EXHIBIT 2.1
AMENDMENT NO. 1 dated as of July 27, 1998
(this "Amendment") to the AGREEMENT AND PLAN OF
---------
MERGER (the "Original Agreement" and, as amended,
------------------
this "Agreement") dated as of June 23, 1998, by
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and among PALESTRA ACQUISITION CORP., a Delaware
corporation ("Purchaser"), CHEMICAL XXXXXX
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CORPORATION, a Pennsylvania corporation (the
"Company"), and THE SHAREHOLDERS OF THE COMPANY
--------
NAMED ON SCHEDULE I ATTACHED TO THE ORIGINAL
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AGREEMENT (each, a "Shareholder", and
-----------
collectively, the "Shareholders"). Capitalized
------------
term used but not defined herein shall have the
meanings ascribed to them in the Original
Agreement.
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving this Amendment and the transactions to which the Company is a party
contemplated hereby, and has agreed, upon the terms and subject to the
conditions set forth herein, to recommend that the Company's shareholders
approve this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual benefits to
be derived from this Amendment and the representations, warranties, covenants,
agreements and conditions hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE I
AMENDMENTS
1.1 PURCHASE PRICE; EFFECT ON CAPITAL STOCK.
---------------------------------------
(a) Annex I to the Original Agreement is hereby amended by deleting
the definition of "Merger Consideration" and replacing it with the following:
""Merger Consideration" means the sum of (i) the Aggregate Cash
--------------------
Merger Consideration plus (ii) shares of New Preferred Stock having a
stated value equal to $5 million."
(b) Annex I to the Original Agreement is hereby amended by adding the
following thereto:
""Aggregate Cash Merger Consideration" means $72,800,000.
-----------------------------------
(c) Annex I to the Original Agreement is hereby amended by adding the
following thereto:
"New Preferred Stock" means shares of the Preferred Stock of MTL,
-------------------
the designations, rights and preferences of which are more
particularly described on Exhibit 2.1(b) hereto.
--------------
(d) Section 2.1(a) of the Original Agreement is hereby amended by
adding the following new sentence to the end thereof:
"Notwithstanding anything to the contrary contained in this
Agreement or in any Employment Agreement, the Purchaser shall be
obligated to pay in cash to the Shareholders an amount equal to but
not more than (i) the Aggregate Cash Merger Consideration, less (ii)
the product of (A) the aggregate number of Merger Shares that are to
be converted into MTL Stock pursuant to Section 2.1(c) and the
applicable Employment Agreements multiplied by (B) a fraction, the
numerator of which shall be the Merger Consideration less the Net
Transaction Expenses, and the denominator of which shall be the Merger
Share Number (the "MTL Stock Amount"), less (iii) the Net Transaction
----------------
Expenses."
(e) Sections 2.1(b)(iii), (iv) and (v) of the Original Agreement are
each hereby deleted in their entirety and shall be collectively replaced with
the following:
"(iii) the Merger Shares held by each Shareholder (other than
the Merger Shares that are to be converted into shares of MTL Stock)
shall, by virtue of the Merger and without any action on the part of
any Shareholder, cease to be outstanding and be converted into the
right to receive, subject to the terms and conditions of this
Agreement, (A) shares of New Preferred Stock having a stated value
equal to the product of such Shareholder's Common Equity Percentage
multiplied by $5 million and (B) cash in an amount equal to such
Shareholder's Cash Merger Consideration.
For purposes of the foregoing, "Cash Merger Consideration" means the
-------------------------
following:
(i) in respect of each Shareholder other than Xxxxx X. Xxxxxxxx
and Xxxxx X. Xxxxxxx, an amount equal to (A) the product of such
Shareholder's Common Equity Percentage multiplied by the Aggregate
Cash Merger Consideration, less (B) the product of the Xxxxxxxx
Special Merger Consideration multiplied by such Shareholder's Post
Xxxxxxxx Percentage, less (C) the product of the Xxxxxxx Special
Merger Consideration multiplied by such Shareholder's Post Xxxxxxx
Percentage, less (D) the product of such Shareholder's Percentage of
Merger Consideration multiplied by the Net Transaction Expenses;
(ii) in respect of Xxxxx X. Xxxxxxxx, an amount equal to (A) the
product of Xx. Xxxxxxxx'x Common Equity Percentage multiplied by the
Aggregate Cash Merger Consideration, plus (B) the Xxxxxxxx Special
Merger Consideration, less (C) the product of the Xxxxxxx Special
Merger Consideration multiplied by Xx. Xxxxxxxx'x Post Xxxxxxx
Percentage, less (D) the product of
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Xx. Xxxxxxxx'x Percentage of Merger Consideration multiplied by the
Net Transaction Expenses; and
(iii) in respect of Xxxxx X. Xxxxxxx, an amount equal to (A) the
product of Xx. Xxxxxxx'x Common Equity Percentage multiplied by the
Aggregate Cash Merger Consideration, plus (B) Xxxxxxx Special Merger
Consideration, less (C) the product of the Xxxxxxxx Special Merger
Consideration multiplied by Xx. Xxxxxxx'x Post Xxxxxxxx Percentage,
less (D) the product of Xx. Xxxxxxx'x Percentage of Merger
Consideration multiplied by the Net Transaction Expenses.
For purposes of the foregoing, the "Post Xxxxxxx Percentage" means in
-----------------------
respect of any Shareholder, the total number of Merger Shares held by such
Shareholder divided by the total number of Merger Shares held by all
Shareholders other than Xx. Xxxxxxx."
For purposes of the foregoing, the "Post Xxxxxxxx Percentage" means in
------------------------
respect of any Shareholder, the total number of Merger Shares held by such
Shareholder divided by the total number of Merger Shares held by all
Shareholders other than Xx. Xxxxxxxx."
1.2 DELIVERY OF FUNDS AND CERTIFICATES; SURRENDER OF CERTIFICATES.
-------------------------------------------------------------
(a) Section 2.2(a) of the Original Agreement is hereby amended by
deleting the words the "the funds necessary to pay the Merger Consideration
(taking into account the MTL Stock and subject to any setoffs as set forth in
Section 7.3(g) or Section 7.3(h))" contained therein and replacing such words
with the words "the funds necessary to pay the Aggregate Cash Merger
Consideration, less the Net Transaction Expenses, less the MTL Stock Amount and
less the aggregate amount of all setoffs pursuant to Section 7.3(g) and Section
7.3(h))."
(b) Section 2.2(b) of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
"Each holder of an outstanding certificate or certificates which prior
thereto represented Merger Shares, upon surrender at, or as soon as
practicable after, the Effective Time of the Merger (as the case may
be) to the Transfer Agent of such certificate or certificates
(together with a letter of transmittal signed by such holder in
substantially the form of EXHIBIT A attached hereto), shall be
---------
entitled to the Cash Merger Consideration (subject to any setoffs as
set forth in Section 7.3(g) or Section 7.3(h)) and the shares of New
Preferred Stock into which such Merger Shares previously represented
by such certificate or certificates surrendered shall have been
converted pursuant to this Agreement. The Transfer Agent shall accept
such certificates and such letter of transmittal upon compliance with
such reasonable terms and conditions as the Transfer Agent may impose
to effect an orderly exchange thereof in accordance with normal
practices. After the Effective Time of the Merger, there shall be no
further transfer on the records of the Company or its transfer agent
of certificates representing Merger Shares which have been converted,
in whole or in part, pursuant to this Agreement, into the right to
receive cash, MTL Stock or New
3
Preferred Stock, and if such certificates are presented to the Company
for transfer, they shall be canceled against delivery of such
consideration. If cash or a certificate representing shares of MTL
Stock or New Preferred Stock is to be remitted to a name other than
that in which the certificate for Merger Shares surrendered for
exchange is registered, it shall be a condition of such exchange that
the certificate so surrendered shall be properly endorsed, with
signature guaranteed or otherwise in proper form for transfer. Until
surrendered as contemplated by this Section 2.2(b), each certificate
for Merger Shares shall be deemed at any time after the Effective Time
of the Merger to represent only the right to receive, subject to any
setoffs pursuant to Section 7.3(g) or Section 7.3(h), for each Merger
Share represented thereby upon such surrender, cash, shares of New
Preferred Stock and/or shares of MTL Stock, in the amount determined
pursuant to Section 2.1(b) or the applicable Employment Agreement, as
the case may be."
(c) Section 2.2(d) of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
"(d) All consideration (whether in the form of cash, New Preferred
Stock, MTL Stock or setoff pursuant to Section 7.3(g) or Section 7.3(h))
paid upon surrender of certificates representing Shares in accordance with
the terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Shares so exchanged that were
previously represented by such certificates."
1.3 SETOFFS.
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Sections 7.3(g) and (h) of the Original Agreement are each hereby amended
by deleting the words "any Merger Consideration or other payments" in each such
Section and replacing it in each such Section with the words "Cash Merger
Consideration or other cash payments."
1.4 CONDITIONS.
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Section 7.3(p) of the Original Agreement is hereby amended by deleting
"$4,000,000; provided that, in the Shareholder Representative's sole discretion,
--------
such amount may be increased, at any time prior to two days after Purchaser
delivers a notice that it intends to terminate this Agreement pursuant to
Section 9.1 based upon the condition set forth in this Section 7.3(p) not being
satisfied, to an amount not to exceed $5,000,000 (such excess amount over
$4,000,000, the "Indemnity Cap Adjustment Amount"); it being understood that if
-------------------------------
such amount exceeds $5,000,000, Purchaser shall be under no obligation to effect
the Merger" and replacing it with "$6,500,000."
1.5 INDEMNIFICATION.
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(a) Section 8.6(b) of the Original Agreement is hereby deleted in
its entirety and replaced with the following:
"(b) Indemnity Limitations for the Shareholders. Except as
------------------------------------------
provided herein, the sum of all Losses pursuant to which
indemnification is payable by the
4
Shareholders in the aggregate pursuant to Section 8.1(a)(i) and
Section 8.1(a)(iv) shall not exceed the sum of (i) $8,250,000 (the
"Cap"), plus (ii) an amount equal to the Indemnity Cap Adjustment
--- ----
Amount (as adjusted, the "Adjusted Cap"), and no Shareholder shall be
------------
liable to Purchaser for any amount in excess of the sum of (x) the
Cash Merger Consideration received by such Shareholder (which shall
include for these purposes shares of MTL Stock), plus (y) the stated
value of all shares of New Preferred Stock received by such
Shareholder in connection with the consummation of the Merger (which
shall not include, for purposes hereof, shares issued as a payment-in-
kind dividend); provided, however, that in no event shall the
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limitations set forth in this Section 8.6(b) apply with respect to the
representations and warranties set forth in the Subject R&W or any
claim arising as a result of fraud. Notwithstanding anything else
provided herein or in the Original Agreement, any setoff or reduction
made in respect of the stated value of the New Preferred Stock or any
dividends thereunder shall be included in any calculation of amounts
paid by the shareholders for the purpose of determining the Cap, the
Adjusted Cap and the L/C Cap."
(b) Section 8.7 of the Original Agreement is hereby amended by (i)
deleting the words "Adjusted Cap" each time it appears therein and replacing it
with the words "L/C Cap" and (ii) adding a new sentence to the end thereof which
shall read as follows:
"Notwithstanding anything to the contrary contained herein, Purchaser
agrees not to draw on any Qualified Letter of Credit (i) prior to the
twenty-fourth month immediately following the Closing Date, unless at such
time all dividends on the shares of the New Preferred Stock have either (i)
been paid in cash or (ii) paid as a payment-in-kind dividend )("PIK
Shares"), the stated value of which has been reduced to zero, and (iii)
after the twenty fourth month immediately following the Closing Date, until
such time as the stated value of the outstanding PIK Shares has been
reduced to zero and the stated value of the outstanding shares of New
Preferred Stock that are issued at the Effective Time in connection with
the Merger has been reduced to $2.5 million."
(c) Annex I to the Original Agreement is hereby amended by deleting
the definition of "Indemnity Cap Adjustment Amount" and replacing it with the
following:
""Indemnity Cap Adjustment Amount" means an amount, not to exceed $2.5
-------------------------------
million, equal to the excess of (i) (a) the sum of any EHS Damages which in
the written opinion of Purchaser's consultant (which shall be one or more
of the consultants listed on Schedule 7.3(p)(1)) are reasonably expected to
-------------------
be required to be incurred pursuant to EHS Requirements of Law due to
conditions other than those identified on Schedule 7.3(p)(2) discovered by
------------------
the Purchaser after the date hereof and prior to the Closing in the course
of Purchaser's due diligence or due to any new Proceeding or Order or any
new claim or amended claim arising in connection with any existing
Proceeding, Order or condition, plus (b) the reasonably expected costs
based on the Purchaser's consultant's evaluation in writing, for full
compliance and remediation required pursuant to any EHS Requirement of Law
(including pursuant to ISRA and the Connecticut Transfer Act) resulting
from the announcement or consummation of the transactions contemplated by
this Agreement over (ii) $4,000,000.
5
(d) Annex I to the Original Agreement is hereby further amended by
adding the following thereto:
""L/C Cap" means, at any time, (i) the Cap, plus (ii) the Indemnity
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Cap Adjustment Amount, less (iii) the aggregate Preferred Stock Adjustment
----
Amount in effect at such time.
"Preferred Stock Adjustment Amount" means the sum of (i) the stated
---------------------------------
value of all outstanding PIK Shares that are issued or are required to be
issued pursuant to the terms of the New Preferred Stock as a payment-in-
kind dividend on shares of New Preferred Stock that are issued at the
Effective Time in connection with the Merger ("Initial PIK Shares"), plus
------------------
(ii) after the end of the twenty-fourth month immediately following the
Closing Date, if all shares of New Preferred Stock including all PIK Shares
have not been redeemed, $2.5 million, plus (iii) at Purchaser's option
(exercised by delivery of an irrevocable notice to the Shareholders
Representative), additional shares of New Preferred Stock that are issued
at the Effective Time in connection with the Merger having a stated value
equal to up to $2.5 million.
1.6 FINANCING.
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EXHIBIT E is hereby deleted in its entirety and replaced with EXHIBIT E
--------- ---------
hereto.
1.7 NOTES.
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(a) Purchaser covenants and agrees to use its commercially reasonable
best efforts to cause MTL Inc. to commence an offer to purchase up to all of the
outstanding Notes within five business days after the date hereof and to
complete such offer substantially in accordance with the terms and subject to
the conditions described in the draft of such offer to purchase which has been
previously provided to the Company. It is understood that any delay in
commencing such offer to purchase in connection with either (i) any act or
failure to act by the Company or any third party or (ii) Purchaser's compliance
with applicable law shall not constitute a breach of this Agreement.
(b) The Company agrees to use its commercially reasonable best efforts
(without incurring any costs) to cooperate with the Purchaser and the holders of
its Notes in connection with the offer to purchase set forth in Section 1.7(a).
(c) Annex I to the Original Agreement is hereby amended by deleting
the definition of "Transaction Expenses" contained therein and replacing it with
the following:
"Transaction Expenses" means all fees and expenses that are
--------------------
incurred by or on behalf of the Company or any Shareholder (whether
incurred prior to, at or after the Closing) in connection with the
preparation for, and consummation of, the transactions contemplated
hereby, by the other agreements referred to herein or otherwise in
connection with a sale of the Company, including any payments to
terminate or purchase options to purchase equity interests of any
Subsidiary (including payments to Xxxxxx Xxxxxxx and Xxxxxxx Kannehan)
(it being understood that Transaction Expenses shall not include
either (a) the $4,000,000
6
cost to obtain the requisite consent of the holders of Notes to an
amendment to the terms of the Indenture, or the fees and expenses
incurred by the Company in connection with such solicitation of
consents all as set forth in Section 6.12 or (b) any costs incurred by
the Purchaser, MTL Inc. or Apollo Management, L.P., in connection with
any offer to purchase the Notes commenced by MTL Inc.).
(d) Sections 6.12 and 7.3(m) of the Original Agreement are hereby
deleted in their entirety.
1.8 CLOSING.
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Each party hereto agrees to use its commercially reasonable efforts to
consummate the Merger on or prior to August 31, 1998.
ARTICLE II
MISCELLANEOUS PROVISIONS
2.1 AGREEMENT.
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Except as modified by this Amendment, the Original Agreement shall remain
in full force and effect, enforceable in accordance with its terms.
2.2 COUNTERPARTS.
------------
This Amendment may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
2.3 GOVERNING LAW.
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THIS AMENDMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL
LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION
OF THIS AMENDMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT
OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
APPLY. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AMENDMENT OR ANY
RELATED DOCUMENT MAY BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY
EXECUTION AND DELIVERY OF THIS AMENDMENT, EACH PARTY HERETO HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF OR HIMSELF AND IN RESPECT OF ITS OR HIS PROPERTY AND ASSETS,
7
GENERALLY AND UNCONDITIONALLY THE JURISDICTION OF THE AFORESAID COURTS.
* * *
8
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
THE PURCHASER:
PALESTRA ACQUISITION CORP.
By:____________________________
Name:
Title:
THE COMPANY:
CHEMICAL XXXXXX CORPORATION
By:____________________________
Name:
Title:
XXXXX X. XXXXXXXX
XXXXXXXXX X. XXXXXXXX
XXXXXXXXX XXXXXXXXX XXXXXXXX
TENNESSEE ALEXIS XXXXXXXX
XXXXXXXX FAMILY TRUST
XXXXXX X. XXXXXXXX
XXXXXX XXXXXXXX
XXXX X. XXXXXXXX
TRUSTEES U/W/O XXXXXXXXX X.
XXXXXXXX, DECEASED, F/B/O XXXX,
XXXX AND XXXXXX XXXXXXXX
TRUSTEES U/W/O XXXXXX XXXXXXXX,
DECEASED, F/B/O XXXXXX XXXXXXXX
TRUSTEES U/W/O XXXXXX XXXXXXXX
DECEASED, F/B/O XXXX X. XXXXXXXX
TRUSTEES U/W/O XXXXXX XXXXXXXX,
DECEASED, F/B/O XXXX XXXXXXXXX
XXXXXXXX
XXXXXX XXXXXX
TRUSTEES F/B/O XXXXXXXXX CUTTING
XXXXXXXX
XXXXXX X. XXXXXXXXX
XXXXX X. XXXXXXX
XXXXXX X. XXXXX
XXXXXX X. XXXXXXXXX
XXXX X. XXXXX
J. XXXXXXX XXXXXXXX
XXXX X. XXXXXX
XXXXXX X. XXXXXXXX
X.X. XXXXX-XXXXXX
G. XXXXXXX XXXXX
XXXXX XXXXX XXXXX
XXXXX XXXXX
By:____________________________
Xxxxx X. Xxxxxxxx
Attorney-in-Fact
XXXXX X. XXXXXXXX
XXXXXXXXX X. XXXXXXXX
XXXXXXXXX XXXXXXXXX XXXXXXXX
TENNESSEE ALEXIS XXXXXXXX
XXXXXXXX FAMILY TRUST
XXXXXX X. XXXXXXXX
XXXXXX XXXXXXXX
XXXX X. XXXXXXXX
TRUSTEES U/W/O XXXXXXXXX X.
XXXXXXXX, DECEASED, F/B/O XXXX,
XXXX AND XXXXXX XXXXXXXX
TRUSTEES U/W/O XXXXXX XXXXXXXX,
DECEASED, F/B/O XXXXXX XXXXXXXX
TRUSTEES U/W/O XXXXXX XXXXXXXX
DECEASED, F/B/O XXXX X. XXXXXXXX
TRUSTEES U/W/O XXXXXX XXXXXXXX,
DECEASED, F/B/O XXXX XXXXXXXXX
XXXXXXXX
XXXXXX XXXXXX
TRUSTEES F/B/O XXXXXXXXX CUTTING
XXXXXXXX
XXXXXX X. XXXXXXXXX
XXXXX X. XXXXXXX
XXXXXX X. XXXXX
XXXXXX X. XXXXXXXXX
XXXX X. XXXXX
J. XXXXXXX XXXXXXXX
XXXX X. XXXXXX
XXXXXX X. XXXXXXXX
X.X. XXXXX-XXXXXX
G. XXXXXXX XXXXX
XXXXX XXXXX XXXXX
XXXXX XXXXX
By:____________________________
Xxxxxx XxXxxxxx
Attorney-in-Fact
The Shareholders:
_______________________________
Xxxxx X. Xxxxxxxx
XXXXXXXXX X. XXXXXXXX
XXXXXXXXX XXXXXXXXX XXXXXXXX
TENNESSEE XXXXXX XXXXXXXX
By: _______________________________
Xxxxx X. Xxxxxxxx
Attorney-in-Fact
XXXXXXXX FAMILY TRUST
By: _______________________________
Trustee
__________________________________
Xxxxxx X. Xxxxxxxx
__________________________________
Xxxxxx XxXxxxxx
__________________________________
Xxxx X. XxXxxxxx
TRUSTEES U/W/O XXXXXXXXX X.
XXXXXXXX, DECEASED, F/B/O XXXX,
XXXX AND XXXXXX XXXXXXXX
By: _______________________________
Xxxxxx XxXxxxxx, Trustee
By: _______________________________
Xxxxxxxxx Xxxxxxx, Trustee
By: _______________________________
Mellon Bank (East), Trustee
TRUSTEE U/W/O XXXXXX XXXXXXXX,
DECEASED, F/B/O XXXXXX XXXXXXXX
By: _______________________________
Xxxxxx XxXxxxxx, Trustee
By: _______________________________
Xxxxxxxxx Xxxxxxx, Trustee
By: _______________________________
Mellon Bank (East), Trustee
TRUSTEES U/W/O XXXXXX XXXXXXXX,
DECEASED, F/B/O XXXX X. XXXXXXXX
By: _______________________________
Xxxxxx XxXxxxxx, Trustee
By: _______________________________
Xxxx X. XxXxxxxx, Trustee
By: _______________________________
Mellon Bank (East), Trustee
TRUSTEES U/W/O XXXXXX XXXXXXXX,
DECEASED, F/B/O XXXX XXXXXXXXX
XXXXXXXX
By: _______________________________
Xxxxxx XxXxxxxx, Trustee
By: _______________________________
Mellon Bank (East), Trustee
_______________________________
Xxxxxx Xxxxxx
TRUSTEES F/B/O XXXXXXXXX CUTTING
XXXXXXXX
By: _______________________________
Xxxxxx XxXxxxxx, Trustee
By: _______________________________
Xxxxxx Xxxxxx
__________________________________
Xxxxxx X. Xxxxxxxxx
__________________________________
Xxxxx X. Xxxxxxx
__________________________________
Xxxxxx X. Xxxxx
__________________________________
Xxxxxx X. Xxxxxxxxx
__________________________________
Xxxx X. Xxxxx
__________________________________
J. Xxxxxxx Xxxxxxxx
__________________________________
Xxxx X. Xxxxxx
__________________________________
Xxxxxx X. Xxxxxxxx
__________________________________
X.X. Xxxxx-Xxxxxx
__________________________________
G. Xxxxxxx Xxxxx
__________________________________
Xxxxx Xxxxx Xxxxx
__________________________________
Xxxxx Xxxxx
Exhibit 2.1(b)
Terms of New Preferred Stock
----------------------------
ISSUER MTL Inc.
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STATED VALUE $5,000,000. The stated value of the outstanding shares of New
Preferred Stock (including Initial PIK Shares but excluding all other
PIK Shares) will be reduced by $1 for each $1 of Purchaser Losses;
provided that the aggregate amount of such reduction will not exceed
the sum of (i) $2.5 million, plus (ii) the stated value of all Initial
PIK Shares. The stated value will be further reduced by the stated
value of all shares of New Preferred Stock that reduce the L/C Cap
pursuant to clause (iii) of the definition of Preferred Stock
Adjustment Amount. Any setoff against Purchaser Losses set forth above
will reduce the L/C Cap.
At any time, the stated value of all PIK Shares other than Initial PIK
Shares will equal (i) the aggregate stated value of all such PIK Shares
multiplied by (ii) a fraction, the numerator of which is the aggregate
reduction of the stated value of the Initial PIK Shares pursuant to the
preceding paragraph and the denominator of which is the aggregate
stated value of all Initial PIK Shares (without giving effect to any
reductions to the stated value thereof); provided that, notwithstanding
the foregoing, if the stated value of the Initial PIK Shares shall be
reduced to zero, then the stated value of all other PIK Shares
automatically be reduced to zero.
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DIVIDENDS 8% per annum, payable annually in arrears and payable in kind at
Issuer's option for three years from issuance date. Dividends will be
payable on the stated value on the applicable payment date of all
outstanding shares of New Preferred Stock (including all shares issued
at the Effective Time in connection with the Merger and all PIK Shares
previously issued).
Dividends on shares of common stock will not be paid unless all accrued
dividends on New Preferred Stock have been paid.
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MATURITY Ninth anniversary from the Closing Date.
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OPTIONAL REDEMPTION Redeemable at any time at Issuer's option at the following prices (plus
accrued and unpaid dividends):
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Premium to
Date Stated Value
--------------------------------------------------------- -------------
Closing Date to 42nd Month 100%
Beg. of 43rd month to end of 54th month 105%
Beg. of 55th month to end of 66th month 110%
Beg. of 67th month to end of 78th month 115%
Thereafter 120%
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CHANGE OF CONTROL Upon sale of Issuer to a non-affiliated third party or other change of
control to a non-affiliated third party, shares of New Preferred Stock
would be mandatorily redeemable for the redemption value set forth
above.
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IPO Up to 50% of net proceeds of primary offering to be used to redeem
shares of New Preferred Stock for the redemption value set forth above.
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LIQUIDATION PREFERENCE Upon liquidation, shares of New Preferred Stock would be senior to
common stock and would be entitled to receive the redemption value set
forth above.
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EXCHANGEABILITY Shares of New Preferred Stock can be exchanged at the Issuer's option
for Junior Subordinated Debt of the Issuer, which shall be subject to
the same rights of offset and adjustment. The Junior Subordinated Debt
will contain substantially similar terms and conditions as the terms
and conditions of the New Preferred Stock, including terms and
conditions relating to dividends, maturity, optional redemption, change
of control, IPO, liquidation preference and voting rights.
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VOTING RIGHTS Holders of shares of New Preferred Stock will be entitled to a separate
class vote for any amendment to the Certificate of Designations in
respect of the New Preferred Stock to the extent that such amendment
adversely affects the holders of the New Preferred Stock.
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