Exhibit 10.1
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
AMENDMENT NO. 1, dated November 10, 1998 (the "Amendment"), to Rights
Agreement dated as of March 19, 1997 (the "RIGHTS AGREEMENT"), between Steel of
West Virginia, Inc., a Delaware corporation (the "COMPANY") and CONTINENTAL
STOCK TRANSFER & TRUST COMPANY (the "RIGHTS AGENT"); all capitalized terms not
defined herein shall have the meaning set forth in the Rights Agreement:
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 $0.01 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 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.
WHEREAS, the Company and the Rights Agent entered into the Rights
Agreement; and
WHEREAS, on November 2, 1998, a majority of the Independent Directors of
the Company, in accordance with Section 26 of the Rights Agreement, determined
it desirable and in the best interests of the Company and its stockholders to
supplement and amend certain provisions of the Rights Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. AMENDMENT TO SECTION 1. The definition of "Exempt Person" in
Section 1(k) of the Rights Agreement is amended to read in its entirety as
follows:
(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;
(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;
(iv) Roanoke Electric Steel Corporation, a Virginia
corporation ("Parent"), and any wholly owned subsidiary of Parent
(collectively, "Roanoke"); PROVIDED, HOWEVER, that Roanoke shall only
be an Exempt Person pursuant to this clause (iv) to the extent that
Roanoke becomes the Beneficial Owner of Company Common Stock as a
result of the approval, execution, delivery or consummation of (A) the
Agreement and Plan of Merger and Reorganization dated November 10,
1998 by and among SWVA Acquisition, Inc. ("Purchaser"), Parent and
the Company (as amended or modified, the "ROANOKE MERGER AGREEMENT")
or (B) the Stock Option Agreement dated November 10, 1998 between
Purchaser and the Company (as amended or modified, the "STOCK OPTION
AGREEMENT"), in each case pursuant to and in accordance with the terms
and conditions thereof; and PROVIDED, FURTHER, that Roanoke shall
immediately and thereafter cease to be an Exempt Person if the tender
offer contemplated by the Roanoke Merger Agreement (the "Roanoke
Offer") is not consummated, except that, in such event, Purchaser
shall be permitted to exercise the Stock Option Agreement in
accordance with its terms, become the Beneficial Owner of Company
Common Stock as a result of such exercise and, under such
circumstances, Roanoke shall continue as an Exempt Person by virtue of
this clause (iv) for so long as Roanoke is not, or does not thereafter
become, the Beneficial Owner of any other shares of Company Common
Stock, it being understood that if, at any time after the exercise of
the Stock Option Agreement, Roanoke shall be, or thereafter becomes,
the Beneficial Owner of less than 15% of the shares of Company Common
Stock then outstanding, then the provisions of this clause (iv) shall
automatically, without any action or omission on the part of any
Person, terminate and be of no further force and effect; and
(v) 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.
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SECTION 2. AMENDMENTS TO SECTION 3.
(a) Section 3(a) of the Rights Agreement is amended to read in its
entirety as follows:
(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, or Roanoke provided that Roanoke is
an Exempt Person) 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) Section 3(c) of the Rights Agreement is amended to read in its
entirety as follows:
(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
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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, and as amended to date (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 3. AMENDMENT TO SECTION 7(A). Section 7(a) of the Rights
Agreement is amended to read in its entirety as follows:
(a) Prior to the earlier of (i) the Close of Business on the
tenth anniversary hereof (the "FINAL EXPIRATION DATE"), (ii) the
acceptance for payment of the shares of Company Common Stock validly
tendered and not withdrawn in the Roanoke Offer, and (iii) the time at
which the Rights are redeemed as provided in Section 23 (the earlier
of (i), (ii) and (iii) 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
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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.
SECTION 4. AMENDMENT TO RIGHT CERTIFICATES. The Form of Rights
Certificate set forth in Exhibit A attached to the Rights Agreement is hereby
amended to read in its entirety as set forth in Exhibit A attached hereto.
SECTION 5. AMENDMENT TO SUMMARY OF RIGHTS. The form of Summary of Rights
to Purchase Common Stock set forth in Exhibit B attached to the Rights Agreement
is hereby amended to read in its entirety as set forth in Exhibit B attached
hereto.
SECTION 6. RIGHTS AGREEMENT AS AMENDED. The terms "Agreement" and "Rights
Agreement" as used in the Rights Agreement shall be deemed to refer to the
Rights Agreement as amended hereby. This Amendment shall be effective as of the
date hereof and, except as set forth herein, the Rights Agreement shall remain
in full force and effect and be otherwise unaffected hereby.
SECTION 7. BENEFITS OF THIS AMENDMENT. Nothing in this Amendment 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 Amendment; but this Amendment 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 8. GOVERNING LAW. This Amendment 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 9. COUNTERPARTS. This Amendment 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.
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SECTION 10. DESCRIPTIVE HEADINGS. The headings contained in this
Amendment are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed, all as of the date first above written.
ATTEST: STEEL OF WEST VIRGINIA, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxx
---------------------------- ---------------------------
ATTEST: CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By: /s/ Xxxxxx Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------- ---------------------------
Name: Xxxxxx Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxxx
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 originally dated as of March 19, 1997, and as amended to
date (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.
---------------------
(1) The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
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.
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
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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.
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WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated: ____________ ___, 199_/200_.
ATTEST: STEEL OF WEST VIRGINIA, INC.
By:______________________________ By:_____________________________
Name: Name:
Title: Title:
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
as Rights Agent
By:______________________________
Authorized Officer
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights 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:
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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.
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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: ______________
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_______________________________
Signature
Signature Guaranteed:
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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.
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EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
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 & Trust Company, as Rights Agent (the "RIGHTS
AGREEMENT").
On November 2, 1998, a majority of the Independent Directors voted to
amend the terms of the Rights to permit a tender offer (the "Roanoke Offer") to
be made for all of the outstanding Company Common Stock by Roanoke Electric
Steel Corporation, a Virginia corporation ("Parent"), to be followed by the
merger of the Company with a wholly-owned subsidiary of Parent, and to provide
for the termination of the Rights upon acceptance for payment of the shares of
Company Common Stock validly tendered and not withdrawn in the Roanoke Offer.
This amendment was subsequently executed on November 10, 1998. The description
and terms of the Rights are set forth in a Rights Agreement, as amended, between
the Company and Continental Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agreement"). A copy of the Rights Agreement and the amendments thereto
have 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
and any amendments thereto are 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, any employee benefit
plan of the Company or such subsidiary, or Roanoke Electric Steel Corporation,
or a wholly-owned subsidiary of Roanoke Electric
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Steel Corporation, if such acquisition is pursuant to the terms of the Agreement
and Plan of Merger and Reorganization by and among Roanoke Electric Steel
Corporation, Purchaser and the Company or the Stock Option Agreement by and
between Purchaser and the Company) (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 earlier of the close of business on March 18, 2007, the tenth
anniversary of the Rights Agreement, the acceptance for payment of the shares of
Company Common Stock validly tendered and not withdrawn in the Roanoke Offer or
when 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
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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
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"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.
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