EXHIBIT 4.1
RIGHTS AGREEMENT
RIGHTS AGREEMENT dated as of March 19, 1997 (the "Agreement"),
between STEEL OF WEST VIRGINIA, a Delaware corporation (the "Company") and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY (the "Rights Agent").
WHEREAS, effective March 13, 1997 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a
distribution of one right for each share of common stock, par value $.01 per
share, of the Company (the "Company Common Stock") outstanding at the Close of
Business (as hereinafter defined) on March 28, 1997 (the "Record Date"), and has
authorized the issuance of one right (as such number may hereinafter be adjusted
pursuant hereto) for each share of Company Common Stock issued between the
Record Date (whether originally issued or delivered from the Company's treasury)
and, except as otherwise provided in Section 22, the Distribution Date (as
hereinafter defined), each right issued in respect of a share of Company Common
Stock ("Right") initially representing the right to purchase, upon the terms and
subject to the conditions hereinafter set forth, one-half of one share of
Company Common Stock;
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" means any Person (other than the
Company, any Subsidiary of the Company, 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) that shall be the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding; provided, however, that
the term "Acquiring Person" shall not include an Exempt Person. Notwithstanding
the foregoing, if a majority of the Independent Directors determines in good
faith that a Person who would otherwise be an Acquiring Person has become such
inadvertently (including, without limitation, because (A) such Person was
unaware that he or it is the Beneficial Owner of a percentage of Common Stock
that would otherwise cause such Person to be an Acquiring Person, or (B) such
Person was aware of the percentage of securities of which he or it was the
Beneficial Owner but had no actual knowledge of the consequences of being the
Beneficial Owner of such percentage under this Agreement) and without any
intention of changing or influencing control of the Company, and if such Person,
as promptly as practicable after being advised of such determination, divests
himself or itself of a sufficient number of shares of Common Stock so that such
Person would no longer be the Beneficial Owner of that percentage of securities
which would otherwise result in him or it being an Acquiring Person, then such
Person shall not be deemed to be or to have become an Acquiring Person for any
purposes of this Agreement.
(b) "Affiliate" and "Associate" have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) of which such Person or any of such Person's
Affiliates or Associates is considered to be a "beneficial owner" under Rule
13d-3 of the General Rules and Regulations under the Exchange Act (the "Exchange
Act Regulations") as in effect on the date hereof; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own",
any
securities under this subparagraph (i) as a result of an agreement, arrangement
or understanding to vote such securities if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response to a
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the Exchange Act and the Exchange Act Regulations, and
(B) is not reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report);
(ii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate of such other
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), for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (i) of this
paragraph (c) of Section 1) or disposing of such securities; or
(iii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the passage of time
or upon the satisfaction of conditions) pursuant to any agreement, arrangement
or understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise; provided,
however, that under this paragraph (c) a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own", (A) securities tendered
pursuant to a tender or exchange offer made in accordance with Exchange Act
Regulations by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange, (B)
securities that may be issued upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (C) securities that may be issued upon
exercise of Rights from and after the occurrence of a Triggering Event, which
Rights were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(c) or Section
22 (the "Original Rights") or pursuant to Section 11(i) in connection with an
adjustment made with respect to any Original Rights.
(d) "Business Day" means any day other than a Saturday, Sunday
or a day on which banking institutions in New York City are authorized or
obligated by law or executive order to be closed.
(e) "Close of Business" on any given date means 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(f) "Common Stock" of any Person other than the Company means
the capital stock of such Person with the greatest voting power, or, if such
Person shall have no capital stock, the equity securities or other equity
interest having power to control or direct the management of such Person.
(g) "Common Stock Equivalent" shall have the meaning set forth
in Section 11(a)(iii).
(h) "Company Common Stock" has the meaning set forth in the
Recital.
(i) "Company Option" has the meaning set forth in Section
1(c).
(j) "Distribution Date" has the meaning set forth in Section
3(a).
(k) "Exempt Person" means:
(i) any Person who, as of the close of business on the
Record Date, (A) is the beneficial owner of more than 10% of the outstanding
Company Common Stock, (B) is eligible to
report such beneficial ownership on Schedule 13G pursuant to Rule 13d-1(b)(1) of
the Exchange Act, and (C) has a Schedule 13G on file with the Securities and
Exchange Commission; provided, however, that such Person shall immediately and
thereafter cease to be an Exempt Person if such Person at any time shall acquire
additional shares such that its aggregate beneficial ownership of Company Common
Stock is more than 20% of the then outstanding shares of Common Stock; and
provided, further, that such Person shall immediately and thereafter cease to be
an Exempt Person if such Person at any time is no longer eligible to file or
maintain a Schedule 13G in lieu of a Schedule 13D.
(ii) any Fifteen Percent Holder; provided, however, that
such Fifteen Percent Holder shall immediately and thereafter cease to be an
Exempt Person if such Person at any time shall acquire one additional share of
Company Common Stock or be deemed the Beneficial Owner of one additional shares
of Company Common Stock; and
(iii) the Company, any Subsidiary of the Company, any
employee benefit plan or employee stock plan of the Company or of any Subsidiary
of the Company, or any person or entity organized, appointed, established or
holding Company Common Stock for or pursuant to the terms of any such plan; and
(iv) any Person who would otherwise become an Acquiring
Person solely by virtue of a reduction in the number of outstanding shares of
Company Common Stock; provided, however, that such Person shall not be an Exempt
Person if, subsequent to such reduction, such Person shall become the Beneficial
Owner of any additional shares of Company Common Stock.
(l) "Expiration Date" has the meaning set forth in Section
7(a).
(m) "Fifteen Percent Holder" means (i) any Person who, as of
the close of business on the Dividend Declaration Date, is the beneficial owner
of 15% or more of the outstanding Company Common Stock, or (ii) any Affiliate or
Associate of any such Person described in clause (i).
(n) "Independent Director" means a member of the Board of
Directors of the Company who is not an officer or employee of the Company, who
is not an Acquiring Person or an Affiliate or Associate of an Acquiring Person
or a representative or nominee of an Acquiring Person or of any such Affiliate
or Associate, and who either (i) was a member of the Board of Directors of the
Company prior to the date hereof or (ii) subsequently became a director of the
Company and whose election or nomination for election is approved or recommended
by a vote of a majority of the Board of Directors of the Company, which majority
includes a majority of the Independent Directors then on the Board of Directors.
(o) "Person" means any individual, partnership, 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.
(p) "Purchase Price" has the meaning set forth in Section
7(b).
(q) "Record Date" has the meaning set forth in the Recital.
(r) "Right" has the meaning set forth in the Recital.
(s) "Rights Certificate" has the meaning set forth in Section
3(a).
(t) "Rights Dividend Declaration Date" has the meaning set
forth in the Recital.
(u) "Section 11(a)(ii) Event" means any event described in
Section 11(a)(ii)(A), (B) or (C).
(v) "Section 13 Event" means any event described in clause
(x), (y) or (z) of Section 13(a).
(w) "Stock Acquisition Date" means the first date of public
announcement (including, without limitation, the filing of any report pursuant
to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such.
(x) "Subsidiary" means, with reference to any Person, any
other Person of which 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
Person, or otherwise controlled by such first-mentioned Person.
(y) "Summary of Rights" has the meaning set forth in Section
3(b).
(z) "Triggering Event" means any Section 11(a)(ii) Event or
any Section 13 Event.
(aa) "Underlying Securities" has the meaning set forth in
Section 1(c).
(bb) "Unit" has the meaning set forth in Section 7(b).
SECTION 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
With the consent of the Rights Agent, the Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or desirable.
SECTION 3. Issue of Rights Certificates.
(a) Until (i) the earlier of the Close of Business on the
tenth Business Day after the Stock Acquisition Date, and the Close of Business
on the tenth Business Day after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan maintained by the Company or any of its Subsidiaries or any trustee
or fiduciary with respect to such plan acting in such capacity) is first
published or sent or given within the meaning of Rule 14d-4(a) of the Exchange
Act Regulations or any successor rule, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Company Common
Stock then outstanding, or (ii) such later date as may be determined by action
of a majority of the Independent Directors (such determination to be made prior
to either of the dates specified in (i) above) and of which the Company will
give the Rights Agent prompt written notice (such date above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for shares of
Company Common Stock registered in the names of the holders of shares of Company
Common Stock as of and subsequent to the Record Date (which certificates for
shares of Company Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Company Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of shares of
Company Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit A (the "Rights
Certificates"), evidencing one Right for each share of Company Common Stock so
held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per share of Company Common Stock has been made pursuant
to
Section 11(p), at the time of distribution of the Rights Certificates, the
Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) 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 Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Company Common
Stock, in a form which may be appended to certificates that evidence shares of
Company Common Stock, in substantially the form attached hereto as Exhibit B
(the "Summary of Rights"), by first-class, postage prepaid mail, to each record
holder of shares of Company 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.
(c) Rights shall, without any further action, be issued in
respect of all shares of Company Common Stock that are issued (including any
shares of Company Common Stock held in treasury) after the Record Date (but
prior to the earlier of the Distribution Date and the Expiration Date).
Certificates evidencing such shares of Company Common Stock issued after the
Record Date 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 Steel of
West Virginia, Inc. (the "Company") and Continental Stock Transfer &
Trust Company (the "Rights Agent") dated as of March 19, 1997 (the
"Rights Agreement), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
office of the stock transfer administration office of the Rights
Agent. Under certain circumstances; as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to,
or held by, any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void."
With respect to certificates evidencing shares of Company Common Stock (whether
or not such certificates include the foregoing legend or have appended to them
the Summary of Rights), until the earlier of the Distribution Date and the
Expiration Date, the Rights associated with the shares of Company Common Stock
evidenced by such certificates shall be evidenced by such certificates alone and
registered holders of the shares of Company Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock evidenced by such certificates.
SECTION 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase, assignment and certificate to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit A hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or any rule or regulation thereunder 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 Section 11
and Section 22, the
Rights Certificates, whenever distributed, shall be dated as of the Record Date
and on their face shall entitle the holders thereof to purchase such number of
shares of Company Common Stock as shall be set forth therein at the price set
forth therein, but the amount and type of securities, cash or other assets that
may be acquired upon the exercise of each Right and the Purchase Price thereof
shall be subject to adjustment as provided herein.
(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 agreement, arrangement or understanding regarding either the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer that a majority of the Independent Directors has determined to be part
of a plan, arrangement or understanding that has as a primary purpose or effect
the avoidance of Section 7(e) shall, upon the written direction of a majority of
the Independent 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 terms
are defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and
void in the circumstances specified in Section 7(e) of such
Agreement."
SECTION 5. Countersignature and Registration.
(a) Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, the President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Rights Certificates may be manual or facsimile. Rights
Certificates bearing the manual or facsimile signatures of the individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the countersignature of such Rights Certificates or did not
hold such offices at the date of such Rights Certificates. No Rights Certificate
shall be entitled to any benefit under this Agreement or be valid for any
purpose unless there appears on such Rights Certificate a countersignature duly
executed by the Rights Agent by manual signature of an authorized signatory, and
such countersignature upon any Rights Certificate shall be conclusive evidence,
and the only evidence, that such Rights Certificate has been duly countersigned
as required hereunder.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated for surrender of Rights
Certificates upon exercise or transfer, books for registration and registration
of transfer of the Rights Certificates issued hereunder. Such books shall show
the name and address of each holder of the Rights Certificates, the number of
Rights evidenced on its face by each Rights Certificate and the date of each
Rights Certificate.
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,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of shares of Company Common Stock (or, following a Triggering
Event, other securities, cash or other assets, as the case may be, including
Common Stock Equivalents) as the Rights Certificate or Certificates surrendered
then entitled such holder 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 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 the Rights Agent shall, subject
to the provisions of Section 4(b), Section 7(e) and Section 14, countersign and
deliver to the Person entitled thereto, a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen
or destroyed, upon request by the registered holder of the Rights represented
thereby and upon payment to the Company and the Rights Agent of all reasonable
expenses incident thereto, there shall be issued, in exchange for and upon
cancellation of the mutilated Rights Certificate, or in substitution for the
lost, stolen or destroyed Rights Certificate, a new Rights Certificate, in
substantially the form of the prior Rights Certificate, of like tenor and
evidencing the equivalent number of Rights, but, in the case of loss, theft or
destruction, only upon receipt of evidence satisfactory to the Company and the
Rights Agent of such loss, theft or destruction of such Rights Certificate and,
if requested by the Company or the Rights Agent, indemnity also satisfactory to
it.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Prior to the earlier of (i) the Close of Business on the
tenth anniversary hereof (the "Final Expiration Date"), and (ii) the time at
which the Rights are redeemed as provided in Section 23 (the earlier of (i) and
(ii) being the "Expiration Date"), the registered holder of any Rights
Certificate may, subject to the provisions of Sections 7(e) and 9(c), exercise
the Rights evidenced thereby in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price (as
hereinafter defined) for the number of shares of Company Common Stock (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be, including Common Stock Equivalents) for which such surrendered
Rights are then exercisable.
(b) The purchase price for each share of Company Common Stock
pursuant to the exercise of two Rights (and only whole multiples of two Rights)
shall be $26.00 (equivalent to $13.00 for each one-half of a share of Company
Common Stock), subject to adjustment from time to time as provided in Sections
11 and 13(a) (such purchase price, as so adjusted, being the "Purchase Price"),
and shall be payable in accordance with paragraph (c) below.
(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall 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 (such institution being the "Depositary Agent") certificates
evidencing the shares of Company Common Stock that may be acquired upon exercise
of the Rights and shall cause such Depositary Agent to enter into an agreement
pursuant to which the Depositary Agent shall issue receipts evidencing interests
in the shares of Company Common Stock so deposited. Upon receipt of a Rights
Certificate evidencing 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 shares of Company Common Stock
(or, following a Triggering Event, other securities, cash or other assets, as
the case may be, including Common Stock Equivalents) to be purchased thereby as
set forth below and an amount equal to any applicable transfer tax or evidence
satisfactory to the Company of payment of such tax, the Rights Agent shall,
subject to Section 20(k), thereupon promptly (i) requisition from the Depositary
Agent depositary receipts evidencing such number of shares of Company Common
Stock as are to be purchased and the Company will direct the Depositary Agent to
comply with such request, (ii) requisition from the Company the amount of cash,
if any, to be paid in lieu of fractional shares in accordance with Section 14,
(iii) after receipt of 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 Company Common Stock, or determines to issue other securities
of the Company, pay cash and/or distribute other property (including, without
limitation, Common Stock Equivalents) pursuant to Section 11(a), the Company
will make all arrangements necessary so that such Company Common Stock, other
securities, cash and/or other property (including, without limitation, Common
Stock Equivalents) are available for distribution by the Rights Agent or the
Depositary Agent, if and when appropriate. The payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii) 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 Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of any Section 11(a)(ii) Event,
any 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 any such Associate or Affiliate) or to
any Person with whom the Acquiring Person (or such Associate or Affiliate) has
any continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer that a
majority of the Independent Directors has determined to be part of a plan,
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 no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but shall
have no liability to any holder of Rights or any other Person as a result of its
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.
(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 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 evidenced 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 canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. Reservation and Availability of Stock.
(a) Subject to the Company's rights under Section 11(a)(iii)
hereto to otherwise fulfill its obligations hereunder, the Company shall at all
times prior to the Expiration Date cause to be reserved and kept available, out
of its authorized and unissued shares of Company Common Stock (and/or any
authorized and issued shares of Company Common Stock held in its treasury), the
number of shares of Company Common Stock that, as provided in this Agreement,
will be sufficient to permit the exercise in full of all outstanding Rights;
provided, however, that such action need not be taken with respect to shares of
Company Common Stock or other securities issuable upon exercise of the Rights
until after such time as the Rights become exercisable.
(b) So long as shares of Company Common Stock may be listed on
any national securities exchange or authorized for quotation on any interdealer
quotation system of any securities association, the Company shall use its best
efforts to cause all securities reserved for such issuance to be listed on such
exchange or quoted on such system upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts (i) as soon as
practicable following the occurrence of a Section 11 (a)(ii) Event and a
determination by the Company in accordance with Section 11(a)(iii) of the
consideration to be delivered by the Company upon exercise of the Rights or, if
so required by law, as soon as practicable following the Distribution Date (such
date being the "Registration Date"), to file a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities that may be acquired upon exercise of the
Rights (the "Registration Statement"), (ii) to cause the Registration Statement
to become effective as soon as practicable after such filing, (iii) to cause the
Registration Statement to continue to be effective (and to include a prospectus
complying with the requirements of the Securities Act) until the earlier of (A)
the date as of which the Rights are no longer exercisable for the securities
covered by the Registration Statement, and (B) the Expiration Date and (iv) to
take as soon as practicable following the Registration Date such action as may
be required to ensure that any acquisition of securities upon exercise of the
Rights complies with any applicable state securities or "blue sky" laws. The
Company may temporarily suspend, for a period of time not to exceed ninety (90)
days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date but prior to the
occurrence of a Section 11(a)(ii) Event hereof, the Company may temporarily
suspend the exercisability of the Rights until such time as a registration
statement has been declared effective. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained, the exercise thereof shall not be permitted under applicable law
or a registration statement shall not have been declared effective.
(d) The Company shall take such action as may be necessary to
ensure that all shares of Company Common Stock (and, following the occurrence of
a Triggering Event, any other securities that may be delivered upon exercise of
Rights, including Common Stock Equivalents) shall be, at the time of delivery of
the certificates or depositary receipts for such securities, duly and validly
authorized and issued and fully paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer
tax imposed in connection with the issuance or delivery of the Rights
Certificates or of any shares of Company Common Stock (and, following the
occurrence of a Triggering Event, any other securities that may be delivered
upon exercise of Rights, including Common Stock Equivalents), or upon the
exercise of Rights; provided, however, that the Company shall not be required to
pay any such tax imposed in connection with the issuance or delivery of shares
of Company Common Stock, or any certificates or depositary receipts for such
shares of Company Common Stock(or, in each case, following the occurrence of a
Triggering Event, any other securities, cash or assets, as the case may be,
including Common Stock Equivalents) to any person other than the registered
holder of the Rights Certificates evidencing the Rights surrendered for
exercise. The Company shall not be required to issue or deliver any certificates
or depositary receipts for shares of Company Common Stock (or, following the
occurrence of a Triggering Event, any other securities, cash or assets, as the
case may be, including Common Stock Equivalents) to, or in a name other than
that of, the registered holder upon the exercise of any Rights until any 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. Company Common Stock Record Date. Each Person in whose
name any certificate for shares of Company Common Stock (or, following the
occurrence of a Triggering Event, any other securities, cash or assets, as the
case may be, including Common Stock Equivalents) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the shares of Company Common Stock (or, following the occurrence of a Triggering
Event, any other securities, any other securities, cash or assets, as the case
may be, including Common Stock Equivalents) evidenced 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 any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Company Common Stock
(or, following the occurrence of a Triggering Event, any other securities, cash
or assets, as the case may be, including Common Stock Equivalents) transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such securities on, and such certificate shall be dated, the
next succeeding Business Day on which the Company Common Stock (or, following
the occurrence of a Triggering Event, any other securities, cash or assets, as
the case may be, including Common Stock Equivalents) transfer books of the
Company are open and; provided, further, however, that if delivery of shares of
Company Common Stock is suspended pursuant to Section 9(c), such Persons shall
be deemed to have become the record holders of such shares of Company Common
Stock, and such certificate shall be dated, the next succeeding Business Day on
which the Company Common Stock (or, following the occurrence of a Triggering
Event, any other securities, cash or assets, as the case may be, including
Common Stock Equivalents) transfer books of the Company are open or the next
succeeding Business Day on which such suspension is no longer in effect. Prior
to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to securities for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. The Purchase Price, the number and kind of 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.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Company Common Stock
payable in shares of Company Common Stock, (B) subdivide the outstanding shares
of Company Common Stock into a greater number of shares, (C) combine the
outstanding shares of Company Common Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of the Company
Common 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 of Company Common 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 of Company Common 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. If an event occurs that would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 34, in the event:
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date hereof, directly
or indirectly, (1) shall merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of such
merger or combination and Company Common Stock shall remain outstanding and
unchanged, (2) shall, 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) shall 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, 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) shall 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 $5 million, other
than pursuant to a transaction set forth in Section 13(a), (5) shall 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 xxxx, other than
pursuant to a transaction set forth in Section 13(a), (6) shall 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) shall 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,
other than pursuant to any transaction set forth in Section 13(a); 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 Subsidiaries, other than 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, immediately upon the date of the occurrence of an event described in
Section 11 (a)(ii)(A)-(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) hereof) 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 shares of Company Common Stock for which a
Right was exercisable immediately prior to the first occurrence of a Section 11
(a)(ii) Event, such number of shares of Company Common Stock as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the then
number of shares of Company Common 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) hereof) per share of
Company Common Stock on the date of such first occurrence (such shares of
Company Common Stock being the "Adjustment Shares").
(iii) In the event that the number of shares of Company
Common Stock that are authorized by the Company's Certificate of Incorporation
but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a),
the Company, by the vote of a majority of the Independent Directors, shall: (A)
determine the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value") over (2) the Purchase Price (such
excess being the "Spread"), and (B) with respect to each Right, make adequate
provision to substitute for such Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Company Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock which the
Board of Directors of the Company has deemed to have the same values as shares
of Company Common Stock (such other shares being "Common Stock Equivalents")),
(4) debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by a majority of the Independent 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 30 days following the later of
(x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which
the Company's right of redemption pursuant to Section 23(a) expires (the later
of (x) and (y) being referred to herein as the "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 Company Stock (to the extent available) and then, if necessary, cash, which
shares of Company Common Stock and/or cash shall have an aggregate value equal
to the Spread. If a majority of the independent directors shall determine in
good faith that it is likely that sufficient additional shares of Company Common
Stock might be authorized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the extent necessary,
but not more than ninety (90) days after the Section 11(s)(ii) Trigger Date, in
order that the Company may seek stockholder approval for the authorization of
such additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action need be
taken pursuant to the first sentence and/or second sentence of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e), that such
action shall apply uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period to
seek any authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to determine
the value thereof. In the even of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of a the Company Common Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per shares of Company Common Stock
on the Section 11(a)(iii) Trigger Date and the value of any Common Stock
Equivalent shall be deemed to have the same value as the Company 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 Company Common Stock
entitling them to subscribe for or purchase (for a period expiring within 45
days after such record date) shares of Company Common Stock or securities
convertible into Company Common Stock at a price per share of Company Common
Stock, or having a conversion price per share, if a security convertible into
Company Common Stock, less than the current market price (as determined pursuant
to Section 11(d) hereof) per share of Company Common Stock on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the sum of the number of shares
of Company Common Stock outstanding on such record date plus the number of
shares of Company Common Stock that the aggregate offering price of the total
number of shares of Company Common Stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be the
number of shares of Company Common Stock outstanding on such record date plus
the number of additional shares of Company Common Stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
by delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by a
majority of the Independent 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 Company Common Stock owned by or held
for the account of the Company or any Subsidiary shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such
rights or warrants are not so issued the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of shares of Company Common Stock (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in shares of Company Common Stock, but including any dividend payable in
stock other than Company Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Company Common Stock on such record date less
the fair market value (as determined in good faith by a majority of the
Independent Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding 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 Company Common Stock and the denominator of which shall be such
current market price (as determined pursuant to Section 11(d) hereof) per share
of Company Common Stock. Such adjustments shall be made successively whenever
such a record date is fixed, and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase Price which would
have been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the "current
market price" per share of Company Common Stock or Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of such
shares for the 10 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that if prior to the
expiration of such requisite ten Trading Day-period the issuer announces either
(A) a dividend or distribution on such shares payable in such shares 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" shall be properly adjusted to take
into account such event. The closing price for each day shall be, if the shares
are listed and admitted to trading on a national securities exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which such
shares 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 Independent 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 Independent 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 Independent 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 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.
(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 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one-thousandth of a share of Company Common
Stock or Common 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 and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a) the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Company Common 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 Company Common Stock contained in this Section
11, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Company Common 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 shares of Company Common
Stock (or other securities or amount of cash or combination thereof, including
Common Stock Equivalents) 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 two Rights
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares of Company Common Stock (calculated to the nearest ten-thousandth of a
share) obtained by (i) multiplying (x) the number of shares of Company Common
Stock covered by two Rights 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 shares of Company Common 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 shares
of Company Common 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
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) 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, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates 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 shares of Company Common Stock issuable upon the exercise
of the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares of
Company Common Stock that were 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 shares of
Company Common Stock issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue such fully paid and
nonassessable number of shares of Company Common 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 until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
that number of shares of Company Common Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of shares of Company Common 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 xxxx 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, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment a majority of
the Independent Directors shall determine to be advisable in order that any (i)
consolidation or subdivision of the Company Common Stock, (ii) issuance wholly
for cash of any shares of Company Common Stock at less than the current market
price, (iii) issuance wholly for cash of shares of Company Common Stock or
securities that by their terms are convertible into or exchangeable for shares
of Company Common 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 Company Common 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 Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o) hereof), (ii) merge
with or into any other Person (other than a Subsidiary of the Company in a
transaction which 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 than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies 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 which constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) shall have distributed or otherwise transferred to its
stockholders 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, that 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 Distribution Date, the Company shall not, except
as permitted by Section 23 or Section 26, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
SECTION 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Company 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 Distribution
Date, to each holder of a certificate evidencing shares of Company Common Stock)
in accordance with Section 25. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, either (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which
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
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Company Common
Stock shall be converted into or exchanged for stock or other securities of any
other Person or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer) to any Person or Persons (other than the Company or any of its
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
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) (any such event being a "Section 13 Event"), then, and in
each such case, proper provision shall be made so that: (i) each holder of two
Rights, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price multiplied
by the number of shares of Company Common Stock for which two Rights are then
exercisable, such number of validly authorized and issued, fully paid and
nonassessable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), 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 the then
current Purchase Price by the number of shares of Company Common Stock for which
two Rights are 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 shares
for which two Rights would be exercisable hereunder but for the occurrence of
such Section 11(a)(ii) Event by the Purchase Price which 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 current market price
(determined pursuant to Section 11(d) hereof) per share of the Common Stock of
such Principal Party on the date of consummation of such Section 13 Event; (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 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 Stock) in connection with the consummation of any such
transaction as may be necessary to ensure that the provisions of this Agreement
shall thereafter be applicable to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of Section
11(a)(ii) shall be of no further effect following the first occurrence of any
Section 13 Event.
(b) "Principal Party" means:
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which shares of Company Common Stock are converted
in such merger or consolidation, or, if there is more than one such issuer, the
issuer of Common Stock that has the highest aggregate current market price
(determined pursuant to Section 11(d) hereof) and (B) if no securities are so
issued, the Person that is the other party to such merger or consolidation, or,
if there is more than one such Person, the Person the Common Stock 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 the Common Stock of which has the highest aggregate
current market price (determined pursuant to Section 11(d) hereof); provided,
however, that in any such case, (1) if the Common Stock of such Person is not at
such time and has not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act ("Registered Common Stock"), or
such Person is not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Stock outstanding,
"Principal Party" shall refer to such other Person; (2) if the Common Stock of
such Person is not Registered Common Stock or such Person is not a corporation,
and such Person is a direct or indirect Subsidiary of another Person but is not
a direct or indirect Subsidiary of another Person which has Registered Common
Stock outstanding, "Principal Party" shall refer to the ultimate parent entity
of such first-mentioned Person; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Common Stock outstanding, "Principal Party"
shall refer to whichever of such other Persons is the issuer of the Registered
Common Stock having the highest aggregate current market price (determined
pursuant to Section 11(d) hereof); and (4) if the Common Stock of such Person is
not Registered Common Stock or such Person is not a corporation, and such Person
is directly or indirectly controlled by more than one Person, and none of such
other Persons have Registered Common Stock 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 such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock that have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13, and unless prior thereto the Company and 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 will:
(i) (ii) 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 Common Stock that may be acquired
upon exercise of the Rights, (B) cause such registration statement to remain
effective (and to include a prospectus complying with the requirements of the
Securities Act) until the Expiration Date, and (C) as soon as practicable
following the execution of such agreement, take such action as may be required
to ensure that any acquisition of such Common Stock upon the exercise of the
Rights complies with any applicable state security or "blue sky" laws; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 under
the Exchange Act.
(d) In case the Principal Party that is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock 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 Stock of such Principal
Party at less than such then current market price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the Common Stock of
such Principal Party pursuant to the provisions of this Section 13; then, in
such event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived or amended, or
that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
(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 which 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 fractions of
Rights or to distribute Rights Certificates that evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the Persons to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the market value of a whole Right. For purposes of this Section
14(a), the market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of the
Rights for any day shall be, if the Rights are listed or admitted to trading on
a national securities exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by a majority of the Independent Directors. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by a majority of the Independent Directors
shall be used and such determination shall be described in a statement filed
with the Rights Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of
shares of Company Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Company Common Stock. In lieu
of fractional shares of Company Common Stock equal to one-half of one share or
less 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 then current market price of a share of Company Common
Stock on the day of exercise, determined in accordance with Section 11(d). Any
exercise of Rights that would entitle the holder thereof to receive any fraction
of a share of Company Common Stock greater than one-half of a share shall be
governed by
Section 7(a) hereof. In the event that an additional fraction of a share of
Company Common Stock is not purchased by such holder (or sold by the Company)
pursuant to such Section 7(a), the Company shall pay such holder an amount in
case equal to the same fraction of the market value of one share of Company
Common Stock. for purposes of this Section 14(b), the market value of one share
of Company Common Stock shall be the closing price of a share of Company Common
Stock as determined pursuant to Section 11(d) hereof for the Trading Day
immediately prior to the date of exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his or her right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this Section
14.
SECTION 15. Rights of Action. All rights of action in respect of
this Agreement, other than rights of action vested in the Rights Agent pursuant
to Section 18, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates evidencing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate evidencing shares of Company Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of a certificate evidencing shares of Company Common
Stock), may, in his or her own behalf and for his or her own benefit, enforce,
and may institute and maintain any suit, action or proceeding against the
Company or any other Person to enforce, or otherwise act in respect of, his or
her right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
SECTION 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents to and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Company Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purposes duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f), the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Company 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 Company Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e), 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 any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any preliminary
or permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the Company must
use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as promptly as practicable.
SECTION 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Company Common Stock or any other securities of the Company that may at any time
be issuable on the exercise of the Rights evidenced 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 stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 24, to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. Concerning the Rights Agent.
(a) 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, including reasonable
fees and disbursements of its counsel, incurred in connection with the execution
and administration of this Agreement and the exercise and performance of its
duties hereunder. The Company shall indemnify the Rights Agent for, and hold it
harmless against, any loss, liability, or expense, incurred without gross
negligence, bad faith or wilful 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 hereunder.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Company Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to have
been signed and/or executed or made by the proper Person or Persons.
SECTION 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stockholder services businesses 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 document or
any further act on the part of any of the parties hereto; provided, however,
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and
in case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
SECTION 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, it
may consult with legal counsel (who may be legal counsel for the Company), and
the opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "current market price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be specified herein) 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; provided, however, that so
long as any Person is an Acquiring Person hereunder, such certificate shall be
signed and delivered by a majority of the Independent Directors; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
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 have any responsibility for the
validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or for 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 failure by the
Company to satisfy conditions contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or Section 13 or 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 receipt by the Rights Agent of the
certificate describing any such adjustment contemplated by Section 12); 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 Company Common Stock or
any other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Company Common Stock or any other
securities will, when so issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company shall perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further acts, instruments and assurances as may reasonably be required by the
Rights Agent for the performance by the Rights Agent of its duties under this
Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer; provided, however, that so long as any Person
is an Acquiring Person hereunder, the Rights Agent shall accept such
instructions and advice only from a majority of the Independent Directors and
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with such instructions of the majority of the Independent
Directors. Any application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Rights Agreement
and the date on and/or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable for any action taken
by, or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application (which
date shall not be less than five Business Days after the date any such officer
of the Company actually receives such application, unless any such officer shall
have consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents.
(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 or in the exercise of its rights
hereunder if the Rights Agent shall have reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed, not signed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company. If such certificate has been completed and signed and shows a negative
response to clauses 1 and 2 of such certificate, unless previously instructed
otherwise in writing by the Company (which instructions may impose on the Rights
Agent additional ministerial responsibilities, but no discretionary
responsibilities), the Rights Agent may assume without further inquiry that the
Rights Certificate is not owned by a person described in Section 4(b) or Section
7(e) and shall not be charged with any knowledge to the contrary.
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' prior notice in writing mailed to the Company, and to
each transfer agent of the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
prior notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Company Common
Stock, by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. 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 or her Rights Certificate for
inspection by the Company), then any registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a corporation organized and doing business under the
laws of the United States or any state of the United States in good standing,
shall be authorized to do business as a banking institution in the State of New
York or the Commonwealth of Pennsylvania, shall be authorized under such laws to
exercise corporate trust or stock transfer powers, shall be subject to
supervision or examination by federal or state authorities and shall have at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000 or (b) an Affiliate of a corporation described in clause (a).
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Preferred Stock
and the Company Common 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.
SECTION 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by a majority of the Independent 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 Company Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (a) shall
with respect to shares of Company 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 a
majority of the Independent 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) Subject to Section 30, the Company may, at its option, by
action of a majority of the Independent Directors, at any time prior to (i) the
Close of Business on the tenth Business Day following the Stock Acquisition
Date, or (ii) such later date as a majority of the Independent Directors shall
determine (such determination to be made prior to the date specified in (i)
above) and of which the Company will give the Rights Agent prompt written
notice, but in no event later than the Final Expiration Date, redeem all but not
less than all the then outstanding Rights at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being the "Redemption Price"), and the
Company may, at its option, by action of a majority of the Independent
Directors, pay the Redemption Price either in shares of Company Common Stock
(based on the "current market price" as defined in Section 11(d), of the shares
of Company Common Stock at the time of redemption) or cash.
(b) Immediately upon the action of a majority of the
Independent Directors ordering the redemption of the Rights, evidence of which
shall be filed with the Rights Agent, and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of a majority of the Independent
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 each holder's last address
as it appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for Company
Common Stock. 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
redemption will state the method by which the payment of the Redemption Price
will be made.
SECTION 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Company Common Stock or to make any other distribution to the holders
of Company Common Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company), (ii) to offer to the holders of
Company Common Stock rights or warrants to subscribe for or to purchase any
additional shares of Company Common Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Company Common Stock (other than a reclassification involving only the
subdivision of outstanding shares of Company Common Stock), (iv) to effect any
consolidation or merger into or with any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof), or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), 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, to the extent feasible and in accordance with Section 25, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common 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 Company Common Stock whichever shall be the
earlier; provided, however, that no such notice shall be required pursuant to
this Section 24, if any Subsidiary of the Company effects a consolidation or
merger with or into, or effects a sale or other transfer of assets or earnings
power to, any other Subsidiary of the Company.
(b) In case any of the events set forth in Section 11(a)(ii)
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii).
SECTION 25. Notices. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company, at
its address at:
Steel of West Virginia, Inc.
00xx Xxxxxx & Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: President
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to the Rights Agent, at its address at:
Continental Stock Transfer & Trust Company
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Compliance
Tel: (000) 000-0000
Fax: (000) 000-0000
Notices to the Company and to the Rights Agent shall be deemed given upon
receipt. Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 26. Supplements and Amendments. Prior to the Distribution
Date and subject to the penultimate sentence of this Section 26, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
evidencing shares of Company Common Stock. From and after the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable and that shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person); provided, however, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) subject to Section 30, a time period relating to when the Rights
may be redeemed at such time as the Rights are not then redeemable, or (B) any
other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to the holders of
Rights. Upon the delivery of a certificate from an appropriate officer of the
Company or, so long as any Person is an Acquiring Person hereunder, from the
majority of the Independent Directors that states that the proposed supplement
or amendment is in compliance with the terms of this Section 26, the Rights
Agent shall execute such supplement or amendment, subject to the Right Agent's
right to apply to counsel chosen by the Right Agent and the Right Agent being
reasonably assured that such supplement or amendment is in no way detrimental to
the Right Agent's right or interest. Notwithstanding anything contained in this
Agreement to the contrary, (i) the Company and the Rights Agent shall, if the
Company so directs by a vote of a majority of the Independent Directors,
supplement or amend this Agreement without the approval of any holders of
certificates evidencing shares of Company Common Stock to provide that each
Right is exercisable for a greater fraction of a share of Company Common Stock,
a whole share of Company Common Stock, such multiple of a whole share of Company
Common Stock or any fraction, whole share or multiple of a whole share of
Preferred Stock, if authorized in the future, as the
majority of the Independent Directors shall determine, and (ii) no supplement or
amendment shall be made that changes the Redemption Price, the Purchase Price,
the Expiration Date or the number of Company Common Stock for which a Right is
exercisable without the approval of a majority of the Independent Directors.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Company Common Stock.
SECTION 27. 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 28. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of shares
of Company Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Company Common Stock of which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the 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 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. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
or by a majority of the Independent Directors in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board or any member
thereof to any liability to the holders of the Rights.
SECTION 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock).
SECTION 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and a majority of the
Independent Directors determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, the right
of redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth Business Day following the date
of such determination by a majority of the Independent Directors.
SECTION 31. Governing Law. This Agreement each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in and
to be performed entirely in such State.
SECTION 32. Counterparts. This Agreement may be executed (including
by facsimile) in one or more counterparts and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 33. Descriptive Headings. The headings contained in this
Agreement are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 34. Exchange.
(a) The Company may at any time after the Distribution Date,
upon resolution of a majority of the Independent Directors, exchange all or part
of the then outstanding exercisable Rights (which shall not include Rights that
have become void pursuant to Section 7(e) hereof) for shares of Company Common
Stock at an exchange ratio of two shares of Company Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange being referred to as
an "Exchange" and such exchange ratio being the "Exchange Ratio").
(b) Immediately upon the action of a majority of the
Independent Directors ordering the Exchange of any Rights pursuant to Section
34(a) and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Company Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
Exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such Exchange. The Company promptly
shall mail a notice of any such Exchange to all the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of Exchange
shall state the method by which the Exchange of shares of Company Common Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that the number of shares of Company Common
Stock that are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit any exchange of Rights as contemplated
in accordance with this Section 34, the Exchange Ratio shall be two Common Stock
Equivalents for each Right. Alternatively, the Independent Directors may, at
their option, (i) issue Company Common Stock in the Exchange to the extent they
are available, and (ii) utilize Common Stock Equivalents in the Exchange as
provided above to the extent shares of Company Common Stock are not available,
in which case such shares of Company Common Stock shall be allocated on such
basis as the Independent Directors determine.
(d) After aggregating all the shares of Company Common Stock
to which a holder of Rights is entitled upon the Exchange, the Company shall not
be required to issue fractions of shares of Company Common Stock or to
distribute certificates that evidence fractional shares of Company Common Stock.
In lieu of fractional shares of Company Common Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exchanged
as herein provided an amount in cash equal to the same fraction of the current
market price (determined pursuant to Section 11(d) hereof) of one share of
Company Common Stock.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first above written.
ATTEST: STEEL OF WEST VIRGINIA, INC.
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXX
----------------------- ---------------------------
Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxx,
Secretary President
ATTEST: CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
By: /s/ XXXXXX XXXXXXXX By: /s/ XXXXX XXXXXXXXXX
--------------------- -------------------------
Name: Xxxxxx Xxxxxxxx Name: Xxxxx Xxxxxxxxxx
Title: Assistant Secretary Title: Vice President
EXHIBIT A
Form of Rights Certificate
Certificate No. R-______ __________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW) OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN THE RIGHTS
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT REFERRED TO BELOW). 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.]1
Rights Certificate
STEEL OF WEST VIRGINIA, INC.
This certifies that _____________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated as of March __, 1997 (the "Rights Agreement"; terms
defined therein are used herein with the same meaning unless otherwise defined
herein) between STEEL OF WEST VIRGINIA, INC., a Delaware corporation (the
"Company"), and Continental Stock Transfer & Trust Company, as Rights Agent
(which term shall include any successor Rights Agent under the Rights
Agreement), to purchase from the Company at any time after the Distribution Date
and prior to 5:00 p.m. on the Expiration Date at the office of the Rights Agent,
one-half of one fully paid and nonassessable share of Common Stock, par value
$.01 per share, of the Company (the "Company Common Stock") at the Purchase
Price initially of $26.00 per share of Company Common Stock (equivalent to
$13.00 for each one-half of one share of Company Common Stock), upon
presentation and surrender of this Rights Certificate with the Election to
Purchase and related certificate duly executed. No less than two Rights and only
whole multiples of two Rights may be exercised at any time by holders of Rights
at the Purchase Price. The number of Rights evidenced by this Rights Certificate
(and the number of shares that may be purchased upon exercise thereof) set forth
above, and the Purchase Price per share set forth above shall be subject to
adjustment in certain events as provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person or, under
certain circumstances described in the Rights Agreement, a transferee of any
such Acquiring Person, Associate or Affiliate, such Rights shall become null and
void and no holder hereof shall have any right with respect to such Rights from
and after the occurrence of such Section 11(a)(ii) Event.
----------
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
In certain circumstances described in the Rights Agreement, the
rights evidenced hereby may entitle the registered holder thereof to purchase
capital stock of an entity other than the Company or receive common stock, cash
or other assets, all as provided in the Rights Agreement.
This Rights Certificate is subject to all the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof 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. Copies of the Rights
Agreement are on file at the principal office of the Company and are available
from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates so
surrendered. If this Rights Certificate shall be exercised in part, the
registered 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 (i) redeemed by the Company under certain
circumstances at its option at a redemption price of $.01 per Right, payable at
the Company's option in cash or in Company Common Stock, subject to adjustment
in certain events as provided in the Rights Agreement, or (ii) exchanged by the
Company at its option for shares of Company Common Stock (or, in certain
circumstances, Common Stock Equivalents), as provided in the Rights Agreement.
No fractional shares of Company Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby. In lieu thereof, a cash
payment will be made as provided in the Rights Agreement. No Rights may be
exercised that would entitle the holders to any fraction of a share of Company
Common Stock unless concurrently therewith such holder purchases an additional
fraction of a share of Company Common Stock which, when added to the number of
shares of Company Common Stock to be received upon such exercise, equals a whole
number of shares of Company Common Stock, as provided in the Rights Agreement.
If such holder does not purchase such additional fraction of a share of Company
Common Stock, a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Company
Common Stock or of any other securities which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the 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 ____________ ___, 199_/200_.
ATTEST: STEEL OF WEST VIRGINIA, INC.
By:______________________________ By:_____________________________
Name: Name:
Title: Title:
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
as Rights Agent
By:______________________________
Name:
Title:
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate)
FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name of transferee)
________________________________________________________________________________
(Please print address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________________ as
Attorney-in-fact, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _________ __, 199_/200_
_______________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate |_| is |_| is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it |_| did |_| did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ____________ __, 199_/200_ ___________________________________
Signature
Signature Guaranteed:
-------------------------------
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member in the Securities Transfer
Agents Medallion Program, the Stock Exchange Medallion Program or the New York
Stock Exchange Medallion Program.
In the event the certification set forth above 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 Certificates issued in exchange for this
Rights Certificate.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate.)
To: STEEL OF WEST VIRGINIA, INC.
The undersigned hereby irrevocably elects to exercise _________
Rights represented by this Rights Certificate to purchase the shares of Company
Common Stock issuable upon the exercise of the Rights (or such other securities
of the Company or of any other person or other property which may be issuable
upon the exercise of the Rights) and requests that certificates for such shares
of Company Common Stock (or such other securities of the Company or of any other
person or other property which may be issued upon the exercise of the Rights) be
issued in the name of and delivered to:
_____________________________________
(Please print name and address)
_____________________________________
Please insert social security
or other identifying number: ______________
If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance of such Rights
shall he registered in the name of and delivered to:
_____________________________________
(Please print name and address)
_____________________________________
Please insert social security
or other identifying number: ______________
____________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate |_| are |_| are
not beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned |_| did |_| did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: ____________ __, 199_/200_ _______________________________
Signature
Signature Guaranteed:
------------------------
NOTICE
The signature in the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member in the Securities Transfer
Agents Medallion Program, the Stock Exchange Medallion Program or the New York
Stock Exchange Medallion Program.
In the event the certification set forth above 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 Certificates issued in exchange for this
Rights Certificate.
EXHIBIT B
On March 13, 1997, the Board of Directors of Steel of West Virginia,
Inc., a Delaware corporation (the "Company"), declared a distribution of (i) one
Right (as defined below) for each outstanding share of Common Stock, par value
$.01 per share (the "Company Common Stock"), to stockholders of record at the
close of business on March 28, 1997 (the "Record Date") and for each share of
Company Common Stock issued (including shares distributed from Treasury) by the
Company thereafter and prior to the Distribution Date (as defined below). Each
Right entitles the registered holder, subject to the terms of the Rights
Agreement (as defined below), to purchase from the Company one-half of a share
of Company Common Stock at a purchase price of $26.00 per share of Company
Common Stock, equivalent to $13.00 for each one-half of a share of Company
Common Stock (the "Purchase Price"), subject to adjustment (the "Right"). No
less than two Rights, and only whole multiples of two Rights, may be exercised
by a holder. The Purchase Price is payable in cash or by certified or bank check
or money order payable to the order of the Company. The description and terms of
the Rights are set forth in a Rights Agreement between the Company and
Continental Stock Transfer and Trust Company, as Rights Agent (the "Rights
Agreement").
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an exhibit to a Current Report on Form 8-K (the "Form
8-K"). A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to all the provisions of the
Rights Agreement, including the definitions therein of certain terms, the terms
and conditions of are incorporated herein by reference. Capitalized terms used
herein but not otherwise defined have the meanings set forth in the Rights
Agreement.
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the "Distribution Date" will occur upon (i) the earlier of (A) 10 business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
(other than the Company, any subsidiary of the Company or any employee benefit
plan of the Company or such subsidiary) (an "Acquiring Person") has acquired,
obtained the right to acquire, or otherwise obtained beneficial ownership of 15%
or more (or 20% or more in the case of certain current stockholders of 10% or
more) of the then outstanding shares of Company Common Stock, and (B) 10
business days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 15% or more of the
then outstanding shares of Company Common Stock, or (ii) such later date as may
be determined by action of a majority of the Independent Directors of the Board
prior to the occurrence of either event specified in (i) above. Until the
Distribution Date, (x) the Rights will be evidenced by Company Common Stock
certificates and will be transferred with and only with such Company Common
Stock certificates, (y) new Company Common Stock certificates issued after the
Record Date (also including shares distributed from Treasury) will contain a
notation incorporating the Rights Agreement by reference, and (z) the surrender
for transfer of any certificates representing outstanding Company Common Stock
will also constitute the transfer of the Rights associated with the Company
Common Stock represented by such certificates. As soon as practicable after the
Distribution Date, Rights Certificates will be mailed to holders of record of
Company Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on March 18, 2007, the tenth anniversary of the
Rights Agreement, unless earlier redeemed by the Company as described below.
In the event that (i) the Company is the surviving corporation in a
merger with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a Person becomes the beneficial owner of 15% or more (or 20%
or more in the case of certain current stockholders of 10% or more) of the then
outstanding shares of Company Common Stock, (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 which results in such Acquiring Person's ownership
interest in any class of Company Common Stock being increased by more than 1%
(e.g., by means of a reverse stock split or recapitalization), then, in each
such case, each holder of two Rights will thereafter have the right to receive,
upon exercise, shares of Company Common Stock (or, in certain circumstances,
Common Stock Equivalents (as such terms is defined in the Rights Agreement))
having a current market value equal to two times the exercise price of the
Rights. 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 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 or other business combination
transaction and the Company is not the surviving corporation (other than a
merger described in the preceding paragraph), (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, each
holder of two Rights (except Rights which previously have been voided as
described above) shall thereafter have the right to receive, upon exercise,
common stock of the Acquiring Person having a current market value equal to two
times the exercise price of the Rights.
The Purchase Price payable, and the number of shares of Company
Common Stock or other securities issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Company Common Stock, (ii) if holders of the Company Common Stock are granted
certain rights or warrants to subscribe for Company Common Stock or convertible
securities at less than the current market price of the Company Common Stock, or
(iii) upon the distribution to the holders of the Company Common Stock of
evidences of indebtedness, cash or assets (excluding regular cash dividends, if
any) or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional shares of Company Common
Stock. In lieu thereof, a cash payment will be made as provided in the Rights
Agreement. No Rights may be exercised that would entitle the holders to any
fraction of a share of Company Common Stock unless concurrently therewith such
holder purchases an additional fraction of a share of Company Common Stock
which, when added to the number of shares of Company Common Stock to be received
upon such exercise, equals a whole number of shares of Company Common Stock, as
provided in the Rights Agreement. If such holder does not purchase such
additional fraction of a share of Company Common Stock, a cash payment will be
made, as provided in the Rights Agreement.
At any time after any person or group of affiliated or associated
persons becomes an Acquiring Person, the Board of Directors of the Company may
exchange the Rights (except Rights which previously have been voided as
described above), in whole or in part, at an exchange ratio of two Common Shares
(or, in certain circumstances, two Common Stock Equivalents) per Right.
Any person who, as of the close of business on the Record Date, is
the beneficial owner of more than 10% of the outstanding Company Common Stock,
is and continues to be eligible to report such beneficial ownership on Schedule
13G, and has a Schedule 13G on file with the Securities and Exchange Commission
will not be an Acquiring Person unless such Person acquires additional shares
such that its aggregate beneficial ownership of Company Common Stock is more
than 20% of the then outstanding shares of Common Stock. Additionally, any
person who, as of the close of business on March 13, 1997, is the beneficial
owner of 15% or more of the outstanding Company Common Stock shall not be
considered an Acquiring Person unless such person shall acquire one additional
share of Company Common Stock or be deemed the Beneficial Owner of one
additional shares of Company Common Stock.
A majority of the Independent Directors may redeem the Rights in
whole, but not in part, until (i) ten business days following the Stock
Acquisition Date, or (ii) such later date as they shall determine, at a price of
$.01 per Right (subject to adjustment in certain events) (the "Redemption
Price"), payable, at the election of such majority of the Independent Directors,
in cash or shares of Company Common Stock. Immediately upon the action of a
majority of the Independent Directors ordering the redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to stockholders or to the Company, stockholders may, depending
upon the circumstances, recognize taxable income in the event that the Rights
become exercisable for shares of Company Common Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
