EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SHEFFIELD STEEL CORPORATION,
GERDAU AMERISTEEL US INC.
XXXX ACQUISITION, INC.
AND
THE STOCKHOLDER REPRESENTATIVE
APRIL 5, 2006
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER .................................................... 1
1.1 The Merger ...................................................... 1
1.2 The Closing ..................................................... 1
1.3 Actions at the Closing .......................................... 1
1.4 Additional Action ............................................... 2
1.5 Conversion of Shares ............................................ 2
1.6 Dissenting Shares ............................................... 4
1.7 Certificate of Incorporation and By-laws ........................ 5
1.8 No Further Rights ............................................... 5
1.9 Closing of Transfer Books ....................................... 5
1.10 Escrow .......................................................... 5
1.11 Stockholder Representative ...................................... 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................ 7
2.1 Organization, Qualification and Corporate Power ................. 7
2.2 Capitalization .................................................. 7
2.3 Authorization of Transaction .................................... 8
2.4 Noncontravention ................................................ 8
2.5 Subsidiary ...................................................... 8
2.6 Financial Statements ............................................ 9
2.7 Absence of Certain Changes ...................................... 9
2.8 Undisclosed Liabilities ......................................... 11
2.9 Tax Matters ..................................................... 11
2.10 Assets .......................................................... 11
2.11 Owned Real Property ............................................. 12
2.12 Real Property Leases ............................................ 13
2.13 Intellectual Property ........................................... 14
2.14 Contracts ....................................................... 14
2.15 Powers of Attorney .............................................. 15
2.16 Insurance ....................................................... 15
2.17 Litigation ...................................................... 15
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2.18 Employees ....................................................... 15
2.19 Employee Benefits ............................................... 16
2.20 Environmental Matters ........................................... 17
2.21 Legal Compliance ................................................ 18
2.22 Permits ......................................................... 18
2.23 Certain Business Relationships With Affiliates .................. 19
2.24 Brokers' Fees ................................................... 19
2.25 Books and Records ............................................... 19
2.26 SEC Documents ................................................... 19
2.27 Transaction Expenses ............................................ 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER AND
THE TRANSITORY SUBSIDIARY ................................... 20
3.1 Organization and Corporate Power ................................ 20
3.2 Authorization of Transaction .................................... 20
3.3 Noncontravention ................................................ 20
3.4 Financial Arrangements of Buyer ................................. 20
ARTICLE IV COVENANTS .................................................... 21
4.1 Closing Efforts ................................................. 21
4.2 Governmental and Third-Party Notices and Consents ............... 21
4.3 Stockholder Approval ............................................ 21
4.4 Operation of Business ........................................... 22
4.5 Access to Information ........................................... 24
4.6 Notice of Breaches .............................................. 24
4.7 Exclusivity ..................................................... 25
4.8 Expenses ........................................................ 26
4.9 Directors and Officers .......................................... 26
ARTICLE V CONDITIONS TO CONSUMMATION OF MERGER .......................... 27
5.1 Conditions to Each Party's Obligations .......................... 27
5.2 Conditions to Obligations of the Buyer and the
Transitory Subsidiary ........................................... 27
5.3 Conditions to Obligations of the Company ........................ 28
ARTICLE VI TERMINATION .................................................. 29
6.1 Termination of Agreement ........................................ 29
6.2 Effect of Termination ........................................... 30
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ARTICLE VII DEFINITIONS ................................................. 30
ARTICLE VIII MISCELLANEOUS .............................................. 36
8.1 Press Releases and Announcements ................................ 36
8.2 No Third Party Beneficiaries .................................... 36
8.3 Entire Agreement ................................................ 37
8.4 Succession and Assignment ....................................... 37
8.5 Counterparts and Facsimile Signature ............................ 37
8.6 Headings ........................................................ 37
8.7 Notices ......................................................... 37
8.8 Governing Law ................................................... 39
8.9 Amendments and Waivers .......................................... 39
8.10 Severability .................................................... 39
8.11 Submission to Jurisdiction ...................................... 39
8.12 Construction .................................................... 40
Exhibit A - Opinion of Counsel to the Company
Exhibit B - Opinion of Counsel to the Buyer and the Transitory Subsidiary
Exhibit C - Transaction Expenses
Exhibit D - Company Expenses
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AGREEMENT AND PLAN OF MERGER
Agreement entered into as of April 5, 2006 by and among GERDAU AMERISTEEL
US INC., a Florida corporation (the "Buyer"). XXXX ACQUISITION, INC., a Delaware
corporation and a wholly-owned subsidiary of the Buyer (the "Transitory
Subsidiary"). SHEFFIELD STEEL CORPORATION, a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxx, as the Stockholder Representative hereunder.
This Agreement contemplates a merger of the Transitory Subsidiary into the
Company. In such merger, the stockholders of the Company will receive cash in
exchange for their capital stock of the Company.
Now, therefore, in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.
ARTICLE I
THE MERGER
1.1 The Merger. Upon and subject to the terms and conditions of this
Agreement, the Transitory Subsidiary shall merge with and into the Company at
the Effective Time. From and after the Effective Time, the separate corporate
existence of the Transitory Subsidiary shall cease and the Company shall
continue as the Surviving Corporation. The Merger shall have the effects set
forth in Section 259 of the Delaware General Corporation Law.
1.2 The Closing. The Closing shall take place at the offices of Xxxxxxx
Xxxxxx Xxxxxx & Dodge LLP, 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
commencing at 9:00 a.m. local time on the Closing Date.
1.3 Actions at the Closing. At the Closing:
(a) the Company shall deliver to the Buyer and the Transitory
Subsidiary the various certificates, instruments and documents referred to in
Section 5.2;
(b) the Buyer and the Transitory Subsidiary shall deliver to the
Company the various certificates, instruments and documents referred to in
Section 5.3;
(c) the Surviving Corporation shall file with the Secretary of State
of the State of Delaware the Certificate of Merger;
(d) each Company Stockholder, other than holders of Dissenting Shares,
shall tender to the Buyer his/her Common Shares for cancellation either by
delivering the certificate(s) representing those shares or by book entry
transfer;
(e) the Buyer or the Surviving Corporation shall pay (by check or by
wire transfer) to each Company Stockholder its, his or her pro-rata portion of
the Merger Consideration minus $3,500,000; and
(f) the Buyer or the Surviving Corporation shall pay an amount in cash
equal to $7,000,000 (the "Escrow Fund") of which $3,500,000 shall be deducted
from the Merger Consideration otherwise payable by the Buyer to the Company
Stockholders at Closing (the "Stockholder Portion") and $3,500,000 of which
shall be in addition to the Merger Consideration otherwise payable by the Buyer
to the Stockholders (the "Buyer Portion"), to US Bank National Association, as
escrow agent (the "Escrow Agent"), by wire transfer of immediately available
funds to an account designated in writing by the Escrow Agent. The Escrow Fund
shall be held in escrow by the Escrow Agent pursuant to the terms of an escrow
agreement to be mutually agreed among the parties (the "Escrow Agreement") in
order to facilitate the Working Capital Adjustment pursuant to Section 1.5(b).
1.4 Additional Action. The Surviving Corporation may, at any time after the
Effective Time, take any action, including executing and delivering any
document, in the name and on behalf of either the Company or the Transitory
Subsidiary, in order to consummate the transactions contemplated by this
Agreement.
1.5 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of any Party or the holders of Common Shares:
(a) Merger Consideration. Each Common Share issued and outstanding
immediately prior to the Effective Time (other than Common Shares owned
beneficially by the Buyer or the Transitory Subsidiary, Dissenting Shares and
Common Shares held in the Company's treasury) shall be converted into and
represent the right to receive a pro-rata portion of the Merger Consideration,
the amount of which to be paid on the Closing Date shall be determined pursuant
to Section 1.5(b)(i) below and which amount shall be adjusted by the Working
Capital Adjustment pursuant to Section 1.5(b)(ii) below. The pro-rata portion of
the Merger Consideration payable to each Company Stockholder shall be derived by
multiplying the Merger Consideration by the result of the following equation:
(x) the number of Common Shares held by such Company Stockholder immediately
prior to the Effective Time divided by (y) the total number of issued and
outstanding Common Shares immediately prior to the Effective Time (other than
Common Shares held in the Company's treasury).
(b) Adjustments to Merger Consideration. The Merger Consideration
shall be subject to the following adjustments:
(i) Closing Merger Consideration. The Company shall, not less
than two (2) Business Days prior to the Closing Date, deliver to the Buyer a
consolidated balance sheet of the Company and its Subsidiaries as of the Closing
Date that shall be certified by the Chief Financial Officer of the Company and
prepared in accordance with GAAP on a consistent basis with past practice and
the Most Recent Balance Sheet, without giving effect to (i) adjustments for the
transactions contemplated hereby, except for Company Expenses paid on or prior
to the Closing Date or (ii) any fees related to termination of the CIT Agreement
(and reflecting each of the line items included in the Baseline Net Working
Capital as set forth in Schedule I attached hereto) (the "Estimated Closing Date
Balance Sheet"). Such delivery shall be accompanied by a certificate of the
Chief Financial Officer of the Company setting forth a good faith determination
of the estimated Net Working Capital Amount of the Company as of the Closing
Date, which amount shall be calculated in a manner consistent with the
calculation of
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the Baseline Net Working Capital as set forth in Schedule I attached hereto (the
"Estimated Net Working Capital Amount"). The Merger Consideration payable at
Closing shall be determined as follows:
(A) If the Estimated Net Working Capital Amount is less than
the Baseline Net Working Capital, then the Merger Consideration will be
decreased on a dollar-for-dollar basis by the amount of such deficiency; and
(B) If the Estimated Net Working Capital Amount is greater
than the Baseline Net Working Capital, then the Merger Consideration will be
increased on a dollar-for-dollar basis by the amount of such excess.
(ii) Final Working Capital Adjustment.
(A) As soon as practicable, but in any event within ten (10)
Business Days following the Closing Date, the Buyer shall prepare and deliver to
the Stockholder Representative an unaudited consolidated balance sheet of the
Company as of the close of business on the Closing Date prepared in accordance
with GAAP on a consistent basis with the Financial Statements and past practice,
without giving effect to (i) adjustments for the transactions contemplated
hereby, except for Company Expenses paid on or prior to the Closing Date or (ii)
any fees related to termination of the CIT Agreement (the "Final Closing Date
Balance Sheet"), together with a detailed calculation of the Final Net Working
Capital Amount of the Company calculated in a manner consistent with the
calculation of the Baseline Net Working Capital as set forth in Schedule I
attached hereto. The Buyer shall provide the Stockholder Representative with
full access to the work papers in connection with such calculation and
representatives of the Buyer shall make themselves available at reasonable times
upon request of the Stockholder Representative to discuss with the Buyer such
calculation. The Stockholder Representative shall have ten (10) days after
delivery of the Final Closing Date Balance Sheet to dispute the Final Net
Working Capital Amount. If the Stockholder Representative disputes any of the
calculations in the Final Closing Date Balance Sheet or the Final Net Working
Capital Amount, the Buyer and the Stockholder Representative shall use
commercially reasonable efforts to reconcile such disputes and reach agreement
on the Final Closing Date Balance Sheet and Final Net Working Capital Amount. In
the event the Buyer and the Stockholder Representative are unable to reach
agreement on a Final Closing Date Balance Sheet within fifteen (15) days after
delivery thereof, then each of the Buyer or the Stockholder Representative shall
submit the remaining issues in dispute for resolution to a nationally-recognized
accounting firm mutually agreeable to the Buyer and the Stockholder
Representative (the "Selected Accountants"), which firm shall resolve such
dispute within thirty (30) days following its selection. The Buyer and the
Stockholder Representative shall cooperate with the Selected Accountants in all
respects, including providing the Selected Accountants with all work papers and
back-up materials used in preparation and review of their calculations of the
Final Closing Date Balance Sheet and the Final Net Working Capital Amount. The
determination of the Final Closing Date Balance Sheet and Final Net Working
Capital Amount by the Selected Accountants' shall be final, binding and
conclusive upon the parties hereto. The Buyer and the Stockholder Representative
will each bear 50% of all fees, expenses and costs of the Selected Accountants.
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(B) Subject to the resolution of all disputes, if any,
regarding the Final Closing Date Balance Sheet and Final Net Working Capital
Amount in accordance with Section 1.5(b)(ii) above, the Merger Consideration
shall be adjusted as follows:
(1) if the Estimated Net Working Capital Amount exceeds
the Final Net Working Capital Amount, the Merger Consideration shall
be decreased by the difference between the Final Net Working Capital
Amount and the Estimated Net Working Capital Amount (the "Deficit"),
and the Buyer shall be paid from the Escrow Fund an amount equal to
(x) the Deficit, which amount shall be deducted from the Stockholder
Portion of the Escrow Fund plus (y) the full amount of the Buyer
Portion of the Escrow Fund, and any balance remaining in the
Stockholder Portion of the Escrow Fund shall be released by the Escrow
Agent to the Stockholder Representative for distribution to the former
holders of Common Shares to the extent of their pro-rata share of such
amount (after payment of all Stockholder Representative expenses); and
(2) if the Final Net Working Capital Amount exceeds the
Estimated Net Working Capital Amount, the Merger Consideration shall
be increased by the difference between the Final Net Working Capital
Amount and the Estimated Net Working Capital Amount (the "Surplus"),
and the holders of Common Shares collectively shall be entitled to
payment of the Surplus from the Escrow Fund to the extent of his or
her pro-rata share. The Stockholder Representative shall be paid from
the Escrow Fund an amount equal to (x) the Surplus, which amount shall
be deducted from the Buyer Portion of the Escrow Fund plus (y) the
full amount of the Stockholder Portion of the Escrow Fund for
distribution to the former holders of Common Shares to the extent of
their pro-rata share of such amount (after payment of all Stockholder
Representative expenses), and any balance remaining in the Buyer
Portion of the Escrow Fund shall be released by the Escrow Agent for
distribution to the Buyer.
(c) Each Common Share held in the Company's treasury immediately prior
to the Effective Time and each Common Share owned beneficially by the Buyer or
the Transitory Subsidiary shall be cancelled and retired without payment of any
consideration therefor.
(d) Each share of common stock, $.01 par value per share, of the
Transitory Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and thereafter evidence one share of common stock,
$.01 par value per share, of the Surviving Corporation.
1.6 Dissenting Shares.
(a) Dissenting Shares shall not be converted into or represent the
right to receive the Merger Consideration unless such Company Stockholder shall
have forfeited his, her or its right to appraisal under the Delaware General
Corporation Law or properly withdrawn his, her or its demand for appraisal. If
such Company Stockholder has so forfeited or withdrawn his, her or its right to
appraisal of Dissenting Shares, then, (i) as of the occurrence of such event,
such holder's Dissenting Shares shall cease to be Dissenting Shares and shall be
converted into and
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represent the right to receive the Merger Consideration payable in respect of
such Common Shares pursuant to Section 1.5, and (ii) promptly following the
occurrence of such event, the Buyer or the Surviving Corporation shall deliver
to such Company Stockholder a payment in cash representing the Merger
Consideration to which such holder is entitled pursuant to Section 1.5.
(b) The Company shall give the Buyer (i) prompt notice of any written
demands for appraisal of any Common Shares, withdrawals of such demands, and any
other instruments that relate to such demands received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the Delaware General Corporation Law. The Company
shall not, except with the prior consent of the Buyer, make any payment with
respect to any demands for appraisal of Common Shares or offer to settle or
settle any such demands.
1.7 Certificate of Incorporation and By-laws.
(a) The Certificate of Incorporation of the Surviving Corporation
immediately following the Effective Time shall be the same as the Certificate of
Incorporation of the Transitory Subsidiary immediately prior to the Effective
Time, except that (i) the name of the corporation set forth therein shall be
changed to the name of the Company and (ii) the identity of the incorporator
shall be deleted.
(b) The By-laws of the Surviving Corporation immediately following the
Effective Time shall be the same as the By-laws of the Transitory Subsidiary
immediately prior to the Effective Time, except that the name of the corporation
set forth therein shall be changed to the name of the Company.
1.8 No Further Rights. From and after the Effective Time, no Common Shares
shall be deemed to be outstanding, and holders of certificates or book entry
accounts formerly representing Common Shares shall cease to have any rights with
respect thereto except as provided herein or by law.
1.9 Closing of Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and no transfer of Common Shares shall
thereafter be made. If, after the Effective Time, certificates or book entry
accounts formerly representing Common Shares are presented to the Buyer or the
Surviving Corporation, they shall be cancelled and exchanged for the Merger
Consideration in accordance with Section 1.5 and to applicable law in the case
of Dissenting Shares.
1.10 Escrow. To secure the making of any payments due pursuant to Section
1.5(b) after the Closing, the Buyer and the Stockholder Representative shall
enter into the Escrow Agreement with the Escrow Agent. The Escrow Fund shall be
administered in accordance with the terms and provisions of the Escrow Agreement
for a term ending upon the resolution of any claims for adjustments to the
Merger Consideration made pursuant to Section 1.5(b). The Escrow Fund shall be
held as a trust fund and shall not be subject to any lien, attachment, trustee
process or any other judicial process of any creditor of any party, and shall be
held and disbursed solely for the purposes and in accordance with the terms of
the Escrow Agreement. The
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adoption of this Agreement and the approval of the Merger by the stockholders of
the Company shall constitute approval of the Escrow Agreement and of all of the
arrangements relating thereto, including the placement of the Escrow Fund in
escrow and the appointment of the Stockholder Representative.
1.11 Stockholder Representative.
(a) The Company and the holders of Common Shares hereby appoint Xxxxx
X. Xxxxx (the "Stockholder Representative") for and on behalf of the holders of
Common Shares. The Stockholder Representative shall have full power and
authority to represent all of the holders of Common Shares and their successors,
assigns, heirs and representatives with respect to all matters arising under
this Agreement and the Escrow Agreement and all actions taken by the Stockholder
Representative hereunder and thereunder shall be final, conclusive and binding
upon all such holders of Common Shares and their successors, assigns, heirs and
representatives as if expressly confirmed and ratified in writing by each of
them, and no holder of Common Shares shall have the right to object, dissent,
protest or otherwise contest the same.
(b) The Stockholder Representative shall take any and all actions
which he believes are necessary or appropriate under this Agreement and the
Escrow Agreement for and on behalf of the holders of Common Shares, as fully as
if the holders of Common Shares were acting on their own behalf, including
executing the Escrow Agreement as Stockholder Representative, giving and
receiving any notice or instruction permitted or required under this Agreement
or the Escrow Agreement by the Stockholder Representative or any holder of
Common Shares, interpreting all of the terms and provisions of this Agreement
and the Escrow Agreement, authorizing payments to be made with respect hereto or
thereto, obtaining reimbursement for all out-of-pocket fees and expenses and
other obligations of or incurred by the Stockholder Representative in connection
with this Agreement and the Escrow Agreement, which fees and expenses shall be
disbursed from the Escrow Fund, in accordance with the Escrow Agreement, dealing
with the Buyer and the Escrow Agent under this Agreement and the Escrow
Agreement with respect to all matters arising under this Agreement and the
Escrow Agreement, taking any and all other actions specified in or contemplated
by this Agreement and the Escrow Agreement, and engaging counsel, accountants or
other Stockholder Representative in connection with the foregoing matters.
Without limiting the generality of the foregoing, the Stockholder Representative
shall have full power and authority to interpret all the terms and provisions of
this Agreement and the Escrow Agreement and to consent to any amendment hereof
or thereof on behalf of all such holders of Common Shares and their successors,
assigns, heirs and representatives.
(c) By virtue of their approval of this Agreement and the Merger, the
Stockholders hereby jointly and severally agree to indemnify the Stockholder
Representative for, and hold him harmless against, any loss, liability or
expense incurred in good faith and without gross negligence or bad faith on the
part of the Stockholder Representative and arising out of or in connection with
the acceptance or administration of his duties hereunder.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer that, except as set forth
in the Disclosure Schedule as referenced herein or to the extent that the
qualifying nature of such disclosure with respect to a specific representation
or warranty is readily apparent therefrom or as set forth in the Financial
Statements delivered or made available to the Buyer prior to the date hereof,
the statements contained in this Article II are true and correct as of the date
of this Agreement, except to the extent such representations and warranties are
specifically made as of a particular date (in which case such representations
and warranties will be true and correct as of such date). The Disclosure
Schedule shall be arranged in sections and subsections corresponding to the
numbered and lettered sections and subsections contained in this Article II. For
purposes of this Article II, the phrase "to the knowledge of the Company" or any
phrase of similar import shall be deemed to refer to the actual knowledge of the
Executive Officers of the Company.
2.1 Organization, Qualification and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company is duly qualified to conduct business and
is in good standing under the laws of each jurisdiction in which the nature of
the Company's businesses or the ownership or leasing of its properties requires
such qualification, except for those jurisdictions in which the failure to be so
qualified or in good standing, individually or in the aggregate, has not had and
would not reasonably be expected to have a Company Material Adverse Effect. The
Company has all requisite corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. The Company is not in default under or in violation of any provision
of its Certificate of Incorporation or by-laws.
2.2 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
7,500,000 Common Shares, of which, as of the date of this Agreement, 4,956,819
shares were issued and outstanding and 43,181 shares were held in the treasury
of the Company.
(b) Section 2.2 of the Disclosure Schedule indicates all outstanding
Common Shares that constitute restricted stock or that are otherwise subject to
a repurchase or redemption right, indicating the name of the applicable
stockholder, the vesting schedule (including any acceleration provisions with
respect thereto), and the repurchase price payable by the Company. All of the
issued and outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. The Company
has no stock option plans or other stock or equity-related plans.
(c) Except as set forth in this Section 2.2 or in Section 2.2 of the
Disclosure Schedule, (i) no subscription, warrant, option, convertible security
or other right (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company is authorized or outstanding, (ii) the Company has
no obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right, or to issue or distribute to
holders of any shares of its capital stock any evidences of indebtedness or
assets of the Company, (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or
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otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or to make any other distribution in respect thereof, and (iv)
there are no outstanding or authorized stock appreciation, phantom stock or
similar rights with respect to the Company.
(d) Except as set forth in Section 2.2 of the Disclosure Schedule,
there is no agreement, written or oral, between the Company and any holder of
its securities, or, to the best of the Company's knowledge, among any holders of
its securities, relating to the sale or transfer (including agreements relating
to rights of first refusal, co-sale rights or "drag-along" rights), registration
under the Securities Act, or voting, of the capital stock of the Company.
2.3 Authorization of Transaction. The Company has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by the Company of this Agreement and,
subject to obtaining the Requisite Stockholder Approval, the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Company. Without
limiting the generality of the foregoing, the Board of Directors of the Company,
at a meeting duly called and held, by the unanimous vote of all directors (with
one abstention) (i) determined that the Merger is fair and in the best interests
of the Company and its stockholders, (ii) adopted this Agreement in accordance
with the provisions of the Delaware General Corporation Law, and (iii) directed
that this Agreement and the Merger be submitted to the stockholders of the
Company for their adoption and approval and resolved to recommend that the
stockholders of the Company vote in favor of the adoption of this Agreement and
the approval of the Merger. This Agreement has been duly and validly executed
and delivered by the Company and constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.
2.4 Noncontravention. Except as set forth in Section 2.4 of the Disclosure
Schedule and subject to compliance with the applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Act, the Exon-Xxxxxx Amendment and the filing of the
Certificate of Merger as required by the Delaware General Corporation Law,
neither the execution and delivery by the Company of this Agreement, nor the
consummation by the Company of the transactions contemplated hereby, will (a)
conflict with or violate any provision of the Certificate of Incorporation or
By-laws of the Company or the charter, by-laws or other organizational document
of the Subsidiary, (b) require on the part of the Company or the Subsidiary any
notice to or filing with, or any permit, authorization, consent or approval of,
any Governmental Entity, (c) conflict with, result in a breach of, constitute a
default under, result in the acceleration of obligations under, create in any
party the right to terminate, modify or cancel any contract or instrument to
which the Company or the Subsidiary is a party or by which the Company or the
Subsidiary is bound or to which any of their respective assets is subject,
except for any conflict, breach, default, acceleration, termination,
modification or cancellation which, individually or in the aggregate, would not
have a Company Material Adverse Effect.
2.5 Subsidiary.
(a) Section 2.5 (a) of the Disclosure Schedule sets forth: (i) the
name of the Company's sole Subsidiary; (ii) the number and type of outstanding
equity securities of the Subsidiary and a list of the holders thereof; (iii) the
jurisdiction of organization of the Subsidiary;
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(iv) the names of the officers and directors of the Subsidiary; and (v) the
jurisdictions in which the Subsidiary is qualified or holds licenses to do
business as a foreign corporation or other entity.
(b) The Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
The Subsidiary is duly qualified to conduct business and is in good standing
under the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties, requires such qualification, except
where the failure to be so qualified or in good standing, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect. The Subsidiary has all requisite power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. The Subsidiary is not in default under or in violation of
any provision of its charter, by-laws or other organizational documents. All of
the issued and outstanding shares of capital stock of the Subsidiary are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Except to the extent set forth in Section 2.5(b) of the Disclosure
Schedule, all shares of the Subsidiary that are held of record or owned
beneficially by the Company are held or owned free and clear of any restrictions
on transfer (other than restrictions under the Securities Act and state
securities laws), claims, Security Interests, options, warrants, rights,
contracts, calls, commitments, equities and demands. There are no outstanding or
authorized options, warrants, rights, agreements or commitments to which the
Company or the Subsidiary is a party or which are binding on any of them
providing for the issuance, disposition or acquisition of any capital stock of
the Subsidiary. There are no outstanding stock appreciation, phantom stock or
similar rights with respect to the Subsidiary. There are no voting trusts,
proxies or other agreements or understandings with respect to the voting of any
capital stock of the Subsidiary.
(c) The Company does not control directly or indirectly or have any
direct or indirect equity participation or similar interest in any corporation,
partnership, limited liability company, joint venture, trust or other business
association or entity that is not a Subsidiary.
2.6 Financial Statements. The Company has provided to the Buyer the
Financial Statements. The Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered thereby,
fairly present the consolidated financial condition, results of operations and
cash flows of the Company and the Subsidiary as of the respective dates thereof
and for the periods referred to therein and are consistent with the books and
records of the Company and the Subsidiary; provided, however, that the Financial
Statements referred to in clauses (b) and (c) of the definition of such term are
subject to normal recurring year-end adjustments (which will not be material)
and do not include footnotes.
2.7 Absence of Certain Changes. Since the Most Recent Balance Sheet Date
through and including the date of this Agreement, the Company or any Subsidiary
has not:
(a) issued or sold any stock or other securities of the Company or the
Subsidiary or any options, warrants or rights to acquire any such stock or other
securities or amended any of the terms of (including the vesting of) any
restricted stock agreements, or repurchase or redemption of any stock or other
securities of the Company (except from former employees, directors or
consultants in accordance with agreements providing for the repurchase
-9-
of shares at their original issuance price in connection with any termination of
employment with or services to the Company);
(b) split, combined or reclassified any shares of the Company's
capital stock; or declared, set aside or paid any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock;
(c) other than pursuant to the Financing Documents, created, incurred
or assumed any indebtedness (including obligations in respect of capital leases
exceeding $150,000); assumed, guaranteed, endorsed or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person or entity; or made any loans, advances or capital contributions
to, or investments in, any other person or entity;
(d) acquired, sold, leased, licensed or disposed of any assets or
property, other than purchases and sales of assets in the Ordinary Course of
Business;
(e) other than pursuant to the Financing Documents, mortgaged or
pledges any of the Company's property or assets or subjected any such property
or assets to any Security Interest;
(f) other than in the Ordinary Course of Business, discharged or
satisfied any Security Interest or paid any obligation or liability;
(g) amended the Company's charter, by laws or other organizational
documents;
(h) made any change to the Company's accounting methods, principles or
practices, except insofar as may have been required by a generally applicable
change in GAAP, or made any new elections, or changes to any current elections,
with respect to Taxes;
(i) made or committed to make any capital expenditure in excess of
$1,000,000 in the aggregate, except for projects currently under construction,
including without limitation the ladle arc furnace;
(j) settled any Legal Proceeding except for settlements for an amount
to be paid by the Company of less than $50,000;
(k) increased the compensation (or benefits) payable to or to become
payable to any director or employee, except for increases in salary or wages of
employees in the ordinary course of business and consistent with past practice;
(ii) made any new grants of severance or termination pay to or any entering into
or amendment of any employment or severance agreement with any employee; (iii)
established, adopted, entered into or amended any collective bargaining
agreement or Company Plan or any other "employee benefit plan" (as defined in
Section 3(3) of ERISA); (iv) taken any action to accelerate any rights or
benefits, or made any determinations not in the ordinary course of business
consistent with past practice, under any Company Plan; or (iv) made any promise
or other representation, written or oral, relating to future actions similar to
those listed above; or
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(l) had any event or development which, individually or in the
aggregate, has had, or could reasonably be expected to have in the future, a
Company Material Adverse Effect.
2.8 Undisclosed Liabilities. Neither the Company nor the Subsidiary has any
liability (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), except for (a)
liabilities shown on the Most Recent Balance Sheet, (b) liabilities which have
arisen since the Most Recent Balance Sheet Date in the Ordinary Course of
Business and (c) contractual and other liabilities incurred in the Ordinary
Course of Business which are not required by GAAP to be reflected on a balance
sheet.
2.9 Tax Matters.
(a) Except to the extent set forth on Section 2.9 of the Disclosure
Schedule, each of the Company and the Subsidiary has filed on a timely basis all
Tax Returns that it was required to file, and all such Tax Returns were complete
and accurate in all material respects. Neither the Company nor the Subsidiary is
or has ever been a member of a group of corporations with which it has filed (or
been required to file) consolidated, combined or unitary Tax Returns, other than
a group of which only the Company and the Subsidiary are or were members. Each
of the Company and the Subsidiary has paid on a timely basis all Taxes that were
due and payable. The unpaid Taxes of the Company and the Subsidiary for tax
periods through the Most Recent Balance Sheet Date do not exceed the accruals
and reserves for Taxes (excluding accruals and reserves for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the Most Recent Balance Sheet. Neither the Company nor the Subsidiary has any
liability for any Tax obligation of any taxpayer (including any affiliated group
of corporations or other entities that included the Company or the Subsidiary
during a prior period) other than the Company and the Subsidiary. All Taxes that
the Company or the Subsidiary is or was required by law to withhold or collect
have been duly withheld or collected and, to the extent required, have been paid
to the proper Governmental Entity. There are no liens for Taxes (other than for
current Taxes not yet due and payable or for Taxes being contested in good
faith) on any of the Company's assets, other than such liens as would not
reasonably be expected to have a Company Material Adverse Effect.
(b) The Company has delivered to the Buyer complete and accurate
copies of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company or the Subsidiary
since December 31, 2002. No examination or audit of any Tax Return of the
Company or the Subsidiary by any Governmental Entity is currently in progress
or, to the knowledge of the Company, threatened or contemplated. Neither the
Company nor the Subsidiary has been informed by any jurisdiction that the
jurisdiction believes that the Company or Subsidiary was required to file any
Tax Return that was not filed. Neither the Company nor the Subsidiary has waived
any statute of limitations with respect to Taxes or agreed to an extension of
time with respect to a Tax assessment or deficiency.
2.10 Assets. The Company or the Subsidiary is the true and lawful owner,
and has good title to, all of the assets (tangible or intangible) purported to
be owned by the Company or the Subsidiary, free and clear of all Security
Interests except as set forth in Section 2.10 of the Disclosure Schedule. Each
of the Company and the Subsidiary owns or leases all tangible assets
-11-
sufficient for the conduct of its businesses as presently conducted. Each such
tangible asset is free from material defects, has been maintained in accordance
with normal industry practice, is in good operating condition, and repair
(subject to normal wear and tear) and is suitable for the purposes for which it
presently is used.
2.11 Owned Real Property. Section 2.11 of the Disclosure Schedule lists all
Owned Real Property and with respect to each Owned Real Property identifies the
property address, the approximate lot size, and whether or not such Owned Real
Property is encumbered by a Security Interest or subject to any lease or other
third party rights. With respect to each Owned Real Property:
(a) based upon the owner's title insurance policy for such Owned Real
Property, the Company or the Subsidiary has good and clear record and marketable
title to such Owned Real Property, free and clear of any Security Interest
except to the extent set forth in Section 2.11 of the Disclosure Schedule, and
free and clear of any easement, covenant or other restriction, except for
recorded easements, covenants and other restrictions that do not unreasonably
interfere with the use and occupancy of such Owned Real Property for the
Intended Uses;
(b) there are no (i) pending or, to the knowledge of the Company,
overtly threatened condemnation proceedings relating to such Owned Real Property
or (ii) pending or, to the knowledge of the Company, overtly threatened
litigation or administrative actions relating to such Owned Real Property except
to the extent set forth in Section 2.11 of the Disclosure Schedule;
(c) the existing buildings and improvements located on such Owned Real
Property are located entirely within the boundary lines of such Owned Real
Property or on permanent easements on adjoining land and may lawfully be used
under applicable zoning and land use laws (either as of right, by special permit
or variance, or as a grandfathered use) for the Intended Uses; and such Owned
Real Property is not located within any flood plain or subject to any similar
type restriction for which any permits or licenses, if any, necessary to the use
thereof have not been obtained;
(d) there are no leases, subleases, licenses or agreements, written or
oral, granting to any party or parties (other than the Company or the
Subsidiary) the right of use or occupancy of any portion of such Owned Real
Property except to the extent set forth on Section 2.11 of the Disclosure
Schedule;
(e) there are no outstanding options or rights of first refusal to
purchase such Owned Real Property, or any portion thereof or interest therein
except to the extent set forth on Section 2.11 of the Disclosure Schedule;
(f) all buildings and improvements located on such Owned Real Property
are supplied with electricity, water, telephone, sanitary sewer and storm sewer
and other utilities and services adequate for the operation of such buildings
and improvements for the Intended Uses, except as set forth in Schedule 2.11 of
the Disclosure Schedule;
-12-
(g) such Owned Real Property either abuts on and has direct vehicular
access to a public road or has access to a public road via a permanent
appurtenant easement benefiting such Owned Real Property;
(h) neither the Company nor the Subsidiary has received written notice
of any, and to the knowledge of the Company there is no, proposed or pending
proceeding to change or redefine the zoning classification of all or any portion
of such Owned Real Property;
(i) the improvements and mechanical and utility systems serving the
buildings and other improvements located on such Owned Real Property are in
condition and order adequate for the operation of such buildings and
improvements for the Intended Uses;
(j) such Owned Real Property is assessed by local property assessors
as a tax parcel or parcels separate from all other tax parcels; and
(k) the Company has delivered to the Buyer complete and accurate
copies of all of the following materials relating to such Owned Real Property,
to the extent in the Company's possession or control: title insurance policies;
deeds; encumbrance and easement documents and other documents and agreements
affecting title to or for operation of such Owned Real Property; surveys;
as-built construction plans; warranties; appraisals; structural inspection,
soils, environmental assessment and similar reports.
2.12 Real Property Leases. Section 2.12 of the Disclosure Schedule lists
all Leases and lists the term of such Lease, any extension and expansion
options, and the rent payable thereunder. The Company has delivered to the Buyer
complete and accurate copies of the Leases. With respect to each Lease:
(a) such Lease is a legal, valid, binding, enforceable obligation of
the Company and, to the knowledge of the Company, is in full force and effect
and the binding obligation of the other parties thereto;
(b) neither the Company nor any Subsidiary has received any written
notice that it is in default under such Lease, nor to the knowledge of the
Company is any other party to such Lease in default under such Lease, and no
event has occurred, which, after the giving of notice, with lapse of time, or
otherwise, would constitute a default by the Company or any Subsidiary or, to
the knowledge of the Company, any other party under such Lease;
(c) there are no disputes, oral agreements or forbearance programs in
effect as to such Lease;
(d) neither the Company nor the Subsidiary has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold
or subleasehold created by such Lease except as set forth in Section 2.12 of the
Disclosure Schedule; and
(e) to the knowledge of the Company, all facilities leased or
subleased under such Lease are supplied with utilities and other services
adequate for the operation of such leased or subleased facilities for the
Intended Use.
-13-
2.13 Intellectual Property. Section 2.13(a) of the Disclosure Schedule
lists any (i) registrations or applications therefore for any Company patents,
copyrights, trademarks, or domain names and (ii) unregistered Company trademarks
material to the Company's business. To the best of the Company's knowledge,
neither the manufacture, use or sale by the Company of products, materials, or
components, nor any manufacturing operation or machinery employed by the
Company, nor the internal business operations of the Company, infringes upon any
valid claims of any United States or foreign patent held by a third party or
infringes or misappropriates any third party copyright, trademark, or trade
secret. Section 2.13(b) of the Disclosure Schedule lists any written complaint,
claim, or notice, or written threat thereof, received by the Company alleging
any infringement, violation, or misappropriation of any third party's patent,
copyright, trademark, or trade secret and the Company has provided the Buyer
complete and accurate copies of all written documentation in the possession of
the Company relating to any such complaint, claim, notice or threat.
2.14 Contracts.
(a) Section 2.14 of the Disclosure Schedule lists the following
agreements to which the Company or the Subsidiary is a party as of the date of
this Agreement:
(i) any agreement for the lease of personal property from or to
third parties providing for lease payments in excess of $100,000
per annum;
(ii) any agreement for the purchase or sale of products or for
the furnishing or receipt of services (A) which calls for
performance over a period of more than one year, (B) which
involves more than the sum of $750,000 or (C) in which the
Company or the Subsidiary has granted manufacturing rights, "most
favored nation" pricing provisions or exclusive marketing or
distribution rights relating to any products or territory or has
agreed to purchase a minimum quantity of goods or services or has
agreed to purchase goods or services exclusively from a certain
party;
(iii) any agreement concerning the establishment or operation of
a partnership, joint venture or limited liability company;
(iv) any agreement under which it has created, incurred, assumed
or guaranteed indebtedness (including capitalized lease
obligations) involving more than $100,000 or under which it has
imposed a Security Interest on any of its assets, tangible or
intangible;
(v) any agreement for the disposition of the assets or business
of the Company or the Subsidiary (other than sales of products in
the Ordinary Course of Business) or any agreement for the
acquisition of the assets or business of any other entity (other
than purchases of inventory or components in the Ordinary Course
of Business);
(vi) any employment or consulting agreement;
-14-
(vii) any agreement involving any current officer or director of
the Company or an Affiliate thereof;
(viii) any agreement under which the consequences of a default or
termination would reasonably be expected to have a Company
Material Adverse Effect;
(b) The Company has delivered or made available to the Buyer a
complete and accurate copy of each agreement listed in Section 2.13 or Section
2.14 of the Disclosure Schedule. With respect to each agreement so listed: (i)
the agreement is legal, valid, binding and enforceable and in full force and
effect and (ii) neither the Company nor the Subsidiary nor, to the knowledge of
the Company, any other party thereto is in breach or violation of, or default
under, any such agreement, and no event has occurred, is pending or, to the
knowledge of the Company, is threatened, which, after the giving of notice, with
lapse of time, or otherwise, would constitute a breach or default by the Company
or the Subsidiary.
2.15 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company or the Subsidiary.
2.16 Insurance. Section 2.16 of the Disclosure Schedule lists each
insurance policy (including fire, theft, casualty, comprehensive general
liability, workers compensation, business interruption, environmental, product
liability and automobile insurance policies and bond and surety arrangements) to
which the Company or the Subsidiary is a party, all of which are in full force
and effect. Such insurance policies are of the type and in amounts customarily
carried by organizations conducting businesses or owning assets similar to those
of the Company and the Subsidiary. There is no claim pending under any such
policy as to which coverage has been questioned, denied or disputed by the
underwriter of such policy. All premiums due and payable under all such policies
have been paid, neither the Company nor the Subsidiary may be liable for
retroactive premiums or similar payments, and the Company and the Subsidiary are
otherwise in compliance in all material respects with the terms of such
policies. The Company has no knowledge of any threatened termination of, or
premium increase with respect to, any such policy. Each such policy will
continue to be enforceable and in full force and effect immediately following
the Closing in accordance with the terms thereof as in effect immediately prior
to the Closing.
2.17 Litigation. As of the date of this Agreement, there is no Legal
Proceeding that is pending or has been threatened in writing against the Company
or the Subsidiary which (a) seeks either damages in excess of $100,000 or
equitable relief or (b) in any manner challenges or seeks to prevent, enjoin,
alter or delay the transactions contemplated by this Agreement. There are no
judgments, orders or decrees outstanding against the Company or the Subsidiary.
2.18 Employees.
(a) Section 2.18(a) of the Disclosure Schedule contains a list of all
non-bargaining unit employees of the Company and the Subsidiary whose annual
rate of compensation exceeds $50,000 per year, along with the position and the
annual rate of compensation of each such person.
-15-
(b) Except as set forth in Section 2.18(b) of the Disclosure Schedule,
neither the Company nor the Subsidiary is a party to or bound by any collective
bargaining agreement. Except as disclosed in Section 2.18(b) of the Disclosure
Schedule, (i) there is no union representation question existing with respect to
the employees of the Company or the Subsidiary, and, to the knowledge of the
Company, no union organizing activities are taking place that, could,
individually or in the aggregate, have a Company Material Adverse Effect, (ii)
to the Company's knowledge, no union organizing or decertification efforts are
underway or threatened against the Company or the Subsidiary; and (iii) no labor
strike, work stoppage, slowdown, or other material labor dispute is pending
against the Company or the Subsidiary, or, to the knowledge of the Company,
threatened against the Company or the Subsidiary.
(c) The Company and the Subsidiary are in material compliance with any
and all laws in any relevant jurisdiction with respect to employment practices,
labor relations, safety and health regulations, mass layoffs and plant closings,
except where such non-compliance taken as a whole could not reasonably be
expected to have a Company Material Adverse Effect. The Company and the
Subsidiary do not reasonably expect to incur any liability or notice obligation
under WARN as a result of actions taken or not taken within 90 days prior to or
as of the Merger.
(d) The Company and the Subsidiary have not made a promise or
commitment to increase the compensation or the benefits payable to any employee,
except increases occurring in the customary practices or in accordance with the
existing Company Plans and changes required by applicable law. The Company does
not reasonably expect the Merger to materially affect the levels or vesting of
any such compensation or benefits payable to any employee, except for any
payable pursuant to the employment agreements between the Company and Messrs.
Xxxxx, Xxxxxxxx, Xxxxxxx and Xxxxxx set forth on Section 2.14 of the Disclosure
Schedule.
2.19 Employee Benefits.
(a) Section 2.19(a) of the Disclosure Schedule sets forth a list of
each material Company Plan. Complete and accurate copies of (i) all Company
Plans which have been reduced to writing, (ii) written summaries of all
unwritten Company Plans, (iii) all related trust agreements, insurance contracts
and summary plan descriptions, and (iv) all annual reports filed on IRS Form
5500, 5500C or 5500R and (for all funded plans) all plan financial statements
for the last three plan years for each Company Plan, have been delivered or made
available to the Buyer.
(b) Each Company Plan (and each related funding vehicle or insurance
policy) has been administered, funded and documentation has been maintained in
all material respects in accordance with its terms and all applicable laws,
rules and regulations, except where the failure thereof would not reasonably be
expected to have, individually or in the aggregate, a material liability to the
Company or the Subsidiary. The Company has complied in good faith with all
requirements of Section 409A of the Code, including all employer tax withholding
and reporting obligations. All contributions (including all employer
contributions and employee salary reduction contributions) for any period ending
on or before the Closing Date which are not yet due have been made or accrued on
the Closing Balance Sheet.
-16-
(c) There are no pending, or the Knowledge of the Company threatened,
Legal Proceedings (except claims for benefits payable in the normal operation of
the Company Plans and proceedings with respect to qualified domestic relations
orders), against or involving any Company Plan or asserting any rights or claims
to benefits under, any Company Plan that could give rise to any material
liability to the Company and the Subsidiary.
(d) Each Company Plan that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service (or, where there is no determination letter but the
Company Plan is based upon a master and prototype or volume submitter form, the
sponsor of such form has received a current advisory opinion as to the form upon
which the Company is entitled to rely under applicable IRS procedures) and to
the knowledge of the Company, nothing has occurred that could reasonably be
expected to affect such qualification.
(e) Except as set forth on Schedule 2.19(e), no Company Plan is
subject to Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code.
Neither the Company nor any ERISA Affiliate is a participating or contributing
employer in or has any liability to any "multiemployer plan" (as defined in
Section 3(37) of ERISA) subject to Title IV of ERISA.
(f) The funded status and current and long-term liabilities of all
Company Plans, including those subject to Title IV and those providing retiree
benefits, and liabilities of the Company and the Subsidiary with respect
thereto, have been properly determined in accordance with PBGC and other
applicable accounting methods, factors, and assumptions, and have been
accurately disclosed on the Financial Statements, such that any inaccuracy
therein would not have a materially adverse effect on such Company Plan, the
Company or the Subsidiary. To the knowledge of the Company and the Subsidiary,
all amounts payable from any Company Plan are fully deductible for federal
income tax purposes.
2.20 Environmental Matters.
(a) Section 2.20(a) of the Disclosure Schedule sets forth a list of
all documents (whether in hard copy or electronic form) that contain any
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by the Company or the Subsidiary which were
issued or conducted at any time and to which the Company has possession of or
reasonable access to. A copy of each such document has been made available to
Buyer.
(b) Except as set forth in Section 2.20(b) of the Disclosure Schedule:
(i) each of the Company and the Subsidiary is in compliance with
any and all applicable Environmental Laws except as has not and
would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect;
(ii) each of the Company and the Subsidiary has received and is
in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct
its respective businesses
-17-
except as has not and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect;
(iii) there is no pending or, to the knowledge of the Company,
threatened civil or criminal litigation, written notice of
violation, formal administrative proceeding, pending orders
(unilateral or consent) or investigation, inquiry or information
request by any Governmental Entity; relating to any Environmental
Law involving the Company or the Subsidiary;
(iv) to the knowledge of the Company, neither the Company nor the
Subsidiary has any liabilities or obligations arising from the
release of any Materials of Environmental Concern into the
environment except as has not and would not reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect;
(v) neither the Company nor the Subsidiary is a party to or bound
by any court order, administrative order, consent order or other
agreement between the Company and any Governmental Entity entered
in connection with any legal obligation or liability arising
under any Environmental Law;
(vi) to the knowledge of the Company and the Subsidiary, no
spill, release, disposal, burial or placement of any Materials of
Environmental Concern on, upon, into or from property owned or
operated by the Company or the Subsidiary, or from Materials of
Environmental Concern generated at properties owned or operated
by the Company or the Subsidiary and disposed of offsite,
requires any remedial action under any Environmental Law except
as has not and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect; and
(vii) there are no surface impoundments, lagoons, injection
xxxxx, waste piles or landfills at properties owned or operated
by the Company or the Subsidiary that have been used to treat,
store or dispose of Materials of Environmental Concern.
2.21 Legal Compliance. Each of the Company and the Subsidiary is currently
conducting their respective businesses in compliance with each applicable law
(including rules and regulations thereunder) of any federal, state, local or
foreign government, or any Governmental Entity, except for any violations or
defaults that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect. Neither the
Company nor the Subsidiary has received any written notice from any Governmental
Entity alleging noncompliance with any applicable law, rule or regulation.
2.22 Permits. Section 2.22 of the Disclosure Schedule sets forth a list of
all Permits issued to or held by the Company or the Subsidiary. Such listed
Permits are the only Permits
-18-
that are required for the Company and the Subsidiary to conduct their respective
businesses as presently conducted or as proposed to be conducted, except for
those the absence of which, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect. Each
such Permit is in full force and effect; the Company or the Subsidiary is in
compliance with the terms of each such Permit; and, to the knowledge of the
Company, no suspension or cancellation of such Permit is threatened and there is
no basis for believing that such Permit will not be renewable upon expiration.
Each such Permit will continue in full force and effect immediately following
the Closing.
2.23 Certain Business Relationships With Affiliates. No Affiliate of the
Company or of the Subsidiary (a) owns any property or right, tangible or
intangible, which is used in the business of the Company or the Subsidiary, (b)
has any claim or cause of action against the Company or the Subsidiary, or (c)
owes any money to, or is owed any money by, the Company or the Subsidiary.
2.24 Brokers' Fees. Neither the Company nor the Subsidiary has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement other than
as set forth in Section 2.24 of the Disclosure Schedule.
2.25 Books and Records. The minute books and other similar records of the
Company and the Subsidiary contain complete and accurate records of all actions
taken at any meetings of the Company's or the Subsidiary's stockholders, Board
of Directors or any committee thereof and of all written consents executed in
lieu of the holding of any such meeting. The books and records of the Company
and the Subsidiary accurately reflect in all material respects the assets,
liabilities, business, financial condition and results of operations of the
Company or the Subsidiary and have been maintained in accordance with good
business and bookkeeping practices. Section 2.25 of the Disclosure Schedule
contains a list of all bank accounts and safe deposit boxes of the Company and
the Subsidiary and the names of persons having signature authority with respect
thereto or access thereto.
2.26 SEC Documents. The Company has furnished or made available to the
Buyer and the Transitory Subsidiary a true and complete copy of (a) its Annual
Report on Form 10-K for the fiscal year ended April 30, 2005, as amended, and
(b) all other filings (other than preliminary registration and proxy statements)
between April 30, 2005 and the date hereof, which the Company filed under the
federal securities laws of the Securities and Exchange Commission. As of their
respective filing dates, the SEC Documents complied in all material respects
with any applicable requirements of the Exchange Act, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except to the extent corrected by subsequently filed
documents with the Securities and Exchange Commission.
2.27 Transaction Expenses. The Transaction Expenses are the only costs or
expenses incurred or payable by or on behalf of the Company in connection with
the transactions contemplated by this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
AND THE TRANSITORY SUBSIDIARY
Each of the Buyer and the Transitory Subsidiary represents and warrants to
the Company that the statements contained in this Article III are true and
correct as of the date of this Agreement and will be true and correct as of the
Closing as though made as of the Closing.
3.1 Organization and Corporate Power. Each of the Buyer and the Transitory
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation. The Buyer has all
requisite corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it.
3.2 Authorization of Transaction. Each of the Buyer and the Transitory
Subsidiary has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
by the Buyer and the Transitory Subsidiary of this Agreement and the
consummation by the Buyer and the Transitory Subsidiary of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Buyer and Transitory Subsidiary,
respectively. This Agreement has been duly and validly executed and delivered by
the Buyer and the Transitory Subsidiary and constitutes a valid and binding
obligation of the Buyer and the Transitory Subsidiary, enforceable against them
in accordance with its terms.
3.3 Noncontravention. Subject to compliance with the applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Act, the Exon-Xxxxxx Amendment and the
filing of the Certificate of Merger as required by the Delaware General
Corporation Law, neither the execution and delivery by the Buyer or the
Transitory Subsidiary of this Agreement, nor the consummation by the Buyer or
the Transitory Subsidiary of the transactions contemplated hereby, will (a)
conflict with or violate any provision of the charter or By-laws of the Buyer or
the Transitory Subsidiary, (b) require on the part of the Buyer or the
Transitory Subsidiary any filing with, or permit, authorization, consent or
approval of, any Governmental Entity, (c) conflict with, result in breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of obligations under, create in any party any
right to terminate, modify or cancel any contract or instrument to which the
Buyer or the Transitory Subsidiary is a party or by which either is bound or to
which any of their assets are subject, or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer or the
Transitory Subsidiary or any of their properties or assets.
3.4 Financial Arrangements of Buyer. The Buyer has sufficient capital
resources to pay the aggregate Merger Consideration and shall maintain such
capital resources through the Effective Time and the payment of the Merger
Consideration. The Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
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ARTICLE IV
COVENANTS
4.1 Closing Efforts. Each of the Parties shall use its Reasonable Best
Efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement, including using
its Reasonable Best Efforts to ensure that (i) its representations and
warranties remain true and correct in all material respects through the Closing
Date and (ii) the conditions to the obligations of the other Parties to
consummate the Merger are satisfied.
4.2 Governmental and Third-Party Notices and Consents.
(a) Each Party shall use its Reasonable Best Efforts to obtain, at its
expense, all waivers, permits, consents, approvals or other authorizations from
Governmental Entities, and to effect all registrations, filings and notices with
or to Governmental Entities, as may be required for such Party to consummate the
transactions contemplated by this Agreement and to otherwise comply with all
applicable laws and regulations in connection with the consummation of the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, each of the Parties shall promptly file any Notification and
Report Forms and related material that it may be required to file with (i) the
Committee on Foreign Investment in the United States under the Exon-Xxxxxx
Amendment and (ii) the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act (in each
case, the filing fees related to which shall be split equally between the
Company and the Buyer), shall use its Reasonable Best Efforts to obtain an early
termination of the applicable waiting periods, and shall make any further
filings or information submissions pursuant thereto that may be necessary,
proper or advisable.
(b) The Company shall use its Reasonable Best Efforts to obtain, at
its expense, all such waivers, consents or approvals from third parties, and to
give all such notices to third parties, as are required to be listed in the
Disclosure Schedule.
4.3 Stockholder Approval.
(a) The Company shall use its Reasonable Best Efforts to obtain, as
promptly as practicable, the Requisite Stockholder Approval, either at a special
meeting of stockholders or pursuant to a written stockholder consent, all in
accordance with the applicable requirements of the Delaware General Corporation
Law. In connection with such special meeting of stockholders or written
stockholder consent, the Company shall provide to its stockholders the
Disclosure Statement, which shall include (A) a summary of the Merger and this
Agreement and (B) a statement that appraisal rights are available for the Common
Shares pursuant to Section 262 of the Delaware General Corporation Law and a
copy of such Section 262. The Buyer agrees to cooperate with the Company in the
preparation of the Disclosure Statement. The Company agrees not to distribute
the Disclosure Statement until the Buyer has had a reasonable opportunity to
review and comment on the Disclosure Statement and the Disclosure Statement has
been approved by the Buyer (which approval may not be unreasonably withheld,
conditioned or delayed). If the Requisite Stockholder Approval is obtained by
means of a written consent, the Company shall send, pursuant to Sections 228 and
262(d) of the Delaware General
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Corporation Law, a written notice to all stockholders of the Company that did
not execute such written consent informing them that this Agreement and the
Merger were adopted and approved by the stockholders of the Company and that
appraisal rights are available for their Common Shares pursuant to Section 262
of the Delaware General Corporation Law (which notice shall include a copy of
such Section 262), and shall promptly inform the Buyer of the date on which such
notice was sent.
(b) The Company, acting through its Board of Directors, shall include
in the Disclosure Statement the unanimous recommendation of its Board of
Directors that the stockholders of the Company vote in favor of the adoption of
this Agreement and the approval of the Merger. Notwithstanding the foregoing,
the obligations set forth in the foregoing sentence shall not apply (and the
Board of Directors shall be permitted to modify or withdraw any such
recommendation previously made) if:
(i) the Company receives a Company Superior Proposal; and
(ii) the Board of Directors of the Company reasonably concludes,
after consultation with its outside legal counsel, that the
fiduciary duties of the Board of Directors under applicable law
prohibit it from fulfilling the obligations in the foregoing
sentence.
(c) The Buyer shall ensure that any information furnished by the Buyer
to the Company in writing for inclusion in the Disclosure Statement does not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
4.4 Operation of Business. Except as contemplated by this Agreement, during
the period from the date of this Agreement to the Closing, the Company shall
(and shall cause the Subsidiary to) conduct its operations in the Ordinary
Course of Business and in compliance with all applicable laws and regulations
and, to the extent consistent therewith, use its Reasonable Best Efforts to
preserve intact its current business organization, keep its physical assets in
good working condition, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material respect. The Company shall
maintain its cash management practices and its policies, practices and
procedures with respect to collection of trade accounts receivable,
establishment of reserves for uncollectible accounts, accrual of accounts
receivable, inventory control, prepayment of expenses, payment of trade accounts
payable, accrual of other expenses, deferral of revenue, and acceptance of
customer deposits in accordance with past custom and practice and GAAP. Without
limiting the generality of the foregoing, prior to the Closing, the Company
shall not (and shall cause the Subsidiary not to), without the written consent
of the Buyer:
(a) issue or sell any stock or other securities of the Company or the
Subsidiary or any options, warrants or rights to acquire any such stock or other
securities or amend any of the terms of (including the vesting of) any
restricted stock agreements, or repurchase or redeem any stock or other
securities of the Company (except from former employees, directors or
consultants in accordance with agreements providing for the repurchase of shares
at their original
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issuance price in connection with any termination of employment with or services
to the Company);
(b) split, combine or reclassify any shares of its capital stock, or
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock;
(c) other than pursuant to the Financing Documents, create, incur or
assume any indebtedness (including obligations in respect of capital leases
exceeding $150,000); assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person or entity; or make any loans, advances or capital contributions
to, or investments in, any other person or entity;
(d) acquire, sell, lease, license or dispose of any assets or
property, other than purchases and sales of assets in the Ordinary Course of
Business;
(e) other than pursuant to the Financing Documents, mortgage or pledge
any of its property or assets or subject any such property or assets to any
Security Interest;
(f) other than in the Ordinary Course of Business, discharge or
satisfy any Security Interest or pay any obligation or liability;
(g) amend its charter, by-laws or other organizational documents;
(h) change its accounting methods, principles or practices, except
insofar as may be required by a generally applicable change in GAAP, or make any
new elections, or changes to any current elections, with respect to Taxes;
(i) enter into, amend, terminate, take or omit to take any action that
would constitute a material violation of or default under any contract or
agreement of a nature required to be listed in Section 2.12, Section 2.13 or
Section 2.14 of the Disclosure Schedule;
(j) make or commit to make any capital expenditure in excess of
$1,000,000 in the aggregate, except for projects currently under construction,
including without limitation the ladle arc furnace;
(k) settle any Legal Proceeding except for settlements for an amount
to be paid by the Company of less than $50,000;
(l) except as permitted by Section 4.7, knowingly take any action or
fail to take any action permitted by this Agreement with the knowledge that such
action or failure to take action would result in (i) any of the representations
and warranties of the Company set forth in this Agreement becoming untrue or
(ii) any of the conditions to the Merger set forth in Article V not being
satisfied;
(m) (i) increase the compensation (or benefits) payable to or to
become payable to any director or employee, except for increases in salary or
wages of employees in the ordinary course of business and consistent with past
practice; (ii) make any new grants of
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severance or termination pay to or enter into or amend any employment or
severance agreement with any employee; (iii) establish, adopt, enter into or
amend any collective bargaining agreement or Company Plan or any other "employee
benefit plan" (as defined in Section 3(3) of ERISA); (iv) take any action to
accelerate any rights or benefits, or make any determinations not in the
ordinary course of business consistent with past practice, under any Company
Plan; or (iv) make any promise or other representation, written or oral,
relating to future actions similar to those listed above; notwithstanding the
foregoing the Company may enter into or amend any collective bargaining
agreement after June 15, 2006, provided that the Company consults with Buyer in
connection with any amendment of or entry into a collective bargaining agreement
and conducts any such negotiations consistent with past practice and such
amendment to or new collective bargaining agreement is consistent with the
current collective bargaining agreement; or
(n) agree in writing or otherwise to take any of the foregoing
actions.
Notwithstanding the foregoing, the Company may make any funding payments in an
aggregate amount not to exceed $10,000,000 in respect of any Company Plan.
4.5 Access to Information.
(a) The Company shall (and shall cause the Subsidiary to) permit
representatives of the Buyer to have full access (at all reasonable times, and
in a manner so as not to interfere with the normal business operations of the
Company and the Subsidiary) to all premises, properties, financial, tax and
accounting records, the contracts, other records and documents, and personnel,
of or pertaining to the Company and the Subsidiary. Prior to the Closing, the
Buyer and its representatives shall not contact or communicate with the
employees (including related labor organizations), customers and suppliers of
the Company in connection with the transactions contemplated by this Agreement,
except with the prior written consent of the Company (not to be unreasonably
withheld or delayed).
(b) Within 15 days after the end of each month ending prior to the
Closing, beginning with the month of March 2006, the Company shall furnish to
the Buyer an unaudited income statement for such month and a balance sheet as of
the end of such month, prepared on a basis consistent with the Financial
Statements. Such financial statements shall present fairly the financial
condition and results of operations of the Company and the Subsidiary on a
consolidated basis as of the dates thereof and for the periods covered thereby,
and shall be consistent with the books and records of the Company and the
Subsidiary.
4.6 Notice of Breaches.
(a) From the date of this Agreement until the Closing, the Company
shall promptly deliver to the Buyer supplemental information concerning events
or circumstances occurring subsequent to the date hereof which would render any
representation, warranty or statement in this Agreement or the Disclosure
Schedule inaccurate or incomplete in any material respect at any time after the
date of this Agreement until the Closing. No such supplemental information shall
be deemed to avoid or cure any misrepresentation or breach of warranty or
constitute an amendment of any representation, warranty or statement in this
Agreement or the
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Disclosure Schedule; provided that if such supplemental information relates to
an event or circumstance occurring subsequent to the date hereof in the Ordinary
Course of Business (without breach of Section 4.4) and if the Buyer would have
the right to terminate this Agreement pursuant to Section 7.1(b) as a result of
the information so disclosed and it does not exercise such right within 20 days
of notice thereof, then such supplemental information shall constitute an
amendment of the representation, warranty or statement to which it relates.
(b) From the date of this Agreement until the Closing, the Buyer shall
promptly deliver to the Company supplemental information concerning events or
circumstances occurring subsequent to the date hereof which would render any
representation or warranty in this Agreement inaccurate or incomplete in any
material respect at any time after the date of this Agreement until the Closing.
No such supplemental information shall be deemed to avoid or cure any
misrepresentation or breach of warranty or constitute an amendment of any
representation or warranty in this Agreement; provided that if such supplemental
information relates to an event or circumstance occurring subsequent to the date
hereof in the Ordinary Course of Business and if the Company would have the
right to terminate this Agreement pursuant to Section 7.1(c) as a result of the
information so disclosed and it does not exercise such right prior to the
Closing, then such supplemental information shall constitute an amendment of the
representation or warranty to which it relates.
4.7 Exclusivity.
(a) Except as provided in Section 4.7(b), 4.7(c) or 6.1(f), from the
date of this Agreement until the earlier of termination of this Agreement or the
Effective Time, the Company shall not and shall not authorize or permit its
officers, directors, employees, investment bankers, attorneys, accountants or
other agents to directly or indirectly (i) initiate, solicit or knowingly
encourage, or knowingly take any action to facilitate the making of, any offer
or proposal which constitutes or is reasonably likely to lead to any Company
Acquisition Proposal, (ii) enter into any agreement with respect to any Company
Acquisition Proposal, or (iii) engage in negotiations or discussions with, or
provide any information or data to, any person (other than Buyer) relating to
any Company Acquisition Proposal.
(b) Notwithstanding the foregoing, prior to obtaining the Requisite
Stockholder Approval, Company may (i) furnish information concerning its
business, properties or assets to any person pursuant to a confidentiality
agreement with terms no less favorable to Company than those contained in the
Confidentiality Agreement and (ii) negotiate and participate in discussions and
negotiations with such person concerning a Company Acquisition Proposal if the
Company Board of Directors determines in good faith by resolution duly adopted,
after consultation with outside legal counsel and a financial advisor of
nationally recognized reputation, that such Company Acquisition Proposal
constitutes or would reasonably be expected to lead to a Company Superior
Proposal, but only if such Company Acquisition Proposal did not result from a
breach of Section 4.7(a).
(c) The Company shall promptly (and in any case within 48 hours) (i)
notify Buyer of any Company Superior Proposal, which notice shall include a copy
of such Company Superior Proposal, (ii) notify Buyer upon receipt of any
inquiries, proposals or offers received by, any request for information from, or
any discussions or negotiations sought to be initiated or
-25-
continued with, Company or its representatives concerning a Company Acquisition
Proposal or that could reasonably be expected to lead to a Company Acquisition
Proposal and disclose the identity of the other party and the material terms of
such inquiry, offer, proposal or request and, in the case of written materials,
provide copies of such materials and (iii) provide Buyer with copies of all
written materials provided by Company to such party. Company will keep Buyer
informed on a reasonably prompt basis (and, in any case, within 48 hours of any
significant development) of the status and details (including amendments and
proposed amendments) of any such Company Superior Proposal or other inquiry,
offer, proposal or request. Company shall promptly, following a determination by
the Company Board of Directors that a Company Acquisition Proposal is a Company
Superior Proposal, notify Buyer of such determination.
4.8 Expenses. Except as set forth in Section 4.2, each of the Parties shall
bear its own costs and expenses (including legal and accounting fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby; provided.
4.9 Directors and Officers.
(a) The Buyer shall not take any action to alter or impair any
exculpatory or indemnification provisions now existing in the Certificate of
Incorporation or By-laws of the Company for the benefit of any individual who
served as a director or officer of the Company at any time prior to the Closing
(each an "Indemnified Executive"), except for any changes that may be required
to conform with changes in applicable law and any changes that do not affect the
application of such provisions to acts or omissions of such individuals prior to
the Closing.
(b) From and after the Closing, the Buyer agrees that it will, and
will cause the Surviving Corporation to, indemnify and hold harmless each
Indemnified Executive against any costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities or amounts paid in
settlement incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Closing, whether asserted or claimed prior to, at or after the Closing, to the
fullest extent permitted under Delaware law (and the Buyer and the Surviving
Corporation shall also advance expenses as incurred to the fullest extent
permitted under Delaware law, provided the Indemnified Executive to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such Indemnified Executive is not entitled to
indemnification).
(c) For a period of six years after the Closing, the Buyer shall cause
the Surviving Corporation to maintain (to the extent available in the market) in
effect a directors' and officers' liability insurance policy covering those
persons who are currently covered by the Company's directors' and officers'
liability insurance policy (a copy of which has been heretofore delivered to the
Buyer) with coverage in amount and scope at least as favorable to such persons
as the Company's existing coverage (the "D&O Insurance Policy").
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ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
5.1 Conditions to Each Party's Obligations. The respective obligations of
each Party to consummate the Merger are subject to the satisfaction of the
following conditions:
(a) this Agreement and the Merger shall have received the Requisite
Stockholder Approval;
(b) all applicable waiting periods (and any extensions thereof) under
the Xxxx-Xxxxx-Xxxxxx Act and the Exon-Xxxxxx Amendment shall have expired or
otherwise been terminated.
5.2 Conditions to Obligations of the Buyer and the Transitory Subsidiary.
The obligation of each of the Buyer and the Transitory Subsidiary to consummate
the Merger is subject to the satisfaction (or waiver by the Buyer) of the
following additional conditions:
(a) the Company and the Subsidiary shall have obtained all of the
waivers, permits, consents, approvals or other authorizations, and effected all
of the registrations, filings and notices, referred to in Section 4.2 that are
required on the part of the Company or the Subsidiary, except for any failure of
which to obtain or effect would not, individually or in the aggregate, have a
Company Material Adverse Effect or a material adverse effect on the ability of
the Parties to consummate the transactions contemplated by this Agreement.
(b) the representations and warranties of the Company set forth in
this Agreement shall be true and correct as of the date of this Agreement and
shall be true and correct as of the Closing as though made as of the Closing,
except to the extent that (i) such representations and warranties are
specifically made as of a particular date (in which case such representations
and warranties shall be true and correct as of such date); and (ii) the
inaccuracy of any such representation or warranty is the result of events or
circumstances occurring subsequent to the date of this Agreement and any such
inaccuracies, individually or in the aggregate, would not have a Company
Material Adverse Effect or a material adverse effect on the ability of the
Parties to consummate the transactions contemplated by this Agreement (it being
agreed that any materiality qualifications in particular representations and
warranties shall be disregarded in determining whether any such inaccuracies
would have a Company Material Adverse Effect for purposes of this Section
5.2(b));
(c) the Company shall have performed or complied with in all material
respects its agreements and covenants required to be performed or complied with
under this Agreement as of or prior to the Closing;
(d) no Legal Proceeding shall be pending wherein an unfavorable
judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the transactions contemplated by this Agreement, (ii) cause the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) have, individually or in the aggregate, a Company Material
Adverse Effect, and no such judgment, order, decree, stipulation or injunction
shall be in effect;
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(e) no more than ten percent (10%) of the issued and outstanding
Common Shares shall be Dissenting Shares;
(f) the Company shall have delivered to the Buyer and the Transitory
Subsidiary the Company Certificate;
(g) the Buyer shall have received from counsel to the Company an
opinion in substantially the form attached hereto as Exhibit A, addressed to
the Buyer dated as of the Closing Date;
(h) the Buyer shall have purchased the D&O Insurance Policy, which
shall be in full force and effect; and
(i) the Buyer shall have received such other certificates and
instruments (including certificates of good standing of the Company and the
Subsidiary in their jurisdiction of organization and the various foreign
jurisdictions in which they are qualified, certified charter documents,
certificates as to the incumbency of officers and the adoption of authorizing
resolutions) as it shall reasonably request in connection with the Closing.
5.3 Conditions to Obligations of the Company. The obligation of the Company
to consummate the Merger is subject to the satisfaction (or waiver by the Buyer)
of the following additional conditions:
(a) the representations and warranties of the Buyer and the Transitory
Subsidiary set forth in the first sentence of Section 3.1 and in Section 3.2 and
any representations and warranties of the Buyer and the Transitory Subsidiary
set forth in this Agreement that are qualified as to materiality shall be true
and correct in all respects, and all other representations and warranties of the
Buyer and the Transitory Subsidiary set forth in this Agreement shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing as though made as of the Closing, except to the
extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties shall be true
and correct as of such date);
(b) each of the Buyer and the Transitory Subsidiary shall have
performed or complied with in all material respects its agreements and covenants
required to be performed or complied with under this Agreement as of or prior to
the Closing;
(c) no Legal Proceeding shall be pending wherein an unfavorable
judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the transactions contemplated by this Agreement or (ii) cause
the transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect;
(d) the Buyer shall have delivered to the Company the Buyer
Certificate;
(e) the Company shall have received from counsel to the Buyer and the
Transitory Subsidiary an opinion in substantially the form attached hereto as
Exhibit B, addressed to the Company and dated as of the Closing Date; and
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(f) the Company shall have received such other certificates and
instruments (including certificates of good standing of the Buyer and the
Transitory Subsidiary in their jurisdiction of organization, certified charter
documents, certificates as to the incumbency of officers and the adoption of
authorizing resolutions) as it shall reasonably request in connection with the
Closing.
ARTICLE VI
TERMINATION
6.1 Termination of Agreement. The Parties may terminate this Agreement and
abandon the Merger prior to the Effective Time (whether before or after
Requisite Stockholder Approval), as provided below:
(a) by mutual written consent;
(b) by the Buyer by giving written notice to the Company in the event
the Company is in breach of any representation, warranty or covenant contained
in this Agreement, and such breach, individually or in combination with any
other such breach, (i) would cause the conditions set forth in clauses (b) or
(c) of Section 5.2 not to be satisfied and (ii) is not cured within 20 days
following delivery by the Buyer to the Company of written notice of such breach;
(c) by the Company by giving written notice to the Buyer in the event
the Buyer or the Transitory Subsidiary is in breach of any representation,
warranty or covenant contained in this Agreement, and such breach, individually
or in combination with any other such breach, (i) would cause the conditions set
forth in clauses (a) or (b) of Section 5.3 not to be satisfied and (ii) is not
cured within 20 days following delivery by the Company to the Buyer of written
notice of such breach;
(d) by any Party by giving written notice to the other Parties at any
time after the stockholders of the Company have voted on whether to approve this
Agreement and the Merger in the event this Agreement and the Merger failed to
receive the Requisite Stockholder Approval;
(e) by any Party if the Merger has not been consummated by September
30, 2006; provided, however, that the right to terminate this Agreement pursuant
to this Section 6.1(e) shall not be available to any party whose action or
failure to fulfill any obligation under this Agreement has been the principal
cause of, or resulted in, the failure of the Merger to be consummated by such
date; or
(f) by the Company at any time prior to the Effective Time, whether
before or after adoption of this Agreement by the stockholders of the Company,
if (i) the Company Board of Directors has received a Company Superior Proposal,
(ii) in light of such Company Superior Proposal, the Company Board of Directors
has determined, in good faith by resolution duly adopted after consultation with
outside counsel, that it is necessary for the Company Board of Directors to
withdraw, amend or modify its approval or recommendation of this Agreement or
the Merger in order to comply with its fiduciary duties to the stockholders of
the Company under applicable law, (iii) the Company has provided written notice
of the determination described in clause (ii) above to the Buyer, which notice
has attached to it a copy of the definitive agreement
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or agreements containing all of the terms and conditions of such Company
Superior Proposal, (iv) at least three business days following receipt by the
Buyer of the notice referred to in clause (iii) above, and after taking into
account any revised proposal made by the Buyer following receipt of the notice
referred to in clause (iii) above, such Company Superior Proposal remains a
Company Superior Proposal and the Company Board of Directors has again made the
determination referred to in clause (ii) above (it being understood and agreed
that any change to the financial or other material terms of such Company
Superior Proposal shall require a new notice to the Buyer under clause (iii)
above and a new three-business-day period under this clause (iv)), (v) the
Company has not breached Section 4.7 in any material respect, (vi) concurrent
with such termination, the Company Board of Directors approves, and the Company
enters into, a definitive agreement providing for the implementation of a
Company Superior Proposal and (vii) the Company, at or prior to any termination
pursuant to this Section 6.1(f) pays to Buyer the Termination Fee.
6.2 Effect of Termination.
(a) Any termination of this Agreement under Section 6.1 hereof will be
effective immediately upon the delivery of a valid written notice of the
terminating party to the other parties hereto and, if then due, payment of the
Termination Fee. In the event of termination of this Agreement as provided in
Section 6.1 hereof, this Agreement shall forthwith become null and void and be
of no further force or effect, and there shall be no liability on the part of
Buyer, Transitory Subsidiary or Company (or any of their respective directors,
officers, employees, stockholders, agents or representatives); provided,
however, that nothing herein shall relieve any party from liability for fraud or
the willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
(b) If the Company terminates this Agreement pursuant to Section
6.1(f), the Company shall pay the Termination Fee.
ARTICLE VII
DEFINITIONS
For purposes of this Agreement, each of the following terms shall have the
meaning set forth below.
"Affiliate" shall mean any affiliate, as defined in Rule 12b-2 under the
Securities Exchange Act of 1934.
"Baseline Net Working Capital" of the Company is $96,894,000, as calculated
in accordance with Schedule I attached hereto.
"Business Day" shall mean any day any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
Delaware.
"Buyer" shall have the meaning set forth in the first paragraph of this
Agreement.
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"Buyer Certificate" shall mean a certificate to the effect that each of the
conditions specified in clauses (a) through (c) (insofar as clause (c) relates
to Legal Proceedings involving the Buyer or the Transitory Subsidiary) of
Section 5.3 is satisfied in all respects.
"CERCLA" shall mean the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Certificate of Merger" shall mean the certificate of merger or other
appropriate documents prepared and executed in accordance with Section 25l(c)
of the Delaware General Corporation Law.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall mean the first date that is at least two business days
after the satisfaction or waiver of all of the conditions to the obligations of
the Parties to consummate the transactions contemplated hereby (excluding the
delivery at the Closing of any of the documents set forth in Article V) and on
the first day of the month after the end of the most recently ended calendar
month, or such other date as may be mutually agreeable to the Parties.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Shares" shall mean the shares of common stock, $.01 par value per
share, of the Company.
"Company" shall have the meaning set forth in the first paragraph of this
Agreement.
"Company Acquisition Proposal" shall mean any offer or proposal or
potential offer or proposal relating to any transaction or proposed transaction
or series of related transactions, other than the transactions contemplated
hereby, involving: (A) any acquisition or purchase from Company of more than a
twenty percent (20%) interest in the total outstanding voting securities of
Company or any tender offer or exchange offer that if consummated would result
in the acquisition or purchase of twenty percent (20%) or more of the total
outstanding voting securities of Company, whether by purchase of stock,
consolidation, business combination merger or other similar transaction
involving the Company, (B) any sale, lease, exchange, transfer, license,
acquisition or disposition of assets of Company (including, without limitation,
stock or assets of Company or any Company Subsidiary by merger, consolidation,
recapitalization, spin-off, stock purchase, asset purchase or otherwise) for
consideration equal to twenty percent (20%) or more of the aggregate fair market
value of all of the outstanding shares of Company Common Stock on the date prior
to the date hereof, whether by purchase of assets, consolidation, business
combination merger or other similar transaction involving Company; or (C) any
recapitalization, restructuring, liquidation or dissolution of Company.
"Company Certificate" shall mean a certificate to the effect that each of
the conditions specified in clause (a) of Section 5.1 and clauses (a) through
(e) (insofar as clause (e) relates to Legal Proceedings involving the Company or
the Subsidiary) of Section 5.2 is satisfied in all respects.
-31-
"Company Expenses" shall mean those costs and expenses set forth on Exhibit
D attached hereto except to the extent paid on or prior to the Closing Date,
which exhibit shall be updated to reflect actual costs and expenses incurred
through the Closing Date.
"Company Material Adverse Effect" shall mean any material adverse change or
event with respect to, or material adverse effect on, (i) the business, assets,
liabilities, capitalization, condition (financial or other), or results of
operations of the Company and the Subsidiary, taken as a whole, or (ii) the
ability of the Buyer to operate the business of the Company and the Subsidiary
immediately after the Closing; provided, however, that in determining whether a
Company Material Adverse Effect has occurred there shall be excluded any effect
on the referenced party the primary cause of which is (i) any change in
applicable law or interpretations thereof by any Governmental Entity, (ii) any
change in GAAP or regulatory accounting requirements applicable to companies in
the referenced party's industry generally, (iii) general changes in the
referenced party's industry or in the global or United States economy or
financial markets, (iv) any change arising out of or attributable to the
execution and delivery of this Agreement, or the public announcement thereof,
(v) any action or omission of the referenced party or the Subsidiary taken with
the prior written consent of the other party to this Agreement, and (vi) any
effect related to or arising from an Event of Default as that term is defined
under the CIT Agreement or the exercise of remedies by CIT in connection with
such Event of Default. For the avoidance of doubt, the parties agree that the
terms "material", "materially" or "materiality" as used in this Agreement with
an initial lower case "m" shall have their respective customary and ordinary
meanings, without regard to the meaning ascribed to Company Material Adverse
Effect.
"Company Plan" shall mean any "employee benefit plan" (as defined in
Section 3(3) of ERISA and any material bonus, deferred or incentive
compensation, profit sharing, retirement, stock option, stock purchase or other
equity compensation, severance, employment, termination pay, change in control
or other employee benefit plan, arrangement, agreement or program that is
sponsored, maintained or contributed to by any Company or any ERISA Affiliate in
which present or former employees, officers or directors of the Company and its
Subsidiaries participate or with respect to which such entities have a material
liability or potential liability.
"Company Stockholders" shall mean the stockholders of record of the Company
immediately prior to the Effective Time.
"Company Superior Proposal" means any bona fide written proposal made by a
third party (i) involving the purchase or acquisition, directly or indirectly
of, more than 50% of the shares of Company Common Stock or all or substantially
all of the assets of Company and (ii) which is otherwise on terms which the
Company Board of Directors determines in good faith, by resolution duly adopted
(A) would result in a transaction that, if consummated, is more favorable to
holders of Company Common Stock, from a financial point of view, than the
transactions contemplated by this Agreement (after consultation with a financial
advisor of nationally recognized reputation), taking into account all the terms
and conditions of such proposal and this Agreement that the Company Board of
Directors deems relevant and (B) is reasonably capable of being completed on the
terms proposed, taking into account all financial, regulatory, legal and other
aspects of such proposal.
-32-
"Disclosure Schedule" shall mean the disclosure schedule provided by the
Company to the Buyer on the date hereof and accepted in writing by the Buyer, as
the same may be supplemented pursuant to Section 4.6.
"Disclosure Statement" shall mean a written proxy or information statement
containing the information prescribed by Section 4.3(a).
"Dissenting Shares" shall mean Common Shares held as of the Effective Time
by a Company Stockholder who has not voted such Common Shares in favor of the
adoption of this Agreement and with respect to which appraisal shall have been
duly demanded and perfected in accordance with Section 262 of the Delaware
General Corporation Law and not effectively withdrawn or forfeited prior to the
Effective Time.
"Effective Time" shall mean the time at which the Surviving Corporation
files the Certificate of Merger with the Secretary of State of the State of
Delaware.
"Environmental Law" shall mean any federal, state or local law, statute,
rule, order, directive, judgment, Permit or regulation relating to the
protection of the environment or Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any entity which together with the Company
would be deemed a single employer within the meaning of Sections 414(b), (c) or
(m) of the Code.
"Estimated Net Working Capital Amount" shall have the meaning set forth in
Section 1.5(b)(i) of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Executive Officers" shall mean the Company's Chief Executive Officer and
Chief Financial Officer.
"Exon-Xxxxxx Amendment" shall mean the Omnibus Trade and Competitiveness
Act of 1988, amending the Defense Production Act of 1950.
"Final Net Working Capital Amount" means the Net Working Capital as
determined pursuant to the Final Closing Date Balance Sheet.
"Financial Statements" shall mean:
(a) the audited consolidated balance sheets and statements of income,
changes in stockholders' equity and cash flows of the Company as of the end of
and for each of the last three fiscal years, and
-33-
(b) the Most Recent Balance Sheet and the unaudited consolidated
statements of income, changes in stockholders' equity and cash flows for the
nine months ended as of the Most Recent Balance Sheet Date; and
(c) the Closing Balance Sheet.
"Financing Documents" shall mean the Amended and Restated Financing
Agreement dated of August 12, 2004, as amended, among the Company the
Subsidiary, the lenders from time to time parties thereto and The CIT
Group/Business Credit, Inc., as agent for the lenders (the "CIT Agreement") and
the Indenture dated as of August 12, 2004 among the Company as Issuer, the
Guarantors and U.S. Bank National Association as Trustee and Collateral Agent,
as amended.
"GAAP" shall mean United States generally accepted accounting principles.
"Governmental Entity" shall mean any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency.
"Xxxx-Xxxxx-Xxxxxx Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Intended Uses" shall mean the manufacturing, fabricating and sale of steel
products including hot rolled steel bar, concrete reinforcing bar, or "rebar,"
and fabricated products.
"Lease" shall mean any lease or sublease pursuant to which the Company or
the Subsidiary leases or subleases from another party any real property.
"Legal Proceeding" shall mean any action, suit, proceeding, claim,
arbitration or investigation before any Governmental Entity or before any
arbitrator, or any grievance with respect to employment-related claims.
"Materials of Environmental Concern" shall mean any: pollutants,
contaminants or hazardous substances (as such terms are defined under CERCLA),
pesticides (as such term is defined under the Federal Insecticide, Fungicide and
Rodenticide Act), solid wastes and hazardous wastes (as such terms are defined
under the Resource Conservation and Recovery Act), chemicals, other hazardous,
radioactive or toxic materials, oil, petroleum and petroleum products (and
fractions thereof), or any other material (or article containing such material)
listed or subject to regulation under any law, statute, rule, regulation, order,
or Permit due to its potential to harm the human health or the environment.
"Merger" shall mean the merger of the Transitory Subsidiary with and into
the Company in accordance with the terms of this Agreement.
"Merger Consideration" shall mean an amount equal to One Hundred Seventy
Million Four Hundred Thousand Dollars ($170,400,000) minus (a) all debt and
long-term liabilities including accrued post-retirement benefit costs and
long-term pension liabilities as such amounts are reflected on the Estimated
Closing Date Balance Sheet; plus (b) $28,000,000; minus (c) the
-34-
Company Expenses, all as adjusted by the Working Capital Adjustment pursuant to
Section 1.5(b).
"Most Recent Balance Sheet" shall mean the unaudited consolidated balance
sheet of the Company as of the Most Recent Balance Sheet Date.
"Most Recent Balance Sheet Date" shall mean January 31, 2006.
"Net Working Capital" shall mean an amount (positive or negative) equal to
the Total Current Assets minus the Total Current Liabilities, each as determined
in accordance with Schedule I.
"Ordinary Course of Business" shall mean the ordinary course of business
consistent with past custom and practice (including with respect to frequency
and amount), which shall include, without limitation, the negotiation,
renegotiation or entry into collective bargaining agreements and the amendment
to the Financing Documents to permit the dividend described in the proviso to
Section 4.4(b).
"Owned Real Property" shall mean each item of real property owned by the
Company or the Subsidiary.
"Parties" shall mean the Buyer, the Transitory Subsidiary and the Company.
"Permits" shall mean all permits, licenses, registrations, certificates,
orders, approvals, franchises, variances and similar rights issued by or
obtained from any Governmental Entity (including those issued or required under
Environmental Laws and those relating to the occupancy or use of owned or leased
real property).
"Reasonable Best Efforts" shall mean best efforts, to the extent
commercially reasonable.
"Requisite Stockholder Approval" shall mean the adoption of this Agreement
and the approval of the Merger by a majority of the votes represented by the
outstanding Common Shares entitled to vote on this Agreement and the Merger.
"SEC Documents" shall mean, with respect to the Company, (a) its Annual
Report on Form 10-K for the fiscal year ended April 30, 2005, as amended, and
(b) all other filings (other than preliminary registration and proxy statements)
made by the Company after April 30, 2005 through the date hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Interest" shall mean any mortgage, pledge, security interest,
encumbrance, charge or other lien (whether arising by contract or by operation
of law), other than (i) mechanic's, materialmen's, and similar liens, (ii) liens
arising under worker's compensation, unemployment insurance, social security,
retirement, and similar legislation and (iii) liens on goods in transit incurred
pursuant to documentary letters of credit, in each case arising in the Ordinary
Course of Business of the Company and not material to the Company.
-35-
"Subsidiary" shall mean any corporation, partnership, trust, limited
liability company or other non-corporate business enterprise in which the
Company (or another Subsidiary) holds stock or other ownership interests
representing (a) more than 50% of the voting power of all outstanding stock or
ownership interests of such entity or (b) the right to receive more than 50% of
the net assets of such entity available for distribution to the holders of
outstanding stock or ownership interests upon a liquidation or dissolution of
such entity.
"Surviving Corporation" shall mean the Company, as the surviving
corporation in the Merger.
"Taxes" shall mean all taxes, charges, fees, levies or other similar
assessments or liabilities, including income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, unemployment, insurance, social security,
business license, business organization, environmental, workers compensation,
payroll, profits, license, lease, service, service use, severance, stamp,
occupation, windfall profits, customs, duties, franchise and other taxes imposed
by the United States of America or any state, local or foreign government, or
any agency thereof, or other political subdivision of the United States or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof.
"Tax Returns" shall mean all reports, returns, declarations, statements or
other information required to be supplied to a taxing authority in connection
with Taxes.
"Termination Fee" shall mean an amount equal to $3,500,000.
"Transaction Expenses" shall mean those costs and expenses set forth on
Exhibit C attached hereto, which exhibit shall be updated to reflect actual
costs and expenses incurred through the Closing Date.
"Transitory Subsidiary" shall have the meaning set forth in the first
paragraph of this Agreement.
"WARN" shall mean the Worker Adjustment Retraining Notification Act.
ARTICLE VIII
MISCELLANEOUS
8.1 Press Releases and Announcements. No Party shall issue any press
release or public announcement relating to the subject matter of this Agreement
without the prior written approval of the other Parties; provided, however, that
the Company may issue a public announcement with respect to the execution of
this Agreement and any Party may make any public disclosure it believes in good
faith is required by applicable law, regulation or stock market rule (in which
case the disclosing Party shall use reasonable efforts to advise the other
Parties and provide them with a copy of the proposed disclosure prior to making
the disclosure).
8.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted
-36-
assigns; provided, however, that (a) the provisions in Article I concerning
payment of the Merger Consideration and (b) the provisions of Section 4.9
concerning indemnification are intended for the benefit of the individuals
specified therein.
8.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations by or among the Parties,
written or oral, with respect to the subject matter hereof; provided that the
letter agreement dated December 2, 2005 between the Buyer and the Company (the
"Confidentiality Agreement") shall remain in effect in accordance with its
terms.
8.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties; provided that the Transitory Subsidiary may assign its
rights, interests and obligations hereunder to an Affiliate of the Buyer.
8.5 Counterparts and Facsimile Signature. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. This Agreement may
be executed by facsimile signature.
8.6 Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly delivered four business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one business day after it is sent for next business day
delivery via a reputable nationwide overnight courier service, in each case to
the intended recipient as set forth below:
If to the Company:
000 X. Xxxxxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000)000-0000
Copy to:
Xxxxxxx Xxxxxx Xxxxxx & Dodge LLP
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Fax: (000)000-0000
And:
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Xxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Fax: (000)000-0000
If to the Buyer or the Transitory Subsidiary:
0000 X. Xxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Fax: (000)000-0000
And:
Gerdau Ameristeel US Inc.
0000 X. Xxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Fax: (000)000-0000
Copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx, XXX
Xxxxx 0000, Xxxxxxxxx XX
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: A. Xxx Xxxxxxxx, Esq.
Fax: (000)000-0000
If to the Stockholder Representative:
Xxxxx X. Xxxxx
000 X. Xxxxxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Fax: (000)000-0000
Copy to:
Xxxxxxx Xxxxxx Xxxxxx & Dodge LLP
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Fax: (000)000-0000
Any Party may give any notice, request, demand, claim or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
-38-
actually is received by the party for whom it is intended. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of laws of
any jurisdictions other than those of the State of Delaware.
8.9 Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Closing; provided, however, that any
amendment effected subsequent to the Requisite Stockholder Approval shall be
subject to any restrictions contained in the Delaware General Corporation Law.
No amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver of any right or
remedy hereunder shall be valid unless the same shall be in writing and signed
by the Party giving such waiver. No waiver by any Party with respect to any
default, misrepresentation or breach of warranty or covenant hereunder shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
8.10 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified.
8.11 Submission to Jurisdiction. Each Party (a) submits to the jurisdiction
of any state or federal court sitting in State of Delaware in any action or
proceeding arising out of or relating to this Agreement (including any action or
proceeding for the enforcement of any arbitral award made in connection with any
arbitration of a dispute hereunder), (b) agrees that all claims in respect of
such action or proceeding may be heard and determined in any such court, (c)
waives any claim of inconvenient forum or other challenge to venue in such court
and (d) agrees not to bring any action or proceeding arising out of or relating
to this Agreement in any other court; provided in each case that, solely with
respect to any arbitration of a dispute, the arbitrator shall resolve all
threshold issues relating to the validity and applicability of the arbitration
provisions of this Agreement, contract validity, applicability of statutes of
limitations and issue preclusion, and such threshold issues shall not be heard
or determined by such court. Each Party agrees to accept service of any summons,
complaint or other initial pleading made in the manner provided for the giving
of notices in Section 8.7, provided that nothing in this Section 8.11 shall
affect the right of any Party to serve such summons, complaint or other initial
pleading in any other manner permitted by law.
-39-
8.12 Construction.
(a) The language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against any Party.
(b) Any reference to any federal, state, local or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(c) Any reference herein to "including" shall be interpreted as
"including without limitation".
(d) Any reference to any Article, Section or paragraph shall be deemed
to refer to an Article, Section or paragraph of this Agreement, unless the
context clearly indicates otherwise.
[The remainder of this page intentionally left blank.]
-40-
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
GERDAU AMERISTEEL US INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: President and CEO
XXXX ACQUISITION, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: President and CEO
SHEFFIELD STEEL CORPORATION
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx
President and Chief Executive
Officer
SOLELY FOR PURPOSES OF SECTION 1.11:
STOCKHOLDER REPRESENTATIVE
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
SCHEDULE I
WORKING CAPITAL CALCULATION
ADJUSTED
FEBRUARY-06
-----------
($ in thousands)
Cash 28,000
Accounts Receivable 42,261
Inventory 56,829
Deferred Assets (1,777)
Notes Receivable (Current Portion) 233
Deferred Income Tax 2,102
Prepaid Assets 495
-------
Total Current Assets 128,143
Accounts Payable 12,822
Accrued Liabilities 16,068
Accrued Interest Payable 428
Income Tax Payable 1,931
-------
Total Current Liabilities (1) 31,249
-------
NET WORKING CAPITAL 96,894
=======
(1) Current Liabilities excludes Current Portion of Long Term Debt.
EXHIBIT A
OPINION OF COUNSEL TO THE COMPANY
[Letterhead of Xxxxxxx Xxxxxx Xxxxxx & Dodge LLP]
[_____________________] [____], 2006
Gerdau Ameristeel US Inc.
0000 X. Xxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Gentlemen:
This opinion is being rendered pursuant to Section 5.2(g) of that certain
Agreement and Plan of Merger dated as of April [_____], 2006, by and among
Gerdau Ameristeel US Inc., a Florida corporation ("Parent"), XXXX Acquisition,
Inc. a Delaware corporation and wholly-owned subsidiary of Parent, Sheffield
Steel Corporation, a Delaware corporation (the "Company") and [Xxxxx X. Xxxxx],
as Stockholder Representative (the "Merger Agreement"). Capitalized terms that
are defined the Merger Agreement and not otherwise defined in this opinion are
used in this opinion as so defined.
We have acted as counsel to the Company in connection with the Company's
entry into the Merger Agreement and the consummation of the transactions
contemplated thereby. In connection with the foregoing, we have reviewed the
Merger Agreement, including the schedules and exhibits referenced therein and
have made such other investigation as we have deemed appropriate to render the
opinions set forth below. As to matters of fact material to our opinions, we
have relied, without independent verification, on representations made in the
Merger Agreement, and on certificates and other inquiries of officers of the
Company. We are also relying on certificates of public officials.
This opinion shall be interpreted in accordance with the Legal Opinion
Principles issued by the Committee on Legal Opinions of the American Bar
Association's Business Law Section as published in 53 Business Lawyer 831 (May
1998).
The opinions expressed herein are limited to the federal laws of the United
States and the laws of the State of Delaware.
We have assumed for purposes of Section 144 of the DGCL that (i) the Board
of Directors of the Company has complied with applicable fiduciary duties in
connection with the transactions contemplated by the Merger Agreement; and (ii)
the Merger Consideration and other terms of the Merger are fair to the Company
and its Stockholders.
In our examination of documents, we have assumed the genuineness of all
signatures, other than those by or on behalf of the Company, the authenticity of
all documents submitted to
A-l
us as originals, the conformity to originals of all documents submitted to us as
copies, the authenticity of such latter documents, and the legal competence of
natural persons. As to questions of fact material to our opinions, we have
relied, with your permission, and without independent verification of the
accuracy or completeness thereof, solely upon:
(a) the certificate of incorporation of the Company, which has been certified to
us by the Secretary of State of the State of Delaware as the true and correct
certificate of incorporation of the Company;
(b) the bylaws of the Company, which have been certified to us by an appropriate
officer of the Company as the true and correct bylaws of the Company;
(c) the corporate proceedings of the Company relating to the authorization,
execution and delivery of the Merger Agreement and the transactions contemplated
thereby, which have been certified to us by an appropriate officer of the
Company as true, correct and complete;
(d) the corporate minute books of the Company, certified to us as true and
correct by an appropriate officer of the Company; and
(e) a certificate, dated [___________________] [_____], 2006, with respect to
the existence of the Company issued by the Secretary of State of the State of
Delaware (the "Official Certificate").
With respect to questions of fact material to our opinions, we have relied,
without independent investigation or verification of the accuracy or
completeness thereof, solely upon (i) the statements and representations
contained in the Official Certificate; (ii) the representations and warranties
of the Company contained in the Merger Agreement; and (iii) the statements,
representations and warranties set forth in a certificate executed by an officer
of the Company.
The use herein of the term "our knowledge" or equivalent words mean the
actual knowledge of the lawyers in this firm responsible for preparing this
opinion after such inquiry as they deemed appropriate. We have made no
independent search of any public records in connection with our rendering the
opinions contained herein.
To the extent that the obligations of the Company may be dependent upon
such matters, we have assumed for purposes of this opinion that all of the
documents as to which we have opined with respect to enforceability have been
duly authorized, executed and delivered by the parties thereto other than the
Company and constitute the legal, valid and binding obligations of such other
parties.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing and in good standing under the
laws of the State of Delaware.
2. The authorized capital stock of the Company consists of (i) 7,500,000 Common
Shares, of which, as of the date of this Agreement, 4,956,819 shares were issued
and outstanding and
A-2
43,181 shares were held in the treasury of the Company. All of the issued and
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable.
3. The Company has all requisite corporate power and authority to execute and
deliver the Merger Agreement and each instrument required thereby to be executed
and delivered by the Company, to perform its obligations thereunder, and to
consummate the transactions contemplated thereby including the Merger.
4. The execution, delivery and performance of the Merger Agreement have been
validly authorized by all necessary corporate action by the Company and its
stockholders, the Company has duly executed and delivered the Merger Agreement.
The Merger Agreement constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
5. The execution, delivery and performance of the Merger Agreement by the
Company, the consummation of the transactions contemplated thereby and the
performance of the Merger Agreement will not (with or without the lapse of
time): (a) to our knowledge result in a breach or other violation of the terms,
conditions, or provisions of any order, writ, judgment or decree of any court or
governmental or regulatory authority applicable to the Company; (b) violate
existing federal or Delaware law; (c) violate any provision of the certificate
of incorporation or bylaws of the Company; or (d) except as identified in the
Merger Agreement, to our knowledge, require the consent or approval of any
person or entity by virtue of any agreement, instrument or document listed on
Exhibit A.
7. Except for the filing of the Certificate of Merger under the Delaware General
Corporation Law, the requirements of the Xxxx-Xxxxx-Xxxxxx Act and the
Exon-Xxxxxx Amendment, no consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority is required in
connection with the execution, delivery and performance of the Merger Agreement.
This opinion letter has been delivered solely for the benefit of the
addressee hereof in connection with the transactions contemplated by the Merger
Agreement and may not be relied upon by any other person or entity or for any
other purpose without our express written permission. We expressly disclaim any
duty to update this opinion letter in the future in the event that there are any
changes in the relevant fact or law that may change or otherwise affect any of
the opinions expressed herein.
Very truly yours,
Xxxxxxx Xxxxxx Xxxxxx & Dodge LLP
A-3
EXHIBIT B
OPINION OF COUNSEL TO THE BUYER AND THE TRANSITORY SUBSIDIARY
[Letterhead of Xxxxx, Xxxxxxxx & Xxxxxxx, LLP]
[________________________] [____], 2006
Sheffield Steel Corporation
000 X. Xxxxxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Gentlemen:
This opinion is being rendered pursuant to Section 5.3(e) of that certain
Agreement and Plan of Merger dated as of [______________________] [_______],
2006, by and among Gerdau Ameristeel US Inc., a Florida corporation ("Gerdau
Ameristeel"), XXXX Acquisition, Inc., a Delaware corporation and wholly-owned
subsidiary of Gerdau Ameristeel ("XXXX Acquisition"), and Sheffield Steel
Corporation, a Delaware corporation (the "Merger Agreement").
We have acted as counsel to Gerdau Ameristeel and XXXX Acquisition in
connection with their entry into the Merger Agreement and the consummation of
the transactions contemplated thereby. In connection with the foregoing, we have
reviewed, among other things, the Merger Agreement, including the schedules and
exhibits referenced in the Merger Agreement. We have also examined and are
familiar with such other corporate records, certificates and documents, have
supervised such corporate proceedings, and have examined such questions of law
and the facts as we have considered necessary or appropriate for the purposes of
the opinions expressed herein.
This opinion letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (1991) (the "Accord") adopted by the Section of
Business Law of the American Bar Association, which is incorporated in this
opinion letter by this reference. As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this opinion
letter should be read in conjunction therewith. Capitalized terms used in this
opinion letter and not otherwise defined herein shall have the meanings assigned
to such terms in the Accord and in the Merger Agreement. If there should be any
conflict between the definitions contained in the Accord and the definitions in
the Merger Agreement, the definition in the Accord shall control.
The opinions expressed herein are limited to the federal laws of the United
States, the Delaware General Corporation Law and the laws of the State of
Georgia. To the extent that matters covered by this opinion letter involve the
laws of any other jurisdiction, we have assumed, without independent
verification of the accuracy or correctness of such assumption,
X-x
that the laws of such other jurisdiction are the same as the substantive laws of
the State of Georgia (without regard to choice of law or conflict of law
principles) which would apply were such matter governed by the laws of the State
of Georgia. To the extent our opinions herein involve matters governed by the
Florida Business Corporation Act (the "Florida Act"), such opinions are based
solely on our review of the Florida Act (and without regard to judicial or case
law interpretation thereof) as reported in Corporation (Aspen Law and Business),
as updated through [___________________, _____].
In our examination of documents, we have assumed the genuineness of all
signatures, other than those by or on behalf of Gerdau Ameristeel and XXXX
Acquisition, the authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies, the
authenticity of such latter documents, and the legal competence of natural
persons. As to questions of fact material to our opinions, we have relied, with
your permission, and without independent verification of the accuracy or
completeness thereof, solely upon:
(a) the articles of incorporation of Gerdau Ameristeel, which have been
certified to us by the Secretary of State of the State of Florida as the true
and correct articles of incorporation of Gerdau Ameristeel;
(b) the articles of incorporation of XXXX Acquisition, which have been certified
to us by the Secretary of State of the State of Delaware as the true and correct
articles of incorporation of XXXX Acquisition;
(c) the bylaws of Gerdau Ameristeel, which have been certified to us by an
appropriate officer of Gerdau Ameristeel as the true and correct bylaws of
Gerdau Ameristeel;
(d) the bylaws of XXXX Acquisition, which have been certified to us by an
appropriate officer of XXXX Acquisition as the true and correct bylaws of XXXX
Acquisition;
(e) the corporate proceedings of Gerdau Ameristeel relating to the
authorization, execution and delivery of the Merger Agreement and the
transactions contemplated thereby, which have been certified to us by an
appropriate officer of Gerdau Ameristeel as true, correct and complete;
(f) the corporate proceedings of XXXX Acquisition relating to the authorization,
execution and delivery of the Merger Agreement and the transactions contemplated
thereby, which have been certified to us by an appropriate officer of XXXX
Acquisition as true, correct and complete;
(g) a certificate, dated [______________________] [_____], 2006, with respect to
the existence of Gerdau Ameristeel issued by the Secretary of State of the State
of Florida (the "Florida Certificate"); and
(h) a certificate, dated [_______________________] [_____], 2006, with respect
to the existence of XXXX Acquisition issued by the Secretary of State of the
State of Delaware (the "Delaware Certificate").
B-2
With respect to questions of fact material to our opinions, we have relied,
without independent investigation or verification of the accuracy or
completeness thereof, solely upon (i) the statements and representations
contained in each of the Florida Certificate and the Delaware Certificate; (ii)
the representations and warranties of each of XXXX Acquisition and Gerdau
Ameristeel contained in the Merger Agreement; and (iii) the statements,
representations and warranties set forth in a certificate executed by an officer
of each of Gerdau Ameristeel and XXXX Acquisition.
The use herein of the term "Actual Knowledge" shall have the meaning' given
to such term in the Accord, but shall not be taken to indicate that we have
made, and, in fact, we have not made, any independent investigation concerning
the accuracy or veracity of any representations or warranties or statements of
fact, other than as described in the preceding paragraphs. We have made no
independent search of any public records in connection with our rendering the
opinions contained herein.
To the extent that the obligations of Gerdau Ameristeel and XXXX
Acquisition may be dependent upon such matters, we have assumed for purposes of
this opinion that all of the documents as to which we have opined with respect
to enforceability have been duly authorized, executed and delivered by the
parties thereto other than Gerdau Ameristeel and XXXX Acquisition and constitute
the legal, valid and binding obligations of such other parties.
Based upon the foregoing, we are of the opinion that:
Gerdau Ameristeel is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida and has the requisite corporate
power and authority to carry on its business as it is now being conducted.
XXXX Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority to carry on its business as it is now being conducted.
Each of XXXX Acquisition and Gerdau Ameristeel has all requisite corporate power
and authority to execute and deliver the Merger Agreement and each instrument
required thereby to be executed and delivered by XXXX Acquisition and Gerdau
Ameristeel, respectively, to perform its obligations thereunder, and to
consummate the transactions contemplated thereby including the Merger.
The execution, delivery and performance of the Merger Agreement have been
validly authorized by all necessary corporate action by each of Gerdau
Ameristeel and XXXX Acquisition. Each of Gerdau Ameristeel and XXXX Acquisition
has duly executed and delivered the Merger Agreement. The Merger Agreement
constitutes a legal, valid and binding obligation of each of Gerdau Ameristeel
and XXXX Acquisition, enforceable against such entity in accordance with its
terms.
The execution, delivery and performance of the Merger Agreement by each of
Gerdau Ameristeel and XXXX Acquisition, the consummation of the transactions
contemplated thereby
B-3
and the performance of the Merger Agreement will not (with or without the lapse
of time): (a) to our Actual Knowledge result in a breach or other violation of
the terms, conditions, or provisions of any order, writ, judgment or decree of
any court or governmental or regulatory authority applicable to either Gerdau
Ameristeel or XXXX Acquisition; (b) conflict with or constitute a violation of
any existing federal law; (c) contravene, conflict with or violate any provision
of the articles of incorporation or bylaws of either Gerdau Ameristeel or XXXX
Acquisition; or (d) except as identified in the Merger Agreement, to our Actual
Knowledge, require the consent or approval of any person or entity by virtue of
any agreement, instrument or document which is binding on either Gerdau
Ameristeel or XXXX Acquisition.
Except for the filing of the Certificate of Merger under the Delaware General
Corporation Law, the requirements of the Xxxx-Xxxxx-Xxxxxx Act and the
Exon-Xxxxxx Amendment, no consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority is required in
connection with the execution, delivery and performance of the Merger Agreement.
This opinion letter has been delivered solely for the benefit of the
addressee hereof in connection with the transactions contemplated by the Merger
Agreement and may not be relied upon by any other person or entity or for any
other purpose without our express written permission. We expressly disclaim any
duty to update this opinion letter in the future in the event that there are any
changes in the relevant fact or law that may change or otherwise affect any of
the opinions expressed herein.
Very truly yours,
XXXXX, XXXXXXXX & XXXXXXX, LLP
By:
------------------------------------
Xxxxxx Xxx Xxxxxxxx, a Partner
B-4
EXHIBIT C
TRANSACTION EXPENSES
SEVERANCE COSTS
Xxxxx $ 855,000.00
Xxxxxxx 315,000.00
Xxxxxxxx 315,000.00
Xxxxxx 112,000.00
TOTAL $1,597,000.00
CHANGE-OF-CONTROL PAYMENTS
Xxxxx $ 200,000.00
Xxxxxxx 75,000.00
Xxxxxxxx 75,000.00
Xxxxxx 0.00
TOTAL $ 350,000.00
XXXX XXXXX FEE
Estimated Fee $2,229,750.00
Less: Retainers Paid $ (150,000.00)
Expenses Estimate 50,000.00
Incremental Fee Percentage (1.5%)
TOTAL $2,129,750.00
LEGAL FEES
Xxxxxxx Xxxxxx Xxxxxx & Dodge $ 500,000.00
Less Amounts Paid Prior to Closing $ (_________)
TOTAL $ 500,000.00
GOVERNMENTAL FILINA FEES
Xxxx-Xxxxx Xxxxxx $ 22,500.00
Exon-Xxxxxx $ 0
TOTAL $ 22,500.00
DATA ROOM EXPENSES $ 7,575.00
D&O TAIL POLICY $ 300,000.00
SPECIAL COMMITTEE FEES AND EXPENSES, INCLUDING LEGAL $ 275,000.00
Less Amounts Paid Prior to Closing $ (_________)
TOTAL $ 275,000.00
-------------
TOTAL TRANSACTION EXPENSES ESTIMATE $5.181.825.00
=============
C-l
EXHIBIT D
COMPANY EXPENSES
SEVERANCE COSTS
Xxxxx $ 855,000.00
TOTAL $ 855,000.00
CHANGE-OF-CONTROL PAYMENTS
Xxxxx $ 200,000.00
Xxxxxxx 75,000.00
Xxxxxxxx 75,000.00
Xxxxxx 0.00
TOTAL $ 350,000.00
XXXX XXXXX FEE
Estimated Fee $2,229,750.00
Less: Retainers Paid $ (150,000.00)
Expenses Estimate 50,000.00
Incremental Fee Percentage (1.5%)
TOTAL $2,129,750.00
LEGAL FEES
Xxxxxxx Xxxxxx Xxxxxx & Dodge $ 500,000.00
Less Amounts Paid Prior to Closing $ (_________)
TOTAL $ 500,000.00
GOVERNMENTAL FILINA FEES
Xxxx-Xxxxx Xxxxxx $ 22,500.00
Exon-Xxxxxx $ 0
TOTAL $ 22,500.00
DATA ROOM EXPENSES $ 7,575.00
SPECIAL COMMITTEE FEES AND EXPENSES, INCLUDING LEGAL $ 275,000.00
Less Amounts Paid Prior to Closing $ (_________)
TOTAL $ 275,000.00
-------------
TOTAL COMPANY EXPENSES ESTIMATE $4,139,825.00
=============
D-1
PRIVILEGED & CONFIDENTIAL
DISCLOSURE SCHEDULE
in connection with the
Agreement and Plan of Merger
among
Gerdau Ameristeel US Inc.
XXXX Acquisition, Inc.
Sheffield Steel Corporation
and Xxxxx X. Xxxxx as Stockholder Representative
Dated as of April 5, 2006
PRIVILEGED & CONFIDENTIAL
This Disclosure Schedule is being furnished by Sheffield Steel Corporation,
a Delaware corporation (the "Company"), in connection with the execution and
delivery of that certain Agreement and Plan of Merger (the "Merger Agreement"),
dated as of April 5, 2006, among Gerdau Ameristeel US Inc.' ("Parent"), a
Florida corporation, XXXX Acquisition, Inc., a Delaware corporation and
newly-formed, wholly owned subsidiary of Parent ("Sub"), the Company and the
Stockholder Representative. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed thereto in the Merger Agreement.
All exceptions and disclosures set forth in this Disclosure Schedule are
numbered to correspond to the section or subsection numbers of the Merger
Agreement to which they refer.
Except as otherwise limited herein, all information and disclosures
contained herein are made as of the date of the Merger Agreement and their
accuracy is confirmed only as of that date and not at anytime thereafter, except
as is otherwise provided by Section 4.6 of the Merger Agreement.
Nothing in this Disclosure Schedule is intended to broaden the scope of any
representation or warranty contained in the Merger Agreement or create any
covenant.
No reference to or disclosure of any item or other matter in this
Disclosure Schedule shall be deemed to be an admission or evidence of the
materiality of such item, nor shall it establish a standard or materiality for
any purpose whatsoever. No disclosure in this Disclosure Schedule relating to
any possible breach or violation of or conflict with any contract or legal
requirement shall be construed as an admission thereof.
Matters reflected in this Disclosure Schedule are not necessarily limited
to matters required by the Merger Agreement to be reflected in this Disclosure
Schedule. Such additional matters are set forth for informational purposes only.
The section headings and subheadings in this Disclosure Schedule are for
the convenience of reference only and shall not be deemed to alter or affect the
express description of the sections of this Disclosure Schedule set forth in the
Merger Agreement.
PRIVILEGED & CONFIDENTIAL
SECTION 2.2
CAPITALIZATION
1. Restricted stock awards:
[omitted] [omitted]
2. Registration Rights Agreement, dated August 14, 2002, among Sheffield Steel
Corporation, Xxxxxxx Restructuring Fund, L.P., Xxxxxxx Restructuring Fund
II, L.P., Xxxxxxx Offshore Restructuring Fund Inc., LC Capital Partners,
L.P., Axis-RDO Limited, HFR DS Performance Master Trust, Mellon HBV Master
Multi-Strategy Fund L.P. and Mellon HBV Master Rediscovered Opportunities
Fund L.P.
3
PRIVILEGED & CONFIDENTIAL
SECTION 2.4
NONCONTRAVENTION
1. Pursuant to Section 10.1(j) of the CIT Agreement, the transactions
contemplated by the Merger Agreement will constitute an Event of Default,
as defined in the CIT Agreement, upon which CIT may terminate the CIT
Agreement.
4
PRIVILEGED & CONFIDENTIAL
SECTION 2.5(A)
SUBSIDIARY
1. Sand Springs Railway Company
- 100,000 shares of common stock outstanding
- All outstanding shares are held by Sheffield Steel Corporation
- State of incorporation: Oklahoma
- Directors and Officers:
Xxxxx X. Xxxxx Chairman, President and Chief Executive Officer
Xxxxxxx X. Xxxxxxx Vice President, Chief Financial Officer,
Treasurer, Secretary and Director
Xxxxxxx X. Xxxxxx Director
Xxxxx X. Xxxxxxxx Director
Xxxxxxx X. Xxxxxxxx Vice President & General Manager & Director
PRIVILEGED & CONFIDENTIAL
SECTION 2.5(B)
SUBSIDIARY
1. U.S. Bank National Association has a security interest in the shares of
common stock of Sand Springs Railway Company owned by Sheffield Steel
Corporation. The security interest secures Sheffield Steel Corporation's
obligations under its 11 3/8% Senior Secured Notes due 2011 and related
indenture and collateral agreements.
6
PRIVILEGED & CONFIDENTIAL
SECTION 2.7
ABSENCE OF CERTAIN CHANGES
(1)
1. Agreement dated May 8, 2004 between Sheffield Steel Corporation-Joliet and
United Steeelworkers of America Local No. 9777-29 expired as of February 1,
2006.
2. Agreement dated March 2, 2004 between Sheffield Steel Corporation-Sand
Springs Division and United Steelworkers of America Local No. 2741 expired
as of March 2, 2006.
3. Agreement dated November 1, 1999 between Sheffield Steel Corporation and
United Steelworkers of America (Kansas City) expired as of October 31,2003.
7
PRIVILEGED & CONFIDENTIAL
SECTION 2.9
TAX MATTERS
1. [omitted]
PRIVILEGED & CONFIDENTIAL
SECTION 2.10
ASSETS
1. The CIT Group/Business Credit, Inc. has a first priority perfected
security interest in Sheffield Steel Corporation's present and future
accounts; inventory; general intangibles; copyrights; patents; trademarks;
documents; chattel paper; instruments (excluding equity interests in Sand
Springs Railway Company); letter of credit rights (other than from the use,
sale, lease or disposition of equipment or real property); investment
property; lockbox, blocked accounts or other deposit accounts into which
proceeds of such collateral are or may be deposited; cash in possession or
control of The CIT Group/Business Credit, Inc or lender under the CIT
Group/Business Credit, Inc. Credit Facility; and any products and proceeds
of any of the above.
2. The CIT Group/Business Credit, Inc. has a first priority perfected security
interest in Sand Springs Railway Company's present and future real property
and personal property, including any products and proceeds of all of the
above.
3. U.S. Bank National Association has a subordinated security interest in
Sheffield Steel Corporation's present and future accounts; inventory;
general intangibles; copyrights; patents; trademarks; documents; chattel
paper; instruments; letter of credit rights; investment property lockbox,
blocked accounts or other deposit accounts into which proceeds of such
collateral are or may be deposited; and any products and proceeds of any of
the above.
4. U.S. Bank National Association has a subordinated security interest in Sand
Springs Railway Company's present and future real property and personal
property, including any products and proceeds thereof.
5. U.S. Bank National Association has a first priority perfected security
interest in Sheffield Steel Corporation's present and future goods;
equipment; rights under present and future leases or real and personal
property, locomotives, railcars and rolling stock; equity interests in Sand
Springs Railway Company; letter of credit rights from the sale, use, lease
or disposition of equipment or real property; commercial tort claims; and
personal property; and cash in possession or control of U.S. Bank National
Association; and any products and proceeds of any of the above.
6. There is an outstanding lien against Sheffield Steel Corporation in favor
of TA Steel I, LLC. This debt has been repaid, and a UCC-3 termination
statement will be filed before the Closing.
9
PRIVILEGED & CONFIDENTIAL
SECTION 2.11
OWNED REAL PROPERTY
1. Sand Springs Mill
- Address: 0000 Xxxxx Xxxxxxx 00, Xxxx Xxxxxxx, XX
- Size: 616,548 square feet
- Security Interest: First priority lien to U.S. Bank National
Association; Second priority lien to The CIT Group/Business Credit,
Inc.
2. Sand Springs Corporate Office
- Address: 000 X. Xxxxxxxxx Xxxxxx, Xxxx Xxxxxxx, XX 00000
- Size: 24,955 square feet
- Security Interest: First priority lien to U.S. Bank National
Association; Second priority lien to The CIT Group/Business Credit,
Inc.
3. Joliet Mill
- Address: Xxx Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000
- Size: 345,735 square feet
- Security Interest: First priority lien to U.S. Bank National
Association; Second priority lien to The CIT Group/Business Credit,
Inc.
4. Team Rebar Facility
- Address: 0000 Xxxxxxxxxxx Xxxx, Xxxxxxxxxxxx, XX
- Size: 32,213 square feet
- Security Interest: First priority lien to U.S. Bank National
Association; Second priority lien to The CIT Group/Business Credit,
Inc.
5. Sand Springs Railway Transload Facility
- Address: 0000 Xxxxx 00xx Xxxx Xxxxxx, Xxxxx, XX 00000
- Size: 68,772 square feet
- Security Interest: First priority lien to U.S. Bank National
Association; Second priority lien to The CIT Group/Business Credit,
Inc.
6. Sand Springs Railway Maintenance Facility
- Address: 125 AE. Xxxxxx Xxxx, Xxxx Xxxxxxx, XX 00000
000 X. Xxxxxx Xxxx, Xxxx Xxxxxxx, XX 00000
- Size: 44,778 square feet
- Security Interest: First priority lien to U.S. Bank National
Association; Second priority lien to The CIT Group/Business Credit,
Inc.
7. Sand Springs Railway Track (Owned and possessed under a right of way)
- Address: Located between Tulsa, OK and Sand Springs, OK
- Size: 32 miles of yard track
- Security Interest: First priority lien to U.S. Bank National
Association; Second priority lien to The CIT Group/Business Credit,
Inc.
10
PRIVILEGED & CONFIDENTIAL
8. Sand Springs Railway (Warehouse)
- Address: 000 X. Xxxxxx Xxxx, Xxxx Xxxxxxx, XX 00000
- Size: 6000 square feet
- Security Interest: First priority security interest CIT Group/Business
Credit, Inc.; Subordinated security interest U.S. Bank National
Association
11
PRIVILEGED & CONFIDENTIAL
SECTION 2.12
REAL PROPERTY LEASES
1. Lease Agreement dated February 1, 1993 between Sand Springs Home and
Sheffield, as successor in interest to Wellington Industries, Inc., as
amended by the Renewal Extension Agreement dated as of February 1, 1998, as
further amended by the Renewal Extension Agreement dated January 20, 2003
- Address: 000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxxxxx, XX
- Expiration: [omitted]
- Rent: [omitted]
- Extension/expansion options: [omitted]
2. Sanitary District Lease
- Address: Xxx Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000 (Parcel of land
between building and river)
- Expiration: [omitted]
- Rent: [omitted]
- Extension/expansion options: [omitted]
3. Sanitary District Sublease with Xxxxxx Industries, Inc.
- Address: Xxx Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000 (Parcel of land
between building and river)
- Expiration: [omitted]
- Rent: [omitted]
- Extension/expansion options: [omitted]
4. Team Rebar Kansas City Facility
- Address: 0000 Xxxxxxxx Xxxxxxxxxx, Xxxxxx Xxxx, XX, 00000
- Expiration: [omitted]
- Rent: [omitted]
- Extension/expansion options: [omitted]
12
PRIVILEGED & CONFIDENTIAL
SECTION 2.13(A)
INTELLECTUAL PROPERTY
None.
13
PRIVILEGED & CONFIDENTIAL
SECTION 2.13(B)
INTELLECTUAL PROPERTY
None.
14
PRIVILEGED & CONFIDENTIAL
SECTION 2.14
CONTRACTS
1. Employment Agreement dated August 13, 2004, between Sheffield Steel
Corporation and Xxxxx X. Xxxxx.
2. Employment Agreement dated August 13, 2004 between Sheffield Steel
Corporation and Xxxxx X. Xxxxxxxx
3. Employment Agreement dated August 13, 2004 between Sheffield Steel
Corporation and Xxxxxxx X. Xxxxxxx
4. Employment Agreement dated August 13, 2004 between Sheffield Steel
Corporation and Xxxxxxx Xxxxxx
5. Amended and Restated Financing Agreement dated August 12, 2004 among
Sheffield Steel Corporation, Sand Springs Railway Company, The CIT
Group/Business Credit Inc. and the Lenders party thereto
6. Amended and Restated Pledge and Security Agreement dated August 12, 2004
between Sheffield Steel Corporation and The CIT Group/Business Credit,
Inc., as agent
7. Pledge and Security Agreement dated August 12, 2004 between Sand Springs
Railway Company and The CIT Group/Business Credit, Inc., as agent
8. Contract for Ladle Metallurgical Facility dated September 16, 2005 between
Sheffield Steel Corporation and Voest Alpine Industries, Inc.
9. Electric Service Contracts between Public Service Company of Oklahoma and
Sheffield Steel Corporation, as amended by Second Addendum dated December
1, 2005
10. Natural Gas Agency Agreement dated effective November 1, 2004 between
Constellation NewEnergy - Gas Division, LLC and Sheffield Steel Corporation
11. Master Gas Sale and Transportation Contract date effective November 1, 2004
between Constellation NewEnergy - Gas Division, LLC and Sheffield Steel
Corporation, along with Transaction Confirmation dated August 10, 2005
12. Gas Transportation Agreement dated November 24, 2004 between Oklahoma
Natural Gas Company and Sheffield Steel Corporation
13. Agreement dated March 1, 2003 between Sheffield Steel Corporation and Sand
Springs Metal Processing Corp.
14. Indenture dated as of August 12, 2004 among Sheffield Steel Corporation, as
issuer, the Guarantors named therein, and U.S. Bank National Association,
as Trustee and as Collateral Agent, as amended
15
PRIVILEGED & CONFIDENTIAL
15. Security Agreement dated August 12, 2004 between Sheffield Steel
Corporation, Sand Springs Railway Company and US Bank National Association
16. Intercreditor Agreement dated August 12, 2005 between Sheffield Steel
Corporation, Sand Springs Railway Company and US Bank National Association,
as Collateral Agent and The CIT Group/Business Credit, Inc., as Financing
Agent
16
PRIVILEGED & CONFIDENTIAL
SECTION 2.16
INSURANCE
1. [omitted]
2. [omitted]
3. [omitted]
4. [omitted]
5. [omitted]
6. [omitted]
7. [omitted]
8. [omitted]
9. [omitted]
10. [omitted]
11. [omitted]
17
PRIVILEGED & CONFIDENTIAL
SECTION 2.17
LITIGATION
1. [omitted]
18
PRIVILEGED & CONFIDENTIAL
SECTION 2.18(A)
EMPLOYEES
EMPLOYEE SALARY POSITION
-------- ------ --------
[omitted] [omitted] [omitted]
PRIVILEGED & CONFIDENTIAL
EMPLOYEE SALARY POSITION
-------- ------ --------
[omitted] [omitted] [omitted]
20
PRIVILEGED & CONFIDENTIAL
EMPLOYEE SALARY POSITION
-------- ------ --------
[omitted] [omitted] [omitted]
21
PRIVILEGED & CONFIDENTIAL
SECTION 2.18(B)
EMPLOYEES
1. Agreement dated May 8, 2004 between Sheffield Steel Corporation - Joliet
and United Steelworkers of America Local No. 9777-29 (expired February 1,
2006)
2. Agreement dated March 2, 2004 between Sheffield Steel Corporation - Sand
Springs Division and United Steelworkers of America Local No. 2741 (expired
March 2, 2006)
3. Agreement dated November 1, 1999 between Sheffield Steel Corporation and
United Steelworkers of America (Kansas City) (expired October 31, 2003)
4. Memorandum of Agreement dated October 1, 2002 between Sand Springs Railway
Company and the Brotherhood of Maintenance of Way Employees
5. Memorandum of Agreement dated July 1, 1998 between Sand Springs Railway
Company and Brotherhood of Locomotive Engineers
6. Memorandum of Agreement dated December 15, 1996 between Sand Springs
Railway Company and the United Transportation Union
22
PRIVILEGED & CONFIDENTIAL
SECTION 2.19(A)
EMPLOYEE BENEFITS
1. Group Medical, Dental, and Vision Benefits Plan for Hourly Associates of
Sheffield Steel Corporation Joliet Division, Effective December 1, 2003
2. Group Medical, Dental, and Vision Benefits Plan for Salary Associates of
Sheffield Steel Corporation Joliet Division, Effective December 1, 2003
3. Group Medical, Dental, and Vision Benefits Plan for Sheffield Steel
Corporation Kansas City Fabrication Shop Employees, Effective December 1,
2003
4. Group Medical, Dental, and Vision Benefits Plan for Sheffield Steel
Corporation Team Rebar (Hired from May 1, 1998, Effective December 1, 2003
5. Group Medical, Dental, and Vision Benefits Plan for Sheffield Steel
Corporation Kansas City Division (Hired prior to May 1, 1998), Effective
December 1, 2003
6. Group Insurance Plan for Hourly Retired Associates (Medicare and
Non-Medicare Coverage) Sand Springs Division, Effective December 31, 2003
7. Group Insurance Plan for Salary Retired Associates (Medicare and
Non-Medicare Coverage) Sand Springs Division, Effective December 31, 2003
8. Group Medical, Dental, and Vision Benefits Plan for Hourly Associates of
Sheffield Steel Corporation Sand Springs Division, Effective December 1,
2003
9. Group Medical, Dental, and Vision Benefits Plan for Salaried Associates of
Sheffield Steel Corporation Sand Springs Division, Effective December 1,
2003
10. Employee Group Benefits Underwritten by Sunlife Assurance Company of Canada
Sheffield Steel Corporation Kansas City Salary Exempt Employees Hired prior
to May 1, 1998, Effective January 1, 2001
11. Employee Group Benefits Underwritten by Sunlife Assurance Company of Canada
Sheffield Steel Corporation Joliet Hourly Employees, Effective January 1,
2001
12. Employee Group Benefits Underwritten by Sunlife Assurance Company of Canada
Sheffield Steel Corporation Joliet Salaried Employees, Effective January 1,
2001
13. Employee Group Benefits Underwritten by Sunlife Assurance Company of Canada
Sheffield Steel Corporation Kansas City Hourly Employees, Effective January
1, 2001
14. Employee Group Benefits Underwritten by Sunlife Assurance Company of Canada
Sheffield Steel Corporation Kansas City Salary Exempt Employees Hired after
May 1, 1998, Effective January 1, 2001
23
PRIVILEGED & CONFIDENTIAL
15. Employee Group Benefits Underwritten by Sunlife Assurance Company of Canada
Sheffield Steel Corporation Kansas City Non-Exempt Salaried Employees Hired
prior to May 1, 1998, Effective January 1, 2001
16. Employee Group Benefits Underwritten by Sunlife Assurance Company of Canada
Sheffield Steel Corporation Kansas City Non-Exempt Salaried Employees Hired
after May 1, 1998, Effective January 1, 2001
17. Employee Group Benefits Underwritten by Sunlife Assurance Company of Canada
Sheffield Steel Corporation Sand Springs Railway Salary Non-Exempt
Employees, Effective January 1, 2001
18. Employee Group Benefits Underwritten by Sunlife Assurance Company of Canada
Sheffield Steel Corporation Xxxxxxx Salary and Hourly, Effective January 1,
2001
19. Life Insurance Summary Sheet
20. Employee Group Benefits Underwritten by Sunlife Assurance Company of Canada
Sheffield Steel Corporation Sand Springs Railway Salaried Exempt Employees,
Effective January 1, 2001
21. Salary Continuation Program Summary
22. Weekly Sickness & Accident Summary
23. Group Long Term Disability Plan, Effective April 1, 2003
24. Dependent Care and Medical Reimbursement Plan - Summary Plan Description
25. 401(k) Retirement Plan - Sand Springs Hourly Employees, Effective January
1, 2002
26. Joliet Savings Plan, Effective January 1, 2002 (401(k))
27. Sand Springs Hourly Employees 401(k) Plan
28. Sand Springs Salaried Exempt and Non-Exempt Employees 401(k) Plan
29. Pension Agreement between Sheffield Steel Corporation and United Steel
Workers of America on behalf of Members Local Union #2741 Hired On or After
May 1, 1988, Summary Plan Description, dated January 1, 2005
30. Pension Agreement between Sheffield Steel Corporation and United Steel
Workers of America on behalf of Members Local Union #2741 Hired Prior to
May 1, 1988, Summary Plan Description, dated January 1, 2005
31. Sheffield Steel Corporation Joliet Pension Agreement between Sheffield
Steel Corporation-Joliet and United Steel Workers of America On Behalf of
Local No.2, as applicable to Employees Hired On or After September 1, 1986,
dated January 1, 2005
24
PRIVILEGED & CONFIDENTIAL
32. Sheffield Steel Corporation Joliet Pension Agreement between Sheffield
Steel Corporation-Joliet and United Steel Workers of America On Behalf of
Local No.2, as applicable to Employees Prior to September 1, 1986, dated
January 1, 2005
33. Retirement Plan for Employees of Sheffield Steel Corporation, as applicable
to Salaried Employees Hired on or After May 1, 1988, Summary Plan
Description, dated January 1, 2005
34. Retirement Plan for Employees of Sheffield Steel Corporation, as applicable
to Salaried Employees Prior to May 1, 1988, Summary Plan Description, dated
January 1, 2005
35. Employee Assistance Program - Summary
36. Supplemental Unemployment Benefit Plan for Hourly Employees Pursuant to
Agreement with United Steel Workers of America in Behalf of Members of
Local Union 2741, Effective March 2, 1997
37. Tuition Refund Program - Summary
38. UNUM Life Insurance Company of America Group Life and Accidental Death and
Dismemberment Plan for Sheffield Steel Corporation Joliet (Identification
Number 551381 021), dated May 1, 2005
39. UNUM Life Insurance Company of America Group Life and Accidental Death and
Dismemberment Plan for Sheffield Steel Corporation Kansas City
(Identification Number 551381 031), dated May 1, 2005
40. UNUM Life Insurance Company of America Group Life and Accidental Death and
Dismemberment Plan for Sheffield Steel Corporation Sand Springs
(Identification Number 551381 011), dated May 1, 2005
41. Sheffield Steel Corporation Incentive Plan for Melt Shop, Rolling Mill,
Salaried Employees
42. Sheffield Steel Corporation Incentive Plan for Post Shop
43. Sheffield Steel Corporation Incentive Plan pursuant to Article XIII of
Collective Bargaining Agreement dated Sheffield Steel Corporation-Joliet
and United Steelworkers of America, Effective May 8, 2004 to January 31,
2006
44. Sheffield Steel Corporation Profit Sharing Plan for All Active Permanent
Employees-Sand Spring Division dated March 2, 2004
45. Kansas City Black Bar Bending & Shearing Incentive Plan dated January
15, 1986
46. Kansas City Fabricated Epoxy-Coated Rebar Incentive Plan dated January
29, 1986
47. Kansas City Epoxy Coating Line Incentive Plan dated July 3, 1996
25
PRIVILEGED & CONFIDENTIAL
SECTION 2.19(E)
EMPLOYEE BENEFITS
None.
26
PRIVILEGED & CONFIDENTIAL
SECTION 2.20(A)
ENVIRONMENTAL MATTERS
1. [omitted]
2. [omitted]
3. [omitted]
4. [omitted]
5. [omitted]
6. [omitted]
a. [omitted]
b. [omitted]
7. [omitted]
8. [omitted]
9. [omitted]
10. [omitted]
27
PRIVILEGED & CONFIDENTIAL
11. [omitted]
12. [omitted]
13. [omitted]
14. [omitted]
15. [omitted]
16. [omitted]
17. [omitted]
18. [omitted]
19. [omitted]
20. [omitted]
21. [omitted]
22. [omitted]
23. [omitted]
24. [omitted]
25. [omitted]
28
PRIVILEGED & CONFIDENTIAL
26. [omitted]
27. [omitted]
28. [omitted]
29. [omitted]
30. [omitted]
31. [omitted]
32. [omitted]
33. [omitted]
34. [omitted]
35. [omitted]
36. [omitted]
37. [omitted]
38. [omitted]
39. [omitted]
40. [omitted]
41. [omitted]
42. [omitted]
43. [omitted]
29
PRIVILEGED & CONFIDENTIAL
44. [omitted]
45. [omitted]
46. [omitted]
47. [omitted]
48. [omitted]
49. [omitted]
50. [omitted]
51. [omitted]
52. [omitted]
53. [omitted]
54. [omitted]
55. [omitted]
56. [omitted]
57. [omitted]
58. [omitted]
30
PRIVILEGED & CONFIDENTIAL
SECTION 2.20(B)
ENVIRONMENTAL MATTERS
(vi)
1. [omitted]
(vii)
1. [omitted]
31
PRIVILEGED & CONFIDENTIAL
SECTION 2.22
PERMITS
1. Sheffield Steel Corporation
0000 X. Xxxxxxx 00
Xxxx Xxxxxxx, Xxxxxxxx 00000
a. Air Quality Permit Number (Title V) 2002-019-TVR
Originally Issued: March 17, 1998
Expired: March 17, 2003
Permit Renewal Application Applied for on September 4, 2002
Re-issued: October 6, 2003
New Expiration date: October 6, 2008
b. OPDES Storm Water Permit XXXX00000
Issued: February 8, 2000
Expires: October 2, 2005
(Oklahoma Department of Environmental Quality has administratively
extended the permit while the EPA is in the process of revising
the regulations.)
c. Oklahoma Controlled Industrial Waste Disposal Plan Number 72191
d. D.O.T. Hazardous Materials Certificate Registration 063003008045LN
Issued: July 2, 2003
Expires: June 30, 2006
e. Oklahoma Fuel Storage Tank Permit Owner I.D.: 5678
Facility Number: 7205717
Issued: October 1, 2005
Expires: September 30, 2006
f. City of Sand Springs Industrial Discharge Permit Number 389
Issued June 29, 1990 (Annual Renewal)
Permit No Longer Required by City of Sand Springs, Oklahoma
De-permitting letter dated: August 31, 1992
32
PRIVILEGED & CONFIDENTIAL
2. Sheffield Steel Corporation
0 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
a. Air Quality Permit Number Lifetime Operating Permit 197809ABK
Issued: February 16, 1999
Expires: 180 days after Illinois Environmental Protection Agency
renewal, request.
b. General NPDES Permit for Industrial Storm Water ILR002676
Issued: June 1, 1998
Expired on May 31, 2003
Renewal Date June 1, 2003 and automatically renewed unless otherwise
requested.
c. Illinois Environmental Protection Agency Water Pollution Control
Permit 2001-EO-3462
Operation of closed loop cooling water system.
Issued: June 26, 2001
Expires: May 31, 2006
33
PRIVILEGED & CONFIDENTIAL
SECTION 2.24
BROKERS' FEES
1. Fee of Lane, Xxxxx & Co. International, LLC: $2,029,750.00
34
PRIVILEGED & CONFIDENTIAL
SECTION 2.25
BOOKS AND RECORDS
1. Sheffield Steel Corporation:
a. [omitted]
b. [omitted]
c. [omitted]
d. [omitted]
e. [omitted]
f. [omitted]
g. [omitted]
h. [omitted]
i. [omitted]
j. [omitted]
k. [omitted]
l. [omitted]
35
PRIVILEGED & CONFIDENTIAL
m. [omitted]
2. Sand Springs Railway Company:
a. [omitted]
b. [omitted]
36
