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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
BIRMINGHAM STEEL CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 63-3213634
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(State or incorporation or organization) (IRS tax number)
1000 Urban Center Drive
Suite 300
Birmingham, Alabama 35242-2516
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(Address of principal executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each class is
to be so registered being so registered
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Preferred Stock New York Stock Exchange
Purchase Rights
Securities to be registered pursuant to Section 12(g) of the Act:
None
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Description of Registrant's Securities to be Registered.
On January 16, 1996, the Board of Directors of Birmingham Steel
Corporation (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $0.01
per share, of the Company (the "Common Stock"). The dividend is payable on
January 19, 1996 (the "Record Date") to the stockholders of record on that
date. Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
par value $0.01 per share (the "Preferred Stock") of the Company at a price of
$74 per one one-hundredth of a share of Preferred Stock (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth
in a Rights Agreement dated as of January 16, 1996, as the same may be amended
from time to time (the "Rights Agreement"), between the Company and First Union
National Bank of North Carolina, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 10% or more of the
outstanding shares of Common Stock or (ii) 10 business days (or such later date
as may be determined by action of the Board of Directors prior to such time as
any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 10% or more of the outstanding
shares of Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate together with a copy of the Summary of Rights to Purchase
Shares of Preferred Stock.
Existing holdings of 10% or more of the Company's Common Stock will
not cause the Rights to be exercisable, or entitle the holders of Rights to
purchase additional shares of the Company or any other entity, unless a current
holder of 10% or more of the Company's Common Stock acquires additional shares.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuances of Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or
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expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock outstanding as of the Record Date, even without such
notation or a copy of the Summary of Rights to Purchase Shares of Preferred
Stock, will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire, if not previously exercised, on January 16, 2006 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each
case as described below.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights is
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then-current market price of the Preferred Stock, or (iii) upon
the distribution to holders of the Preferred Stock of evidences of indebtedness
or assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights is also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled, when, as
and if declared, to a minimum preferential quarterly dividend payment of $1.00
per share but will be entitled to an aggregate dividend of 100 times the
dividend declared per share of Common Stock. In the event of liquidation, the
holders of the Preferred Stock will be entitled to a minimum preferential
liquidation payment of $100.00 per share (plus any accrued but unpaid
dividends) but will be entitled to an aggregate payment of 100 times the
payment made per share of Common Stock. Each share of Preferred Stock will
have 100 votes, voting together with the Common Stock. Finally, in the event of
any merger,
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consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be entitled to
receive 100 times the amount received per share of Common Stock. These rights
are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right at the
then-current exercise price of the Right, that number of shares of Common Stock
having a market value of two times the exercise price of the Right.
In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are
sold, proper provisions will be made so that each holder of a Right (other than
Rights beneficially owned by an Acquiring Person which will have become void)
will thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of common stock
of the person with whom the Company has engaged in the foregoing transaction
(or its parent), which number of shares at the time of such transaction will
have a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the earlier of one of the events described in the previous paragraph
or the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which will have become
void), in whole or in part, for shares of Common Stock, or one one-hundredth of
a share of Preferred Stock (or shares of a class or series of the Company's
preferred stock having equivalent rights, preferences and privileges), having a
value per Right equal to the difference between the market value of the shares
of Common Stock receivable upon exercise of the Right and the exercise price of
the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-hundredth of a
share of
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Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), and in lieu thereof an adjustment in cash will be made
based on the market price of the Preferred Stock on the last trading day prior
to the date of exercise.
At any time prior to the time an Acquiring Person becomes such, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner. After
the Rights are no longer redeemable, the Company may, except with respect to
the redemption price, amend the Rights in any manner that does not adversely
affect the interests of holders of the Rights.
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.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. However, the
Rights should not interfere with any merger or other business combination
approved by the Board of Directors since (subject to the limitations described
above) the Rights may be redeemed by the Company at the Redemption Price prior
to the Distribution Date. Thus, the Rights are intended to encourage persons
who may seek to acquire control of the Company to initiate such an acquisition
through negotiations with the Board of Directors.
As of December 31, 1995, there were 28,543,980 shares of Common Stock
issued and outstanding, 1,082,545 shares held in treasury, and an aggregate of
1,223,019 shares reserved for issuance pursuant to certain of the Company's
employee benefits plans. One Right will be distributed to stockholders of the
Company for each share of Common Stock owned of record by them on January 19,
1996. As long as the Rights are attached to the Common Stock, the Company will
issue one Right with each new share of Common Stock so that all such shares
will have attached Rights.
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The Rights Agreement, including the Form of Certificate of Designation
of the Series A Junior Participating Preferred Stock attached as Exhibit A
thereto, the Form of Right Certificate attached as Exhibit B thereto, and the
Summary of Rights to Purchase Shares of Preferred Stock attached as Exhibit C
thereto, together with a letter to the Company's stockholders, dated January
23, 1996, explaining the Rights, and a Press Release, dated January 16, 1996,
are attached hereto as exhibits and are incorporated herein by reference. The
foregoing description of the Rights is qualified in its entirety by reference
to such exhibits.
Item 2. Exhibits
4. Rights Agreement, dated as of January 16, 1996, between
Birmingham Steel Corporation and First Union National Bank of
North Carolina, as Rights Agent, which includes the Form of
Certificate of Designation of the Series A Junior
Participating Preferred Stock as Exhibit A, the Form of Right
Certificate as Exhibit B, and the Summary of Rights to
Purchase Shares of Preferred Stock as Exhibit C. Pursuant to
the Rights Agreement, Right Certificates will not be mailed
until the earlier of (i) 10 days following a public
announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired
beneficial ownership of 10% or more of the outstanding shares
of Common Stock or (ii) 10 business days (or such later date
as may be determined by action of the Board of Directors prior
to such time as any person or group of affiliated persons
becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 10% or more of
the outstanding shares of Common Stock.
20. Letter to Birmingham Steel Corporation stockholders, dated
January 23, 1996.
99. Press Release, dated January 16, 1996.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized.
Dated as of January 23, 1996 BIRMINGHAM STEEL CORPORATION
By
/s/ John M. Casey
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John M. Casey
Its: Executive Vice
President and Chief
Financial Officer
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EXHIBIT 4
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BIRMINGHAM STEEL CORPORATION
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
Rights Agent
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Rights Agreement
Dated as of January 16, 1996
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TABLE OF CONTENTS
<TABLE>
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Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3. Issue of Right Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7. Exercise of Rights, Purchase Price; Expiration
Date of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8. Cancellation and Destruction of
Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9. Availability of Shares of Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares and Number of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earnings Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 17. Right Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 19. Merger or Consolidation or Chance of Name of
Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
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<TABLE>
<S> <C> <C>
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 29. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 30. Determinations and Actions by the Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 32. Governing law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 34. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Exhibit A - Form of Certificate of Designation
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
</TABLE>
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RIGHTS AGREEMENT
Rights Agreement, dated as of January 16, 1996 ("Agreement"),
between Birmingham Steel Corporation, a Delaware corporation (the "Company"),
and First Union National Bank of North Carolina, a national banking
association, as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
share of Common Stock (as hereinafter defined) of the Company outstanding as of
the Close of Business (as defined below) on January 19, 1996 (the "Record
Date"), each Right representing the right to purchase one one-hundredth
(subject to adjustment) of a share of Preferred Stock (as hereinafter defined),
upon the terms and subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right (subject to adjustment as
provided herein) with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earlier of the Distribution Date
and the Expiration Date (as such terms are hereinafter defined); provided,
however, that Rights may be issued with respect to shares of Common Stock that
shall become outstanding after the Distribution Date and prior to the
Expiration Date in accordance with Section 22.
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Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meaning indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which shall be the Beneficial Owner (as
such term is hereinafter defined) of 10% or more of the shares of Common Stock
then outstanding, but shall not include an Exempt Person (as such term is
hereinafter defined); provided, however, that if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be an
"Acquiring Person" became such inadvertently, and if such Person as promptly as
practicable divests itself of Beneficial Ownership of a sufficient number of
shares of Common Stock so that such Person would no longer be an "Acquiring
Person," then such Person shall not be deemed to be or to have become an
"Acquiring Person" for any purposes of this Agreement. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
acquisition of shares of Common Stock by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares of
Common Stock beneficially owned by such Person to 10% or more of the shares of
Common Stock then outstanding, provided, however, that if a Person shall become
the
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Beneficial Owner of 10% or more of the shares of Common Stock then outstanding
by reason of such share acquisitions by the Company and shall thereafter become
the Beneficial Owner of any additional shares of Common Stock, then such Person
shall be deemed to be an "Acquiring Person" unless upon the consummation of the
acquisition of such additional shares of Common Stock such Person does not own
10% or more of the shares of Common Stock then outstanding. In addition,
notwithstanding the foregoing, no Person who or which on January 16, 1996 was
the Beneficial Owner of 10% or more of the shares of Common Stock then
outstanding shall be an "Acquiring Person" as the result of such Beneficial
Ownership as of such date; provided however, in the event such Person shall
thereafter become the Beneficial Owner of any additional shares of Common
Stock, then such Person shall be deemed to be an "Acquiring Person" unless upon
the consummation of the acquisition of such additional shares of Common Stock
such Person does not own 10% or more of the shares of Common Stock then
outstanding. For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof.
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(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Rights
Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of,
shall be deemed to have "Beneficial Ownership" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or (B) the
right to vote pursuant to any agreement, arrangement or understanding;
provided,
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however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security by reason of such agreement, arrangement or
understanding if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the
proviso to Section 1(c)(ii)(B)) or disposing of any securities of the Company;
provided, however, that no Person who is an officer, director or employee of an
Exempt Person shall be deemed, solely by reason of such Person's status or
authority as such, to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are "beneficially
owned" (as defined in
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this Section 1(c)), including, without limitation, in a fiduciary capacity, by
an Exempt Person or by any other such officer, director or employee of an
Exempt Person.
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday or a day on which banking institutions in the State of North
Carolina are authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
P.M., Charlotte, North Carolina time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., Charlotte, North
Carolina time, on the next succeeding Business Day.
(f) "Common Stock" when used with reference to the
Company shall mean the Common Stock, presently par value $0.01 per share, of
the Company. "Common Stock" when used with reference to any Person other than
the Company shall mean the common stock (or, in the case of an unincorporated
entity, the equivalent equity interest) with the greatest voting power of such
other Person or, if such other Person is a subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
(g) "Common Stock equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
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(h) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "Distribution Date" shall have the meaning set forth
in Section 3 hereof.
(j) "equivalent preferred shares" shall have the meaning
set forth in Section 11(b) hereof.
(k) "Exempt Person" shall mean the Company or any
Subsidiary (as such term is hereinafter defined) of the Company, in each case
including, without limitation, in its fiduciary capacity, or any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
or trustee holding Common Stock for or pursuant to the terms of any such plan
or for the purpose of funding any such plan or funding other employee benefits
for employees of the Company or of any Subsidiary of the Company.
(l) "Exchange Consideration" shall have the meaning set
forth in Section 24 hereof.
(m) "Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(n) "Flip-In Event" shall have the meaning set forth in
Section 11(a)(ii) hereof.
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(o) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
(p) "NASDAQ" shall mean the National Association of
Securities Dealers, Inc. Automated Quotation System.
(q) "New York Stock Exchange" shall mean the New York
Stock Exchange, Inc.
(r) "Person" shall mean any individual, firm,
corporation, partnership, trust or other entity, and shall include any
successor (by merger or otherwise) to such entity.
(s) "Preferred Stock" shall mean the Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company having
the rights and preferences set forth in the Form of Certificate of Designations
attached to this Rights Agreement as Exhibit A.
(t) "Principal Party" shall have the meaning set forth in
Section 13 hereof.
(u) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
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(v) "Redemption Price" shall have the meaning set forth
in Section 23 hereof.
(w) "Right Certificate" shall have the meaning set forth
in Section 3 hereof.
(x) "Securities Act" shall mean the Securities Act of
1933, as amended.
(y) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(z) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(aa) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such, or such earlier date as a majority of the Board of Directors shall become
aware of the existence of an Acquiring Person.
(bb) "Subsidiary" of any Person shall mean any corporation
or other entity of which securities or other ownership interests having
ordinary voting power sufficient to elect a
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majority of the board of directors or other persons performing similar
functions are beneficially owned, directly or indirectly, by such Person, and
any corporation or other entity that is otherwise controlled by such Person.
(cc) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(dd) "Summary of Rights" shall have the meaning set forth
in Section 3 hereof.
(ee) "Trading Day" shall have the meaning set forth in
Section 11(d) hereof.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date be the holders of Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and
shall in no event be liable for, the acts or ommissions of any such co-Rights
Agent.
Section 3. Issue of Right Certificates.
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<PAGE> 14
(a) Until the Close of Business on the earlier of (i) the
tenth day after the Stock Acquisition Date or (ii) the tenth Business Day (or
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or of the first
public announcement of the intention of such Person (other than an Exempt
Person) to commence, a tender or exchange offer the consummation of which would
result in any Person (other than an Exempt Person) becoming the Beneficial
Owner of shares of Common Stock aggregating 10% or more of the Common Stock
then outstanding (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Stock registered in the names of the holders thereof
and not by separate Right Certificates, and (y) the Rights will be transferable
only in connection with the transfer of Common Stock. As soon as practicable
after the Distribution Date, the Company will notify the Rights Agent in
writing that the Distribution Date has occurred and the Company will prepare
and execute, the Rights Agent will countersign and the Company will send or
cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Stock as of the close of business on the Distribution Date (other than any
Acquiring Person or any Associate
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<PAGE> 15
or Affiliate of an Acquiring Person), at the address of such holder shown on
the records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right (subject to
adjustment as provided herein) for each share of Common Stock so held. As of
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to Purchase
Shares of Preferred Stock, in substantially the form of Exhibit C hereto (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Record Date (other
than any Acquiring Person or any Associate or Affiliate of any Acquiring
Person), at the address of such holder shown on the records of the Company.
With respect to certificates for Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with the
Summary of Rights. Until the Distribution Date (or, if earlier, the Expiration
Date), the surrender for transfer of any certificate for Common Stock
outstanding on the Record Date, with or without a copy of the Summary of
Rights, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby.
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<PAGE> 16
(c) Certificates issued for Common Stock (including,
without limitation, upon transfer of outstanding Common Stock, disposition of
Common Stock out of treasury stock or issuance or reissuance of Common Stock
out of authorized but unissued shares) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
Birmingham Steel Corporation and First Union National Bank of
North Carolina, as Rights Agent, dated as of January 16, 1996
as the same may be amended from time to time (the "Rights
Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal
executive offices of Birmingham Steel Corporation. 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. Birmingham
Steel Corporation will mail to the holder of this certificate
a copy of the Rights Agreement without charge after receipt of
a written request therefor. Under certain circumstances, as
set forth in the Rights Agreement, Rights owned by or
transferred to any Person who is or becomes an Acquiring
Person (as defined in the Rights Agreement) and certain
transferees thereof will become null and void and will no
longer be transferable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such
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<PAGE> 17
certificate, except as otherwise provided herein, shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.
In the event that the Company purchases or otherwise acquires any Common Stock
after the Record Date but prior to the Distribution Date, any Rights associated
with such Common Stock shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Stock
which are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend
shall not affect the enforceability of any part of this Agreement or the rights
of any holder of the Rights.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase shares and of assignment to
be printed on the reverse thereof) shall be substantially in the form set forth
in Exhibit B hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange or inter-dealer quotation system on which the Rights may from
time to time be listed or quoted, or to conform to usage. Subject to the
provisions of Sections 11, 13 and 22 hereof, the Right Certificates shall
entitle
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<PAGE> 18
the holders thereof to purchase such number of one one-hundredths of a share of
Preferred Stock as shall be set forth therein at the price per one
one-hundredth of a share of Preferred Stock set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a share of Preferred
Stock and the Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by its Chairman, Chief Executive Officer, President, any of its
Vice Presidents, or Treasurer, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof and shall be
attested by the Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as
though the person who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company
15
<PAGE> 19
to sign such Right Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at an office or agency designated for such
purpose, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face
by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e), 11(a)(ii)
and 14 hereof, at any time after the Distribution Date and prior to the
Expiration Date, any Right Certificate or Right Certificates (other than Right
Certificates that have become void pursuant to Section 11(a)(ii) hereof or that
have been exchanged pursuant to Section 24 hereof) may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a share of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled
16
<PAGE> 20
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office or agency of the Rights Agent designated for such
purpose. Thereupon the Rights Agent shall countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Right Certificates.
(b) Subject to the provisions of Section 11(a)(ii)
hereof, at any time after the Distribution Date and prior to the Expiration
Date, upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed
or mutilated.
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<PAGE> 21
Section 7. Exercise of Rights, Purchase Price; Expiration Date of Rights.
(a) Except as otherwise provided herein, the Rights shall
become exercisable on the Distribution Date, and thereafter the registered
holder of any Right Certificate may, subject to Section 11(a)(ii) hereof and
except as otherwise provided herein, exercise the Rights evidenced thereby in
whole or in part upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the office or agency of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one-hundredths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which the Rights
are exercised, at any time which is both after the Distribution Date and prior
to the time (the "Expiration Date") that is the earliest of (i) the Close of
Business on January 16, 2006 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the "Redemption
Date") or (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof.
(b) The Purchase Price shall be initially $74.00 for each
one one-hundredth of a share of Preferred Stock purchasable upon the exercise
of a Right. The Purchase Price and the number of one one-hundredths of a share
of Preferred Stock or other
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<PAGE> 22
securities or property to be acquired upon exercise of a Right shall be subject
to adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) of this Section 7.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the aggregate Purchase Price for the shares of
Preferred Stock to be purchased and an amount equal to any applicable transfer
tax required to be paid by the holder of such Right Certificate in accordance
with Section 9 hereof, in cash or by certified check, cashier's check or money
order payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred Stock
certificates for the number of shares of Preferred Stock to be purchased and
the Company hereby irrevocably authorizes its transfer agent to comply with all
such requests, or (B) requisition from the depositary agent depositary receipts
representing interests in such number of one one-hundredths of a share of
Preferred Stock as are to be purchased (in which case certificates for the
Preferred Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs the depositary
agent to comply with such request, (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional
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<PAGE> 23
shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (iv) after receipt,
deliver such cash, if any, to or upon the order of the registered holder of
such Right Certificate. The payment of the Purchase Price (as such amount may
be reduced pursuant to Section 11(a) hereof) may be made in cash or by
certified bank check or money order payable to the Company. In the event that
the Company is obligated to issue other securities of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all of the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the exercisable Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
20
<PAGE> 24
obligated to undertake any action with respect to a registered holder of Rights
upon the occurrence of any purported transfer or exercise of Rights pursuant to
Section 6 hereof or this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of assignment or
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such transfer or exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrrendered to the Rights Agent,
shall be cancelled by it, and no Right Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right
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<PAGE> 25
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that it will cause
to be reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any shares of Preferred Stock held in its treasury, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and,
following the time that any Person becomes an Acquiring Person, shares of
Common Stock and other securities) issuable upon the exercise of Rights may be
listed or admitted to trading on any national securities exchange, or quoted on
NASDAQ, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to
be listed or admitted to trading on such exchange, or quoted on NASDAQ, upon
official notice of issuance upon such exercise.
(c) From and after such time as the Rights become
exercisable, the Company shall use its best efforts, if then necessary to
permit the issuance of shares of Preferred Stock (and,
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<PAGE> 26
following the time that any Person becomes an Acquiring Person, shares of
Common Stock and other securities) upon the exercise of Rights, to register and
qualify such shares of Preferred Stock (and, following the time that any Person
becomes an Acquiring Person, shares of Common Stock and other securities) under
the Securities Act and any applicable state securities or "Blue Sky" laws (to
the extent exemptions therefrom are not available), cause such registration
statement and qualifications to become effective as soon as possible after such
filing and keep such registration and qualifications effective until the
earlier of the date as of which the Rights are no longer exercisable for such
securities and the Expiration Date. The Company may temporarily suspend, for a
period of time not to exceed 90 days, the exercisability of the Rights in order
to prepare and file a registration statement under the Securities Act and
permit it to become effective. Upon any such suspension, the Company shall
notify the Rights Agent and shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration
statement under the Securities Act (if required) shall have been declared
effective.
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<PAGE> 27
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of Preferred
Stock (and, following the time that any Person becomes an Acquiring Person,
shares of Common Stock and other securities) delivered upon exercise of Rights
shall, at the time of delivery of the certificates therefor (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully
paid and nonassessable shares.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Right Certificates or of any shares of Preferred Stock (or shares of Common
Stock or other securities) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Stock (or shares of Common Stock or other securities) in a name other than that
of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates or depositary
receipts for Preferred Stock (or shares of Common Stock or other securities)
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by that holder of such Right Certificate at the time of
surrender) or until it has
24
<PAGE> 28
been established to the Company's reasonable satisfaction that no such tax is
due.
Section 10. Preferred Stock Record Date. Each Person in
whose name any certificate for Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the shares of Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Preferred Stock transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder
of Preferred Stock for which the Rights shall be exercisable, including,
without limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares and Number of Rights. The Purchase Price, the
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<PAGE> 29
number of shares of Preferred Stock or other securities or property purchasable
upon exercise of 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 Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares of
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock issuable
on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock transfer
books of the Company were open, the holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no
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<PAGE> 30
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in
the event any Person becomes an Acquiring Person (the first occurrence of such
event being referred to hereinafter as the "Flip-In Event"), then (A) the
Purchase Price shall be adjusted to be the Purchase Price in effect immediately
prior to the Flip-In Event multiplied by the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such Flip-In Event, whether or not such Right was then exercisable, and (B)
each holder of a Right, except as otherwise provided in this Section 11(a)(ii)
and Section 11(a)(iii) hereof, shall thereafter have the right to receive, upon
exercise thereof at a price equal to the Purchase Price (as so adjusted), in
accordance with the terms of this Agreement and in lieu of shares of Preferred
Stock, such number of shares of Common Stock as shall equal the result obtained
by dividing the Purchase Price (as so adjusted) by 50% of the current per share
market price of the Common Stock (determined pursuant to Section 11(d) hereof)
on the date of such Flip-In Event; provided, however, that the Purchase Price
(as so adjusted) and the number of shares of Common Stock so receivable upon
exercise of a Right shall, following the Flip-In Event, be subject to further
adjustment as appropriate in accordance with Section 11(f) hereof.
Notwithstanding anything in
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<PAGE> 31
this Agreement to the contrary, however, from and after the Flip-In Event, any
Rights that are beneficially owned by (x) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (y) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a transferee
after the Flip-In Event or (z) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who became a transferee prior to or concurrently
with the Flip-In Event pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any Person with whom it has
any continuing agreement, arrangement or understanding regarding the
transferred Rights or (II) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this paragraph, and subsequent
transferees of such Persons, shall be void without any further action and any
holder of such Rights shall thereafter have no rights whatsoever with respect
to such Rights under any provision of this Agreement. The Company shall use
all reasonable efforts to ensure that the provisions of this Section 11(a)(ii)
are complied with, but neither the Company nor the Rights Agent shall have any
liability to any holder of Right Certificates or other Person as a result of
the Company's failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. From and after
the Flip-In Event, no Right Certificate shall be issued pursuant to Section 3
or Section 6 hereof that represents Rights that are or have become void
pursuant
28
<PAGE> 32
to the provisions of this paragraph, and any Right Certificate delivered to the
Rights Agent that represents Rights that are or have become void pursuant to
the provisions of this paragraph shall be cancelled. From and after the
occurrence of an event specified in Section 13(a) hereof, any Rights that
theretofore have not been exercised pursuant to this Section 11(a)(ii) shall
thereafter be exercisable only in accordance with Section 13 and not pursuant
to this Section 11(a)(ii).
(iii) The Company may at its option substitute for
a share of Common Stock issuable upon the exercise of Rights in accordance with
the foregoing subparagraph (ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the current per share
market price of a share of Common Stock. In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Board of Directors shall, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party (A) determine the excess (such excess, the "Spread") of
(1) the value of the shares of Common Stock issuable upon the exercise of a
Right in accordance with the foregoing subparagraph (ii) (the "Current Value")
over (2) the Purchase Price (as adjusted in accordance with the foregoing
subparagraph (ii)), and (B) with respect to each Right (other than Rights which
have become void pursuant to the
29
<PAGE> 33
foregoing subparagraph (ii)), make adequate provision to substitute for the
shares of Common Stock issuable in accordance with the foregoing subparagraph
(ii) upon exercise of the Right and payment of the Purchase Price (as adjusted
in accordance therewith), (1) cash, (2) a reduction in such Purchase Price, (3)
shares of Preferred Stock or other equity securities of the Company (including,
without limitation, shares or fractions of shares of preferred stock which, by
virtue of having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed in good faith by
the Board of Directors to have substantially the same value as the shares of
Common Stock (such shares of Preferred Stock and shares or fractions of shares
of preferred stock are hereinafter referred to as "Common Stock equivalents")),
(4) debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having a value which, when added to the value of the shares of
Common Stock actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of any reduction in
such Purchase Price), where such aggregate value has been determined by the
Board of Directors upon the advice of a nationally recognized investment
banking firm selected in good faith by the Board of Directors; provided,
however, that if the Company shall not make adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the Flip-In
Event (the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, to the extent permitted by
30
<PAGE> 34
applicable law and any material agreements then in effect to which the Company
is a party, upon the surrender for exercise of a Right and without requiring
payment of such Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary, such number or fractions of shares of
Preferred Stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If, upon the
occurrence of the Flip-In Event, the Board of Directors shall determine in good
faith that it is likely that sufficient additional shares of Common Stock could
be authorized for issuance upon exercise in full of the Rights, then, if the
Board of Directors so elects, 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(a)(ii) Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares (such thirty (30) day
period, as it may be extended, is herein called the "Substitution Period"). To
the extent that the Company determines that some action need be taken pursuant
to the second and/or third sentence of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 11(a)(ii) hereof and the last sentence of
this Section 11(a)(iii) hereof, that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such second sentence
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and to determine the value thereof. In the event of any such suspension, the
Company shall notify the Rights Agent and shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the shares of
Common Stock shall be the current per share market price (as determined
pursuant to Section 11(d)(i)) on the Section 11(a)(ii) Trigger Date and the per
share or fractional value of any "Common Stock equivalent" shall be deemed to
equal the current per share market price of the Common Stock. The Board of
Directors of the Company may, but shall not be required to, establish
procedures to allocate the right to receive shares of Common Stock upon the
exercise of the Rights among holders of Rights pursuant to this Section
11(a)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Stock (or shares having the same
rights, privileges and preferences as the Preferred Stock ("equivalent
preferred shares")) or securities convertible into Preferred Stock or
equivalent preferred shares at a price per share of Preferred Stock or
equivalent preferred shares (or having a conversion price per share, if a
security convertible into shares of Preferred Stock or equivalent
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<PAGE> 36
preferred shares) less than the then current per share market price of the
Preferred Stock (determined pursuant to Section 11(d) hereof), on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock and equivalent preferred shares outstanding on such
record date plus the number of shares of Preferred Stock and equivalent
preferred shares which the aggregate offering price of the total number of
shares of Preferred Stock and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price, and the denominator
of which shall be the number of shares of Preferred Stock and equivalent
preferred shares outstanding on such record date plus the number of additional
shares of Preferred Stock and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in
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<PAGE> 37
a statement filed with the Rights Agent and shall be conclusive for all
purposes. Shares of Preferred Stock and equivalent preferred shares owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Stock (including any
such distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section (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 then current per share market price of the
Preferred Stock (determined pursuant to Section (d) hereof, on such record
date, less the fair market value (as determined in good faith by the Board of
Directors of the Company whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
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<PAGE> 38
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Preferred Stock, and the denominator of which shall
be such current per share market price (determined pursuant to Section 11(d)
hereof) of the Preferred Stock; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company to be issued
upon exercise of one Right. 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 again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.
(d)(i) Except as otherwise provided in this Section
11(d)(i), for the purpose of any computation hereunder, the "current per share
market price" of any security (a "Security" for the purpose of this Section
11(d)(i)) on any date shall be deemed to be the average of the daily closing
prices per share of such Security for the 30 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; provided, however,
that in the event that the current per share market price of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in shares
of such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security, and prior to the
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<PAGE> 39
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported by the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is 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 Security is 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
Security selected by the Board of Directors of the Company. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open for the
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<PAGE> 40
transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder,
if the Preferred Stock is publicly traded, the "current per share market price"
of the Preferred Stock shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Stock is not publicly traded but
the Common Stock is publicly traded, the "current per share market price" of
the Preferred Stock shall be conclusively deemed to be the current per share
market price of the Common Stock as determined pursuant to Section 11(d)(i)
multiplied by one one-hundredth (appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof.
If neither the Common Stock nor the Preferred Stock is publicly traded,
"current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
(e) 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
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in any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one ten-thousandth of a share of
Preferred Stock or share of Common Stock or other share or security, as the
case may be. Notwithstanding the first sentence of this Section (e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than the
Preferred Stock, thereafter the Purchase Price and the number of such other
shares so receivable upon exercise of a Right shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Stock contained in Sections
11(a), 11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) hereof, as applicable, and
the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a share of Preferred
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<PAGE> 42
Stock purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to the nearest one
ten-thousandth of a share of Preferred Stock) obtained by (i) multiplying (x)
the number of one one-hundredths of a share covered by a Right immediately
prior to such 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 pursuant to Sections 11(a)(i), 11(b) or 11(c)
hereof to adjust the number of Rights, in substitution for any adjustment in
the number of one one-hundredths of a share of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after such adjustment
of the number of Rights shall be exercisable for the number of one
one-hundredths of a share of Preferred Stock for which a Right was
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<PAGE> 43
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one-hundredth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Right Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company may, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and
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<PAGE> 44
countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of Preferred
Stock issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase Price
and the number of one one-hundredths of a share of Preferred Stock which were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
Preferred Stock or other shares of capital 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 fully paid and nonassessable shares of Preferred Stock or other such
shares 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
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<PAGE> 45
until the occurrence of such event the issuing to the holder of any Right
exercised after such record date of the Preferred Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise over and
above the Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Stock, issuance wholly for cash of any shares of Preferred Stock at less than
the current market price, issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
Preferred Stock, dividends on Preferred Stock payable in shares of Preferred
Stock or issuance of rights, options or warrants referred to hereinabove in
Section 11(b), hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
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(n) Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of this Rights
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of a dividend payable in Common
Stock) into a greater or lesser number of shares of Common Stock, then in such
case, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter, shall be proportionately
adjusted so that the number of Rights thereafter associated with each share of
Common Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number
of shares of Common Stock outstanding immediately following the occurrence of
such event.
(o) The Company agrees that, after the earlier of the
Distribution Date or the Stock Acquisition Date, it will not, except as
permitted by Sections 23, 24 or 27 hereof, 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
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diminish substantially or 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 13
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Stock and the Preferred Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof (if so required under Section 25 hereof). The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained, shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate, and shall
not be required or permitted to question the requirement for or the calculation
of any such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earnings Power.
(a) In the event, directly or indirectly, at any time
after the Flip-In Event (i) the Company shall merge with and into any other
Person, (ii) any Person shall consolidate with the Company, or any Person shall
merge with and into the Company and
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the Company shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the Common Stock shall be
changed into or exchanged for stock or other securities of any other Person (or
of the Company) or cash or any other property, or (iii) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company or
one or more wholly owned Subsidiaries of the Company), then upon the first
occurrence of such event, proper provision shall be made so that: (A) each
holder of a Right (other than Rights which have become void pursuant to Section
11(a)(ii) hereof) shall thereafter have the right to receive, upon the exercise
thereof at the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof), in accordance with the terms of this Agreement and
in lieu of shares of Preferred Stock or Common Stock of the Company, such
number of validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result obtained by dividing
the Purchase Price (as theretofore adjusted in accordance with Section (a)(ii)
hereof) by 50% of the current per share market price of the Common Stock of
such Principal Party (determined pursuant to Section 11(d) hereof) on the date
of
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consummation of such consolidation, merger, sale or transfer; provided,
however, that the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof) and the number of shares of Common Stock of such
Principal Party so receivable upon exercise of a Right shall be subject to
further adjustment as appropriate in accordance with Section (f) hereof to
reflect any events occurring in respect of the Common Stock of such Principal
Party after the occurrence of such consolidation, merger, sale or transfer; (B)
such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, sale or transfer, all the obligations and
duties of the Company pursuant to this Rights Agreement; (C) the term "Company"
shall thereafter be deemed to refer to such Principal Party; and (D) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its shares of Common Stock in accordance
with Section 9 hereof) in connection with such consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of its Common Stock thereafter deliverable upon the exercise of the
Rights; provided that, upon the subsequent occurrence of any consolidation,
merger, sale or transfer of assets or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase Price
as provided in this Section 13(a), such cash shares, rights, warrants and other
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property which such holder would have been entitled to receive had such holder,
at the time of such transaction, owned the Common Stock of the Principal Party
receivable upon the exercise of a Right pursuant to this Section 13(a), and
such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
(i) or (ii) of the first sentence of Section 13(a) hereof: (A) the Person that
is the issuer of the securities into which the shares of Common Stock are
converted in such merger or consolidation, or, if there is more than one such
issuer, the issuer the shares of Common Stock of which have the greatest
aggregate market value of shares outstanding, or (B) if no securities are so
issued, (x) the Person that is the other party to the merger, if such Person
survives said merger, or, if there is more than one such Person, the Person the
shares of Common Stock of which have the greatest aggregate market value of
shares outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger (including
the Company if it survives) or (z) the Person resulting from the consolidation;
and
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(ii) in the case of any transaction described in
(iii) of the first sentence in Section 13(a) hereof, the Person that is the
party receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, whichever of such
Persons as is the issuer of Common Stock having the greatest aggregate market
value of shares outstanding;
provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), if the Common Stock of such Person is not at such time or
has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stock of all of which is and has been so registered, the
term "Principal Party" shall refer to whichever of such Persons is the issuer
of Common Stock having the greatest aggregate market value of shares
outstanding, or (3) if such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the
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same Person, the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.
(c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) hereof unless prior
thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
requirements of Sections 13(a) and (b) hereof shall promptly be performed in
accordance with their terms and that such consolidation, merger, sale or
transfer of assets shall not result in a default by the Principal Party under
this Agreement as the same shall have been assumed by the Principal Party
pursuant to Sections 13(a) and (b) hereof and providing that, as soon as
practicable after executing such agreement pursuant to this Section 13, the
Principal Party will:
(i) prepare and file a registration statement
under the Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, use
its best efforts to cause such registration statement to become effective as
soon as practicable after such
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<PAGE> 53
filing and use its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date and similarly comply with applicable
state securities laws;
(ii) use its best efforts, if the Common Stock of
the Principal Party shall be listed or admitted to trading on the New York
Stock Exchange or on another national securities exchange, to list or admit to
trading (or continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on the New York Stock Exchange or such securities
exchange, or, if the Common Stock of the Principal Party shall not be listed or
admitted to trading on the New York Stock Exchange or a national securities
exchange, to cause the Rights and the securities receivable upon exercise of
the Rights to be authorized for quotation on NASDAQ or on such other system
then in use;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal
or preemptive rights in respect of the Common Stock of the
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Principal Party subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has 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 (other than to holders
of Rights pursuant to this Section 13), 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 thereof (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, or (ii) providing for any special
payment, tax or similar provision in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of Section 13, then,
in such event, the Company hereby agrees with each holder of Rights that it
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.
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(e) The Company covenants and agrees that it shall not, at any
time after the Flip-In Event, enter into any transaction of the type described
in clauses (i) through (iii) of Section 13(a) hereof if (i) at the time of or
immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (ii)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer or other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (iii) the form or nature
of organization of the Principal Party would preclude or limit the
exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights (except prior
to the Distribution Date in accordance with Section 11(n) hereof). In lieu of
such fractional Rights, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional Rights
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would otherwise be issuable, an amount in cash equal to the same fraction of
the current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by 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 the Board of Directors of the
Company. If on any such date no such market maker is making a market in the
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Rights, the fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Interests in fractions of Preferred Stock in
integral multiples of one one-hundredth of a share of Preferred Stock may, at
the election of the Company, be evidenced by depositary receipts, pursuant to
an appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they
are entitled as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-hundredth of a share of Preferred Stock, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one share of Preferred Stock. For
the purposes of this Section 14(b), the current market value of a share of
Preferred Stock shall be the closing price of a share of Preferred Stock (as
determined pursuant
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to Section 11(d) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided by this Section 14).
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Stock), on his own behalf and for his own
benefit, may enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate (or, prior to
the Distribution Date, such Common Stock) in the manner provided therein 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 will
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be entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the obligations of any
Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date, the
Common Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
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and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary;
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; and
(e) such holder shall be entitled to the benefits of this
Agreement but shall not be entitled to any right not specifically set forth
herein, nor shall any provision of this Agreement be deemed to impose any
fiduciary duty on the officers or directors of the Company or the Rights Agent
with respect to any holder of the Rights.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Stock or any
other securities of the Company which
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may at any time be issuable on the exercise of the Rights represented thereby,
nor shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of
a 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 this Agreement),
or to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Right Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent, its officers, employees,
agents and directors, for, and to hold all of them harmless against, any loss,
liability or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent or such other indemnified party, for
anything done or omitted by the Rights Agent
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in connection with the acceptance or administration of this Agreement or
performance hereunder, including the costs and expenses of defending against
any claim of liability arising therefrom, directly or indirectly, and will
promptly reimburse the Rights Agent therefor.
(b) The Rights Agent, its officers, employees, agents and
directors 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 or the exercise or performance of its duties
hereunder in reliance upon any Right Certificate or certificate for the
Preferred Stock or Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage or any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action.
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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 stock transfer or corporate trust powers of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
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(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Agreement (and no implied
duties or obligations shall be imposed on the Rights Agent) upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable
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that any fact or matter be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any person
believed in good faith by the Rights Agent to be the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer and
the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or 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 to the Company and
any other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent is serving as an administrative agent only,
and accordingly shall not be under any responsibility in
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respect of the validity of any provision of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11(a) (ii) hereof) or any adjustment in the terms of the Rights
provided for herein, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after receipt of a certificate furnished
pursuant to Section 11, describing such change or adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or other
securities to be issued pursuant to this Agreement or any Right Certificate or
as to whether any shares of Preferred Stock or other securities will, when
issued, be validly authorized and issued fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the
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Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
Secretary or the Treasurer or any Assistant Secretary 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 by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions. 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 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 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
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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
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, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
default, neglect or misconduct, provided reasonable care was exercised in the
selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to
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purchase set forth on the reverse thereof, as the case may be, has not been
completed to certify the holder is not an Acquiring Person (or an Affiliate or
Associate thereof), a Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting with
the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and, following the Distribution Date, to the holders of the
Right 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 Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the
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Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the
United States or the State of North Carolina or the State of New York (or of
any other state of the United States so long as such corporation is authorized
to do business as a banking institution in the State of North Carolina or the
State of New York), in good standing, having an office in the State of North
Carolina or the State of New York, 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 and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock or Preferred Stock, and, following the Distribution
Date, mail a notice thereof in writing to the registered holders of the Right
Certificates.
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Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Section 22. Issuance of New Right Certificates. Notwith-standing any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such forms as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Common Stock following the Distribution
Date and prior to the Expiration Date, the Company may with respect to shares
of Common Stock so issued or sold pursuant to (i) the exercise of stock
options, (ii) under any employee plan or arrangement, (iii) upon the exercise,
conversion or exchange of securities notes or debentures issued by the Company
or (iv) a contractual obligation of the Company, in each case existing prior to
the Distribution Date, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale.
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Section 23. Redemption.
(a) The Board of Directors of the Company may, at any time prior
to the Flip-In Event, redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (the redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors ordering
the redemption of the Rights pursuant to paragraph (a) of this Section 23 (or
at such later time as the Board of Directors may establish for the
effectiveness of such redemption), 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.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after such action of the
Board of Directors ordering the redemption of the Rights (or such later time as
the Board of Directors may establish for the effectiveness of such redemption),
the Company shall mail a notice of redemption to
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all the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the purchase of Common Shares prior
to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after the Flip-In Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a) (ii) hereof) by exchanging for each
such Right a number of shares of Common Stock having an aggregate current per
share market price (determined pursuant to Section 11(d) hereof) on the date of
the occurrence of the Flip-In Event equal to the Spread (as defined in Section
11(a)(iii) hereof), appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring
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after the date of such Flip-In Event (such amount per Right being hereinafter
referred to as the "Exchange Consideration"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of
shares of Common Stock aggregating 50% or more of the shares of Common Stock
then outstanding. From and after the occurrence of an event specified in
Section 13(a) hereof, any Rights that theretofore have not been exchanged
pursuant to this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
24(a).
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive the Exchange Consideration. 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 shall promptly mail a notice of any such
exchange to all of the holders of the Rights so exchanged 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
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or not the holder receives the notice. Each such notice of exchange will state
the method by which the exchange of the shares of Common Stock for Rights will
be effected and, in the event of any partial exchange, the number of Rights
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 11(a)(ii) hereof) held by each holder of Rights.
(c) The Company may at its option substitute, and, in the event
that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall substitute
to the extent of such insufficiency, for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, a number of shares of Preferred
Stock or fractions thereof (or equivalent preferred shares, as such term is
defined in Section 11(b)) having an aggregate current per share market price
(determined pursuant to Section 11(d) hereof) equal to the current per share
market price of one share of Common Stock (determined pursuant to Section 11(d)
hereof) as of the date of the Flip-In Event.
(d) The Company shall not, in connection with any exchange
pursuant to this Section 24, be required to issue fractions of shares of Common
Stock or to distribute certificates which evidence
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fractional shares of Common Stock. In lieu of such fractional shares of Common
Stock, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock. For the purposes of
this paragraph (d), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock (as determined pursuant
to Section 11(d) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall at any time after the earlier of the
Distribution Date or the Stock Acquisition Date propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Stock or to make
any other distribution to the holders of its Preferred Stock (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
Preferred Stock), (iv) to effect the liquidation, dissolution or
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winding up of the Company, or (v) to declare or pay any dividend on the Common
Stock payable in Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such liquidation, dissolution or winding up is to take
place and the date of participation therein by the holders of the Common Stock
and/or Preferred Stock, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above at
least 10 days prior to the record date for determining holders of the Preferred
Stock for purposes of such action, and in the case of any such other action, at
least 10 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Stock and/or
Preferred Stock, whichever shall be the earlier.
(b) In case any event described in Section 11(a)(ii) or Section 13
shall occur then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
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and the consequences of such event to holders of Rights under Section 11(a)(ii)
and Section 13 hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if
delivered by hand, sent by overnight courier or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
Birmingham Steel Corporation
Suite 300
1000 Urban Center Drive
Birmingham, Alabama 35242-2516
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if delivered by hand, sent by overnight courier or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
First Union National Bank of North Carolina
230 South Tryon Street
Charlotte, North Carolina 28288-1153
Attention: Shareholder Services Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-
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class mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of
this Agreement in any respect without the approval of any holders of the
Rights. At any time when the Rights are no longer redeemable, except as
provided in the penultimate sentence of this Section 27, the Company may, and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
to (i) cure any ambiguity, (ii) correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) shorten or lengthen any time period hereunder, or (iv) change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; provided that no such supplement or amendment shall
adversely affect the interests of the holders of Rights as such (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no
such amendment may cause the rights again to become redeemable or cause the
Agreement again to become amendable other than in accordance with this
sentence. Notwithstanding anything to the contrary contained herein, no
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supplement or amendment which changes the rights and duties of the Rights Agent
hereunder shall be effective without the written consent of the Rights Agent,
which consent shall be given in the sole discretion of the Rights Agent.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment; provided, however, that the Rights Agent shall have no duty to
execute such supplement or amendment in the absence of its consent where such
consent is required by this Section 27.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. 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 Right Certificates (and, prior to the
Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
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of the Right Certificates (and, prior to the Distribution Date, the Common
Stock).
Section 30. Determinations and Actions by the Board of Directors.
The Board of Directors of the Company shall have the exclusive power and
authority to exercise the rights and powers specifically granted to the Board
of Directors of the Company or to the Company, including, without limitation,
the right and power to (i) interpret the provisions of this Agreement and (ii)
make all determinations deemed necessary or advisable for the administration of
this Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) that are done or made by
the Board of Directors of the Company in good faith, shall (x) be final,
conclusive and binding on the Company and the holders of the Rights, as such,
and (y) not subject the Board of Directors to any liability to the holders of
the Rights.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
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<PAGE> 82
Section 32. Governing law. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State, except that the rights and duties of the Rights
Agent shall be governed by the laws of the State of North Carolina applicable
to contracts made and to be performed entirely within such state.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
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<PAGE> 83
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.
Attest: BIRMINGHAM STEEL CORPORATION
By /s/ Catherine W. Pecher By /s/ Robert A. Garvey
------------------------ -------------------------
Name: Catherine W. Pecher Name: Robert A. Garvey
Title: Corporate Secretary Title: Chairman of the Board
WITNESS: FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
/s/ Myron O. Gray By /s/ Patrick J. Edwards
- -------------------------- -------------------------
Vice President Name: Patrick J. Edwards
Title: Vice President
80
<PAGE> 84
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
Birmingham Steel Corporation
Pursuant to Section 151 of the General Corporation law
of the State of Delaware
Birmingham Steel Corporation, a corporation organized and
existing under the General Corporation law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Certificate of Incorporation
of the said Corporation, the said Board of Directors on January 16, 1996
adopted the following resolution creating a series of 350,000 shares of
Preferred Stock designated as "Series A Junior Participating Preferred Stock":
RESOLVED, that pursuant to the authority vested in
the Board of Directors of this Corporation in accordance with
the provisions of the Certificate of Incorporation, a series
of Preferred Stock, par value $0.01 per share, of the
Corporation be and hereby is created, and that the designation
and number of shares thereof and the voting and other powers,
preferences and relative, participating, optional or other
rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. Designation and Amount. There shall be a series of
Preferred Stock that shall be designated as "Series A Junior Participating
Preferred Stock," and the number of shares constituting such series shall be
350,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, however, that no decrease shall reduce the
number of shares of Series A Junior Participating Preferred Stock to less than
the number of shares then issued and outstanding plus
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<PAGE> 85
the number of shares issuable upon exercise of outstanding rights, options or
warrants or upon conversion of outstanding securities issued by the
Corporation.
2. Dividends and Distribution.
(A) Subject to the prior and superior rights of
the holders of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series A Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series A Junior Participating
Preferred Stock, in preference to the holders of shares of any class or series
of stock of the Corporation ranking junior to the Series A Junior Participating
Preferred Stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on September 30, December 31, March 31, and June 30
in each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 or (b) the Adjustment Number (as
defined below) times the aggregate per share amount of all cash dividends, and
the Adjustment Number times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock, par
value $0.01 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. The
"Adjustment Number" shall initially be 100. In the event the Corporation shall
at any time after January 16, 1996 (the "Rights Declaration Date") (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock or (iii) combine the outstanding Common Stock into
a smaller number of shares, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred Stock as provided
in paragraph (A) above immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of Common Stock).
A-2
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(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior Participating Preferred
Stock from the Quarterly Dividend Payment Date next preceding the date of issue
of such shares of Series A Junior Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior to the
date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating
Preferred Stock shall entitle the holder thereof to a number of votes equal to
the Adjustment Number on all matters submitted to a vote of the stockholders of
the Corporation.
(B) Except as required by law, holders of Series
A Junior Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series A Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
A-3
<PAGE> 87
(i) declare or pay dividends on, make
any other distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make
any other distributions on any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled; or
(iii) purchase or otherwise acquire for
consideration any shares of Series A Junior Participating Preferred Stock, or
any shares of stock ranking on a parity with the Series A Junior Participating
Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of
Series A Junior Participating Preferred Stock, or to such holders and holders
of any such shares ranking on a parity therewith, upon such terms as the Board
of Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired promptly after the
acquisition thereof. All such shares shall upon their retirement become
authorized but unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock to be created by resolution or resolutions
of the Board of Directors, subject to any conditions and restrictions on
issuance set forth herein.
6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of
A-4
<PAGE> 88
shares of Series A Junior Participating Preferred Stock shall have received
$100.00 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional distributions
shall be made to the holders of shares of Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference by (ii)
the Adjustment Number. Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of (1) Series A Junior Participating Preferred Stock and (2)
Common Stock, respectively, (a) holders of Series A Junior Participating
Preferred Stock and (b) holders of shares of Common Stock shall, subject to the
prior rights of all other series of Preferred Stock, if any, ranking prior
thereto, receive their ratable and proportionate share of the remaining assets
to be distributed in the ratio of the Adjustment Number to 1 with respect to
(x) the Series A Junior Participating Preferred Stock and (y) the Common Stock,
on a per share basis, respectively.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all other series of
Preferred Stock, if any, that rank on a parity with the Series A Junior
Participating Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) Neither the merger or consolidation of the
Corporation into or with another corporation nor the merger or consolidation of
any other corporation into or with the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 6.
7. Consolidation, Merger, Etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to the Adjustment
Number times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into
A-5
<PAGE> 89
which or for which each share of Common Stock is changed or exchanged.
8. No Redemption. Shares of Series A Junior
Participating Preferred Stock shall not be subject to redemption by the
Company.
9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise, and shall rank senior to the
Common Stock as to such matters.
10. Amendment. At any time that any shares of Series A
Junior Participating Preferred Stock are outstanding, the Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds of the outstanding
shares of Series A Junior Participating Preferred Stock, voting separately as a
class.
11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share that shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Junior Participating Preferred
Stock.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this 16th day of January, 1996.
ATTEST: BIRMINGHAM STEEL CORPORATION
By:
- --------------------------- ------------------------------------
Name: Name:
Title: Title:
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<PAGE> 90
Exhibit B
Form of Right Certificate
Certificate No. R-_____ _______Rights
NOT EXERCISABLE AFTER JANUARY ____, 2006 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
Right Certificate
Birmingham Steel Corporation
This certifies that _______________ or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of January 16, 1996 as the same may be amended
from time to time (the "Rights Agreement"), between Birmingham Steel
Corporation, a Delaware corporation (the "Company"), and First Union National
Bank of North Carolina (the "Rights Agent"), to purchase from the Company at
any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., Charlotte, North Carolina time, on January
16, 2006 at the office or agency of the Rights Agent designated for such
purpose, or of its successor as Rights Agent, one one-hundredth of a fully paid
non-assessable share of Series A Junior Participating Preferred Stock, par
value $0.01 per share (the "Preferred Stock"), of the Company, at a purchase
price of $74.00 per one one-hundredth of a share of Preferred Stock (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of one one-hundredths of a
share of Preferred Stock which may be purchased upon exercise hereof) set forth
above, and the Purchase Price set forth above, are the number and Purchase
Price as of January 16, 1996 based on the Preferred Stock as constituted at
such date. As provided in the Rights Agreement, the Purchase Price, the number
of one one-hundredths of a share of Preferred Stock (or other securities or
property) which may be purchased upon the exercise of the Rights and the number
of
B-1
<PAGE> 91
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office or agency of
the Rights Agent. The Company will mail to the holder of this Right
Certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.
This Right Certificate, with or without other Right
Certificates, upon surrender at the office or agency of the Rights Agent
designated for such purpose, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of shares of Preferred Stock as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or in part
for shares of the Company's Common Stock, par value $0.01 per share, or shares
of Preferred Stock.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than fractions
which are integral multiples of one one-hundredth of a share of Preferred
Stock, which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof, the Company will make cash payments, as
provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder
of the Preferred Stock or of any other securities of the Company which may at
any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof,
as such, any of the rights of a 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
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<PAGE> 92
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 Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in
the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ________________ ___, 199__.
ATTEST: BIRMINGHAM STEEL CORPORATION
By:
- -------------------------- ------------------------------
Name: Name:
Title: Title:
Countersigned:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
as Rights Agent
By
----------------------------------
Authorized Signature
B-3
<PAGE> 93
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED __________________ hereby sells, assigns
and transfers unto ____________________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________________
Attorney, to transfer said Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ___________________________
_________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
................................................................................
(To be completed)
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being assigned to an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
_________________________________
Signature
B-4
<PAGE> 94
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
To: Birmingham Steel Corporation
The undersigned hereby irrevocably elects to exercise
___________ Rights represented by this Right Certificate to purchase the shares
of Preferred Stock (or other securities or property) issuable upon the exercise
of such Rights and requests that certificates for such shares of Preferred
Stock (or such other securities) be issued in the name of:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ___________
______________________________
Signature
(Signature must conform to holder specified on Right Certificate)
Signature Guaranteed:
Signature must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
B-5
<PAGE> 95
Form of Reverse Side of Right Certificate - continued
________________________________________________________________________________
(To be completed)
The undersigned certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
______________________________
Signature
________________________________________________________________________________
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.
B-6
<PAGE> 96
Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS
OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL
AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF PREFERRED STOCK
On January 16, 1996, the Board of Directors of Birmingham
Steel Corporation (the "Company") declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par
value $0.01 per share, of the Company (the "Common Stock"). The dividend is
payable on January 19, 1996 (the "Record Date") to the stockholders of record
on that date. Each Right entitles the registered holder to purchase from the
Company one onehundredth of a share of Series A Junior Participating
Preferred Stock, par value $0.01 per share (the "Preferred Stock") of the
Company at a price of $74.00 per one one-hundredth of a share of Preferred
Stock (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement dated as of January 16, 1996,
as the same may be amended from time to time (the "Rights Agreement"), between
the Company and First Union National Bank of North Caroina, as Rights Agent
(the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 10% or more of the
outstanding shares of Common Stock or (ii) 10 business days (or such later date
as may be determined by action of the Board of Directors prior to such time as
any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 10% or more of the outstanding
shares of Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate together with a copy of this Summary of Rights.
Existing holdings of 10% or more of the Company's Common Stock
will not cause the Rights to be exercisable, or entitle the holders of Rights
to purchase additional shares of the Company or
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<PAGE> 97
any other entity, unless a current holder of 10% or more of the Company's
Common Stock acquires additional shares.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Stock. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date upon transfer or new issuances of
Common Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for shares of
Common Stock outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights, will also constitute the transfer of the Rights
associated with the shares of Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution Date
and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire, if not previously exercised, on January 16, 2006 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each
case as described below.
The Purchase Price payable, and the number of shares of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights is subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
Preferred Stock at a price, or securities convertible into Preferred Stock with
a conversion price, less than the then-current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights is also subject to adjustment
in the event of a stock split of the Common Stock or a stock dividend on the
Common Stock payable in shares of Common Stock or subdivisions, consolidations
or combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
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<PAGE> 98
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each share of Preferred Stock will be entitled,
when, as and if declared, to a minimum preferential quarterly dividend payment
of $1.00 per share but will be entitled to an aggregate dividend of 100 times
the dividend declared per share of Common Stock. In the event of liquidation,
the holders of the Preferred Stock will be entitled to a minimum preferential
liquidation payment of $100.00 per share (plus any accrued but unpaid
dividends) but will be entitled to an aggregate payment of 100 times the
payment made per share of Common Stock. Each share of Preferred Stock will
have 100 votes, voting together with the Common Stock. Finally, in the event of
any merger, consolidation or other transaction in which shares of Common Stock
are converted or exchanged, each share of Preferred Stock will be entitled to
receive 100 times the amount received per share of Common Stock. These rights
are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, each holder of a Right, other
than Rights beneficially owned by the Acquiring Person (which will thereupon
become void), will thereafter have the right to receive upon exercise of a
Right at the then-current exercise price of the Right, that number of shares of
Common Stock having a market value of two times the exercise price of the
Right.
In the event that, after a person or group has become an
Acquiring Person, the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provisions will be made so that each holder of a Right
(other than Rights beneficially owned by an Acquiring Person which will have
become void) will thereafter have the right to receive, upon the exercise
thereof at the then-current exercise price of the Right, that number of shares
of common stock of the person with whom the Company has engaged in the
foregoing transaction (or its parent), which number of shares at the time of
such transaction will have a market value of two times the exercise price of
the Right.
At any time after any person or group becomes an Acquiring
Person and prior to the earlier of one of the events described in the previous
paragraph or the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which will
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<PAGE> 99
have become void), in whole or in part, for shares of Common Stock, or one
one-hundredths of a share of Preferred Stock (or shares of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), having a value per Right equal to the difference between the
market value of the shares of Common Stock receivable upon exercise of the
Right and the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares of Preferred Stock will be
issued (other than fractions which are integral multiples of one one-hundredth
of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes
such, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the Company
may, except with respect to the redemption price, amend the Rights in any
manner. After the Rights are no longer redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner that does
not adversely affect the interests of holders of the Rights.
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.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated January 23, 1996. A copy of the Rights Agreement is available
free of charge from the Company. This summary description of the Rights does
not purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, as the same may be amended from time to time, which is hereby
incorporated herein by reference.
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<PAGE> 1
EXHIBIT 20
January 23, 1996
To Our Stockholders:
On January 16, 1996, your Board of Directors declared a dividend
distribution of Preferred Share Purchase Rights. This letter describes the
Board's reasons for adopting the Share Purchase Rights Plan.
These Rights contain provisions to protect stockholders in the event of an
unsolicited attempt to acquire the Company, including a low price offer which
does not provide full value to stockholders, a gradual accumulation of shares
in the open market, a partial or two-tier tender offer that does not treat all
stockholders equally, a squeeze-out merger and other abusive takeover tactics
which the Board believes are not in the best interests of stockholders. These
tactics unfairly pressure stockholders, squeeze them out of their investment
without giving them any real choice, and deprive them of the full value of
their shares. The purpose of the Rights Plan is to force a potential acquiring
person or group to negotiate with the Board of Directors. Your Board is not
aware of any effort to acquire control of the Company. Your Board's decision
to act was accelerated by the current share price and the major capital
expansion program now in progress.
Over 1,700 companies, including 49 percent of the companies in the
Business Week 1000, 50 percent of the companies in the Fortune 500, and 67
percent of the companies in the Fortune 200 have issued rights to protect their
stockholders against these tactics. We consider the Rights to be the best
available means of protecting both your right to retain your equity investment
in Birmingham Steel Corporation and the full value of that investment.
Much of the protection for stockholders is provided by the "flip-in" and
"flip-over" features of the Plan, which are explained in more detail below.
These features take effect if an entity attempts to take over the Company in a
transaction which is not approved by the Board, because, for example, the
attempt involves an unfair price which does not recognize the full value of the
Company's current capital expansion program or a coercive two-tier offer that
treats some stockholders differently. If a person or group acquires 10 percent
or more of the Company's stock in such an unapproved transaction, the "flip-in"
and "flip-over" features of the plan give all stockholders, other than the
acquiring stockholder, the right to buy additional shares of the Company's
stock at half price and, in the event of a subsequent acquisition of the
Company, the right to buy stock in the acquiring entity at half price.
The Rights are not intended to prevent a takeover of the Company and will
not do so; however, they should deter any attempt to acquire the Company in a
manner or on terms not approved by the Board. The Rights are designed to deal
with the very serious problem of another
<PAGE> 2
person or group using abusive tactics to deprive Birmingham Steel's Board and
its stockholders of any real opportunity to determine the destiny of the
Company.
The Rights may be redeemed by the Board of Directors for one cent per
Right prior to the time a single acquiror or a group (an "Acquiring Person")
accumulates, through open-market purchases, a tender offer or otherwise, 10
percent or more of the Company's common stock. Thus, the Rights should not
interfere with any merger or business combination approved by the Board of
Directors prior to that time.
Your Board was aware, when it acted, that some people have advanced
arguments that securities of the sort we are issuing deter legitimate
acquisition proposals. We carefully considered these views and concluded that
the arguments are speculative and do not justify leaving stockholders without
any protection against unfair treatment by an acquiror - who, after all, is
seeking his own or his company's advantage, not yours. Your Board believes
that these Rights represent a sound and reasonable means of addressing the
complex issues of corporate policy created by the current takeover environment
and the under-valued price of your Company's shares in the market.
Existing holdings of 10 percent or more of the Company's common stock will
not cause the Rights to be exercisable, or entitle the holders of Rights to
purchase additional shares of the Company or any other entity, unless a current
holder of 10 percent or more of the Company's common stock acquires additional
shares.
Issuance of the Rights does not in any way weaken the financial strength
of the Company or interfere with its business plans. The issuance of the
Rights has no dilutive effect, will not affect reported earnings per share, is
not taxable to you or the Company, and will not change the way in which you can
presently trade the Company's shares. As explained in the following details,
the Rights will only be exercisable if and when the problem with which they
were created to deal arises. They will then operate to protect you against
being deprived of your right to share in the full measure of your Company's
long-term potential.
The Rights were issued on January 19, 1996, to stockholders of record on
that date and will expire in ten years. Initially, the Rights will not be
exercisable, certificates will not be sent to you, and the Rights will
automatically trade with the common shares; however, ten days after a person or
group becomes an Acquiring Person, or after a person or group announces an
offer the consummation of which would result in such person or group becoming
an Acquiring Person (even if no purchases actually occur), the Rights will
become exercisable and separate certificates representing the Rights will be
distributed. We expect that at that time, the Rights will begin to trade
independently from the Company's shares. At no time will the Rights have any
voting power.
At the time Rights become exercisable, unless an Acquiring Person has
already acquired 10 percent or more of the Company's shares, a holder will be
entitled to buy from the Company one one-hundredth of a share of a new series
of junior participating preferred stock for $74.00. After the rights become
exercisable, if the Company is involved in a merger or other business
combination at any time after a person or group has become an Acquiring Person,
the "flip-over" feature is activated. Then the Rights will entitle a holder to
buy a number of shares of common stock of the Acquiring
<PAGE> 3
Person having a market value of twice the exercise price of each Right. For
example, if at the time of the business combination, the acquiring company's
stock has a share value of $50, the holder of each Right would be entitled to
receive two shares of the Acquiring Person's common stock for each $50 paid on
exercise of the Right, i.e., at half price.
If any person or group becomes an Acquiring Person, the "flip-in"
provision of the Rights will be triggered, and the Rights will entitle a holder
(other than the Acquiring Person) to buy a number of additional shares of
common stock of the Company having a market value of twice the exercise price
of each Right, i.e. at half price. Thus, if at the time of the 10 percent
acquisition, the Company's stock were to have a market value per share equal to
$30, the holder of each Right (other than the Acquiring Person) would be
entitled to receive two shares of Birmingham Steel Corporation common stock for
each $30 paid on exercise of the Right.
Following the time a person or group becomes an Acquiring Person, but only
prior to the acquisition by a person or group of a 50 percent stake, the Board
of Directors will also have the ability to exchange the rights (other than
Rights held by the Acquiring Person), in whole or in part, for Birmingham Steel
common stock (or one one-hundredth of a share of the new series of junior
participating preferred stock) with a value equal to the flip-in, i.e., the
economic benefit which would be received if the holder of the Right purchased
additional Company shares at half price. This provision will have an
economically dilutive effect on the Acquiring Person, and provide a
corresponding benefit to the remaining holders of Rights that is comparable to
the flip-in without requiring holders of rights to go through the process and
expense of exercising their Rights.
While, as noted above, the distribution of the Rights will not be taxable
to you or the Company, stockholders may recognize taxable income upon the
occurrence of certain subsequent events.
In addition to authorizing the Rights, your Board authorized a new series
of junior participating preferred stock purchasable upon exercise of the
Rights. The shares of the new series of junior participating preferred stock
will be nonredeemable. Each preferred share will be entitled to an aggregate
dividend equal to the greater of $1.00 per share or 100 times the dividend
declared on the common shares. In the event of liquidation, the holders of the
preferred shares will be entitled to receive an aggregate liquidation payment
equal to the greater of $100 or 100 times the payment made per share of common
stock. Each preferred share will have 100 votes, voting together with the
common shares. Finally, in the event of any merger, consolidation or other
transaction in which common shares are exchanged, each preferred share will be
entitled to receive 100 times the amount received per common share. These
rights are protected by customary anti-dilution provisions. In the event of
issuance of preferred shares upon exercise of the Rights, a depositary receipt
may be issued for each one one-hundredth of a preferred share in order to
facilitate trading. The dividend, liquidation and voting rights, and the
non-redemption feature, of the preferred shares are designed so that the value
of the one-hundredth interest in a preferred share purchasable with each Right
will approximate the value of one share of Birmingham Steel common stock.
The Board of Directors on January 16, 1996, also amended the Company's
By-Laws to, among other things, eliminate a feature which permitted a minority
of stockholders to force special
<PAGE> 4
meetings of stockholders and to add a requirement for advanced notice of
nominations for Directors and matters to be considered at meetings of
stockholders. We believe that these changes are in the best interests of all
stockholders.
In declaring the Rights dividend, we have expressed our confidence in the
future and our determination that you, our stockholders, be given every
opportunity to participate fully in that future.
Thank you for your continued confidence in our Company. A more detailed
summary of the Rights Plan is enclosed.
Robert A. Garvey
Chairman and Chief Executive Officer
<PAGE> 1
EXHIBIT 99
Contact: William R. Lucas, Jr.
Executive Vice President and
General Counsel
(205) 970-1231
FOR IMMEDIATE RELEASE
BIRMINGHAM STEEL CORPORATION DECLARES DIVIDEND
DISTRIBUTION OF PREFERRED SHARE PURCHASE RIGHTS
BIRMINGHAM, Ala. (January 16, 1996) - The Board of Directors of Birmingham
Steel Corporation (NYSE:BIR) today adopted a Share Purchase Rights Plan
designed to discourage takeovers that involve abusive takeover tactics or do
not provide fair value to shareholders. The plan is similar to plans
previously adopted by many other publicly traded companies. The Board is not
aware of any effort to acquire control of the Company.
Robert A. Garvey, Chairman and Chief Executive Officer of Birmingham
Steel, stated, "The Board of Directors determined that the Share Purchase
Rights Plan is an effective and reasonable method to safeguard the interests of
our shareholders. We are particularly concerned that the future benefits of
the current capital development program could be denied to shareholders by an
opportunistic, undervalued acquisition of the Company. The plan is designed to
assure that shareholders are not deprived of their rights to share in the full
measure of the Company's long-term potential, while not preventing a fully
valued bid for the Company."
The Share Purchase Rights Plan provides for a dividend distribution of one
Preferred Share Purchase Right for each outstanding share of Birmingham Steel
common stock. The dividend distribution will be made to shareholders of record
on January 19, 1996. Each shareholder is automatically entitled to the Rights
and no physical distribution of new certificates will be made at this time.
The Rights distribution is not taxable to shareholders.
The Rights will be exercisable only if a person or group acquires 10% or
more of Birmingham Steel's common stock or announces a tender offer which would
result in ownership of 10% or more of the common stock. The Rights entitle the
holder to purchase one one-hundredth of a share of a new series of preferred
stock at an exercise price of $74.00, and will expire on January 16, 2006.
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<PAGE> 2
BIR Adopts Share Purchase Rights Plan
Page 2
January 16, 1996
Following the acquisition of 10% or more of the Company's common stock by
a person or group, the holders of the Rights will be entitled to purchase
additional shares of Company common stock at one-half the then current market
price, and, in the event of a subsequent merger or other acquisition of the
Company, to buy shares of common stock of the acquiring entity at one-half of
the market price of those shares. In neither event, however, would the
acquiring person be entitled to purchase Birmingham Steel stock or its own
shares at the reduced price.
Existing holdings of 10% or more of the Company's common stock will not
cause the Rights to be exercisable, or entitle the holders of Rights to
purchase additional shares of the Company or any other entity, unless a current
holder of 10% or more acquires additional Company common stock.
Birmingham Steel will be able to redeem the Rights for $0.01 per Right at
any time prior to ten days after a person or group acquires 10% or more of the
Company's shares.
A letter outlining the Share Purchase Rights Plan in more detail is being
sent to the Company's shareholders.
The Board of Directors also amended the Company's By-Laws to, among other
things, eliminate a feature which permitted a minority of shareholders to force
special meetings of shareholders and to add a requirement for advanced notice
of nominations for Directors and matters to be considered at meetings of
shareholders.
Birmingham Steel Corporation operates steel mini-mills producing primarily
steel reinforcing bar and merchant products, and also specializes in
manufacturing high-quality rod and wire from semi-finished billets at its
American Steel & Wire subsidiary. The common stock of Birmingham Steel
Corporation is traded on the New York Stock Exchange under the symbol "BIR."
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