SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): September 26, 1997
LACLEDE STEEL COMPANY
(Exact Name of Registrant as Specified in Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-3855
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(Commission File Number)
43-0368310
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(I.R.S. Employer Identification Number)
One Metropolitan Square St. Louis, Missouri 63102
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
314-425-1400
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Item 1. Changes in Control of Registrant.
On September 26, 1997, Ivaco, Inc., a corporation organized under the
Canada Business Corporation Act, ("Ivaco"), sold one-half of its investment in
the Company to a subsidiary of Birmingham Steel Corporation of Birmingham,
Alabama ("Birmingham Steel") for $14.9 million cash. The securities of the
Company sold consisted of 1,009,325 common shares and 183,334 shares of the
Company's Series A preferred stock. The preferred shares are convertible into
859,834 common shares of the Company. The transaction was effected through the
sale of a wholly-owned subsidiary of Ivaco which contained such shares to
Birmingham Steel. In connection with the transaction Ivaco, among other things,
gave Birmingham Steel the voting rights on Ivaco's remaining investment in the
Company's common stock and, in any additional common stock Ivaco may own as a
result of the conversion of Ivaco's remaining Series A preferred stock, subject
to certain limitations. In addition, Ivaco agreed not to sell its remaining
investment in the Company prior to September 24, 1998 and has provided
Birmingham Steel with a right of first refusal for four years thereafter.
Combining securities acquired in the above-referenced transaction and the 20,000
shares of the Company's common stock previously held, Birmingham Steel holds
approximately 25.4% of the Company's outstanding common shares and approximately
44.0% of the non-voting convertible preferred shares of the Company. Assuming
its preferred shares are converted in common stock, Birmingham Steel would hold
approximately 38.4% of the Company's common stock. Combining the voting rights
obtained from Ivaco with its other holdings of the Company's common stock,
Birmingham Steel is currently entitled to vote 50.3% of the outstanding voting
shares of the Company.
The transaction between Ivaco and Birmingham Steel was effected pursuant to a
Purchase Agreement, dated September 26, 1997 (the "Purchase Agreement"). The
foregoing summary of certain provisions of the Purchase Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Purchase Agreement (and the related proxy), which Purchase Agreement is attached
to this Current Report on Form 8-K as Exhibit 2 and is incorporated herein by
reference.
The Company has no knowledge related to the source of the consideration used by
Birmingham Steel to acquire the Company's securities from Ivaco.
Under Section 382 of the Internal Revenue Code of 1986, as amended, if the
percentage of stock (by value) of a corporation (the "Loss Corporation") that is
owned by one or more "five-percent shareholders" has increased by more than 50
percentage points over the lowest percentage of stock owned by the same
shareholders during a three year testing period (an "Ownership Change"), the use
of pre-ownership change net operating losses of the Loss Corporation following
such Ownership Change will be limited based on the value of the Loss Corporation
immediately before the Ownership Change occurs (a "Section 382 Limitation"). As
of the end of its most recent taxable year, the Company had a deferred tax asset
of approximately $21.8 million related to net operating loss and alternative
minimum tax carryovers. Although the Company believes that the transactions
consummated pursuant to the Purchase Agreement between Ivaco and Birmingham
Steel on September 26, 1997 should not result in an Ownership Change, future
transactions involving persons who are now or who during the ensuing thirty-six
month period become "five-percent shareholders" as defined in Section 382 may
trigger an Ownership Change. If such an Ownership Change occurs, the Company's
use of its existing net operating loss carryovers at such time will be subject
to a Section 382 Limitation based on the value of the Company on the date of
such an Ownership Change. Depending on the size of such net operating loss
carryovers at such time the limitation could have a material adverse effect on
the Company's financial statements.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit No. Description of Exhibit
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2 Purchase Agreement, dated as of September 26, 1997, among
Ivaco Inc., LCL Holdings I, LLC, Midwest Holdings, Inc. and
Birmingham Steel Corporation.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LACLEDE STEEL COMPANY
(Registrant)
Date: October 3, 1997 By: /S/ Michael H. Lane
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Michael H. Lane
Vice President-Finance, Treasurer and
Secretary
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EXHIBIT INDEX
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Exhibit No. Description of Exhibit
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2 Purchase Agreement, dated as of September 26, 1997, among Ivaco
Inc., LCL Holdings I, LLC, Midwest Holdings, Inc. and
Birmingham Steel Corporation.
Exhibit 2
PURCHASE AGREEMENT
This Agreement is made as of September 26, 1997, by and among Ivaco Inc., a
corporation organized under the Canada Business Corporations Act ("Ivaco"), LCL
Holdings I, LLC, a Delaware limited liability company ("Holdings I "), Midwest
Holdings, Inc., a Delaware corporation ("Purchaser"), and Birmingham Steel
Corporation, a Delaware corporation ("BSC").
WHEREAS, LCL Holdings II, LLC, a Delaware limited liability company
("Holdings II ), owns 1,009,325 shares of common stock, par value $0.01 per
share (the "Laclede Common Stock"), of Laclede Steel Company, a Delaware
corporation ("Laclede"), and 183,334 shares of Series A Preferred Stock, no par
value (the "Laclede Preferred Stock"), of Laclede (the shares of Laclede Common
Stock and Laclede Preferred Stock owned by Holdings II are collectively referred
to as the "BSC Laclede Shares");
WHEREAS, Holdings I owns 1,009,325 shares of Laclede Common Stock and
183,333 shares of Laclede Preferred Stock (the shares of Laclede Common Stock
and Laclede Preferred Stock owned by Holdings I are collectively referred to as
the "Ivaco Laclede Shares" and the Laclede Common Stock owned at any time by
Ivaco, Holdings I or any other Affiliate (as such term is defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of Ivaco
(collectively, the "Ivaco Entities") and any Laclede Common Stock issued upon
conversion of the Laclede Preferred Stock owned at any time by an Ivaco Entity
are collectively referred to as the "Ivaco Laclede Common Shares");
WHEREAS, Ivaco owns all of the membership interests of each of Holdings II
(the "Holdings II Equity Interests") and Holdings I;
WHEREAS, Purchaser is a wholly-owned subsidiary of BSC;
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WHEREAS, Purchaser desires to purchase, and Ivaco desires to sell, the
Holdings II Equity Interests on the terms and conditions set forth herein;
WHEREAS, Holdings I, Ivaco, BSC and Purchaser desire to enter into an
agreement, to be specifically enforceable, pursuant to which they agree to vote
the Ivaco Laclede Common Shares as directed by Purchaser to the extent set forth
herein;
WHEREAS, Holdings I desires to enter into and grant the rights to Purchaser
contained in the irrevocable proxy attached hereto as Exhibit A (the "Proxy");
and
WHEREAS, the Board of Directors or Manager (as the case may be) of each of
Holdings I, Ivaco, BSC and Purchaser has approved this transaction upon the
terms, conditions and provisions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the respective
representations and warranties hereinafter set forth and the respective
covenants and agreements contained in this Agreement and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Purchase and Sale. Purchaser hereby purchases from Ivaco, and Ivaco
hereby sells to Purchaser, the Holdings II Equity Interests for a purchase price
of $14,953,288 (the "Purchase Price"). Simultaneously with the execution of this
Agreement, the Purchase Price is being paid by Purchaser to Ivaco by [cashier's
check].
2. Voting Agreement. (a) Ivaco and Holdings I hereby agree to vote (the
"Voting Agreement") any and all Ivaco Laclede Common Shares in accordance with
the written directions of Purchaser on any matter submitted to the shareholders
of Laclede until such time as Purchaser and its Affiliates beneficially own in
the aggregate a number of shares of Laclede Common Stock less than the lesser of
(i) 1.3 million shares of Laclede Common Stock, (ii) the number of shares of
Laclede Common Stock beneficially owned in the aggregate by the Ivaco Entities
<PAGE>
or (iii) if the U.S. generally accepted accounting principles ("GAAP") governing
consolidation of subsidiaries is changed after the date hereof or if there is a
revised interpretation by the Securities and Exchange Commission or otherwise
applicable to BSC of existing U.S. GAAP governing consolidation of subsidiaries
which, in either case, reduce the threshold number of shares of Laclede Common
Stock that would require BSC to consolidate Laclede under GAAP (collectively, a
"GAAP Modification"), the maximum number of shares of Laclede Common Stock that
could be beneficially owned by the Purchaser and BSC in the aggregate that would
not result in BSC being required to consolidate Laclede under U.S. GAAP.
Notwithstanding the foregoing, the Voting Agreement shall not apply to
transactions or matters in which BSC or any of its Affiliates has a direct or
indirect interest (other than its interest as a stockholder of Laclede
generally). In order to ensure the voting of the Ivaco Laclede Common Shares in
accordance with this Agreement, simultaneously with the execution of this
Agreement, Holdings I has executed the Proxy, granting to Purchaser the
irrevocable right to vote or execute and deliver stockholders written consents,
in respect of all of the Ivaco Laclede Common Shares. It is understood and
agreed that such proxy is intended to be, and is, irrevocable and coupled with
Purchaser's interest in Laclede and the BSC Laclede Shares and the voting
authority contemplated to be exercised by Purchaser pursuant to this Agreement
and is thereby irrevocable, subject to the terms of this Agreement. In the event
that for any reason or under any circumstances, other than Purchaser's breach of
a material provision of this Agreement or the expiration of the Proxy in
accordance with its terms and the terms of this Agreement, the Proxy shall be
held to be invalid, or the vote by Purchaser of the Ivaco Laclede Common Shares
is challenged, then the applicable Ivaco Entity shall take any and all actions
reasonably necessary in order for it to vote the Ivaco Laclede Common Shares, or
execute written shareholders consents in lieu thereof, as directed in writing by
Purchaser. The Voting Agreement shall not limit the ability of any Ivaco Entity
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to transfer any Ivaco Laclede Common Shares, it being understood that after any
such transfer, the Voting Agreement and the Proxy shall be valid only with
respect to the remaining Ivaco Laclede Common Shares then owned by such Ivaco
Entity and its Affiliates. Purchaser shall not have the right until September
24, 1998, to cancel the Proxy and the Voting Agreement as to any and all of the
Ivaco Laclede Common Shares (subject to the Proxy and the Voting Agreement
expiring in accordance with the terms of this Agreement and the Proxy).
(b) For purposes of determining beneficial ownership under this Agreement,
(i) any shares of Laclede Preferred Stock beneficially owned by any person shall
be deemed to be converted into Laclede Common Stock and (ii) beneficial
ownership shall be determined in accordance with the provisions of Rule 13d-3
promulgated under the Exchange Act.
3. Joint Representations and Warranties of BSC and Purchaser. BSC and
Purchaser hereby jointly represent and warrant to Holdings I and Ivaco as
follows:
(a) Each of BSC and Purchaser is duly organized, validly existing and in
good standing as a corporation under the laws of the State of Delaware.
(b) Each of BSC and Purchaser has full power and authority to execute this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance by BSC and Purchaser of this Agreement have been duly authorized by
all requisite action on the part of BSC and Purchaser. This Agreement has been
duly and validly executed and delivered by BSC and Purchaser and constitutes the
valid and binding obligation of BSC and Purchaser enforceable against BSC and
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
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(c) Other than as contemplated by this Agreement, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not (i) result in the breach of, conflict with, constitute a default
under, or result in the termination or acceleration of (whether after the filing
of notice or lapse of time or both), any agreement, instrument of indebtedness
or other obligation to which BSC or Purchaser is a party or by which either of
them is bound or to which any of their securities or assets is subject, or
result in the creation of any lien, encumbrance or claim upon said securities or
assets, (ii) violate any provision of BSC or Purchaser's constituting documents,
or (iii) contravene or violate any law, rule or regulation or any order, writ,
judgment, injunction or decree to which BSC or Purchaser is subject.
(d) No consent, license, approval or authorization of any governmental
body, authority, bureau or agency is required on the part of BSC, Purchaser or
any of their Affiliates in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated herein.
(e) Except for 20,000 shares of Laclede Common Stock, neither BSC, the
Purchaser nor any of their Affiliates beneficially own any shares of Laclede
Common Stock or Laclede Preferred Stock or any other securities of Laclede.
(f) Purchaser and its Affiliates are and will remain in compliance with all
laws and regulations applicable to the subject matter of this Agreement.
4. Joint Representations and Warranties of Holdings I and Ivaco. Holdings I
and Ivaco hereby jointly represent and warrant to BSC and Purchaser as follows:
(a) Ivaco is a corporation duly organized, validly existing and in good
standing under the laws of Canada. Each of Holdings II and Holdings I is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Holdings II and Holdings I has
full power and authority to own, lease or otherwise hold its properties and
assets and to carry on its business as presently conducted.
<PAGE>
(b) Each of Holdings I and Ivaco has full power and authority to execute
this Agreement and, in the case of Holdings I, the Proxy and to perform its
respective obligations hereunder and, in the case of Holdings I, under the
Proxy. The execution, delivery and performance by Holdings I and Ivaco of this
Agreement, and, in the case of Holdings I, the Proxy have been duly authorized
by all requisite action on the part of Holdings I and Ivaco. This Agreement and,
in the case of Holdings I, the Proxy have been duly and validly executed and
delivered by Holdings I and Ivaco and constitute the valid and binding
obligations of Holdings I and Ivaco, as applicable, enforceable against Holdings
I and Ivaco in accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(c) The total outstanding membership interests (or stock) of Holdings II
consist of the Holdings II Equity Interests. Upon the transfer of the Holdings
II Equity Interests to Purchaser as contemplated by this Agreement, Purchaser
shall own full legal and equitable title to the Holdings II Equity Interests
free and clear of any liens, adverse claims, pledges or encumbrances of any
nature whatsoever (other than any such lien, claim, pledge or encumbrance
created by Purchaser). Other than the Holding II Equity Interest owned by IVACO,
no equity rights exist, nor have any equity rights ever existed, in Holdings II.
Holdings II has no obligations, contracts or agreements with any party.
(d) Other than as contemplated by the Proxy or this Agreement, the
execution and delivery of the Proxy and this Agreement and the consummation of
the transactions contemplated thereby and hereby will not (i) result in the
breach of, conflict with, constitute a default under, or result in the
termination or acceleration of (whether after the filing of notice or lapse of
time or both), any agreement, instrument of indebtedness or other obligation to
which Holdings II, Holdings I or Ivaco is a party or by which any of them is
bound or to which any of their respective securities or assets is subject, or
result in the creation of any lien, encumbrance or claim upon said securities or
assets, (ii) violate any provision of Holdings II's, Holdings I 's or Ivaco's
constituting documents, or (iii) contravene or violate any law, rule or
regulation or any order, writ, judgment, injunction or decree to which Holdings
II, Holdings I or Ivaco is subject.
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(e) For United States federal income tax purposes, Holdings II has not
elected under treasury regulation 301.7701-3 to be classified as a corporation.
Holdings II has not owned any assets other than the BSC Laclede Shares.
(f) No consent, license, approval or authorization of any governmental
body, authority, bureau or agency, is required on the part of Ivaco, Holding I
or any of their Affiliates in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated herein.
(g) Except as disclosed in the preamble to this Agreement, neither Ivaco
nor its Affiliates beneficially own any shares of Laclede Common Stock or
Laclede Preferred Stock or any other securities of Laclede.
(h) Ivaco and its Affiliates are and will remain in compliance with all
laws and regulations applicable to the subject matter of this Agreement.
(i) Holdings II does not have, and has never had, any liabilities or
obligations except as imposed upon Holdings II solely by law or as contemplated
by this Agreement. Holdings II (i) owns full legal and equitable title to the
BSC Laclede Shares free and clear of any and all liens, adverse claims, pledges
or encumbrances of any kind whatsoever and (ii) does not have, and has never
had, any assets other than the BSC Laclede Shares.
<PAGE>
(j) The Proxy effectively transfers to Purchaser all of the voting rights
of the Ivaco Laclede Common Shares to the extent contemplated by the terms of
the Proxy.
(k) Since October 1, 1996, Ivaco has not received any non-public
information concerning Laclede which, if such information had been made public
prior to the date hereof, would reasonably be expected to have a material
adverse effect on the present market price of the Laclede Common Stock; provided
that BSC and Purchaser acknowledge that (i) they are fully aware of the present
situation between Laclede and its labor union with respect to the contract that
is scheduled to expire on September 30, 1997 and acknowledge that a labor strike
or other work stoppage is a possibility when such contract expires and that any
such strike or work stoppage could have a material adverse effect on Laclede,
and (ii) this representation shall have no further force or effect on and after
December 31, 1998. For purposes of this representation, the term "public" shall
refer to information that (i) is publicly available, (ii) has been made
available to securities analysts, (iii) is information that a person
sophisticated in the businesses in which Laclede operates would reasonably be
expected to know or (iv) is information in respect of which BSC has actual
knowledge.
5. Covenants of Ivaco and Holdings I. (a) Ivaco and Holdings I covenant and
agree with Purchaser that the Proxy will be and remain irrevocable until the
Proxy terminates in accordance with its terms.
(b) Ivaco agrees that no Ivaco Entity shall transfer all or any portion of
its respective ownership interest in Holdings I or the Ivaco Laclede Shares (in
each instance, the "Interest") except in accordance with the terms of this
Section 5(b). Any transfer or purported transfer of such Interest not made in
accordance with this Section shall be null and void. For this purpose, the term
"transfer" shall be deemed to refer to a transaction by which an Ivaco Entity
transfers, in whole or in part, its Interest (other than the right solely to
receive distributions) to any other person (other than any Affiliate of Ivaco,
in which case Ivaco and such Affiliate transferee shall give Purchaser notice of
such transfer within three days thereafter and such Affiliate transferee, as a
part of such transfer, shall agree to be bound by all the terms and conditions
of this Agreement relating to the Interest). The term transfer includes a sale,
assignment, exchange or other disposition. An Ivaco Entity shall have the right
to transfer its respective Interest in accordance with the following provisions:
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(I) Until September 24, 1998, no Ivaco Entity shall transfer all or any
portion of its Interest (other than to an Affiliate).
(II) Commencing on September 24, 1998, and through September 23, 2002, in
the event that an Ivaco Entity receives a bonafide written offer (an "Offer") to
purchase its Interest from such third party, the Ivaco Entity shall provide
Purchaser with a copy of such offer. If the Ivaco Entity desires to sell any
Ivaco Laclede Shares on any securities market on which the Laclede Common Stock
is then traded (an "Open Market Sale"), the Ivaco Entity shall give Purchaser
written notice (an "Open Market Notice") of such intent. Purchaser shall have
three (3) business days from the receipt of such Offer or intent to sell in an
Open Market Sale to give notice to the Ivaco Entity, (i) waiving its right to
purchase the Interest and consenting to such transfer or (ii) electing (the
"Election") to purchase the Interest of the Ivaco Entity, in the case of an
Offer, upon the terms set forth in such Offer or, in the case of an intent to
sell in an Open Market Sale, at the closing market price of Laclede Common Stock
on the day prior to the date of the Open Market Notice. Notwithstanding anything
in this provision to the contrary, Purchaser shall not have the right to
exercise the Election to the extent that, upon acquisition of the Interest
subject to the Election, Purchaser, BSC and their Affiliates would beneficially
own in the aggregate on a fully diluted basis more than 49% of the outstanding
shares of Laclede Common Stock. A notice of an Election shall set forth the
<PAGE>
time, place and date not less than three (3) business days and not more than
five (5) business days thereafter for the closing of such purchase. If Purchaser
does not give the Ivaco Entity notice in a timely fashion either giving its
consent to such transfer or electing to purchase the Interest, or fails to
consummate timely such purchase in accordance with this Section, the Ivaco
Entity shall have the right, in the case of an Offer, to consummate a transfer
of its Interest to such third party named in and upon terms no less favorable
than those contained in the Offer or, in the case of an intent to sell in an
Open Market Sale, to sell the Ivaco Laclede Shares in an Open Market Sale and
Purchaser shall be deemed to have consented in writing to any such transaction.
Notwithstanding the above, to the extent Purchaser is required to comply with
the notification provisions of the Hart-Scott-Rodino Anti-trust Improvements Act
of 1976, as amended (the "HSR Act"), in connection with the purchase of any of
the Interests, the closing of the purchase in respect of the portion of such
Interest for which such notification is required shall be postponed until the
day on which all applicable waiting periods under the HSR Act has expired (or
early termination has been granted); provided, however, that if such waiting
periods have not expired by the 90th day after Purchaser has received written
notice of an Offer or an intent to sell in an Open Market Sale, the applicable
Ivaco Entity shall thereafter be free to sell all or any portion of the Interest
subject to such notice without restriction.
(III) After September 23, 2002, the Ivaco Entities shall be free to sell
all or any portion of their Interests without restriction.
Each of the parties hereto agree that any violation of the rights provided
in this Section 5 cannot be compensated for by damages and Purchaser shall have
the right to obtain specific performance of such rights in any court of
competent jurisdiction in the event of any such violation thereof. For purposes
of this Agreement, a business day shall mean a day other than a Saturday, Sunday
or other day on which commercial banks in Montreal, Canada or Birmingham,
Alabama are authorized or required by law to close.
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(c) As soon as practicable after the date of this Agreement, pursuant to
Section 11 of the Registration Rights Agreement (the "Registration Rights
Agreement"), dated July 30, 1996, between Laclede, Ivaco and certain other
purchasers specified therein, Ivaco shall furnish to Laclede in writing the name
and address of Holdings II in order to assign the Registration Rights (as
defined in the Registration Rights Agreement) attaching to the Laclede Preferred
Stock owned by Holdings II. Ivaco or Holdings I shall take similar action in the
event any additional shares of Laclede Preferred Stock are transferred to the
Purchaser pursuant to Section 5(b)(II) hereof. Purchaser understands that in
order to complete any such assignment, it needs to cause Holdings II or any
other transferee of the Laclede Preferred Stock to execute and agree to be bound
by the Registration Rights Agreement and to furnish a counterpart of such
executed Registration Rights Agreement to Laclede and to comply with the other
provisions of Section 11 of the Registration Rights Agreement.
6. Covenants of Purchaser. (a) Each of BSC and Purchaser covenants and
agrees with Ivaco that, so long as Ivaco or any of its Affiliates beneficially
own in the aggregate at least 10% of the outstanding shares of Laclede Common
Stock (with all Laclede Preferred Stock being deemed converted into Laclede
Common Stock), (i) it will not acquire any shares of capital stock of Laclede
(x) directly from Laclede or any Affiliate thereof (other than BSC, Purchaser or
any of their subsidiaries) unless Ivaco is provided the right to purchase its
pro rata percentage of such capital stock (based upon the Laclede Common Stock
beneficially owned by Purchaser and Ivaco and their Affiliates) upon the same
terms and conditions as applies to BSC or Purchaser's acquisition of such
capital stock or (y) from any third party (including purchases on the securities
markets on which the Laclede Common Stock is then traded) unless, at the time of
such acquisition, Holdings I (or, if Holdings I no longer owns any Ivaco Laclede
Shares, Ivaco or any Affiliate thereof then owning any Ivaco Laclede Shares) is
<PAGE>
given the right, exercisable within three (3) business days after written notice
of such acquisition by BSC or Purchaser is received, to sell an equal number of
shares of Laclede Common Stock to BSC or Purchaser at the same purchase price
paid to such third party (or, if such purchase price was not paid in cash, the
cash equivalent of such purchase price); it being understood that to the extent
neither Holdings I, Ivaco nor any Affiliate beneficially owns any Laclede Common
Stock, such right shall apply to any Laclede Preferred Stock beneficially owned
by them as if such shares of Laclede Preferred Stock were converted into Laclede
Common Stock and (ii) it will not cause any directors elected to the Board of
Directors of Laclede at its designation to take any action (or omit to take any
action), and it will not exercise the Proxy or the Voting Agreement to take any
action (or omit to take any action), that would discriminate against the
interests of Ivaco as a stockholder of Laclede (it being understood that this
provision does not apply to any action (or omission to take any action) that
would have the same effect on all stockholders generally, including BSC and
Purchaser); provided, however, the provisions of (i) above shall not be
applicable on and after September 23, 2002 and the provisions of (ii) above
shall not be applicable on and after the expiration of the Proxy and the Voting
Agreement. Each of the parties hereto agree that any violation of the rights
provided in this Section cannot be compensated for by damages and Ivaco shall
share the right to obtain specific performance of such rights in any court of
competent jurisdiction in the event of such violation thereof.
(b) BSC and Purchaser covenants and agrees with Ivaco to pay to Ivaco any
dividends on the Laclede Preferred Stock which BSC, Purchaser or any of their
Affiliates may receive on or after the date hereof which relate to the period
from the date of original issuance by Laclede of the Laclede Preferred Stock
(i.e., July 30, 1996) until September 26, 1997 (the "Period"). For purposes of
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this Section 6(b), all dividends paid on the Laclede Preferred Stock shall be
first applied to unpaid dividends with respect to the Period.
7. (a) Indemnification by Ivaco and Holdings I. Ivaco will indemnify and
hold harmless BSC, Purchaser and their respective officers, directors and
Affiliates from and against any and all claims, liabilities, losses, damages,
costs and expenses, including reasonable counsel fees (collectively "Losses")
arising out of or relating to any breach by Holdings I or Ivaco of any
representation, warranty or covenant made by Holdings I or Ivaco in this
Agreement.
(b) Indemnification by the Purchaser. BSC and Purchaser will indemnify and
hold harmless Holdings I, Ivaco and their respective officers, directors,
managers and Affiliates from and against any Loss arising out of or related to
any breach by BSC or Purchaser of any representation, warranty or covenant made
by BSC or Purchaser in this Agreement.
(c) Procedure for Indemnification. As soon as possible after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or the presentation or other assertion of any claim with respect to which a
claim for indemnification may be made pursuant to this Section 7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnified party, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may otherwise have to such indemnified party
except to the extent the indemnifying party is prejudiced thereby. In case any
such action shall be brought against any indemnified party, and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein, and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party, and,
<PAGE>
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to the indemnified party under this Section 7 (c) for any legal expenses
of other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof; provided that
all of the indemnified parties as a group shall have the right to employ one
separate counsel if, in their reasonable judgment, a conflict of interest
between the indemnified parties and the indemnifying party exists in respect of
such claim, and in that event the reasonable fees and expenses of such separate
counsel shall be paid by the indemnifying party.
8. Modification, etc., This Agreement may not be waived, modified,
discharged or terminated except by a written instrument duly executed by each
party.
9. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors.
10. Cooperation. From time to time, as and when reasonably requested by any
party hereto, the other parties shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions as the requesting party may
reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to a contract
executed and performed in such state without giving effect to the conflicts of
laws principles thereof.
12. Interpretation. The descriptive headings of the several paragraphs and
sections of this Agreement are inserted for convenient only and do not
constitute a part of this Agreement. Words in the singular include the plural
and vice versa; masculine pronouns include feminine and neuter versions thereof.
13. Counterparts. This Agreement may be executed with counterpart signature
pages or in two or more counterparts, each of which shall be deemed an original.
<PAGE>
14. Notices. Any notices, requests, waivers or other communications
required or permitted under this Agreement shall be sufficiently given if in
writing and shall be deemed to have been given or made (i) when delivered by
hand, (ii) three business days after being deposited in the mail, by registered
or certified mail, postage prepaid, return receipt requested, (iii) one business
day after being deposited with an overnight courier service (guaranteeing next
day delivery) or (ii) when sent by telecopy (confirmation of receipt received),
in each case addressed as follows:
If to Purchaser or BSC, to: Birmingham Steel Corporation
1000 Urban Center Drive
Suite 300
Birmingham, Alabama 35242
Attn: William R. Lucas, Jr., Esq.
Telecopy number: (205) 970-1353
If to Holdings I or Ivaco to: c/o Ivaco, Inc.
Place Mercantile
770 Rue Sherbrooke Ouest
Montreal (Quebec) Canada H3A 1G1
Attn: Guy-Paul Massicotte, Esq.
Telecopy number: (514) 288-2669
15. Entire Agreement. This Agreement, together with the Proxy, is intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings with respect to such subject
matter, other than those set forth or referred to herein and therein. This
Agreement, together with the Proxy, supersedes all prior agreements and
understandings between the parties with respect to the subject matter covered
hereby and thereby. Nothing herein shall constitute the parties to this
Agreement partners for any purpose. No party shall take any action (including,
without limitation, any declaration for federal, state or local income tax
purposes) inconsistent with the foregoing.
<PAGE>
16. Ivaco Consent to Jurisdiction. The parties agree (i) that any suit,
proceeding or action brought by BSC or Purchaser in the United States to enforce
Ivaco's obligations under this Agreement (the "Ivaco Obligations") will be
brought only in the United States District Court for the Northern District of
Georgia, and (ii) to be bound by any judgment entered by such court in a legal
proceeding to enforce the Ivaco Obligations, subject to all applicable rights of
appeal. Ivaco irrevocably (a) submits to the exclusive personal jurisdiction of
the United States District Court for the Northern District of Georgia in any
legal proceeding to enforce the Ivaco Obligations; (b) waives any objection that
it may now or hereafter have to venue in any such court in any legal proceeding
to enforce the Ivaco Obligations, or that such court is an inconvenient forum to
conduct such legal proceeding; and (c) agrees to service of process in any such
legal proceeding to enforce the Ivaco Obligations, solely by certified mail,
return receipt requested, postage prepaid, to Ivaco at its address for notice
pursuant to Section 14, and in the manner specified hereunder; provided,
however, that notwithstanding the foregoing and anything to the contrary set
forth herein, BSC and Purchaser agree that neither the negotiation, nor the
execution, nor the delivery nor the performance of this Agreement by Ivaco nor
the limited consent to jurisdiction set forth in this Section 16 shall be
interpreted as, and is not, a submission to the jurisdiction of any federal or
state court in the United States by Ivaco for any purpose other than as
expressly set forth in this Section 16.
17. Publicity. Ivaco and BSC and their respective Affiliates will consult
with the other parties hereto with respect to any initial disclosure of the
matters contemplated by this Agreement. The preceding sentence shall not apply
to any disclosure required to be made by law or the regulations of any stock
exchange(s) as reasonably determined by counsel to the party determining that
such disclosure is required, except that such party, whenever practicable, shall
be required to consult with the other parties concerning the timing and content
of such disclosure before it is made. Until September 23, 2002, Ivaco and BSC
and their respective Affiliates will provide the other parties with copies of
all press releases relating to their holdings in Laclede, and copies of any
Schedule 13D and amendments thereto filed by such party under the Exchange Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BIRMINGHAM STEEL CORPORATION LCL Holdings I, LLC
By: /s/ William R. Lucas, Jr. By: /s/ Jeffrey Bagner
------------------------ ---------------------------
Name: William R. Lucas, Jr. Jeffrey Bagner, its Manager
Title: Executive Vice-President
Midwest Holdings, Inc. IVACO INC.
By: /s/ William R. Lucas, Jr. By: /s/ Paul Ivanier
------------------------- ----------------------------
Name: William R. Lucas, Jr. Name: Paul Ivanier
Title: Executive Vice-President Title: President & CEO
<PAGE>
EXHIBIT A
PROXY
KNOW ALL MEN BY THESE PRESENT, that LCL Holdings I, LLC, a Delaware
limited liability company (the "Grantor"), and the owner of 1,009,325 shares of
common stock, par value $0.01 per share (the "Laclede Common Stock"), of Laclede
Steel Company, a Delaware corporation ("Laclede"), and 183,333 shares of Series
A Preferred Stock, no par value (the "Laclede Preferred Stock"), of Laclede,
does hereby make, constitute and appoint Midwest Holdings, Inc., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Birmingham Steel
Corporation, a Delaware corporation ("Birmingham"), with full power of
substitution, the true and lawful attorney and proxy of the Grantor for and in
its name, place and stead to attend all meetings of the stockholders of Laclede,
and to vote all of said 1,009,325 shares of Laclede Common Stock, any shares of
Laclede Common Stock issued to it upon conversion of said 183,333 shares of the
Laclede Preferred Stock and any other shares of Laclede Common Stock hereinafter
acquired by Grantor (collectively, the "Shares") at any and all meetings of the
stockholders of Laclede (or any adjournments thereof), or in any written consent
solicitation or similar situation in which the voting rights associated with the
Shares may be exercised, with respect to every matter upon which a vote is taken
or consent solicited, except with respect to transactions or matters in which
Birmingham or any of its Affiliates has a direct or indirect interest (other
than its interest as a stockholder of Laclede generally). The term "Affiliates"
shall have the meaning as set forth in the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
The Grantor hereby affirms and agrees that this Proxy is given in
connection with that certain Purchase Agreement by and among the Grantor, Ivaco
Inc., a corporation organized under the laws of Canada, ("Ivaco"), Purchaser and
Birmingham, dated as of September 26, 1997, relating to the purchase by
Purchaser of all of outstanding equity interests in LCL Holdings II LLC, a
Delaware limited liability company, and that this Proxy is coupled with an
interest in Laclede and is irrevocable until its expiration as hereinafter
provided, and hereby ratifies and confirms all that the said Proxy may lawfully
do or cause to be done by virtue hereof.
The Grantor further agrees to execute and deliver at any time any
additional instruments necessary or convenient to evidence or effectuate the
voting arrangements provided for in this Proxy.
This Proxy has no fixed term (and, accordingly, for purposes of Section
215(b) of the Delaware General Corporation Law, this Proxy shall have a term
greater than three years); provided, however, that this Proxy shall expire and
be of no further force and effect from and after such time as Birmingham,
Purchaser and their Affiliates beneficially own in the aggregate a number of
shares of Laclede Common Stock less than the lesser of (i) 1.3 million shares of
Laclede Common Stock, (ii) the number of shares of Laclede Common Stock
beneficially owned in the aggregate by Grantor, Ivaco and their Affiliates or
(iii) if the U.S. generally accepted accounting principles ("GAAP") governing
consolidated of subsidiaries is changed after the date hereof or if there is a
revised interpretation by the Securities and Exchange Commission or otherwise
applicable to BSC of existing U.S. GAAP governing consolidation of subsidiaries
which, in either case, reduces the threshold number of shares of Laclede Common
Stock that would require BSC to consolidate Laclede under GAAP, the maximum
number of shares of Laclede Common Stock that could be beneficially owned by the
Purchaser, BSC and their Affiliates in the aggregate that would not result in
BSC being required to consolidate Laclede under GAAP. Notwithstanding the
foregoing, this Proxy shall not apply to transactions or matters in which BSC or
any of its Affiliates has a direct or indirect interest (other than its interest
as a stockholder of Laclede generally). For purposes of this Proxy, (i) in
computing beneficial ownership any shares of Laclede Preferred Stock
beneficially owned by any person shall be deemed to be converted into Laclede
Common Stock and (ii) beneficial ownership shall be determined in accordance
with the provisions of Rule 13d-3 promulgated under the Exchange Act.
<PAGE>
This Proxy shall not limit the Grantor's ability to transfer or sell
any Shares, it being understood that after any such transfer or sale, this Proxy
shall be valid only with respect to the remaining Shares then owned by the
Grantor.
IN WITNESS WHEREOF, the Grantor has caused this Proxy to be executed by
its duly authorized representative this 26th day of September, 1997.
LCL Holdings I, LLC
By: /s/ Jeffrey Bagner
---------------------------
Jeffrey Bagner, its Manager
