote Multiple". In the event the Company shall
at any time after December 15, 1999 declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Vote Multiple thereafter applicable to the determination of the
number of votes per share to which holders of shares of Series A Preferred Stock
shall be entitled after such event shall be the Vote Multiple immediately prior
to such event multiplied by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Restated Articles of
Incorporation or Restated By-laws of the Company, 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
Company.
(C) In the event that the Preferential Dividends accrued on the
Series A Preferred Stock for four or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and paid or set apart for
payment, the holders of record of Preferred Stock of the Company of all series
(including the Series A Preferred Stock), other than any series in respect of
which such right is expressly withheld by the Restated Articles of Incorporation
or the authorizing resolutions included in the certificate of designations
therefor, shall have the right, at the next meeting of shareholders called for
the election of directors, to elect two members to the Board of Directors, which
directors shall be in addition to the number required by the By-laws prior to
such event, to serve until the next Annual Meeting and until their successors
are elected and qualified or their earlier resignation, removal or incapacity or
until such earlier time as all accrued and unpaid Preferential Dividends upon
the outstanding shares of Series A Preferred Stock shall have been paid (or set
aside for payment) in full. The holders of shares of Series A Preferred Stock
shall continue to have the right to elect directors as provided by the
immediately preceding sentence until all accrued and unpaid Preferential
Dividends upon the outstanding shares of Series A Preferred Stock shall have
been paid (or set aside for payment) in full. Such directors may be removed and
replaced by such shareholders, and vacancies in such directorships may be filled
only by such shareholders (or by the remaining director elected by such
shareholders, if there be one) in the manner permitted by law; provided,
however, that any such action by shareholders shall be taken at a meeting of
shareholders and shall not be taken by written consent thereto.
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(D) Except as otherwise required by the Restated Articles of
Incorporation or Restated By-laws of the Company or 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 the taking of any corporate
action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever Preferential Dividends or Participating Dividends are
in arrears or the Company shall be in default of payment thereof, thereafter and
until all accrued and unpaid Preferential Dividends and Participating Dividends,
whether or not declared, on shares of Series A Preferred Stock outstanding shall
have been paid or set aside for payment in full, and in addition to any and all
other rights which any holder of shares of Series A Preferred Stock may have in
such circumstances, the Company 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 on a parity as to
dividends with the Series A Preferred Stock, unless dividends are
paid ratably on the Series A Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled if the full dividends accrued thereon were to be paid;
(iii) except as permitted by subparagraph (iv) of this
paragraph 4(A), 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 Company may at any time
redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Company ranking
junior (both as to dividends and upon liquidation, dissolution 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 (either as to
dividends or upon liquidation, dissolution or winding up), except in
accordance with a purchase offer made 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.
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(B) The Company shall not permit any Subsidiary (as hereinafter
defined) of the Company to purchase or otherwise acquire for consideration any
shares of stock of the Company unless the Company could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner. A "Subsidiary" of the Company shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the Board of Directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
the Company or by any corporation or other entity that is otherwise controlled
by the Company.
(C) The Company shall not issue any shares of Series A Preferred
Stock except upon exercise of Rights issued pursuant to that certain Rights
Agreement dated as of December 15, 1999 between the Company and American Stock
Transfer & Trust Company as Rights Agent, a copy of which is on file with the
Secretary of the Company at its principal executive office and shall be made
available to shareholders of record without charge upon written request therefor
addressed to said Secretary. Notwithstanding the foregoing sentence, nothing
contained in the provisions hereof shall prohibit or restrict the Company from
issuing for any purpose any series of Preferred Stock with rights and privileges
similar to, different from, or greater than, those of the Series A Preferred
Stock.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such shares
upon their retirement and cancellation shall become authorized but unissued
shares of Preferred Stock, without designation as to series, and such shares may
be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, no
distribution shall be made (i) 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 the holders of shares of Series A Preferred
Stock shall have received, subject to adjustment as hereinafter provided, (A)
$100.00 per share plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(B) if greater than the amount specified in clause (i)(A) of this sentence, an
amount equal to 100 times the aggregate amount to be distributed per share to
holders of Common Stock, as the same may be adjusted as hereinafter provided,
and (ii) to the holders of stock ranking on a parity upon liquidation,
dissolution or winding up with the Series A Preferred Stock, unless
simultaneously therewith distributions are made ratably on the Series A
Preferred Stock and all other shares of such parity stock in proportion to the
total amounts to which the holders of shares of Series A Preferred Stock are
entitled under clause (i)(A) of this sentence and to which the holders of such
parity shares are entitled, in each case upon such liquidation, dissolution or
winding up. The amount to which holders of Series A Preferred Stock may be
entitled upon liquidation, dissolution or winding up of the Company pursuant to
clause (i)(B) of the foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount" and the multiple of the amount to be
distributed to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the Company applicable pursuant to said clause to
the
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determination of the Participating Liquidation Amount, as said multiple may be
adjusted from time to time as hereinafter provided, is hereinafter referred to
as the "Liquidation Multiple". In the event the Company shall at any time after
December 15, 1999 declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or split or a combination,
consolidation or reverse split of the outstanding shares of Common Stock into a
greater or lesser number of shares of Common Stock, then in each such case the
Liquidation Multiple thereafter applicable to the determination of the
Participating Liquidation Amount to which holders of Series A Preferred Stock
shall be entitled after such event shall be the Liquidation Multiple applicable
immediately prior to such event multiplied 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. CERTAIN RECLASSIFICATIONS AND OTHER EVENTS.
(A) In the event that holders of shares of Common Stock of the
Company receive after December 15, 1999 in respect of their shares of Common
Stock any share of capital stock of the Company (other than any share of Common
Stock of the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise (a "Transaction"),
then and in each such event the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall be adjusted so that after such event the holders
of Series A Preferred Stock shall be entitled, in respect of each share of
Series A Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such adjustment, to (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such Transaction multiplied by the additional dividends which the holder of a
share of Common Stock shall be entitled to receive by virtue of the receipt in
the Transaction of such capital stock, (ii) such additional voting rights as
equal the Vote Multiple in effect immediately prior to such Transaction
multiplied by the additional voting rights which the holder of a share of Common
Stock shall be entitled to receive by virtue of the receipt in the Transaction
of such capital stock and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such Transaction multiplied by the additional amount
which the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Company by virtue of the receipt
in the Transaction of such capital stock, as the case may be, all as provided by
the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the
Company receive after December 15, 1999 in respect of their shares of Common
Stock any right or warrant to purchase Common Stock (including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share less than the Fair
Market Value (as hereinafter defined) of a share of Common Stock on the date of
issuance of such right or warrant, then and in each such event the dividend
rights, voting rights and rights upon the liquidation, dissolution or winding up
of the Company of the shares of Series A Preferred Stock shall each be adjusted
so that after such event the Dividend Multiple, the Vote Multiple and the
Liquidation Multiple shall each be the product of the Dividend Multiple, the
Vote Multiple and the
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<PAGE>
Liquidation Multiple, as the case may be, in effect immediately prior to such
event multiplied by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of shares
of Common Stock which could be purchased, at the Fair Market Value of the Common
Stock at the time of such issuance, by the maximum aggregate consideration
payable upon exercise in full of all such rights or warrants.
(C) In the event that holders of shares of Common Stock of the
Company receive after December 15, 1999 in respect of their shares of Common
Stock any right or warrant to purchase capital stock of the Company (other than
shares of Common Stock), including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for capital stock of
the Company (other than Common Stock), at a purchase price per share less than
the Fair Market Value of such shares of capital stock on the date of issuance of
such right or warrant, then and in each such event the dividend rights, voting
rights and rights upon liquidation, dissolution or winding up of the Company of
the shares of Series A Preferred Stock shall each be adjusted so that after such
event each holder of a share of Series A Preferred Stock shall be entitled, in
respect of each share of Series A Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled immediately prior to
such event, to receive (i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such event multiplied, first, by the
additional dividends to which the holder of a share of Common Stock shall be
entitled upon exercise of such right or warrant by virtue of the capital stock
which could be acquired upon such exercise and multiplied again by the Discount
Fraction (as hereinafter defined) and (ii) such additional voting rights as
equal the Vote Multiple in effect immediately prior to such event multiplied,
first, by the additional voting rights to which the holder of a share of Common
Stock shall be entitled upon exercise of such right or warrant by virtue of the
capital stock which could be acquired upon such exercise and multiplied again by
the Discount Fraction and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such event multiplied, first, by the additional
amount which the holder of a share of Common Stock shall be entitled to receive
upon liquidation, dissolution or winding up of the Company upon exercise of such
right or warrant by virtue of the capital stock which could be acquired upon
such exercise and multiplied again by the Discount Fraction. For purposes of
this paragraph, the "Discount Fraction" shall be a fraction the numerator of
which shall be the difference between the Fair Market Value of a share of the
capital stock subject to a right or warrant distributed to holders of shares of
Common Stock of the Company as contemplated by this paragraph immediately after
the distribution thereof and the purchase price per share for such share of
capital stock pursuant to such right or warrant and the denominator of which
shall be the Fair Market Value of a share of such capital stock immediately
after the distribution of such right or warrant.
(D) For purposes of this Section 7, the "Fair Market Value" of a
share of capital stock of the Company (including a share of Common Stock) on any
date shall be deemed to be the average of the daily closing price per share
thereof over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that, in the event
7
<PAGE>
that such Fair Market Value of any such share of capital stock is determined
during a period which includes any date that is within 30 Trading Days after (i)
the ex-dividend date for a dividend or distribution on stock payable in shares
of such stock or securities convertible into shares of such stock, or (ii) the
effective date of any subdivision, split, combination, consolidation, reverse
stock split or reclassification of such stock, then, and in each such case, the
Fair Market Value shall be appropriately adjusted by the Board of Directors of
the Company to take into account ex-dividend or post-effective date trading. The
closing price for any day shall be the last sale price, regular way, or, in
case, no such sale takes place on such day, the average of the closing bid and
asked prices, regular way (in either case, as reported in the applicable
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange), or, if the shares are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
applicable transaction reporting system with respect to securities listed on the
principal national securities exchange on which the shares are listed or
admitted to trading or, if the shares 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 ("Nasdaq") or such other system then in use, or if on any such
date the shares 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 shares selected by the Board of Directors of the Company. The
term "Trading Day" shall mean a day on which the principal national securities
exchange on which the shares are listed or admitted to trading is open for the
transaction of business or, if the shares are not listed or admitted to trading
on any national securities exchange, on which the New York Stock Exchange or
such other national securities exchange as may be selected by the Board of
Directors of the Company is open. If the shares are not publicly held or not so
listed or traded on any day within the period of 30 Trading Days applicable to
the determination of Fair Market Value thereof as aforesaid, "Fair Market Value"
shall mean the fair market value thereof per share as determined in good faith
by the Board of Directors of the Company. In either case referred to in the
foregoing sentence, the determination of Fair Market Value shall be described in
a statement filed with the Secretary of the Company.
Section 8. CONSOLIDATION, MERGER, ETC. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
Section 9. EFFECTIVE TIME OF ADJUSTMENTS.
(A) Adjustments to the Series A Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event requiring
such adjustments occurs.
8
<PAGE>
(B) The Company shall give prompt written notice to each holder of a
share of Series A Preferred Stock of the effect of any adjustment to the voting
rights, dividend rights or rights upon liquidation, dissolution or winding up of
the Company of such shares required by the provisions hereof. Notwithstanding
the foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of or the force or effect of or the requirement for such
adjustment.
Section 10. NO REDEMPTION. The shares of Series A Preferred Stock shall
not be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may acquire
shares of Series A Preferred Stock in any other manner permitted by law, the
provisions hereof and the Restated Articles of Incorporation of the Company.
Section 11. RANKING. Unless otherwise provided in the Restated Articles of
Incorporation of the Company or a Certificate of Designations relating to a
subsequent series of preferred stock of the Company, the Series A Preferred
Stock shall rank junior to all other series of the Company's preferred stock as
to the payment of dividends and the distribution of assets on liquidation,
dissolution or winding up and senior to the Common Stock.
Section 12. AMENDMENT. Except as contemplated herein, the provisions
hereof and the Restated Articles of Incorporation of the Company shall not be
amended in any manner which would adversely affect the rights, privileges or
powers of the Series A Preferred Stock without, in addition to any other vote of
shareholders required by law, the affirmative vote of the holders of two-thirds
or more of the outstanding shares of Series A Preferred Stock, voting together
as a single class.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate of
Designations and do affirm the foregoing as true under the penalties of perjury
this 20th day of December 1999.
By: /s/ G. CHRISTOPER COLVILLE
G. Christopher Colville
Executive Vice President
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<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER DECEMBER 15, 2009 OR EARLIER IF REDEEMED OR EXCHANGED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY
AT $.01 PER RIGHT, AND TO EXCHANGE, ON THE TERMS SET FORTH OR REFERRED TO IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR
BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
RIGHT CERTIFICATE
CONSOLIDATED GRAPHICS, INC.
This certifies that ________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of December 15, 1999, as the same may be supplemented or
amended from time to time (the "Rights Agreement") between Consolidated
Graphics, Inc., a Texas corporation (the "Company"), and American Stock Transfer
& Trust Company, a New Yorkcorporation ("Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to the close of business on December ___, ____ at
the designated office of the Rights Agent, or its successors as Rights Agent,
one one-hundredth of a fully paid nonassessable share of the Company's Series A
Junior Participating Preferred Stock, par value $1.00 per share (the "Preferred
Stock") at a purchase price of $160.00 per one one-hundredth of a share of
Preferred Stock (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase and related certificate
set forth on the reverse side hereof duly executed.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a share of Preferred Stock which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events and, upon the
happening of certain events, securities other than shares of Preferred Stock, or
other property, may be acquired upon exercise of the Rights evidenced by this
Right Certificate, as provided by the Rights Agreement.
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and may not be transferred to any
<PAGE>
person and the holder of any such Right (including any purported transferee or
subsequent holder) shall not have any right to exercise or transfer any such
Right.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of the Right Certificates. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and are
also available from the Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder of record to purchase
a like aggregate number of one-one hundredths of a share of Preferred Stock as
the Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.0l per Right (payable, at the election of the Company, in
cash or in shares of the Company's common stock, $.01 par value per share
("Common Stock")) or (ii) may be exchanged in whole or in part for shares of
Common Stock or for shares of Preferred Stock.
No fractional shares of Preferred Stock are required to be issued upon the
exercise or redemption of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a share of
Preferred Stock), and in lieu thereof the Company may cause depository receipts
to be issued and/or a cash payment may be made, as provided in the Rights
Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a 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 the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
2
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ________ ___, ____.
CONSOLIDATED GRAPHICS, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
ATTEST:
____________________________________
Secretary
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
By: ___________________________________
Name: _________________________________
Title: ________________________________
3
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Right Certificate.)
FOR VALUE RECEIVED,______________ hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint____________
________________________Attorney to transfer the within Rights on the books of
the within-named Company, with full power of substitution.
Dated: ____________________, _______.
____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
4
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
1. this Right Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or an Associate thereof (as such terms are defined pursuant to 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 Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined pursuant to the Rights Agreement)
or who is a direct or indirect transferee of an Acquiring Person or of an
Affiliate or Associate of an Acquiring Person.
Dated as of _____________________, _______.
__________________________________
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder desires to exercise the
Rights represented by this Right Certificate.)
To Consolidated Graphics, Inc.:
The undersigned hereby irrevocably elects to exercise ___________ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of such Rights and requests that certificates for
such share(s) of Preferred Stock (or such other securities)be issued in the
name:
________________________________________________________________________________
(Please insert social security or other identifying number)
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
________________________________________________________________________________
(Please insert social security or other identifying number)
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: __________________, ______.
____________________________________
Signature
6
<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
NOTICE
The signature to the foregoing Form of Election must correspond to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
7
<PAGE>
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (DEFINED
BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID
AND MAY NOT BE TRANSFERRED TO ANY PERSON.
CONSOLIDATED GRAPHICS, INC.
SUMMARY OF RIGHTS TO PURCHASE STOCK
On December 15, 1999, the Board of Directors of Consolidated Graphics,
Inc. (the "Company") declared a dividend on each outstanding share of common
stock, $.01 par value per share (the "Common Stock") of one right to purchase
(individually a "Right" and collectively the "Rights") Series A Junior
Participating Preferred Stock, par value $1.00 per share (the "Preferred
Stock"). The dividend is payable as of December 28, 1999 (the "Record Date"), to
shareholders of record on that date. Each Right will, upon the occurrence of
events, described below, that make it exercisable, entitle the registered holder
to purchase from the Company one one-hundredth of one share of the Preferred
Stock at a price of $160.00 (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (as
amended from time to time, the "Rights Agreement") between the Company and
American Stock Transfer & Trust Company as the rights agent (the "Rights
Agent").
Initially, the Rights will be represented by all certificates representing
outstanding shares of Common Stock, and no separate certificates for the Rights
will be distributed.
The Rights will separate from the Common Stock on the Distribution Date,
which is defined in the Rights Agreement as the earlier of (i) the tenth
business day following the date of a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the Company's Common Stock (the date of
the announcement of such acquisition being the "Share Acquisition Date") or (ii)
the tenth business day (or such later date as may be determined by the Board of
Directors before the Distribution Date occurs) after the commencement of public
announcement of a tender or exchange offer that would, if consummated, result in
a person or group becoming an Acquiring Person, whether any purchases actually
occur pursuant to such offer or not. The definition of Acquiring Person under
the Rights Agreement excludes (A) the Company, (B) any subsidiary of the
Company, (C) any employee benefit plan or employee stock plan of the Company or
of any subsidiary of the Company or any person organized, appointed, established
or holding Common Stock for or pursuant to the terms of any such plan, or (D)
any person whose ownership of 15% or more of the Common Stock of the Company
then outstanding results solely from (i) any action or transaction approved by
the Board of Directors before such person acquires such 15% beneficial ownership
or (ii) a reduction in the number of issued and outstanding shares of Common
Stock pursuant to a transaction or transactions
<PAGE>
approved by the Board of Directors. Any person excluded from becoming an
Acquiring Person by reason of clause (i) or (ii) above will nevertheless become
an Acquiring Person if it acquires any additional shares of Common Stock, unless
such acquisition of additional shares of Common Stock occurs by reason of a
transaction falling within the scope of such clause (i) or (ii).
The Rights Agreement provides that, until the Distribution Date, the
Rights will be represented by and transferred with, and only with, the shares of
Common Stock. Until the Distribution Date or earlier redemption, exchange,
expiration or termination of the Rights, new certificates representing shares of
Common Stock issued after the Record Date will contain a legend incorporating
the Rights Agreement by reference and the surrender for transfer of any
certificates representing shares of Common Stock outstanding as of the Record
Date, with or without a copy of this Summary of Rights, will constitute the
transfer of the Rights associated with the shares of Common Stock represented by
such certificate. The Rights will separate from the Common Stock upon the
occurrence of the Distribution Date, and as soon as practicable following the
Distribution Date, separate certificates evidencing the Rights will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date. From and after the Distribution Date, such separate
certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on December 15, 2009 unless earlier
redeemed or exchanged by the Company or unless they are terminated, in each case
as described below.
The Purchase Price payable and the number of shares of Preferred Stock or
other securities, including without limitation Common Stock, or property
issuable upon exercise of the Rights are subject to adjustment from time to time
to prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) upon the grant to
holders of shares of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock or securities convertible into
Preferred Stock at less than the Current Market Price (as such term is defined
in the Rights Agreement) or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights is also subject to certain adjustments
from time to time in the event of, among other things, a stock split of the
Common Stock or a stock dividend on the Common Stock payable in shares of Common
Stock, or subdivisions, consolidations or combinations of the Common Stock
occurring, in any such case, before the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each share of Preferred Stock will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of $1.00 per
share but will also be entitled to an aggregate dividend of 100 times the
dividend declared per share of Common Stock. In the event of liquidation, the
holders of the Preferred Stock will be entitled to a minimum preferential
liquidation payment of $100.00 per share (plus any accrued but unpaid dividends)
but will be entitled to an aggregate payment of 100 times the payment made per
share of Common Stock. Each share of Preferred Stock will have 100 votes, voting
together with the Common Stock. Finally, in the event of any
2
<PAGE>
merger, consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be entitled to
receive 100 times the amount received per share of Common Stock. These rights
are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
If a person becomes an Acquiring Person (a "Flip-In Event") in a manner
other than pursuant to a tender or exchange offer for all outstanding shares of
Common Stock at a price and on terms that a majority of Continuing Directors (as
such term is defined in the Rights Agreement) determines to be fair to and in
the best interests of the Company and its shareholders (a "Permitted Offer"),
each holder of a Right who is not an Acquiring Person or related thereto as
specified in the Rights Agreement will, if the Rights are not earlier redeemed,
thereafter have the right to receive, upon exercise of such Right and payment of
the Purchase Price, one one-hundredths of a share of Preferred Stock (or, in
certain circumstances, Common Stock, cash, property or other securities).
If, at any time on or after a Share Acquisition Date (i) the Company is
acquired in a merger or other business combination transaction (in which any
shares of Common Stock are changed into or exchanged for other securities or
assets) other than certain mergers that follow a Permitted Offer or (ii) 50% or
more of the assets or earning power of the Company and its subsidiaries (taken
as a whole) is sold or transferred in one or a series of related transactions
(each of the events described in (i) and (ii) above being a "Flip-Over Event"),
each holder of a Right (except Rights that have previously been voided) will
thereafter have the right to receive, upon exercise of such Right and payment of
the Purchase Price, that number of shares of common stock of the acquiring
company having a market value at the time of such transaction equal to two times
the Purchase Price.
Fractions of shares of Preferred Stock (other than integral multiples of
one one-hundredth of a share) which would otherwise be issued upon exercise or
redemption of the Rights may, at the election of the Company, be evidenced by
depositary receipts. The Rights Agreement also provides that the Company may pay
cash in lieu of fractional shares.
At any time on or before the close of business on the tenth business day
following a Share Acquisition Date (or such later date as may be authorized by
the Board of Directors and a majority of the Continuing Directors), the Company
may redeem the Rights in whole, but not in part, at a price of $.0l per Right
(the "Redemption Price"), payable at the election of the Company in cash or
shares of Common Stock. The Rights may be redeemed after the time that any
Person has become an Acquiring Person only if approved by a majority of the
Continuing Directors. Immediately upon the action of the Board of Directors of
the Company authorizing redemption of the Rights and without any further action
or notice, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
3
<PAGE>
After the occurrence of a Flip-In Event and before a person becomes the
beneficial owner of 50% or more of the Common Stock then outstanding, the
Company may, if authorized by the Board of Directors, such authorization having
been approved by a majority of the Continuing Directors, exchange the Rights
(other than Rights owned by an Acquiring Person or an affiliate or an associate
of an Acquiring Person, which will have become void), in whole or in part, at an
exchange ratio per Right of one share of Common Stock, and/or other equity
securities deemed to have the same value as one share of Common Stock, subject
to adjustment.
During any such time as the Rights are redeemable, the Company may amend
the Rights in any manner, including without limitation an amendment to extend
the time period during which the Rights may be redeemed, except that the Company
may not, during such time, amend the Rights to decrease the Redemption Price or
move forward the expiration date of the Rights. During any such time as the
Rights are not redeemable, the Company may amend the Rights Agreement (a) to
cure any ambiguity, defect, or inconsistency, (b) to make changes that do not
materially adversely affect the interests of holders of the Rights (excluding
the interests of any Acquiring Person), or (c) to shorten or lengthen any time
period under the Rights Agreement, except that the Company may not amend the
Rights Agreement to lengthen the time period governing redemption during any
such time as the rights are not redeemable. Amendments to the Rights Agreement
from and after the time that any person or other entity becomes an Acquiring
Person require that at least two Continuing Directors be then in office and a
majority of the Continuing Directors approve such amendment.
Until a Right is exercised, the holder thereof, as such, will not have any
rights as a shareholder of the Company, including without limitation the right
to vote or to receive dividends.
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 dated
December 22, 1999. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated in this summary description herein by reference.
4
EXHIBIT 99.1
FOR: Consolidated Graphics, Inc.
CONTACT: Ronald E. Hale, Jr.
Consolidated Graphics, Inc.
Vice President & Treasurer
(713) 787-0977
Betsy Brod/Jonathan Schaffer
Media: Merridith Ingram/Jennifer Kirksey
Morgen-Walke Associates, Inc.
(212) 850-5600
FOR IMMEDIATE RELEASE
CONSOLIDATED GRAPHICS ANNOUNCES SHARE REPURCHASE PROGRAM
HOUSTON, TEXAS - November 12, 1999 - Consolidated Graphics, Inc.
(NYSE:CGX) announced today that its Board of Directors has approved a share
repurchase program authorizing the Company to buy up to 2.1 million shares of
its common stock. Under the plan, the Company may purchase common stock from
time to time in open-market purchases or in privately negotiated block purchase
transactions. The amount and timing of any purchases will depend upon a number
of factors, including the price and availability of the Company's shares,
general market conditions and certain provisions included in the Company's
existing bank credit agreements.
Joe R. Davis, Chairman and Chief Executive Officer, commented, "In light
of our recent stock performance, the Company believes that a sizable repurchase
program is an appropriate use of the Company's capital. Not withstanding this
purchase program, the Company plans to continue with its strategy of investing
in our operating companies and pursuing the many acquisition opportunities
available to us today."
Consolidated Graphics, Inc. is one of the fastest growing printing company
in the United States. The Company adds value to its acquisitions through
managerial and operational expertise, financial strength and economies of scale.
Upon completion of pending acquisitions, Consolidated Graphics will have
companies operating in 25 states with annualized revenues in excess of $705
million. For more information, visit the Company's Web site at
www.consolidatedgraphics.com.
This press release contains forward-looking statements, which involve
known and unknown risks, uncertainties or other factors that could cause actual
results to materially differ from the results, performance or other expectations
implied by these forward-looking statements. Consolidated Graphics' expectations
regarding run-rate revenues assume, among other things, completion of pending
acquisitions, general economic conditions, continued demand for its product, the
availability of raw materials, retention of its key management and operating
personnel, as well as other factors detailed in Consolidated Graphics' filings
with the Securities and Exchange Commission.
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