PATRICK INDUSTRIES, INC.

and

NATIONAL CITY BANK,

as Rights Agent

 

Rights Agreement

 

 

Dated as of March 21, 2006

 

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TABLE OF CONTENTS

 

                                                                       Page

 

 

 

Section 1.

Certain Definitions

1

Section 2.

Appointment of Rights Agent

6

Section 3.

Issue of Rights Certificates

6

Section 4.

Form of Rights Certificates

8

Section 5.

Countersignature and Registration

8

Section 6.

Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights
Certificates                                            
                            9

Section 7.

Exercise of Rights; Purchase Price; Expiration Date of Rights

10

Section 8.

Cancellation and Destruction of Rights Certificates

12

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 or Number of
Rights                             13

Section 12.

Certificate of Adjusted Purchase Price or Number of Shares

22

Section 13.

Consolidation, Merger or Sale or Transfer of Assets or Earning Power

23

Section 14.

Fractional Rights and Fractional Shares

26

Section 15.

Rights of Action

27

Section 16.

Agreement of Rights Holders

27

Section 17.

Rights Holder Not Deemed a Shareholder

28

Section 18.

Concerning the Rights Agent

28

Section 19.

Merger or Consolidation or Change of Name of Rights Agent

29

Section 20.

Duties of Rights Agent

29

Section 21.

Change of Rights Agent

31

Section 22.

Issuance of New Rights Certificates

32

Section 23.

Redemption and Termination

32

Section 24.

Exchange

33

Section 25.

Notice of Certain Events

34

Section 26.

Notices

34

Section 27.

Supplements and Amendments

35

Section 28.

Successors

36

Section 29.

Determinations and Actions by the Board of Directors, Etc

36

 

 

 

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TABLE OF CONTENTS

(continued)

                                                                      Page

 

 

 

Section 30.

Benefits of this Agreement

37

Section 31.

Severability

37

Section 32.

Governing Law

37

Section 33.

Counterparts

37

Section 34.

Descriptive Headings

37

 

EXHIBITS

EXHIBIT A -- Certificate of Designation, Preferences and Rights

EXHIBIT B -- Rights Certificates

EXHIBIT C -- Summary of Rights

 

 

 

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RIGHTS AGREEMENT

Rights Agreement, dated as of March 21, 2006 (the “Agreement”), by and between
PATRICK INDUSTRIES, INC., an Indiana corporation (the “COMPANY”), and NATIONAL
CITY BANK (the “RIGHTS AGENT”).

W I T N E S S E T H:

WHEREAS, on March 20, 2006, the Rights Agreement dated as of March 20, 1996
between the Company and Harris N.A., successor by merger to Harris Trust and
Savings Bank expired;

WHEREAS, the Board of Directors of the Company deems it to be in the interest of
the Company to adopt a new Rights Agreement; and

WHEREAS, on March 21, 2006 (the “Rights Dividend Declaration Date”), the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) payable on March 31, 2006 for each outstanding share of common stock,
without par value, of the Company (the “COMMON STOCK”) outstanding on March 31,
2006 (the “RECORD DATE”), and the issuance of one Right for each share of Common
Stock of the Company issued between the Record Date and the Separation Date (as
hereinafter defined) and one Right for each share of Common Stock of the Company
issued upon exercise of stock options granted prior to the Separation Date or
under any employee plan or arrangement established prior to the Separation Date,
each Right representing the right to purchase one one-hundredth of a share of
Preferred Stock, Series A, of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation, Preferences and
Rights attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the “RIGHTS”).

NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:

Section 1.           Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:

(a)          “ACQUIRING PERSON” shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as hereinafter
defined) and Associates (as hereinafter defined) of such Person, shall be the
Beneficial Owner (as hereinafter defined) at any time of 20% or more of the
Voting Power of the aggregate of all Voting Stock outstanding, but shall not
include (i) the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company or any entity holding
shares of Common Stock organized, appointed or established by the Company for or
pursuant to the terms of any such plan, (ii) any or all of Jeffrey L. Gendell,
Tontine Capital Partners, L.P. and Tontine Capital Management L.L.C. or any of
their Affiliates or Associates, acting individually, with another Person, or as
part of the group identified by the Schedule 13D filed with the SEC relating to
the Stock Purchase Agreement as first filed with the Securities and Exchange
Commission, solely for such time and to the extent that such Persons referenced
in this clause (ii) are, individually or in the aggregate, the Beneficial Owners
at all times of less than 30% of the Voting Power of the aggregate of all Voting
Stock outstanding, or (iii) any such

 

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Person who has become and is such a Beneficial Owner solely because (A) of a
change in the aggregate number of shares of Voting Stock since the last date on
which such Person acquired Beneficial Ownership of any shares of the Voting
Stock or (B) it acquired such Beneficial Ownership in the good faith belief that
such acquisition would not (1) cause such Beneficial Ownership to be equal to or
exceed 20% of the Voting Power of the aggregate of all shares of Voting Stock of
the Company (or with respect to the Persons identified in clause (ii) of this
Section 1(a), 30%) and such Person relied in good faith in computing the
percentage of its Beneficial Ownership on publicly filed reports or documents of
the Company that are inaccurate or out-of-date or (2) otherwise cause a
Separation Date or a Section 11(a)(ii) Event or Section 13 Event to occur.
Notwithstanding clause (B) of the prior sentence, if any Person that is not an
Acquiring Person due to such clause (B) does not reduce or agree to reduce its
percentage of Beneficial Ownership of the Common Stock to less than 20% (or with
respect to the Persons identified in clause (ii) of this Section 1(a), 30%) by
the Close of Business on the fifth Business Day after notice from the Company
(the date on which such notice is first mailed or sent being the first day) that
such person’s Beneficial Ownership of the Voting Power of the aggregate of all
shares of Voting Stock of the Company then outstanding is equal to or exceeds
20% (or with respect to the Persons identified in clause (ii) of this Section
1(a), 30%) such Person shall, at the end of such five Business Day period,
become an Acquiring Person (and such clause (B) shall no longer apply to such
Person). For purposes of this definition, the determination whether any Person
acted in “good faith” shall be conclusively determined by the Board of Directors
of the Company, acting by a vote of a majority of the Whole Board.

(b)          “AFFILIATE” and “ASSOCIATE” shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the Exchange Act Regulations, as in
effect on the date of this Agreement; provided, however, that no director or
officer of the Company shall be deemed an Affiliate or Associate of any other
director or officer of the Company solely as a result of his or her being a
director or officer of the Company.

(c)          A Person shall be deemed the “Beneficial Owner” of and shall be
deemed to “Beneficially Own” and to have “Beneficial Ownership” of any
securities:

(i)           that such Person or any of such Person’s Affiliates or Associates
beneficially owns, directly or indirectly (as determined pursuant to Rule 13d-3
of the Exchange Act Regulations as in effect on the date of this Agreement);
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own or to have Beneficial Ownership of, any security if the
agreement, arrangement, or understanding to vote such security that would
otherwise render such Person the Beneficial Owner of such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the Exchange Act and the Exchange Act Regulations,
and (2) is not also then reportable 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
has (A) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement, or

 

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understanding, whether or not in writing (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants, or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own or to have Beneficial Ownership of securities
tendered pursuant to a tender or exchange offer made in accordance with the
Exchange Act Regulations by or on behalf of such Person or any of such Person’s
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement, or understanding (except to the extent contemplated by the proviso
to subparagraph (i) of this paragraph (c)); or

(iii)        that are Beneficially Owned, directly or indirectly, by any other
Person (or any Affiliate or Associate of such Person) with which such Person (or
any of such Person’s Affiliates or Associates) has any agreement, arrangement,
or understanding, whether or not in writing (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to subparagraph (i) of
this paragraph (c)), or disposing of any such securities.

Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase “then outstanding,” when used with reference to a Person’s
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding that such Person would be
deemed to Beneficially Own hereunder.

(d)          “BUSINESS DAY” shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of Indiana or Illinois are
authorized or obligated by law or executive order to close.

(e)          “CLOSE OF BUSINESS” on any given date shall mean 5:00 P.M., Eastern
Standard Time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern Standard Time, on the next
succeeding Business Day.

(f)           “CLOSING PRICE” of any security on any given day shall be the last
sale price, regular way, of such security or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, on
the principal trading market on which such security is then traded.

(g)          “COMMON STOCK” shall mean the common stock, without par value, of
the Company plus, after the Separation Date, the Preferred Stock of the Company,
and “COMMON STOCK” when used with reference to any Person other than the Company
shall mean the capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person.

 

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(h)          “COMMON EQUITY INTEREST” when used with reference to any Person
other than the Company shall mean the class or series of capital stock (or
equity interest) with the greatest voting power (in relation to any other
classes or series of capital stock (or equity interest)) of such other Person.

(i)           “EXCHANGE ACT” shall mean the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement, and all references to any
rule or regulation of the General Rules and Regulations under the Exchange Act
shall be, except as otherwise specifically provided herein, to such rule or
regulation as was in effect on the date of this Agreement.

(j)           “EXCHANGE ACT REGULATIONS” shall mean the General Rules and
Regulations under the Exchange Act.

(k)          “EXCHANGE DATE” shall mean the date at which the Rights are
exchanged as provided in Section 24 of this Agreement.

(l)           “PERSON” shall mean any individual, partnership (general or
limited), limited liability company, firm, corporation, association, trust,
unincorporated organization, or other entity, as well as any syndicate or group
deemed to be a Person under Section 14(d)(2) of the Exchange Act.

(m)         “PURCHASE PRICE” shall mean with respect to each Right, the price
set forth in Section 7(b) of this Agreement.

(n)          “PREFERRED STOCK” shall mean shares of Preferred Stock, Series A,
without par value, of the Company.

(o)          “PRINCIPAL PARTY” shall have the meaning set forth in Section 13(b)
of this Agreement.

(p)          “QUALIFIED OFFER” shall mean an acquisition of shares of Common
Stock pursuant to a tender offer or an exchange offer for all outstanding shares
of Common Stock at a price and on terms determined by at least a majority of the
Whole Board who are not officers of the Company and who are not representatives,
nominees, Affiliates or Associates of an Acquiring Person, after receiving
advice from one or more investment banking firms, to be (a) at a price which is
fair to stockholders and not inadequate (taking into account all factors which
such members of the Board deem relevant, including prices which could reasonably
be achieved, if the Company or its assets were sold on an orderly basis designed
to realize maximum value) and (b) otherwise in the best interests of the Company
and its stockholders.

(q)          “REDEMPTION DATE” shall mean the time at which the Rights are
ordered to be redeemed pursuant to Section 23 of this Agreement.

(r)           “SECTION 11(A)(ii) EVENT” shall mean the event described in
Section 11(a)(ii) that triggers the adjustment provided in Section 11(a)(ii).

 

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(s)          “SECTION 13 EVENT” shall mean the event described in clauses (x)(y)
or (z) of Section 13(a) of this Agreement.

(t)           “SEPARATION DATE” shall mean the earlier of (i) the tenth day
after the Stock Acquisition Date (as hereinafter defined) or (ii) the Close of
Business on the tenth Business Day (or such later date as may be determined by
action of a majority of the Whole Board prior to such time as any Person becomes
an Acquiring Person and of which later date the Company will give the Rights
Agent prompt written notice) after the date of the commencement of, or first
public announcement of the intent to commence, a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company or any entity
holding shares of Common Stock organized, appointed or established by the
Company for or pursuant to the terms of any such plan), if upon consummation
thereof, such Person would be the Beneficial Owner of shares of Voting Stock
representing 30% or more of the total Voting Power of the aggregate of all
shares of Voting Stock then outstanding (including any such date which is after
the date of this Agreement and prior to the issuance of the Rights) other than
pursuant to a Qualified Offer.

(u)          “STOCK ACQUISITION DATE” shall mean the first date of public
announcement by the Company or an Acquiring Person or otherwise, that an
Acquiring Person has become such other than pursuant to a Qualified Offer.

(v)          “STOCK PURCHASE AGREEMENT” shall mean that certain Stock Purchase
Agreement dated as of September 13, 2005, by and between Tontine Capital
Partners, L.P. and Mervin D. Lung and Dorothy Lung.

(w)         “SUBSIDIARY” shall mean, with reference to any Person, any other
Person of which (1) a majority of the Voting Power of the voting securities or
equity interests is Beneficially Owned, directly or indirectly, by such
first-mentioned Person or otherwise controlled by such first-mentioned Person,
or (2) an amount of voting securities or equity interests sufficient to elect at
least a majority of the directors or equivalent governing body of such other
Person is Beneficially Owned, directly or indirectly, by such first-mentioned
Person, or otherwise controlled by such first-mentioned Person.

(x)          “TRADING DAY,” with respect to any security shall mean a day on
which the principal national securities exchange on which the security is listed
or admitted to trading is open for the transaction of business or, if the
security is not listed or admitted to trading on any national securities
exchange, a Business Day.

(y)          “TRIGGERING EVENT” shall mean a Section 11(a)(ii) Event or a
Section 13 Event.

(z)          “VOTING POWER” when used with reference to the Voting Stock of any
Person shall mean the number of votes (whether cast in person, by proxy, or by
written consent) entitled (1) to be cast generally in the election of directors
or members of the governing body of such Person (if such person is a corporation
or is managed by or under the direction of a governing body performing functions
and having obligations similar to those of a corporate board of directors) or
(2) to participate in the management and control of such Person (if such

 

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Person is not a corporation and is not managed by or under the direction of a
governing body performing functions and having obligations similar to those of a
corporate board of directors).

(aa)        “VOTING STOCK” when used in reference to any Person, shall mean the
outstanding capital stock, equity interest, or other voting securities of such
Person, in each case entitling the holder thereof (1) to cast votes, in person
or by proxy, or to act by written consent, in the election of directors or
members of the governing body of such Person (if such person is a corporation or
is managed by or under the direction of a governing body performing functions
and having obligations similar to those of a corporate board of directors) or
(2) to participate in the management and control of such Person (if such Person
is not a corporation and is not managed by or under the direction of a governing
body performing functions and having obligations similar to those of a corporate
board of directors).

(bb)         “WHOLE BOARD” shall mean the total number of directors which the
Company would have if there were no vacancies.

Any determination required by the definitions contained in this Section 1 shall
be made by the Board of Directors of the Company in its good faith judgment,
which determination shall be final and binding on the Rights Agent.

Section 2.           Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 of this Agreement, shall prior to the
Separation Date also be the holders of the Common Stock) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable and will promptly notify the Rights Agent of
any such appointment. To the extent that any co-Rights Agent takes any action
pursuant to this Agreement, such co-Rights Agent will be entitled to all of the
rights and protections of, and subject to all of the applicable duties and
obligations imposed upon, the Rights Agent pursuant to the terms of this
Agreement. The Rights Agent shall have no duty to supervise, and shall in no
event be liable for, the acts or omissions of any co-Rights Agent.

 

Section 3.

Issue of Rights Certificates.

(a)          Until the Separation Date, (i) the Rights will be evidenced by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (ii) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company).

(b)          As soon as practicable after the Separation Date, the Company will
prepare and execute, and the Rights Agent will countersign and, at the expense
of the Company, send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the Close of Business on the Separation
Date, at the address of such holder shown on the records of the Company, a
Rights certificate (the “RIGHTS CERTIFICATE”), evidencing one Right (as adjusted
from time to time prior to the Separation Date pursuant to this Agreement) for
each share of Common Stock so held. In the event that an adjustment in the
number of Rights

 

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per share of Common Stock has been made pursuant to Sections 11, 12 or 13
hereof, at the time of distribution of the Rights Certificates, the Company may
make the necessary and appropriate rounding adjustments (in accordance with
Section 14 hereof) so that Rights Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any fractional Rights. As
of and after the Separation Date, the Rights will be evidenced solely by Rights
Certificates.

(c)          As soon as practicable after the Record Date, the Company will send
a copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit C (the “SUMMARY OF RIGHTS”), by first-class, postage prepaid mail to
each record holder of the Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company. Until
the earlier of the Separation Date or the Expiration Date, the surrender for
transfer of any certificate for 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 Common Stock
represented thereby.

(d)          Certificates for the Common Stock issued after the Record Date but
prior the earlier of the Separation Date or the Expiration Date (as hereinafter
defined), shall be deemed also to be certificates for Rights, and shall bear the
following legend:

This certificate also evidences and entitles the holder hereof to certain Rights
as set forth in the Rights Agreement between Patrick Industries, Inc. (the
“Company”) and National City Bank, as Rights Agent, dated as of March 21, 2006,
as it may be amended from time to time (the “Rights Agreement”), the terms of
which are hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under certain
circumstances, Rights beneficially owned by Acquiring Persons (as defined in the
Rights Agreement) become null and void and the holder of such Rights (including
any subsequent holder) or any Affiliate or Associate thereof (as defined in the
Rights Agreement) shall not have any right to exercise the Rights.

(e)          After the Separation Date but prior to the Expiration Date, Rights
shall, without further action, be issued in connection with the issuance of
Common Stock upon the exercise of stock options granted prior to the Separation
Date or pursuant to other benefits under any employee plan or arrangement
established prior to the Separation Date; provided, however, that if, pursuant
to the terms of any option or other benefit plan, the number of shares issuable
thereunder is adjusted after the Separation Date, the number of Rights issuable
upon issuance of the shares shall be equal only to the number of shares which
would have been issuable prior to the adjustment. In the event that the Company
purchases or acquires any shares of Common Stock after the Record Date but prior
to the Separation 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 that are no
longer outstanding.

 

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Section 4.

Form of Rights Certificates.

(a)          The Rights Certificates (and the form of election to purchase
shares and form of assignment) shall be in substantially the form attached
hereto as Exhibit B and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed or to conform to
usage. Subject to the provisions of this Agreement, the Rights Certificates,
whenever issued, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of shares of Preferred Stock
which shall be set forth therein at the Purchase Price set forth therein,
subject to adjustment as provided in this Agreement.

(b)          Any Rights Certificate issued pursuant hereto that represents
Rights Beneficially Owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) that becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) that becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and that receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing written or oral agreement, arrangement, or understanding regarding
either the transferred Rights, shares of Common Stock, or the Company, or (B) a
transfer that the Board of Directors has determined in good faith to be part of
a plan, agreement, arrangement, or understanding that has as a primary purpose
or effect the avoidance of Section 7(e) hereof shall, upon the written direction
of the Board of Directors, contain (to the extent feasible), the following
legend:

“The Rights represented by this Rights Certificate are or were Beneficially
Owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Stockholders Rights Agreement, dated as of March 21, 2006, as it may be amended
from time (the “Rights Agreement”), by and between Patrick Industries, Inc. and
National City Bank, as Rights Agent). Accordingly, this Rights Certificate and
the Rights represented hereby may become null and void in the circumstances
specified in Section 7(e) of the Rights Agreement.”

 

Section 5.

Countersignature and Registration.

(a)          The Rights Certificates shall be executed on behalf of the Company
by the Chairman of its Board of Directors, its President or any Vice President,
either manually or by facsimile signature and shall have affixed thereto the
Company’s seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. Each Rights Certificate shall be either manually or by

 

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facsimile signature countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.

(b)          Following the Separation Date, the Rights Agent will keep or cause
to be kept, at its principal office or offices designated as the appropriate
place for surrender of Rights Certificate upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced by each of the Rights Certificates,
and the certificate number and the date of each of the Rights Certificates.

Section 6.           Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time
after the Close of Business on the Separation Date, and at or prior to the Close
of Business on the Expiration Date, any Rights Certificate or Certificates
(other than Rights Certificates representing Rights that have become null and
void pursuant to Section 7(e) hereof, that have been redeemed pursuant to
Section 23 hereof, or that have been exchanged pursuant to Section 24 hereof)
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase a like
number of shares of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and executed the
certificate set forth in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
represented by such Rights Certificate or Affiliates or Associates thereof as
the Company shall reasonably request; whereupon, subject to the provisions of
Sections 4, 7 and 14 hereof, the Company shall prepare, execute and deliver to
the Rights Agent, and the Rights Agent shall countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination, or exchange of Rights Certificates.

 

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(b)          Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.

Section 7.           Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Subject to Sections 7(e), 9(c) and 9(f) hereof, (i) the Close of
Business on March 21, 2016 (the “Final Expiration Date”), or (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof or (iii) the time
at which the Rights are exchanged as provided in Section 24 hereof (the earlier
of (i), (ii), and (iii) being the “Expiration Date”), the registered holder of
any Right Certificate may exercise the Rights evidenced thereby in whole or in
part at any time after the Separation Date (except as provided herein) upon
surrender of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the principal
corporate trust office of the Rights Agent, together with payment of the
Purchase Price for each share of Preferred Stock as to which the Rights are
exercised.

(b)          The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $30.00,
and shall be subject to adjustment from time to time as provided in Sections 11,
12 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with Paragraph (c) below. Each one one- hundredth of a
share of Preferred Stock shall be referred to herein as a “Unit” of Preferred
Stock.

(c)          (1) Subject to Section 14 hereof, following the Separation Date,
the Company may (at the direction of the Board of Directors) deposit with a
corporation in good standing organized under the laws of the United States or
any State of the United States, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority (the “Depositary Agent”) certificates
representing the shares of Preferred Stock that may be acquired upon exercise of
the Rights and may cause such Depositary Agent to enter into an agreement
pursuant to which the Depositary Agent shall issue receipts representing
interests in the shares of Preferred Stock so deposited.

(2) Upon receipt of a Rights Certificate representing exercisable Rights, with
the form of election to purchase and the certificate duly executed, accompanied
by payment, with respect to each Right so exercised, of the Purchase Price for
the Units of Preferred Stock (or, following a Triggering Event, other
securities, cash, or other assets, as the case may be) to be purchased thereby
as set forth below and an amount equal to any applicable tax or charge required
to be paid by the holder of such Rights Certificate in accordance with Section 9
hereof, or evidence satisfactory to the Company of payment of such tax or
charge, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i)(A) requisition from any transfer agent of the Preferred Stock
certificates representing such number of shares of Preferred Stock (or fractions
of shares that are integral multiples of one one-hundredth of a share of
Preferred Stock) as are to be purchased and the Company will direct its transfer
agent to comply with all

 

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such requests, and/or (B) requisition from the Depositary Agent depositary
receipts representing such number of Units of Preferred Stock as are to be
purchased and the Company will direct the Depositary Agent to comply with all
such requests, (ii) requisition from the Company the amount of cash, if any, to
be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or such depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. In the event that
the Company is obligated to issue Common Stock or other securities of the
Company, pay cash, and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such Common
Stock, other securities, cash, and/or other property is available for
distribution by the Rights Agent, if and when necessary to comply with this
Agreement. The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11 hereof) may be made in cash or by certified or bank check
or money order payable to the order of the Company.

 

(d)          In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
prepared, executed and delivered to the Rights Agent by the Company,
countersigned by the Rights Agent and delivered to the registered holder of such
Right Certificate or to his duly authorized assigns, subject to the provisions
of Sections 6 and 14 hereof.

(e)          Notwithstanding anything in this Agreement to the contrary, from
and after the time that any Person becomes an Acquiring Person, any Rights
Beneficially Owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and who receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or any such Associate or Affiliate) or to any Person with
whom the Acquiring Person (or such Associate or Affiliate) has any continuing
written or oral agreement, arrangement, or understanding regarding the
transferred Rights, shares of Common Stock or Voting Stock of the Company, or
the Company or (B) a transfer that the Board of Directors has determined in good
faith to be part of a plan, agreement, arrangement, or understanding that has as
a primary purpose or effect the avoidance of this Section 7(e), shall be null
and void without any further action, and any holder of such Rights thereafter
shall have no rights or preferences whatsoever with respect to such Rights,
whether under any provision of this Agreement, the Rights Certificates, or
otherwise (including, without limitation, rights and preferences pursuant to
Sections 7, 11, 12, 13, 14, 23, and 24 hereof). The Company shall use reasonable
efforts to ensure compliance with the provisions of this Section 7(e) and
Section 4(b), but neither the Company nor the Rights Agent shall have any
liability to any holder of Rights or any other Person as a result of the
Company’s failure to make any determination under this Section 7(e) or such
Section 4(b) with respect to an Acquiring Person or its Affiliates, Associates,
or transferees.

 

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(f)           Notwithstanding anything in this Agreement or any Rights
Certificate 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 by such
registered holder unless such registered holder shall have (i) completed and
executed the certificate following the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) of the Rights represented by such Rights
Certificate or Affiliates or Associates thereof as the Company shall reasonably
request.

Section 8.           Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificates purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.

 

Section 9.

Reservation and Availability of Preferred Stock.

(a)          The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
or its authorized and issued shares of Preferred Stock held in its treasury,
free from preemptive rights or any right of first refusal, the number of shares
of Preferred Stock that will be sufficient to permit the exercise in full of all
Rights from time to time outstanding.

(b)          So long as the shares of Preferred Stock issuable upon the exercise
of the Rights may be listed on any national securities exchange, the Company
shall use its best efforts to cause, from and after the time the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.

 

(c)

The Company shall use its best efforts to:

(i)           file, as soon as practicable following the earlier of the
Separation Date or as soon as is required by law, a registration statement under
the Securities Act of 1933 (the “Act”), with respect to the Preferred Stock
purchasable upon exercise of the Rights on an appropriate form;

(ii)          cause such registration statement to become effective as soon as
practicable after the filing; and

(iii)         cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earliest
of

 

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(A) the date as of which Rights are no longer exercisable for such securities,
(B) the Expiration Date and (C) the Redemption Date.

The Company will also take all action necessary to ensure compliance with the
securities or “blue sky” laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed one hundred twenty (120) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statements and permit them
to become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in that jurisdiction shall have been obtained and, if
applicable, until a registration statement has been declared effective.

(d)          The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.

(e)          The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates and
of any shares of Preferred Stock upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of any certificate for shares of Preferred
Stock in respect of a name other than that of, the registered holder of the
Rights Certificate evidencing Rights surrendered for exercise or the issuance or
delivery of any certificates for shares of Preferred Stock, upon the exercise of
any Rights until such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company’s satisfaction that no such tax is due.

Section 10.         Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
shares of Preferred Stock represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock transfer books of the Company are open.

Section 11.        Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of securities covered
by each Right, and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.

 

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(a)          (i)          In the event the Company shall at any time after the
Rights Dividend Declaration Date (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller number of
shares, or (D) issue any shares of its capital stock in a reclassification of
the Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares (or fractions thereof) of Preferred Stock or capital
stock, as the case may be, issuable on such date upon exercise of the Rights,
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 (or fractions thereof)
of Preferred Stock or capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date, such holder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares (or fractions thereof) of capital
stock of the Company issuable upon exercise of one Right. If an event occurs
that would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.

 

(ii)

Subject to Section 23(a), in the event:

 

(A)

any Acquiring Person or any Associate or Affiliate of any Acquiring Person, at
any time after the date of this Agreement, directly or indirectly, shall, other
than pursuant to a Qualifying Offer, (1) merge into the Company or otherwise
combine with the Company and the Company shall be the continuing or surviving
corporation of such merger or combination and Company Common Stock shall remain
outstanding and unchanged, (2) in one transaction or a series of transactions,
transfer any assets to the Company or to any of its Subsidiaries in exchange (in
whole or in part) for shares of Company Common Stock, for other equity
securities of the Company or any such Subsidiary, or for securities exercisable
for or convertible into shares of equity securities of the Company or any of its
Subsidiaries (whether Company Common Stock or otherwise) or otherwise obtain
from the Company or any of its Subsidiaries, with or without consideration, any
additional shares of such equity securities or securities exercisable for or
convertible into such equity securities (other than pursuant to a pro rata
distribution to all holders of Company Common Stock), (3) sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the Company or any of
its Subsidiaries or any employee benefit plan maintained by the Company or any
of its Subsidiaries or any trustee or fiduciary with

 

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respect to such plan acting in such capacity, assets (including securities) on
terms and conditions less favorable to the Company or such Subsidiary or plan
than those that could have been obtained in arm’s-length negotiations with an
unaffiliated third party, other than pursuant to a transaction set forth in
Section 13(a), (4) sell, purchase, lease, exchange, mortgage, pledge, transfer
or otherwise acquire or dispose of, in one transaction or a series of
transactions, to, from or with the Company or any of the Company’s Subsidiaries
or any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting in
such capacity (other than transactions, if any, consistent with those engaged
in, as of the date hereof, by the Company and such Acquiring Person or such
Associate or Affiliate), assets (including securities) having an aggregate fair
market value of more than $3,000,000, other than pursuant to a transaction set
forth in Section 13(a), (5) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of, in one transaction or a series of
transactions, to, from or with the Company or any of its Subsidiaries or any
employee benefit plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such plan acting in such capacity, any
material trademark or material service mark, other than pursuant to a
transaction set forth in Section 13(a), (6) receive, or any designee, agent or
representative of such Acquiring Person or any Affiliate or Associate of such
Acquiring Person shall receive, any compensation from the Company or any of its
Subsidiaries other than compensation for full-time employment as a regular
employee at rates in accordance with the Company’s (or its Subsidiaries’) past
practices, or (7) receive the benefit, directly or indirectly (except
proportionately as a holder of Company Common Stock or as required by law or
governmental regulation), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantage provided by the
Company or any of its Subsidiaries or any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity; or

 

(B)

any Person shall become an Acquiring Person, unless the event causing such
Person to become an Acquiring Person is either a transaction set forth in
Section 13(a) or a Qualifying Offer; or

 

(C)

during such time as there is an Acquiring Person, there shall be any
reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the Company
with any of its Subsidiaries or any other transaction or series of transactions
involving the Company or any of its

 

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Subsidiaries, other than a Qualifying Offer or a transaction or transactions to
which the provisions of Section 13(a) apply (whether or not with or into or
otherwise involving an Acquiring Person), which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity securities of the Company or any of
its Subsidiaries that is directly or indirectly beneficially owned by any
Acquiring Person or any Associate or Affiliate of any Acquiring Person;

then, subject to the cure provisions contained in the definition of Acquiring
Person, upon the date of the occurrence of an event described in Section
11(a)(ii)(A), (B) or (C) (a “Section 11(a)(ii) Event”), proper provision shall
be made so that each holder of a Right (except as provided below and in Section
7(e)) shall thereafter have the right to receive, upon exercise thereof at the
then-current Purchase Price in accordance with the terms of this Agreement, in
lieu of the number of Units of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, such
number of Units of Preferred Stock as shall equal the result obtained by (x)
multiplying the then-current Purchase Price by the then number of Units of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event (such product thereafter being, for all
purposes of this Agreement other than Section 13, the “Purchase Price”), and (y)
dividing that product by 50% of the then-current market price (determined
pursuant to Section 11(d)) per Unit of Preferred Stock on the date of such first
occurrence (such Units of Preferred Stock being the “Adjustment Shares”).

(iii) In the event that the number of shares of Common Stock that are authorized
by the Company’s Articles of Incorporation but are not outstanding or reserved
for issuance for purposes other than upon exercise of the Rights is insufficient
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall take all such action
as may be necessary to authorize additional shares of Common Stock for issuance
upon exercise of the Rights. In the event that the Company shall, after good
faith effort, be unable to take all such actions as may be necessary to
authorize such additional shares of Common Stock, then the Company shall issue
Common Stock to the extent shares thereof are available in connection with
exercise of the Rights and to the extent sufficient shares of Common Stock are
not available therefor shall substitute, for each share of Common Stock that
would otherwise be issuable upon exercise of a Right, a number of Units of
Preferred Shares such that the current per share market price of one Unit of
Preferred Stock multiplied by such number of Units is equal (as nearly as
possible) to the current per share market price of one share of Common Stock as
of the date of issuance of such Units of Preferred Stock. In the event that the
number of shares of Common Stock, together with the number of Units of Preferred
Stock, that are authorized by the Company’s Articles of Incorporation but are
not outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is insufficient to permit the exercise in full of the Rights in
accordance with the foregoing provisions of this subparagraph (iii) and
subparagraph (ii) of this Section 11(a), then the Company shall take all such
action as may be necessary to authorize additional shares of Preferred Stock for
issuance upon exercise of the Rights. In the event that the Company shall, after
good faith effort, be unable to take all such actions as may be necessary to
authorize such additional shares of Common Stock and/or Units

 

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of Preferred Stock, then the Company, by the vote of a majority of the Whole
Board, shall: (A) determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of each such Right (the “Current Value”) over (2) the
Purchase Price (such excess being the “Spread”), and (B) with respect to each
such Right, make adequate provision to substitute for such Adjustment Shares,
upon exercise of such Rights and payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Common Stock, Units of
Preferred Stock, and/or other equity securities of the Company, each to the
extent permitted by the Company’s Articles of Incorporation (including, without
limitation, shares, or units of shares, of preferred stock that the Board of
Directors has deemed to have the same value as shares of Common Stock (the
“Preferred Stock Equivalents”)), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an aggregate value equal
to the Current Value, where such aggregate value has been determined by a
majority of the Board of Directors, after receiving advice from a nationally
recognized investment banking firm; provided, however, that if the Company shall
not have made adequate provision to deliver value pursuant to clause (B) above
within thirty days following the first occurrence of a Section 11(a)(ii) Event
(for purposes hereof, the “Section 11(a)(iii) Trigger Date”), then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, Units of Preferred Stock (to the
extent available) and then, if necessary, cash, which shares of Common Stock,
Units of Preferred Stock and/or cash shall have an aggregate value equal to the
Spread. To the extent that the Company determines that some action need be taken
pursuant to this Section 11(a)(iii), the Company shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all outstanding
Rights. For purposes of this Section 11(a)(iii), the value of a share of Common
Stock shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on the Section 11(a)(iii) Trigger Date, the
value of a Unit of Preferred Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per Unit of Preferred Stock on the
Section 11(a)(iii) Trigger Date, and the value of a unit or share, as
applicable, of any Preferred Stock Equivalent shall be deemed to have the same
value as the Common Stock on such date.

 

(b) In case the Company shall fix a record date for the issuance of rights,
options, or warrants to all holders of any Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five calendar days
after such record date) shares of Preferred Stock (or shares having
substantially the same rights, privileges, and preferences as shares of
Preferred Stock (“Equivalent Preferred Stock”)) or securities convertible into
Preferred Stock or Equivalent Preferred Stock at a price per share of Preferred
Stock or per share of Equivalent Preferred Stock (or having a conversion price
per share, if a security convertible into Preferred Stock or Equivalent
Preferred Stock) less than the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, then the
Purchase Price with respect to the Preferred Stock 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 sum of the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock that the aggregate
offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be

 

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the number of shares of Preferred Stock outstanding on such record date plus the
number of additional shares of Preferred Stock and/or Equivalent Preferred Stock
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration all or part of which
may be in a form other than cash, the value of such consideration shall be as
determined by the Board of Directors, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Shares of Preferred Stock owned by or held for
the account of the Company or any Subsidiary shall not be deemed outstanding for
the purpose of such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price that would then be in effect if such record date had not been
fixed.

 

(c) In case the Company shall fix a record date for a distribution to all
holders of shares of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation), evidences of indebtedness, cash other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company, assets
(other than a dividend payable in shares of Preferred Stock, but including any
dividend payable in stock other than Preferred Stock), or subscription rights,
options, or warrants (excluding those referred to in Section 11(b) hereof),
then, in each case, 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 (as determined pursuant to Section 11(d) hereof) per share
of Preferred Stock on such record date minus the fair market value (as
determined in good faith by a majority of the Whole Board, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding and conclusive for all purposes on the Rights Agent and the holder of
the Rights) of the cash, assets, or evidences of indebtedness so to be
distributed or of such subscription rights or warrants distributable in respect
of a share of Preferred Stock and the denominator of which shall be such current
market price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase Price that
would have been in effect if such record date had not been fixed.

 

(d)(i)    For the purpose of any computation hereunder, the “current market
price” per share of any security, including the Common Stock or any Common
Equity Interest, on any date shall be deemed to be the average of the daily
closing prices per share of such security for the ten consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date; provided,
however, if prior to the expiration of such requisite ten Trading Day period,
the issuer announces either (A) a dividend or distribution on such security
payable in shares of such security or securities convertible into such shares
(other than the Rights), or (B) any subdivision, combination, or
reclassification of such shares, then, following the ex-dividend date for such
dividend or the record date for such subdivision, as the case may be, the
“current market price” for such security shall be properly adjusted to take into
account such event. The closing price for each day shall be, if the shares of
such security are listed and admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting system
with

 

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respect to securities listed on the principal national securities exchange on
which such shares of such security are listed or admitted to trading or, if such
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 such 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 such
shares selected by a majority of the Board of Directors. If on any such date no
market maker is making a market in such shares, the fair value of such shares on
such date as determined in good faith by a majority of the Board of Directors
shall be used. If such shares are not publicly held or not so listed or traded,
“current market price” per share shall mean the fair value per share as
determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. The term “Trading Day” shall mean, if such
shares of such security are listed or admitted to trading on any national
securities exchange, a day on which the principal national securities exchange
on which such shares are listed or admitted to trading is open for the
transaction of business or, if such shares are not so listed or admitted, a
Business Day.

 

(ii) For the purpose of any computation hereunder, the “current market price”
per share of Preferred Stock shall be determined in the same manner as set forth
above for Common Stock in clause (i) of this Section 11(d) (other than the
fourth sentence thereof). If the current market price per share of Preferred
Stock cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(d), the “current market price” per share of Preferred
Stock shall be conclusively deemed to be the “current market price” per share of
the Common Stock multiplied by 100 (as such amount may be appropriately adjusted
to reflect any stock split, reverse stock split, stock dividend, or any similar
transaction with respect to Common Stock occurring after the date of this
Agreement. If neither the Common Stock nor the Preferred Stock is publicly held
or so listed or traded, “current market price” per share of Preferred Stock
shall mean the fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. For all purposes of this Agreement, the “current market price” of a Unit
of Preferred Stock shall be equal to the “current market price” of one share of
Preferred Stock divided by 100.

 

(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent in the Purchase Price; provided,
however, that any adjustments that 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 one-hundredth of a share of Common Stock or
Common Equity Interest or other share or one-millionth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction that mandates
such adjustment or (ii) the Expiration Date.

 

 

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(f) If, as a result of an adjustment made pursuant to Sections 11(a)(ii) or
13(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock other than Preferred Stock, thereafter
the number of such other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a), (b), (c), (d), (e),
(g), (h), (i), (j), (k), (1), and (m), and the provisions of Sections 7, 9, 10,
13, and 14 hereof 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 Units of Preferred Stock (or other
securities or amount of cash or combination thereof) that may be acquired from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.

 

(h) Unless the Company shall have exercised its election as provided in Section
11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Units of Preferred
Stock (calculated to the nearest one one-hundredth of a Unit) obtained by (i)
multiplying (x) the number of Units 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 lieu of any adjustment in the number of
Units of Preferred Stock that may be acquired upon the exercise of a Right. Each
of the Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of Units 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 one-hundredth of a Right) 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, and notify the
Rights Agent in writing, of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than the date of
such public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the

 

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Rights to which such holders shall be entitled after such adjustment. Rights
Certificates to be so distributed shall be issued, executed, and countersigned
in the manner provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names of the holders
of record of Rights Certificates on the record date specified in the public
announcement.

 

(j) Irrespective of any adjustment or change in the Purchase Price or the number
of Units of Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per Unit and the number of Units of Preferred Stock that was
expressed in the initial Rights Certificates issued hereunder.

 

(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value of the number of Units of Preferred
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action that may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue such fully paid and non-assessable number
of Units of Preferred Stock 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 (and shall notify the Rights Agent in writing of any
such election) until the occurrence of such event the issuance to the holder of
any Right exercised after such record date of that number of Units of Preferred
Stock and shares of other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of Units of Preferred
Stock and shares of 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) or securities upon
the occurrence of the event requiring such adjustment.

 

(m) Anything in this Section 11 to the contrary notwithstanding, prior to the
Separation Date, 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 the Board of Directors shall determine
that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of shares of Preferred Stock or securities
that by their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends, or (v) issuance of rights, options, or warrants
referred to in this Section 11, hereafter made by the Company to holders of its
Preferred Stock, shall not be taxable to such holders or shall reduce the taxes
payable by such holders.

 

(n) The Company shall not, at any time after the Separation Date, (i)
consolidate with any other Person (other than a direct or indirect, wholly-owned
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 direct or
indirect, wholly-owned Subsidiary of the Company in a transaction that complies
with Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary
to sell or transfer), in one transaction, or a series of transactions, assets or
earning power aggregating more

 

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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 direct or indirect, wholly-owned Subsidiaries in one or more
transactions, each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger, or sale there are any
rights, warrants, or other instruments or securities outstanding or agreements
in effect that would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with, or
immediately after such consolidation, merger, or sale, the Person that
constitutes, or would constitute, the “Principal Party” for purposes of Section
13(a) hereof shall have distributed or otherwise transferred to its shareholders
or other persons holding an equity interest in such Person Rights previously
owned by such Person or any of its Affiliates and Associates; provided, however,
this Section 11(n) shall not affect the ability of any Subsidiary of the Company
to consolidate with, merge with or into, or sell or transfer assets or earning
power to, any other Subsidiary of the Company.

 

(o) After the Separation Date and so long as any Rights shall then be
outstanding (other than Rights that have become null and void pursuant to
Section 7(e) hereof), the Company shall not, except as permitted by Sections 23,
24, and 27 hereof, take (or permit any Subsidiary of the Company to take) any
action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.

 

(p) Anything in this Agreement to the contrary notwithstanding, in the event
that the Company shall at any time after the Rights Dividend Declaration Date
and prior to the Separation Date (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide any
outstanding shares of Common Stock, (iii) combine any of the outstanding shares
of Common Stock into a smaller number of shares, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Separation Date, shall be proportionately
adjusted so that the number of Rights thereafter associated with each share of
Common Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number
of shares of Common Stock outstanding immediately following the occurrence of
such event. The adjustments provided for in this Section 11(p) shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination, or reclassification is effected. If an event occurs that would
require an adjustment under Section 11(a)(ii) and this Section 11(p), the
adjustments provided for in this Section 11(p) shall be in addition and prior to
any adjustment required pursuant to Section 11(a)(ii).

Section 12.         Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts and computations accounting for
such adjustment, (b) promptly file with the Rights Agent,

 

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and with each transfer agent for the Preferred Stock and the Common Stock, a
copy of such certificate and (c) mail a brief summary thereof to each holder of
a Rights Certificate (or, if prior to the Separation Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 26
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment or statement therein contained and shall have
no duty or liability with respect to, and shall not be deemed to have knowledge
of, any adjustment or any such event unless and until it shall have received
such a certificate.

Section 13.         Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) at any time after a Stock Acquisition Date, in the event
that, directly or indirectly, either (x) the Company shall consolidate with, or
merge with and into, any other Person (other than a direct or indirect,
wholly-owned Subsidiary of the Company in a transaction that complies with
Section 11(o) hereof), and the Company shall not be the continuing or surviving
entity of such consolidation or merger, (y) any Person (other than a direct or
indirect, wholly-owned Subsidiary of the Company in a transaction that complies
with Section 11(o) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving entity 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 converted into or
exchanged for stock or other securities of any other Person (or the Company) or
cash or any other property or (z) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer) to any
Person or Persons (other than the Company or any of its direct or indirect,
wholly-owned Subsidiaries in one or more transactions, each of which complies
with Section 11(o) hereof), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) (any such event described in (x), (y), or (z)
being herein referred to as a “Section 13 Event”); then, and in each such case,
subject to the last sentence of Section 23(a) proper provision shall be made so
that:

(i) each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price multiplied by the number of Units of Preferred Stock for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Units of Preferred Stock, such number of validly
authorized and issued, fully paid, and non-assessable shares of Common Equity
Interest of the Principal Party (which shares shall not be subject to any liens,
encumbrances, rights of first refusal, transfer restrictions, or other adverse
claims) as shall be equal to the result obtained by (1) multiplying such then
current Purchase Price by the number of Units of Preferred Stock for which such
Right is exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such Units of
Preferred Stock for which a Right would be exercisable hereunder but for the
occurrence of such Section 11(a)(ii) Event by the Purchase Price that would be
in effect hereunder but for such first occurrence) and (2) dividing that product
(which, following the first occurrence of a Section 13 Event, shall be the
“Purchase Price” for all purposes of this Agreement) by 50% of the then current
market price (determined pursuant to Section 11(d) hereof) per share of the
Common Equity Interest of such Principal Party on the date of consummation of
such Section 13 Event;

 

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(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement;

 

(iii) the term “Company” shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first occurrence of a
Section 13 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 Equity Interest)
in connection with the consummation of any such transaction as may be necessary
to ensure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be possible, to its shares of Common Equity Interest
thereafter deliverable upon the exercise of the Rights; and

 

(v) the provisions of Section 11(a)(ii) hereof shall be of no further effect
following the first occurrence of any Section 13 Event, and the Rights that have
not theretofore been exercised shall thereafter become exercisable in the manner
described in this Section 13.

 

 

(b)

“Principal Party” shall mean:

 

(i) in the case of any transaction described in clause (x) or (y) of the first
sentence of Section 13(a), (A) the Person (including the Company as successor
thereto or as the surviving entity) that is the issuer of any securities or
other equity interests into which shares of Common Stock are converted in such
merger or consolidation, or, if there is more than one such issuer, the issuer
of Common Equity Interest that has the highest aggregate current market price
(determined pursuant to Section 11(d) hereof) and (B) if no securities or other
equity interests are so issued, the Person (including the Company as successor
thereto or as the surviving entity) that is the other constituent party to such
merger or consolidation, or, if there is more than one such Person, the Person
that is a constituent party to such merger or consolidation, the Common Equity
Interest of which has the highest aggregate current market price (determined
pursuant to Section 11(d) hereof); and

 

(ii) in the case of any transaction described in clause (z) of the first
sentence of Section 13(a), the Person that is the party receiving the largest
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
transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot be
determined, whichever Person that has received assets or earning power pursuant
to such transaction or transactions, the Common Equity Interest of which has the
highest aggregate current market price (determined pursuant to Section 11(d)
hereof);

 

 

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provided, however, that in any such case, (1) if the Common Equity Interest 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 (“Registered
Common Equity Interest”), and such Person is a direct or indirect Subsidiary of
another Person that has Registered Common Equity Interest outstanding,
“Principal Party” shall refer to such other Person; (2) if the Common Equity
Interest of such Person is not Registered Common Equity Interest, and such
Person is a direct or indirect Subsidiary of another Person (other than an
individual), but is not a direct or indirect Subsidiary of another Person that
has Registered Common Equity Interest outstanding, “Principal Party” shall refer
to the ultimate parent entity of such first-mentioned Person; (3) if the Common
Equity Interest of such Person is not Registered Common Equity Interest, and
such Person is directly or indirectly controlled by more than one Person, and
one or more of such other Persons has Registered Common Equity Interest
outstanding, “Principal Party” shall refer to whichever of such other Persons is
the issuer of the Registered Common Equity Interest having the highest aggregate
current market price (determined pursuant to Section 11(d) hereof); and (4) if
the Common Equity Interest of such Person is not Registered Common Equity
Interest, and such Person is directly or indirectly controlled by more than one
Person (one or more of which is a Person other than an individual), and none of
such other Persons has Registered Common Equity Interest outstanding, “Principal
Party” shall refer to whichever ultimate parent entity is the corporation having
the greatest stockholders’ equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.

 

(c) The Company shall not consummate any Section 13 Event unless the Principal
Party shall have a sufficient number of authorized shares of its Common Equity
Interest that have not been issued (or reserved for issuance) or that are held
in its treasury to permit the exercise in full of the Rights in accordance with
this Section 13, and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that the Principal Party shall use its best efforts to:

 

(i) (A) prepare and file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement under the
Securities Act with respect to the shares of Common Equity Interest that may be
acquired upon exercise of the Rights, (B) cause such registration statement to
remain effective (and to include a prospectus at all times complying with the
requirements of the Securities Act) until the Expiration Date, and (C) take such
action as may be required to ensure that any acquisition of such shares of
Common Equity Interest upon the exercise of the Rights complies with any
applicable state security or “Blue Sky” laws as soon as practicable following
the execution of such agreement;

 

(ii) as soon as practicable after the execution of such agreement, deliver to
holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates that comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act; and

 

 

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(iii) obtain any and all regulatory approvals as may be required with respect to
the shares of Common Equity Interest securities that may be acquired upon
exercise of the Rights.

 

(d) In case the Principal Party that is to be a party to a transaction referred
to in this Section 13 has at the time of such transaction, or immediately
following such transaction will have, a provision in any of its authorized
securities or in its articles of incorporation or by-laws or other instrument
governing its affairs, or any other agreements or arrangements, 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, shares of Common Equity Interest of such
Principal Party at less than the then current market price per share (determined
pursuant to Section 11(d) hereof) or securities exercisable for, or convertible
into, Common Equity Interest of such Principal Party at less than such then
current market price (other than to holders of Rights pursuant to this Section
13); (ii) providing for any special payment, tax, or similar provisions in
connection with the issuance of the Common Equity Interest of such Principal
Party pursuant to the provisions of Section 13; or (iii) otherwise eliminating
or substantially diminishing the benefits intended to be afforded by the Rights
in connection with, or as a consequence of, the consummation of a transaction
referred to in 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 cancelled, 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.

 

(e) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights that have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).

 

 

Section 14.

Fractional Rights and Fractional Shares.

(a)          The Company shall not be required to issue fractional Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Current Market
Price of a whole Right as of the date on which such fractional Rights would have
been otherwise issuable.

(b)          The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Subject to Section 7(c) hereof, fractions of shares
of Preferred Stock in integral multiples of one one-hundredth of a share of
Preferred Stock may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
Depositary Agent selected by it. In lieu of fractional

 

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shares of Preferred Stock that are not integral multiples of one one-hundredth
of a share of Preferred Stock, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the Current Market Price of one
one-hundredth of a share of Preferred Stock as of the date of such exercise.

(c)          The Company shall not be required to issue fractions of shares of
Common Stock upon the exercise of Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares, the
Company may pay to the registered holders of Rights Certificates, at the time
such Rights are exercised as herein provided, an amount in cash equal to the
same fraction of the Current Market Price of one share of Common Stock as of the
date of such exercise.

(d)          The holder of a Right by its acceptance thereof expressly waives
any right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as permitted by this Section 14.

Section 15.        Rights of Action. All rights of action in respect of this
Agreement other than rights vested in the Rights Agent as provided herein are
vested in the respective registered holders of the Rights Certificates (and,
prior to the Separation Date, the registered holders of the Common Stock); and
any registered holder of any Rights Certificate (or, prior to the Separation
Date, of the Common Stock) without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Separation Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his rights pursuant to this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the obligations hereunder of
any Person subject to this Agreement.

Section 16.        Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:

(a)          prior to the Separation Date, the Rights will be transferable only
in connection with the transfer of Common Stock;

(b)          after the Separation Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
corporate trust office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;

(c)          subject to Sections 6 and 7, the Company and the Rights Agent may
deem and treat the person in whose name a Rights Certificate (or, prior to the
Separation Date, the associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the associated
Common Stock certificate made by anyone other than the Company

 

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or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and

(d)          notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned.

Section 17.        Rights Holder Not Deemed a Shareholder. Except as otherwise
expressly provided in this Agreement, no holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of the shares of Preferred Stock or any other securities of
the Company that may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders, or to
receive dividends or subscription rights, or otherwise, until and only to the
extent that the Right or Rights evidenced by such Rights Certificate shall have
been exercised in accordance with the provisions of this Agreement.

 

Section 18.

Concerning the Rights Agent.

(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
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises. The indemnification
provided for hereunder shall survive the expiration of the Rights, the
termination of this Agreement and the resignation or removal of the Rights
Agent. The costs and expenses of enforcing this right of indemnification shall
also be paid by the Company.

(b)          The Rights Agent may conclusively rely upon and shall be protected
and shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,

 

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certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.

(c)          Notwithstanding anything in this Agreement to the contrary, in no
event shall the Rights Agent be liable for any special, indirect or
consequential losses or damages of any kind whatsoever (including but not
limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage and regardless of the form of the action.

Section 19.        Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 of this Agreement. In case at
the time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.

In case at any time the name of the Rights Agent shall be changed and at such
time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.

Section 20.        Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:

(a)          Before the Rights Agent acts or refrains from acting, it may
consult with legal counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.

(b)          Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without

 

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limitation, the identity of any Acquiring Person) be proved or established by
the Company prior to taking or omitting any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the Chief Executive Officer,
the President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent, for
any action taken or omitted in good faith by it under the provisions of this
Agreement in reliance upon such certificate.

(c)          The Rights Agent shall be liable hereunder only for its own gross
negligence or willful misconduct.

(d)          The Rights Agent shall not be liable for or by reason of any of the
statements of facts or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.

(e)          The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Sections 11
or 13 of this Agreement or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.

(f)           The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.

(g)          The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken, omitted or suffered to be taken by it in good faith in accordance
with instructions of any such officer or for any delay in acting while waiting
for such instructions.

(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

 

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become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other Person.

(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. The Rights Agent will not be under any duty or
responsibility to ensure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer or exchange of Rights
Certificates.

(j)           No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.

(k)          The Rights Agent shall not be required to take notice or be deemed
to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any Person as an Acquiring Person, Affiliate, Associate or Subsidiary) under the
Rights Agreement unless and until the Rights Agent shall be specifically
notified in writing by the Company of such fact, event or determination.

Section 21.         Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days’ notice in writing mailed to the Company, and to each transfer
agent of the Common Stock and Preferred Stock by registered or certified mail,
and, at the expense of the Company, to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days’ notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of the State of Indiana (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of Indiana), in good standing,
which is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its

 

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appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

Section 22.        Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or the Rights Certificates to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by a majority of the Board of Directors to reflect
any adjustment or change made in accordance with the provisions of this
Agreement in the Purchase Price or the number or kind or class of shares or
other securities or property that may be acquired under the Rights Certificates.
In addition, in connection with the issuance or sale of shares of Common Stock
following the Separation Date and prior to the Expiration Date, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

 

Section 23.

Redemption and Termination.

(a)          The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the tenth day following the Stock Acquisition
Date, or (ii) the Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the “REDEMPTION PRICE”); and the Company may, at its option, by
action of a majority of the Whole Board, pay the Redemption Price either in
shares of Company Common Stock, of the shares of Company Common Stock at the
time of redemption) or cash. Subject to the foregoing, the redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Whole Board in its sole discretion may establish.
Notwithstanding anything in this Agreement to the contrary, no Rights may be
exercised at any time that the Rights are subject to redemption in accordance
with the terms of this Agreement.

 

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(b)          Promptly upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, evidence of which shall have been filed
with the Rights Agent, and without any further action and without any notice,
the right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price for each Right as
held. Within 10 days after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or prior to the Separation Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. In any case, failure
to give such notice to any particular holder of Rights shall not affect the
sufficiency of the notice to other holders of Rights.

 

Section 24.

Exchange.

(a)          The Board of Directors may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become null and
void pursuant to the provisions of Section 7(e) hereof) for Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend, or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as the
“Exchange Ratio”). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Acquiring Person,
together with all Affiliates and Associates of such Acquiring Person, becomes
the Beneficial Owner of shares of Voting Stock representing 50% or more of the
total Voting Power of the aggregate of all shares of Voting Stock then
outstanding.

(b)          Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 24 and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give (i) written notice to the Rights Agent of any such exchange and
(ii) 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 that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights that will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights that have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.

(c)          In the event that there are not sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated

 

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in accordance with this Section 24, the Company shall take all such action as
may be necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights. In the event the Company, after good faith effort,
is unable to take all such action as may be necessary to authorize such
additional shares of Common Stock, the Company shall substitute Units of
Preferred Stock (or equivalent Preferred Stock) for Common Stock exchangeable
for Rights, at the initial rate of one Unit of Preferred Stock (or equivalent
Preferred Stock) for each share of Common Stock, as appropriately adjusted to
reflect stock splits, stock dividends, and other similar transactions after the
date hereof.

(d)          The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional Common
Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share of Common Stock.

 

Section 25.

Notice of Certain Events.

(a)          In case the Company shall propose (i) to pay any dividend payable
in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly
cash dividend at a rate not in excess of $1 per share), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any
Section 13 Event, or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, Section 13 Event, liquidation, dissolution, or winding up is
to take place and the date of participation therein by the holders of the shares
of Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 20
days prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock
whichever shall be the earlier.

(b)          Upon the occurrence of a Section 11(a)(ii) Event or a Section 13
Event, the Company or Principal Party, as the case may be, shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26, a notice of the occurrence of
such event and the consequences thereof to holders of Rights under Sections 11
or 12 of this Agreement, as the case may be.

Section 26.         Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sent by first class mail, postage prepaid
registered or certified mail and shall

 

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be deemed given upon receipt and addressed (until another address is filed in
writing with the Rights Agent) as follows:

Patrick Industries, Inc.

1800 South 14th Street

P.O. Box 638

Elkhart, Indiana 46515

Attention: Secretary

Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sent by registered or certified
mail and shall be deemed given upon receipt and addressed (until another address
is filed in writing with the Company) as follows:

National City Bank

Shareholder Services Administration

629 Euclid Avenue, Location 01-3116

Cleveland, OH 44144

 

Attn:

Pamela Fisher

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company. The Company shall deliver a copy of any notice or demand
it delivers to the holder of any Rights Certificate to the Rights Agent and the
Rights Agent shall deliver a copy of any notice or demand it delivers to the
holder of any Rights Certificate to the Company.

Section 27.         Supplements and Amendments. Subject to the penultimate
sentence of this Section 27, the Company, by action of the Board of Directors,
may from time to time supplement or amend this Agreement without the approval of
any holders of Rights in order to cure any ambiguity, to correct or supplement
any provision contained herein that may be defective or inconsistent with any
other provisions herein, to shorten or lengthen any time period hereunder, or to
make any other provisions with respect to the Rights that the Company may deem
necessary or desirable, any such supplement or amendment to be evidenced by a
writing signed by the Company and the Rights Agent; provided, however, that from
and after such time as any Person becomes an Acquiring Person, this Agreement
shall not be amended in any manner that would adversely affect the interests of
the holders of Rights as such (other than Rights that have become null and void
pursuant to Section 7(e) hereof). Without limiting the foregoing, the Company,
by action of the Board of Directors, may at any time prior to such time as any
Person becomes an Acquiring Person amend this Agreement (A) to make the
provisions of this Agreement inapplicable to a particular transaction by which a
Person would otherwise become an Acquiring Person or to otherwise alter the
terms and conditions of this Agreement as they may apply with respect to any
such transaction; and (B) to lower the thresholds set forth in Section 1(a) and
in the definition of Separation Date to not less than the greater of (i) the sum
of .001% and the largest percentage of Voting Power represented by the then
outstanding shares of Voting Stock then known by the Company to be Beneficially
Owned by any Person (other than

 

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the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any trustee or fiduciary holding
shares of Voting Stock for, or pursuant to the terms of, any such plan, acting
in such capacity), and (ii) 10%; provided, however, no amendment may lower the
thresholds set forth in Section 1(a) with respect to any or all of Jeffrey L.
Gendell, Tontine Capital Partners, L.P. and Tontine Capital Management L.L.C. or
any of their Affiliates or Associates, acting individually, with another Person,
or as part of the group identified by the Schedule 13D filed with the SEC
relating to the Stock Purchase Agreement as first filed with the Securities and
Exchange Commission. Upon delivery of a certificate from an appropriate officer
of the Company that 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; provided, however, that no supplement or amendment
may be made to Sections 18, 19, 20, or 21 hereof or shall otherwise affect the
duties or obligations of the Rights Agent without the consent of the Rights
Agent. Prior to the Separation Date, the interests of the holders of Rights
shall be deemed coincident with the interests of the holders of Common Stock.

Section 28.         Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

Section 29.        Determinations and Actions by the Board of Directors, Etc.
(a) For all purposes of this Agreement, any calculation of the number of shares
of any class or series of Voting Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Voting Stock of which any Person is the Beneficial Owner
(or the particular percentage of Voting Power if such shares of Voting Stock
represented by shares of Voting Stock Beneficially Owned by such Person), shall
be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
Exchange Act Regulations as in effect on the date hereof. Except as otherwise
specifically provided herein, the Board of Directors of the Company shall have
the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board of Directors of the
Company or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power (i) to interpret the provisions of this Agreement and (ii) to make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend this 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 in good faith shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject the Board of
Directors of the Company or any member thereof to any liability to the holders
of the Rights.

(b)          It is understood that the TIDE Committee (as described below) of
the Board of Directors shall review and evaluate this Agreement in order to
consider whether the maintenance of this Agreement continues to be in the best
interests of the Company, its stockholders and other relevant constituencies of
the Company at least once every three years, or sooner than that if any Person
shall have made a proposal to the Company or its stockholders, or taken any
other action that, if effective, could cause such Person to become an Acquiring
Person

 

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hereunder, if a majority of the members of the TIDE Committee shall deem such
review and evaluation appropriate after giving due regard to all relevant
circumstances. Following each such review, the TIDE Committee shall communicate
its conclusions to the full Board of Directors, including any recommendation in
light thereof as to whether this Agreement should be modified or the Rights
should be redeemed. The TIDE Committee shall be comprised of members of the
Board of Directors who are not officers, employees or Affiliates of the Company
and shall be the Nominating, Governance and Review Committee of the Board of
Directors (or any successor committee) as long as the members of such committee
meet such requirements.

(c)          The TIDE Committee and the Board of Directors, when considering
whether this Agreement should be modified or the Rights should be redeemed,
shall have the power to set their own agenda and to retain at the expense of the
Company their choice of legal counsel, investment bankers and other advisors.
The TIDE Committee and the Board of Directors, when considering whether this
Agreement should be modified or the Rights should be redeemed, shall have the
authority to review all information of the Company and to consider any and all
factors they deem relevant to an evaluation of whether this Agreement should be
modified or the Rights should be redeemed.

Section 30.        Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the Separation
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Separation Date,
registered holders of the Common Stock).

Section 31.         Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

Section 32.        Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Indiana and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State, except that the rights, duties
and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of Ohio.

Section 33.         Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

Section 34.   Descriptive Headings. Descriptive headings of the several Sections
of this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.

 

- 37 -

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

NATIONAL CITY BANK,
as Rights Agent

PATRICK INDUSTRIES, INC.

By:

By:

Name:

Name:

Title:

Title:

Attest:

Attest:

By:

By:

Name:

Name:

Title:

Title:

 

 

- 38 -

 

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Exhibit A

CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND

RIGHTS OF PREFERRED STOCK

of

PATRICK INDUSTRIES, INC.

Pursuant to Section 23-1-25-2

Business Corporation Law of the State of Indiana

We, the President and Secretary of Patrick Industries, Inc., a corporation
organized and existing under the Business Corporation Law of the State of
Indiana, in accordance with the provisions of Section 23-1-25-2 thereof, DO
HEREBY CERTIFY:

That pursuant to the authority conferred upon the Board of Directors by the
Articles of Incorporation of the said Corporation, the said Board of Directors
on February 29, 1996, adopted the following resolution creating a series of
100,000 shares of Preferred Stock designated as "Preferred Stock, Series A":

NOW BE IT RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, as amended, a series of Preferred Stock of the
Corporation be, and it hereby is, created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:

SECTION 1.Designation and Amount.

The shares of such series shall be designated as "Preferred Stock, Series A"
(the "Preferred Stock") and the number of shares constituting such series shall
be 100,000. The Preferred Stock may be issued in fractional amounts that are
integral multiples of one one-hundredth.

SECTION 2.Dividends and Distributions.

(A)         Subject to the prior and superior rights of the holders of any
shares of any series of preferred stock ranking prior and superior to the shares
of Preferred Stock with respect to dividends, the holders of shares of Preferred
Stock, in preference to the holders of common stock, without par value, of the
Corporation (the "Common Stock") and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the fifteenth day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Preferred Stock, in an amount per

 

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share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Preferred Stock. In the event the Corporation shall at any time on or after
March 20, 1996 declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision of combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.

(B)         The Corporation shall declare a dividend or distribution on the
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).

(C)         Dividends shall begin to accrue and be cumulative on outstanding
shares of Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Preferred Stock, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share by share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
be not more than 60 days prior to the date fixed for the payment thereof.

SECTION 3.Voting Rights.

The holders of shares of Preferred Stock shall have the following voting rights:

(A)         Subject to the provision for adjustment hereinafter set forth, each
share of Preferred Stock shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the shareholders of the Corporation. In the event
the Corporation shall at any time on or after March 20, 1996 declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of

 

A-2

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Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which holders of
shares of Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event, and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

(B)         Except as otherwise provided herein or by law, the holders of shares
of Preferred Stock and the holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of shareholders of the
Corporation.

(C)         Except as set forth herein, holders of Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.

SECTION 4.Certain Restrictions.

(A)         Whenever quarterly dividends or other dividends or distributions
payable on the Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:

(i)           declare or pay dividends on, or make any other distributions on,
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Preferred Stock;

(ii)          declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Preferred Stock, except dividends paid
ratably on the Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;

(iii)        redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) to the Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to the
Preferred Stock; or

(iv)         purchase or otherwise acquire for consideration any shares of
Preferred Stock, or any shares of stock ranking on a parity with the Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.

 

A-3

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(B)         The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.

SECTION 5.Reacquired Shares.

Any shares of Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of preferred stock and may be reissued as part of
a new series of preferred stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.

SECTION 6.Liquidation, Dissolution or Winding Up.

Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Preferred Stock unless, prior thereto, the holders of shares of Preferred Stock
shall have received $100.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, provided that the holders of shares of Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Preferred Stock, except distributions made ratably on the
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time on or after March 20, 1996 declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

SECTION 7.Consolidation, Merger, etc.

In case the Corporation shall enter into any consolidation, merger, combination
or other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Preferred Stock then outstanding shall at the same
time be similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the

 

A-4

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case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time on or after March 20,
1996 declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Preferred Stock shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

SECTION 8.No Redemption.

The shares of Preferred Stock shall not be redeemable. The preceding sentence
shall not limit the ability of the Corporation to purchase or otherwise deal in
such shares of stock to the extent permitted by law.

SECTION 9.Amendment.

The Articles of Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers, preferences or special
rights of the Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds or more of the outstanding shares
of Preferred Stock, voting as a single class.

 

A-5

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Exhibit B

[Form of Rights Certificate]

Certificate No. R-

Rights

NOT EXERCISABLE AFTER MARCH ??, 2016 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN.

THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT.

[THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECAME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.]

 

RIGHTS CERTIFICATE

PATRICK INDUSTRIES, INC.

 

This certifies that                                           
                                    or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of March ??, 2006 (the “RIGHTS AGREEMENT”) between Patrick Industries,
Inc., an Indiana corporation (the “COMPANY”), and National City Bank, as rights
agent (the “RIGHTS AGENT”), unless notice of redemption or exchange shall have
been previously given by the Company, to purchase from the Company at any time
after the Separation Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M. (Eastern Standard Time) on March ??, 2016 at the principal
corporate trust office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid nonassessable share of the
Preferred Stock, (the “PREFERRED STOCK”), without par value, of the Company, at
a purchase price of $30.00 per one one-hundredth share (the “PURCHASE PRICE”)
upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase duly executed. The Purchase Price may be paid in cash or by
certified bank check or money order payable to the order of the Company.

The number of Rights evidenced by this Rights Certificate (and the number of
shares of Preferred Stock which may be purchased upon exercise thereof) and the
Purchase Price set forth above have been determined as of March ??, 2006, based
on the Common Stock of the Company as constituted at such date. As provided in
the Rights Agreement, the Purchase Price and the number of shares of Preferred
Stock or other securities, cash or other property which may be

 

 

B-1

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purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events.

If the Rights evidenced by this Rights Certificate are or were formerly
beneficially owned, on or after the earlier of the Separation Date (as defined
in the Rights Agreement) and the Stock Acquisition Date (as defined in the
Rights Agreement), by an Acquiring Person or an Affiliate, Associate or direct
or indirect transferee of an Acquiring Person, such Rights shall become null and
void and the holder of any such Right (including any subsequent holder) shall
not have any right with respect to such Right.

This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used in this Rights Certificate have the same meanings as such
terms are defined in the Rights Agreement. Copies of the Rights Agreement are on
file at the principal executive offices of the Company and the office of the
Rights Agent.

This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.

Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Company at its option at a redemption price
of $0.01 per Right at any time prior to the earlier of (i) the close of business
on the tenth day following the time it becomes public that an Acquiring Person
has become such and (ii) the Expiration Date, subject to extension in certain
circumstances.

No fractional shares of Preferred Stock (other than fractions that are integral
multiples of one one-hundredth of share of Preferred Stock, which may, at the
election of the Company, be evidenced by depository receipts) are required to be
issued upon the exercise of any Right or Rights evidenced hereby, but in lieu
thereof the Company may elect to make a cash payment, as provided in the Rights
Agreement.

No holder of this Rights Certificate, as such, shall be entitled to vote or to
receive dividends or shall be deemed, for any purpose, the holder of Preferred
Stock or of any other securities, cash or property which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or this Rights Certificate be construed to confer upon the holder
hereof, as such, any of the rights of a shareholder of the Company, including,
without limitation, any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to

 

 

B-2

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receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or to institute, as a holder of Preferred Stock or other securities
issuable on the exercise of the Rights represented by this Certificate, any
derivative action, or otherwise, until and only to the extent the Right or
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.

This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.

WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal. Dated as of __________, 20__.

PATRICK INDUSTRIES, INC.

By:                                                         

Title:                                                     

ATTEST:

Secretary Countersigned:

By                                             

Authorized Signature

 

 

 

B-3

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[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such holder desires to transfer the
Rights Certificates.)

FOR VALUE RECEIVED, _________________________________ hereby sells, assigns and
transfers unto ____________________________ (Please print name and address of
transferee) this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_____________________ Attorney to transfer the within Rights Certificate on the
books of the within-named Company, with full power of substitution.

Dated:

, 20__

Signature

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

 

CERTIFICATE

 

The undersigned hereby certifies by checking the appropriate boxes that:

(i)           this Rights Certificate o is o is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);

(ii)          after due inquiry and to the best knowledge of the undersigned, it
o did o did not acquire the Rights evidenced by this Rights Certificate from any
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.

 

Dated:

, 20__

Signature

 

 

 

B-4

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Signature Guaranteed:

Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

NOTICE

The signature to the foregoing Assignment must correspond to the name as written
upon the face of this Rights Certificate in every particular, without alteration
or enlargement or any change whatsoever.

In the event the certification set forth above in the Form of Assignment is not
completed, the Company will deem the beneficial owner of the Rights evidenced by
this Right Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and, in the case of an Assignment,
will affix a legend to that effect on any Rights Certificate issued in exchange
for this Rights Certificate.

 

 

 

B-5

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FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise the Rights represented by this
Rights Certificate)

To: Patrick Industries, Inc.

The undersigned hereby irrevocably elects to exercise __________________ Rights
represented by this Rights Certificate to purchase the shares of Preferred
Stock, , or other securities, cash or other property issuable upon the exercise
of such Rights and requests that certificates for such shares or other
securities be issued in the name of, and such cash or other property be paid to:

Please insert social security or other identifying number

 

(Please print name and address)

 

If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the remaining balance of such Rights
shall be registered in the name of and delivered to:

Please insert social security or other identifying number

 

(Please print name and address)

 

 

Dated:

, 20__

Signature

 

(Signature must conform in all respects to name of holder as specified on the
face of this Rights Certificate)

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

 

 

 

B-6

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CERTIFICATE

 

The undersigned hereby certifies by checking the appropriate boxes that:

(i)           this Rights Certificate o is o is not being exercised by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);

(ii)          after due inquiry and to the best knowledge of the undersigned, it
o did o did not acquire the Rights evidenced by this Rights Certificate from any
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.

 

Dated:

, 20__

Signature

 

 

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

NOTICE

 

The signature on the foregoing Form of Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.

In the event the certification set forth above in the Form of Election is not
completed, the Company will deem the beneficial owner of the Rights evidenced by
this Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and, in the case of an Assignment,
will affix a legend to that effect on any Rights Certificate issued in exchange
for this Rights Certificate.

 

 

B-7

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Exhibit C

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED STOCK

The Board of Directors of Patrick Industries, Inc., an Indiana corporation (the
“COMPANY”), has declared a dividend of a right (a “RIGHT”) for each share of
Common Stock, without par value, of the Company (the “COMMON STOCK”). The
dividend is payable to shareholders of record at the close of business on
March 31, 2006 (the “RECORD DATE”) and with respect to all shares of Common
Stock that become outstanding after the Record Date and prior to the earliest of
the Separation Date (as defined below), the redemption of the Rights, the
exchange of the Rights and the expiration of the Rights. Except as set forth
below and subject to adjustment as provided in the Rights Agreement (as defined
below), each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of the Company’s Preferred Stock, Series A, without
par value (the “PREFERRED STOCK”), at an exercise price of $30 per Right (the
“PURCHASE PRICE”). The description and terms of the Rights are set forth in a
Rights Agreement dated as of March 21, 2006 (the “RIGHTS AGREEMENT”), between
the Company and National City Bank, as Rights Agent (the “RIGHTS AGENT”).

The Rights will be evidenced by Common Stock certificates and not separate
certificates until the earlier to occur of (i) 10 days following the date of
public disclosure that a person or group, together with persons affiliated or
associated with it (an “ACQUIRING PERSON”), has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the voting power of the
aggregate of all shares of voting stock of the Company (the “STOCK ACQUISITION
DATE”) and (ii) 10 days following commencement or disclosure of an intention to
commence a tender offer or exchange offer by a person other than the Company and
certain related entities if, upon consummation of the offer, such person or
group, together with persons affiliated or associated with it, could acquire
beneficial ownership of 30% or more of the total voting power of all shares of
voting stock of the Company (the earlier of such dates being called “SEPARATION
DATE”) except in either case pursuant to an offer for all outstanding shares of
Common Stock which the independent directors determine to be fair and not
inadequate and to otherwise be in the best interests of the Company and its
stockholders, after receiving advice from one or more investment banking firms
(a “QUALIFIED OFFER”). The definition of an Acquiring Person does not include
any or all of Jeffrey L. Gendell, Tontine Capital Partners, L.P. and Tontine
Capital Management L.L.C. or any of their Affiliates or Associates, acting
individually, with another Person, or any group, solely to the extent they
individually or in the aggregate, beneficially own less than 30% of the Voting
Power of the aggregate of the Voting Stock of the Company outstanding. Acquiring
Person also shall not include other than as a result of repurchases of stock by
the Company, certain inadvertent actions by stockholders. Until the Separation
Date (or earlier redemption or expiration of the Rights), the transfer of Common
Stock will also constitute transfer of the associated Rights. Following the
Separation Date, separate certificates will evidence the Rights.

The Rights will first become exercisable on the Separation Date (unless sooner
redeemed or exchanged). The Rights will expire at the close of business on March
??, 2016 (the

 

 

C-1

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“EXPIRATION DATE”), unless earlier redeemed or exchanged by the Company as
described below.

The Purchase Price and the number of shares of Preferred Stock or other
securities, cash or other property issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend or distribution on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights, options, warrants to subscribe for Preferred
Stock or securities convertible into Preferred Stock at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to holders
of the Preferred Stock of other securities, cash (excluding regular periodic
cash dividends at an annual rate not in excess of 125% of the annualized rate of
cash dividends paid during the preceding fiscal year), property, evidences of
indebtedness, or assets.

In the event that, other than pursuant to a Qualifying Offer, (i) the Company is
the surviving corporation in a merger or combination with an Acquiring Person
and shares of Company Common Stock shall remain outstanding, (ii) a Person
becomes an Acquiring Person, (iii) an Acquiring Person engages in one or more
“self-dealing” transactions as set forth in the Rights Agreement, or (iv) during
such time as there is an Acquiring Person, an event occurs that results in such
Acquiring Person’s ownership interest being increased by more than 1% (e.g., by
means of a recapitalization) (each such event being a “Section 11(a)(ii)
Event”), then, in each such case, each holder of a Right will thereafter have
the right to receive, upon exercise, Units of Preferred Stock (or, in certain
circumstances, Company Common Stock, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right. The
exercise price is the Purchase Price multiplied by the number of Units of
Preferred Stock issuable upon exercise of a Right prior to the events described
in this paragraph. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate or associate of any
Acquiring Person will be null and void.

In the event that, at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger (other than a merger described in the preceding
paragraph) or other business combination transaction and the Company is not the
surviving corporation, (ii) any Person consolidates or merges with the Company
and all or part of the Company Common Stock is converted or exchanged for
securities, cash or property of any other Person or (iii) 50% or more of the
Company’s assets or earning power is sold or transferred, then each holder of a
Right (except Rights which previously have been voided as described above) shall
thereafter have the right to receive, upon exercise, common stock of the
ultimate parent of the Acquiring Person having a value equal to two times the
exercise price of the Right.

The events described in the two paragraphs above are “TRIGGERING EVENTS.”

Any Rights beneficially owned at any time on or after the Separation Date by an
Acquiring Person or an affiliate or associate of an Acquiring Person (whether or
not such ownership is subsequently transferred) will become null and void upon
the occurrence of the

 

 

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earlier of the Board of Directors decision to exchange the Rights and a
Triggering Event, and any holder of such Rights will have no right to exercise
such Rights.

With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price. Holders will have no right to receive fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon the exercise of Rights. In
lieu of such fractional shares, an adjustment in cash may be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise.

The number of outstanding Rights and the number of one one-hundredths of a share
of Preferred Stock issuable upon exercise of each Right and the Purchase Price
are also subject to adjustment in the event of a stock split of the Common Stock
or distributions, subdivisions, consolidations or combinations of the Common
Stock occurring, in any such case, prior to the Separation Date.

At any time prior to the earlier of (i) the closing of business on the tenth day
following the time that it becomes public that an Acquiring Person has become
such and (ii) the Expiration Date, the Company may redeem the Rights in whole,
but not in part, at a price of $0.01 per Right. Immediately upon the action of
the Company’s Board of Directors electing to redeem the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
thereafter will be to receive the applicable redemption price.

At any time any person becomes an Acquiring Person and prior to such time as
such person, together with its affiliates becomes the beneficial owner of at
least 50% of the Company’s outstanding Common Stock, the Company may, provided
that all necessary regulatory approvals have been obtained, exchange the Rights
(other than Rights owned by such Acquiring Person which become null and void),
in whole or in part, at a ratio of one share of Common Stock per Right, subject
to adjustment.

Until a Right is exercised, the holder has no rights as a shareholder of the
Company, including, without limitation, the right to vote or to receive
dividends or distributions. The Company may, without the approval of any holder
of the Rights, but only if at that time the Board of Directors consists of a
majority of disinterested directors, supplement or amend any provision of the
Rights Agreement, except the redemption window, the Purchase Price or the
redemption price.

Preferred Stock purchasable upon exercise of the Rights will not be redeemable.
Each share of Preferred Stock will be entitled to a minimum preferential
quarterly dividend payment of $1.00 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per share of Common Stock,
if it is greater. In the event of liquidation, the holders of the Preferred
Stock will be entitled to a minimum preferential liquidation payment of $100.00
per share, but will be entitled to an aggregate payment of 100 times the payment
made per share of Common Stock, if it is greater. In the event of any merger or
other business combination in which Common Stock is exchanged, each share of
Preferred Stock will be entitled to receive 100 times the amount received per
share of Common Stock. These rights are protected by customary antidilution
provisions.

 

 

 

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Because of the nature of the Preferred Stock’s dividend, liquidation and voting
rights, the value of the one one-hundredth of a share of Preferred Stock
purchasable upon exercise of each Right is intended to approximate the value of
one share of Common Stock.

The Rights have certain anti-takeover effects. The Rights may cause substantial
dilution to a person or group that attempts to acquire the Company on terms not
approved by the Company’s Board of Directors, except pursuant to an offer
conditioned upon a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors prior to the time a person or group has acquired
beneficial ownership of 20% or more of the Common Stock (30% in the case of
certain beneficial owners), because until such time, the Rights may be redeemed
by the Company at $0.01 per Right and the Rights Agreement may be amended.

A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission and is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.

 

 

 

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