Exhibit 2.1
AGREEMENT
THIS AGREEMENT is made and entered into as of the 28th day of January, 2002
(the "Effective Date"), by and among IRON DYNAMICS, INC., an Indiana corporation
("IDI"), STEEL DYNAMICS, INC., an Indiana corporation ("SDI"), the lender banks
who are parties to this Agreement (the "IDI Lenders") and MELLON BANK, N. A., as
Agent for the IDI Lenders under the IDI Credit Agreement referred to below (the
"Agent"), under the following circumstances:
A. IDI, the IDI Lenders and the Agent are parties to that certain Credit
Agreement dated as of December 31, 1997, as amended by the Amendment and
Waiver, dated as of June 10, 1998, the Second Amendment to Credit
Agreement, dated as of March 15, 1999, the Third Amendment and Waiver to
Credit Agreement, dated as of June 30, 1999, the Fourth Amendment to Credit
Agreement, dated as of December 21, 1999, the Fifth Amendment and Waiver to
Credit Agreement, dated as of March 29, 2000, the Sixth Amendment to Credit
Agreement, dated as of November 30, 2000, the Seventh Amendment to Credit
Agreement, dated as of March 15, 2001 and the Eighth Amendment to Credit
Agreement dated as of July 20, 2001 (as so amended, the "IDI Credit
Agreement"), pursuant to which the IDI Lenders have extended credit to IDI.
B. SDI as borrower, the IDI Lenders together with certain other lender banks
not parties to this Agreement (collectively the "SDI Lenders") and Mellon
Bank, N.A. as agent for the IDI Lenders are parties to that certain Credit
Agreement (Amended and Restated), dated as of June 30, 1994 and amended and
restated as of June 30, 1997 (as so amended and restated, and as further
amended by the First, Second, Third and Fourth Amendments thereto dated as
of May 4, 1998, March 1, 2000, March 15, 2001 and July 20, 2001,
respectively, the "SDI Credit Agreement"), pursuant to which the SDI
Lenders have extended credit to SDI.
C. SDI as borrower, Kreditanstalt Fur Wiederaufbau and GE Capital CFE, Inc. as
lenders (collectively the "SDI Unsecured Lenders") and Mellon Bank, N.A.,
as agent for the SDI Unsecured Lenders are parties to that certain Credit
Agreement dated as of May 5, 2000, as amended as of March 15, 2001, as
modified by the Consent and Agreement dated as of July 10, 2001, and as
further amended by a Second Amendment dated as of July 20, 2001 (as so
amended the "SDI Unsecured Credit Agreement"), pursuant to which the SDI
Unsecured Lenders have extended credit to SDI.
D. Effective December 31, 2001, SDI was in violation of the leverage ratio
covenant contained in the SDI Credit Agreement and in the SDI Unsecured
Credit Agreement, and SDI has requested the SDI Lenders (including the IDI
Lenders), the SDI Unsecured Lenders and the Agent to execute and deliver a
Fifth Amendment to Credit Agreement and Limited Waiver ("Fifth Amendment
and Waiver") and a Third Amendment to Unsecured Credit Agreement and
Limited Waiver ("Third Amendment and Waiver"), respectively (the Fifth
Amendment and Waiver and the Third Amendment and Waiver
are collectively referred to herein as the "Waivers") in the forms attached
hereto as Exhibit "A" and Exhibit "B."
E. The IDI Lenders and the SDI Unsecured Lenders have agreed to execute and
deliver the Waivers subject to, and in consideration of the performance by
IDI and SDI of the agreements set forth in this Agreement.
NOW, THEREFORE, in consideration of the covenants and promises herein, the
parties agree as follows:
1. SDI, the IDI Lenders and the Agent agree to execute and deliver the
Fifth Amendment and Waiver on the Effective Date, and SDI, the SDI Unsecured
Lenders and the Agent agree to execute and deliver the Third Amendment and
Waiver on said Effective Date.
2. SDI agrees to execute and deliver to the IDI Lenders a Guaranty and
Suretyship Agreement in the form attached hereto as Exhibit "C" (the "2002
Guaranty") on the Effective Date.
3. SDI shall pay, or shall cause IDI to pay, to the IDI Lenders the sum of
Fifteen Million Dollars ($15,000,000) in cash on February 1, 2002, such amount
to be applied ratably to the outstanding principal balance of Loans under the
IDI Credit Agreement. With respect to the 2002 Guaranty, the Guaranty and
Suretyship Agreement dated as of July 20, 2001 and the Guaranty and Suretyship
Agreement dated as of March 15, 2001 (collectively the "SDI Guaranties"), in
each case made by SDI in favor of the IDI Lenders, the $15 million payment made
pursuant to the immediately preceding sentence shall be deemed to apply to
installments of Loans under the IDI Credit Agreement so as to reduce the
liability of SDI under the SDI Guaranties in an aggregate amount of $15 million.
4. SDI shall deliver to the IDI Lenders on a pro rata basis determined in
accordance with each IDI Lender's proportionate share of the total Commitments
under the IDI Credit Agreement, SDI common stock which shall be covered by an
effective "resale shelf" registration statement to be filed by SDI on XXX Xxxx
X-0, at the times, in the amounts and subject to the following provisions:
a. On each of March 1, 2002, March 15, 2002 and March 29, 2002, SDI will
issue to the IDI Lenders the number of shares of its common stock
determined by dividing the closing price of SDI stock on the NASDAQ
National Market on the second business day prior to each of said three
issue dates, into $7,333,334, and rounding up to the next whole number
of shares.
b. SDI will maintain the effectiveness of the registration statement for
the maximum period of time permitted by SEC Rule 415 (a)(2), namely
two years from and after the initial effective date of the
registration statement in March, 2002, subject to earlier termination
if and when all of the shares issued to the IDI Lenders have been
sold; provided, however, that in the event that, at any time during
the effectiveness of the shelf registration statement, SDI shall have
elected to register
2
a primary equity offering of its own, as contemplated by Paragraph 4d,
SDI shall be entitled, upon not less than 10-days written notice to
the IDI Lenders, to discontinue the effectiveness of the shelf
registration statement and to require the IDI Lenders to discontinue
any sales of SDI shares pursuant to the shelf registration statement,
for such period, if any, as may be required in order to enable SDI to
lawfully effect such transaction (but such period shall in no event be
longer than 90 days or commence prior to June 15, 2002), following
which the effectiveness of the registration statement shall be
reinstated and the IDI Lenders shall be entitled to resume their sales
pursuant thereto. It shall be SDI's responsibility to notify the IDI
Lenders when, if at all, such sales must be discontinued and when they
may be resumed consistent with the foregoing limitations.
c. Each IDI Lender may sell any or all of the SDI shares it receives
pursuant to subparagraph 4a above, provided, however, that during the
period commencing on March 1, 2002 and ending on May 31, 2002 (the
"Restriction Period"), the IDI Lenders shall not sell, in aggregate,
more than 30,000 shares on any single trading day ("trading day" being
defined to mean any day the NASDAQ national market is open for
business), excluding any exempt private off the market transactions.
d. If SDI should elect to register a primary equity offering of its own,
SDI will afford to those IDI Lenders wishing to avail themselves of
the opportunity, "piggyback" registration rights to sell a portion or
all of their remaining SDI shares in connection with such offering, it
being understood that such opportunity shall be elective with each IDI
Lender. Following such offering, any IDI Lender having remaining SDI
shares shall be entitled to resume selling such shares pursuant the
shelf registration statement in the manner contemplated in Paragraph
4b.
e. Each IDI Lender agrees to notify SDI in writing, following each sale
by such IDI Lender of SDI shares, of the number of shares so sold and
the date of each such sale.
f. In connection with the issuance of the SDI shares described in
Paragraph 4a and the "resale shelf" registration statement to be
effected by SDI in connection therewith, SDI shall deliver or cause to
be delivered to the IDI Lenders, dated concurrently with the delivery
of the SDI shares and the effectiveness of the registration statement,
addressed to each IDI Lender, a legal opinion in substantially the
form attached hereto as Exhibit "D".
g. The IDI Lenders, the Agent and SDI each agree to execute and deliver a
registration rights agreement (the "Registration Rights Agreement") in
the form attached hereto as Exhibit "E" not later than February 28,
2002.
5. In the event that SDI should determine at some future date, in its sole
discretion, to re-start the IDI facility (whether as a subsidiary corporation of
SDI or as an operating division of
3
SDI) and in the further event that operations at the IDI facility generate
positive EBITDA ("IDI EBITDA") (as defined below) in any fiscal year, then
within 30 days after the end of such fiscal year, SDI shall pay to the IDI
Lenders, pro rata in accordance with the calculation contemplated by Paragraph
4, an amount equal to 50% of (i) such IDI EBITDA, minus (ii) any accrued income
tax liability of SDI as a result of such IDI EBITDA (herein "Additional Bank
Payments"), and such Additional Bank Payments shall continue until such time as
the IDI Lenders shall have received an aggregate dollar amount equal to
$21,986,841. The transfer price to be paid by SDI to IDI for the product
produced at the IDI facility shall be set quarterly in an amount equal to the
6-week average price for pig iron (RN Steel-Making Grade) as published in the
most recent issue of Ryan's Notes, a bi-weekly publication of ferrous and
non-ferrous news and prices.
For purposes of this Paragraph 0, xxx xxxx "XXX XXXXXX" means in any fiscal
year of IDI (or in any fiscal year of SDI should IDI become an operating
division of SDI rather than remaining a subsidiary of SDI), IDI's earnings
before interest, taxes, depreciation and amortization, determined in accordance
with generally accepted accounting principles, consistently applied, calculated,
and certified to the IDI Lenders by, an officer of SDI. IDI EBITDA shall not be
affected by any "extraordinary items" (as that term is defined by GAAP) of gain
or loss, nor shall IDI EBITDA be affected by the gain or loss from the sale of
assets not in the ordinary course of business that does not constitute an
"extraordinary item" of gain or loss as defined by GAAP. It is further
understood and agreed that for purposes of determining IDI EBITDA, any costs
incurred by SDI on behalf of IDI for the services described in Schedule 1 to
that certain Administration Agreement between SDI and IDI dated as of June 10,
1998 ("Administration Agreement"), will be allocated to IDI on the basis of the
actual costs of such services, without markup, consistent with the past practice
of SDI and IDI prior to the date hereof under the Administration Agreement. If
SDI does re-start the IDI facility, the IDI Lenders shall have the right to
examine IDI's books and records at any reasonable time during normal business
hours, having first given SDI at least 48 hours advance notice, and the IDI
Lenders shall have the right, at their own expense, to cause outside consultants
or auditors selected by the IDI Lenders to examine and/or audit such books and
records at any reasonable time during normal business hours having first given
SDI 7 days advance notice. In addition, if SDI re-starts the IDI facility, SDI
agrees to provide to the IDI Lenders from and after the date of such re-start,
and for so long thereafter as the IDI facility remains in operation, quarterly
internally prepared consolidating statements of income, cash flows and changes
in stockholders' equity of IDI for such fiscal quarter and for the period from
the beginning of the fiscal year to the end of such fiscal quarter and
internally prepared consolidating balance sheets of IDI as of the close of such
fiscal quarter, and notes to each, in each case which would be required to be
included in a Form 10-Q quarterly report if IDI were required to file such a
report under the Securities Exchange Act of 1934, all in reasonable detail,
setting forth in comparative form the corresponding figures for the same periods
or as of the same date during the preceding fiscal year (except for the balance
sheet, which shall set forth in comparative form the corresponding balance sheet
as of the prior fiscal year end). Such financial statements shall be certified
by an officer of SDI as presenting fairly in all material respects the financial
position of IDI as of the end of such fiscal quarter and the results of
operations and cash flows and changes in stockholders' equity for such fiscal
year, in conformity with GAAP, subject to normal and recurring year-end
adjustments.
4
SDI agrees that the IDI facility shall continue to be owned at all times by
IDI as a subsidiary of SDI or by SDI, in which case the IDI facility shall be an
operating division of SDI. If SDI does not re-start and operate the IDI facility
(whether as a subsidiary corporation to SDI or as an operating division of SDI)
within five (5) years from the Effective Date, then on the fifth anniversary of
the Effective Date, SDI's obligations to make Additional Bank Payments under
this Paragraph 5 shall terminate, and SDI and IDI shall have no further
obligations under this Agreement.
6. Following the payment referenced in Paragraph 3 above, IDI shall no
longer be obligated to make its regularly scheduled revolving loan principal
installment of $421,052.63 on February 28, 2002. IDI agrees to continue making
monthly interest payments on the outstanding principal amount due under the IDI
Credit Agreement (as reduced by the payments contemplated in Paragraphs 3 and 4
above) through March 29, 2002. From and after March 29, 2002, upon compliance by
SDI and IDI with all other obligations to be performed by them on or prior to
such date under Paragraphs 1, 2, 3, 4a, 4b, 4f and 4g, no further interest
payments shall be made to the IDI Lenders. The payments referenced in Paragraphs
3 and 4 above shall constitute full and final settlement of (i) all of IDI's
obligations and liabilities to the IDI Lenders under the IDI Credit Agreement,
and (ii) all of SDI's obligations to the IDI Lenders under any existing
guaranties of the IDI Indebtedness, including, without limitation, the Amended
Guaranty referred to in Paragraph 2 above, subject only to SDI's obligation to
make Additional Bank Payments as contemplated in Paragraph 5 above.
Upon the issuance by SDI of the final installment of its shares to the IDI
Lenders on March 29, 2002 as contemplated in Paragraph 4a, and compliance by SDI
and IDI with all other obligations to be performed by them on or prior to such
date under Paragraphs 1, 2, 3, 4b, 4f and 4g, the IDI Credit Agreement and all
related security agreements, and all SDI Guaranties will terminate, all security
interests held by the Agent for the benefit of the IDI Lenders will be released,
and all promissory notes executed by IDI in favor of the IDI Lenders pursuant to
the IDI Credit Agreement will be returned to IDI marked paid in full.
7. SDI agrees that all of its obligations under this Agreement shall be
permitted obligations under any subsequent credit agreement to which it may be a
party in connection with the refinancing of SDI's bank debt currently held by
the SDI Lenders and the SDI Unsecured Lenders, respectively. SDI and IDI also
agree that they will not enter into any agreement that would prohibit SDI or IDI
from performing its obligations hereunder.
8. Each of the Agent and the IDI Lenders agrees to keep confidential any
information relating to IDI or to IDI operations received by it pursuant to or
in connection with this Agreement which is (a) trade information which the Agent
and the IDI Lenders reasonably expect that IDI would want to keep confidential,
(b) technical information with respect to the equipment or operations of the IDI
facility, (c) information contained in any contracts to which IDI is a party and
which have been provided to the IDI Lenders, (d) financial or environmental
information or (e) information which is clearly marked "CONFIDENTIAL"; provided,
however, that this Paragraph 8 shall not be construed to prevent the Agent or
any IDI Lender from disclosing such information (i) to any Affiliate (as that
term is defined in the IDI Credit
5
Agreement) or advisor that shall agree to be bound by this obligation of
confidentiality, (ii) upon the order of any court or administrative agency of
competent jurisdiction, (iii) upon the request or demand of any regulatory
agency or authority having jurisdiction over the Agent or such IDI Lender
(whether or not such request or demand has the force of law), (iv) that has been
publicly disclosed, other than from a breach of this provision by the Agent or
any IDI Lender, (v) that has been obtained from any person that is neither a
party to this Agreement nor an Affiliate of any such party or (vi) as expressly
contemplated by this Agreement. SDI and IDI acknowledge that representatives of
the IDI Lenders may visit the IDI facility and collect information relating to
IDI operations, subject to the terms of this Paragraph 8.
9. No amendment to or waiver of any provision of this Agreement shall in
any event be effective unless in a writing manually signed by SDI, IDI, the
Agent and all of the IDI Lenders. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
10. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns, provided however
that SDI may not assign or delegate its obligations hereunder or duties
hereunder without the written consent of all of the IDI Lenders (which, in the
case of a business combination involving SDI, shall not be unreasonably
withheld).
11. SDI agrees that the costs and expenses of the IDI Lenders and the Agent
(including reasonable attorneys' fees) incurred by them in connection with the
negotiation, execution, delivery, and performance of this Agreement through the
date of release of security interests in IDI assets as contemplated in Paragraph
6 shall be deemed to be costs and expenses of the Agent and the IDI Lenders
reimbursable under the SDI Credit Agreement and shall be reimbursed accordingly.
12. This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
13. This Agreement shall be deemed to be a contract under the laws of the
State of New York and for all purposes shall be governed by and construed and
enforced in accordance with the laws of said State.
6
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed and delivered this Amendment as of the date first
above written.
IRON DYNAMICS, INC.
By /s/ Xxxxx X. Xxxxx
------------------------------------
Title: President & Chief
Executive Officer
STEEL DYNAMICS, INC.
By /s/ Xxxxx X. Xxxxx
------------------------------------
Title: President & Chief
Executive Officer
MELLON BANK, N.A., as Agent
By /s/ Xxxxx X. Xxxxxxx
------------------------------------
Title: Vice President
GE CAPITAL CFE, INC.
By /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Title: Duly Authorized Signatory
KREDITANSTALT FUR WIEDERAUFBAU
By /s/ Xxxxxx Xxxxxxx
------------------------------------
Title: First Vice President
By /s/ Xxxxxxx Xxx
------------------------------------
Title: Vice President
7
COMERICA BANK
By /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Title: First Vice President
NATIONAL CITY BANK, INDIANA
By /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Title: Senior Vice President
LASALLE BANK NATIONAL ASSOCIATION
By /s/ Xxxxx Xxxxxxxx
------------------------------------
Title: Group Senior Vice
President
8
