SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No.____) (1)
Laclede Steel Company
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
505606 10 3
(CUSIP Number)
William R. Lucas, Jr.
Birmingham Steel Corporation
1000 Urban Center Drive, Suite 300
Birmingham, Alabama 35242
Telephone Number (205)970-1231
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 26, 1997
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box.( )
Note. Six copies of this statement, including all exhibits,should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(continued on following pages)
- ----------
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 2 of 13
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- --------------------------------------------------------------------------------
(1) Name of Reporting Persons and S.S. or I.R.S. Identification Nos. of
Above Persons:
Birmingham Steel Corporation
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group: (a) ( )
(b) (X)
- --------------------------------------------------------------------------------
(3) SEC Use Only:
- --------------------------------------------------------------------------------
(4) Source of Funds: WC
- --------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e) ( )
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization:
Delaware
- --------------------------------------------------------------------------------
Number (7) Sole Voting Power
of
Shares 3,758,318
-----------------------------------------------------------------
Benefi- (8) Shared Voting Power
cially
Owned -0-
-----------------------------------------------------------------
By Each (9) Sole Dispositive Power
Report-
ing 1,889,161
-----------------------------------------------------------------
Person (10) Shared Dispositive Power
With
-0-
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person:
3,758,318
- --------------------------------------------------------------------------------
(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares* ( )
- --------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11):
65%
- --------------------------------------------------------------------------------
(14) Type of Reporting Person:
CO
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<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 3 of 13
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- --------------------------------------------------------------------------------
(1) Name of Reporting Persons and S.S. or I.R.S. Identification Nos. of
Above Persons:
Midwest Holdings, Inc.
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group: (a) ( )
(b) (X)
- --------------------------------------------------------------------------------
(3) SEC Use Only:
- --------------------------------------------------------------------------------
(4) Source of Funds: WC
- --------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e) ( )
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization:
Delaware
- --------------------------------------------------------------------------------
Number (7) Sole Voting Power
of
Shares 3,758,318
------------------------------------------------------------------
Benefi- (8) Shared Voting Power
cially
Owned -0-
------------------------------------------------------------------
By Each (9) Sole Dispositive Power
Report-
ing 1,889,161
------------------------------------------------------------------
Person (10) Shared Dispositive Power
With
-0-
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person:
3,758,318
- --------------------------------------------------------------------------------
(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares* ( )
- --------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11):
65%
- --------------------------------------------------------------------------------
(14) Type of Reporting Person:
CO
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<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 4 of 13
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- --------------------------------------------------------------------------------
(1) Name of Reporting Persons and S.S. or I.R.S. Identification Nos. of
Above Persons:
LCL Holdings II, LLC
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group: (a) ( )
(b) (X)
- --------------------------------------------------------------------------------
(3) SEC Use Only:
- --------------------------------------------------------------------------------
(4) Source of Funds: WC
- --------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e) ( )
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization:
Delaware
- --------------------------------------------------------------------------------
Number (7) Sole Voting Power
of
Shares 3,758,318
------------------------------------------------------------------
Benefi- (8) Shared Voting Power
cially
Owned -0-
------------------------------------------------------------------
By Each (9) Sole Dispositive Power
Report-
ing 1,889,161
------------------------------------------------------------------
Person (10) Shared Dispositive Power
With
-0-
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person:
3,758,318
- --------------------------------------------------------------------------------
(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares* ( )
- --------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11):
65%
- --------------------------------------------------------------------------------
(14) Type of Reporting Person:
OO
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 5 of 13
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Item 1. Security and Issuer.
The class of securities to which this Statement relates is the
common stock, par value $.01 (the "Common Stock") of Laclede
Steel Company, a Delaware corporation (the "Company"). The
address of the principal executive offices of the Company is
One Metropolitan Square, St. Louis, Missouri 63102.
Item 2. Identity and Background.
This Statement is being filed by Birmingham Steel Corporation,
a Delaware corporation ("Birmingham Steel"), its wholly owned
subsidiary Midwest Holdings, Inc., a Delaware corporation
("Midwest Holdings"), and LCL Holdings II, LLC, a Delaware
limited liability company ("LCL Holdings II") (Birmingham
Steel, Midwest Holdings and LCL Holdings II are collectively
referred to herein as the "Reporting Persons"). Midwest
Holdings is the sole member of LCL Holdings II. Birmingham
Steel operates in the mini-mill sector of the steel industry
and conducts operations at facilities located across the
United States. Midwest Holdings and LCL Holdings II are
special purpose entities formed for the purpose of effecting
the Closing (as defined herein in response to Item 3). The
address of each of the Reporting Persons' principal business
and the address of each of the Reporting Persons' principal
office is 1000 Urban Center Drive, Suite 300, Birmingham,
Alabama 35242. By signing this statement and the Joint Filing
Agreement attached hereto, each of the Reporting Persons
agrees that it is signed on its behalf.
As required by General Instruction C of Schedule 13D, this
statement contains information called for by Items 2 through 6
of Schedule 13D with respect to (a) each executive officer and
director of the Reporting Persons, (b) each person controlling
the Reporting Persons, and (c) each executive officer and
director of any corporation or other person ultimately in
control of the Reporting Persons (collectively, the "Covered
Persons"). The information called for by paragraphs (a), (b)
and (c) of this Item with respect to the Covered Persons is
set forth on Schedule A attached hereto and incorporated
herein by reference. All of the Covered Persons are citizens
of the United States.
During the past five years, none of the Reporting Persons or,
to the best knowledge of the Reporting Persons, the Covered
Persons, has been convicted in a criminal proceeding or been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of
<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 6 of 13
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such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
During October of 1996, Birmingham Steel acquired 20,000
shares of the Common Stock in open market transactions
effected through a broker-dealer (the "Open Market Shares").
The source of funds used to acquire the Open Market Shares was
general corporate funds of Birmingham Steel.
The Reporting Persons' beneficial ownership of 3,738,318
shares of Common Stock was acquired on September 26, 1997
through the consummation (the "Closing") of the transactions
contemplated by that certain Purchase Agreement, dated as of
September 26, 1997 (the "Purchase Agreement") by and among
Birmingham Steel, Midwest Holdings, Ivaco Inc., a Canadian
corporation ("Ivaco") and its wholly owned subsidiary, LCL
Holdings I, LLC, a Delaware limited liability company ("LCL
Holdings I"). The consideration paid by the Reporting Persons
pursuant to the Purchase Agreement at the Closing was $14.9
million, which was paid out of the general corporate funds of
Birmingham Steel. The transactions contemplated by the
Purchase Agreement are described in more detail below in
response to Item 4.
The Reporting Persons understand that the Covered Persons
named on Schedule A hereto used their personal funds to
acquire the shares of Common Stock, if any, beneficially owned
by them.
Item 4. Purpose of Transaction.
Background. Prior to September 19, 1997, Ivaco owned directly
2,018,650 shares of the Company's Common Stock and 333,667
shares of the Company's Series A Preferred Stock, no par value
(the "Preferred Stock"). The Preferred Stock is not registered
under Section 12 of the Securities Exchange Act of 1934 and
has no voting rights, but is convertible at any time by the
holder thereof into 4.69 shares of the Common Stock. As of
September 19, 1997, Ivaco divided its holdings of Common Stock
and Preferred Stock by contributing an equal amount to two
newly formed Delaware limited liability companies.
Specifically, Ivaco contributed 1,009,325 shares of the Common
Stock (the "Holdings I Common Shares") and 183,333 shares of
the Preferred Stock (the "Holdings I Preferred
<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 7 of 13
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Shares," and together with the Holdings I Common Shares, the
"Holdings I Shares") to LCL Holdings I in exchange for 100% of
the membership interests in LCL Holdings I and (ii)
contributed 1,009,325 shares of the Common Stock (the
"Holdings II Common Shares") and 183,334 shares of the
Preferred Stock (the "Holdings II Preferred Shares," and
together with the Holdings II Common Shares, the "Holdings II
Shares") to LCL Holdings II in exchange for 100% of the
membership interests in LCL Holdings II.
The Closing. At the Closing, Ivaco (i) transferred 100% of the
membership interests in LCL Holdings II to Midwest Holdings
and (ii) caused LCL Holdings I to grant Midwest Holdings an
irrevocable right (the "Proxy") to vote all Holdings I Common
Shares and any other shares of Common Stock which Ivaco, LCL
Holdings I and any of their affiliates (collectively, the
"Ivaco Entities") may thereafter acquire (including any shares
of Common Stock issuable upon conversion of the Holdings I
Preferred Shares), subject to certain limitations described
herein. As a result, Birmingham Steel, through its ownership
of Midwest Holdings, acquired direct beneficial ownership
(sole voting power and sole investment, or dispositive, power)
of the 1,009,325 Holdings II Common Shares (approximately
24.9%, of the currently outstanding shares of the Company's
Common Stock) and the 859,836 shares of the Company's Common
Stock issuable upon conversion of the Holdings II Preferred
Shares (the "Holdings II Conversion Shares"). In addition,
Birmingham Steel, through its ownership of Midwest Holdings
and the Proxy, secured indirect beneficial ownership (sole
voting power with no investment, or dispositive, power) of the
1,009,325 Holdings I Common Shares (representing approximately
24.9% of the Company's currently outstanding shares of Common
Stock) and the 859,832 shares of Common Stock issuable upon
conversion of the Holdings I Preferred Shares (the "Holdings I
Conversion Shares"). The Proxy also covers any other shares of
Common Stock which may be acquired by the Ivaco Entities after
the date thereof.
Summary of Purchase Agreement. The following 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 Proxy attached thereto as
Exhibit A), which Purchase Agreement is attached to this
Schedule 13D as Exhibit A and is incorporated herein by
reference.
Pursuant to the Purchase Agreement, Ivaco transferred 100% of
the membership interests in LCL Holdings II to Midwest
Holdings, thereby transferring direct ownership of the
Holdings II Shares to Midwest Holdings.
<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 8 of 13
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Pursuant to the Purchase Agreement, Ivaco also caused LCL
Holdings I to grant Midwest Holdings the Proxy to vote all
Holdings I Common Shares and any other shares of Common Stock
which the Ivaco Entities may thereafter acquire (including the
Holdings I Conversion Shares), on all matters on which such
shares are entitled to vote, except for the matters or
transactions in which Birmingham Steel or any of its
affiliates has direct or indirect interest (other than its
interest as a stockholder in the Company, generally). The
Proxy expires from and after such time as Birmingham Steel,
Midwest Holdings and any of their affiliates beneficially own
in the aggregate a number of shares of Common Stock less than
the lesser of (i) 1.3 millon shares of Common Stock, (ii) the
number of shares of Common Stock beneficially owned in the
aggregate by the Ivaco Entities, or (iii) if the U.S.
generally accepted accounting principles ("GAAP") governing
consolidation of subsidiaries is changed after the date of the
Proxy or if there is a revised interpretation by the
Securities and Exchange Commission or otherwise applicable to
Birmingham Steel of existing U.S. GAAP governing consolidation
of subsidiaries which, in either case, reduces the threshold
number of shares of Common Stock that would require Birmingham
Steel to consolidate the Company under GAAP, the maximum
number of shares of Common Stock that could be beneficially
owned by Birmingham Steel, Midwest Holdings or any of their
affiliates in the aggregate that would not result in
Birmingham Steel being required to consolidate the Company
under GAAP.
The Purchase Agreement provides that none of the Ivaco
Entities may sell or otherwise transfer all or any part of the
Holdings I Shares to any person other than to another Ivaco
Entity until September 24, 1998. Commencing on September 24,
1998 and through September 23, 2002, if an Ivaco Entity
desires to sell any Holdings I Shares either pursuant to a
bona fide offer from a third person (the "Offer") or on any
securities market on which the Common Stock is then traded
(the "Open Market Sale"), such Ivaco Entity must provide
Midwest Holdings with a copy of the Offer or a written notice
of the intended Open Market Sale, as the case may be. Within
three business days from the receipt of such notice of a copy
of the Offer, as the case may be, Midwest Holdings has the
right either to (i) consent to the sale pursuant to the Offer
or the Open Market Sale, as the case may be, or (ii) elect to
purchase the Holdings I Shares at a price equal to (x) the
price of the Offer in the case of the Offer or to (y) the
closing market price on the date immediately preceding the
date of the notice in the case of the Open Market Sale. After
September 23, 2002, the Ivaco Entities may sell the Holdings I
Shares without restriction.
<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 9 of 13
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The Purchase Agreement also provides that, for so long as the
Ivaco Entities beneficially own, in the aggregate, at least
10% of the outstanding shares of the Common Stock (with all
the Preferred Stock being deemed converted into Common Stock),
neither Birmingham Steel nor Midwest Holdings shall (i)
acquire any shares of Common Stock directly from the Company
or from any third person (including purchases on any
securities market on which the Common Stock is then traded)
unless (x) in case of direct purchase from the Company, Ivaco
is given a right to purchase a pro rata percentage of shares
being acquired or (y) in case of purchase from a third person,
Ivaco is given a right to sell an equal number of shares of
Common Stock to Birmingham Steel or Midwest Holdings, as the
case may be, at the same purchase price paid to such third
person ("Acquisition Limitations") or (ii) vote or cause the
Company's Board of Directors to vote for any action that will
discriminate against interests of Ivaco as a stockholder in
the Company ("Voting Limitation"), it being understood that
the Voting Limitation does not apply to any action that would
have the same effect on all stockholders, generally. The
Acquisition Limitations expire on September 23, 2002 and the
Voting Limitation expires on and after the expiration of the
Proxy.
Finally, Birmingham Steel and Midwest Holdings agreed to pay
to Ivaco any dividends on the Holdings II Preferred Shares
which Birmingham Steel, Midwest Holdings or any of their
affiliates may receive on or after the date of the Purchase
Agreement which relate to the period from the date of original
issuance by the Company of such shares (i.e., July 30, 1996)
until September 26, 1997 (the "Period"). For purposes of this
provision, all dividends paid on the Holdings II Preferred
Shares will be first applied to unpaid dividends with respect
to the Period.
Effect of the Closing. The effect of the Closing, when
combined with LCL Holdings II's 20,000 Open Market Shares, is
to secure sole voting power with respect to approximately
50.3% of the currently outstanding shares of Common Stock, and
to acquire a sufficient number of shares of Preferred Stock to
protect against dilution below 50% of the total outstanding
shares of Common Stock in the event of conversion of all
presently outstanding shares of Preferred Stock.
Purpose. Birmingham Steel secured voting control of the
Company in order to influence decisions which will affect the
long-term performance of the Company's operations, with the
goal of realizing substantial appreciation of Birmingham
Steel's investment in the Company, thereby improving the
returns in value for all of the Company's shareholders. To
this end, the Reporting Persons presently intend to cause
three Executive Officers of Birmingham Steel to become
directors of the Company. The initial such directors will be
<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 10 of 13
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Robert A. Garvey, William R. Lucas and Joseph Alvarado.
The Reporting Persons understand that prior acquisitions of
Common Stock beneficially owned by any Covered Persons were
made for purposes of such Covered Persons' personal
investment.
Other than as described above, neither the Reporting Persons
nor, to the best knowledge of the Reporting Persons, any
Covered Person, has formulated any plans or proposals which
relate to or would result in an acquisition or disposition of
shares of Common Stock, an extraordinary corporate transaction
involving the Company, sale of a material amount of the
Company's assets, change in capitalization or dividend policy
of the Company, changes in the bylaws or Certificate of
Incorporation of the Company, any other material change in the
Company's business or any other matter which would be required
to be disclosed in response to paragraphs (a) through (j) of
Item 4 of Schedule 13D. The Reporting Persons intend to
review, however, on a regular basis, their investment in the
Company and the Company's business, affairs and financial
position, as well as the market price level of the Common
Stock, conditions in the securities markets and general
economic and industry conditions. The Reporting Persons may in
the future take such actions in respect of their investment in
the Company as they deem appropriate in light of circumstances
existing from time to time.
Item 5. Interest in Securities of the Issuer.
(a) According to the Form 10-Q Quarterly Report filed by the
Company with the Securities and Exchange Commission for the
quarter ended June 30, 1997, the Company had, as of July 24,
1997, 4,056,140 shares of Common Stock issued and outstanding.
Accordingly, the 3,758,318 shares of Common Stock beneficially
owned by the Reporting Persons (as more fully explained in
paragraph (b) below) represent approximately 65% of the issued
and outstanding shares of Common Stock. For purposes of
calculating this percentage, the securities not outstanding
which are subject to conversion privileges (i.e., 1,719,668
shares of Common Stock issuable upon conversion of the
Holdings I Preferred Shares and the Holdings II Preferred
Shares) are deemed to be outstanding. Information concerning
the beneficial ownership of Common Stock by Covered Persons is
contained in Schedule A attached hereto.
<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 11 of 13
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(b) As a result of the transaction described in Item 4,
Birmingham Steel, through its ownership of Midwest Holdings,
has the sole power to vote or to direct the vote of (i) the
1,009,325 Holdings II Common Shares, (ii) the 859,836 Holdings
II Conversion Shares, (iii) the 20,000 Open Market Shares,
(iv) the 1,009,325 Holdings I Common Shares (via the Proxy),
and (v) the 859,832 Holdings I Conversion Shares (via the
Proxy), for a total of 3,758,318 shares of Common Stock
(assuming the conversion of all Holdings I Preferred Shares
and Holdings II Preferred Shares). Birmingham Steel, through
its ownership of Midwest Holdings, has the sole investment, or
dispositive, power with respect to (i) the 1,009,325 Holdings
II Common Shares, (ii) the 859,836 Holdings II Conversion
Shares, and (iii) the 20,000 Open Market Shares, for a total
of 1,889,161 shares of Common Stock (assuming the conversion
of all Holdings II Preferred Shares).
(c) Other than the transactions consummated at the Closing,
there have been no transactions in the Common Stock by the
Reporting Persons or, to the best knowledge of the Reporting
Persons, the Covered Persons, during the last sixty (60) days.
(d) As discussed in Item 4 above, Birmingham Steel and Midwest
Holdings agreed to pay to Ivaco any dividends on the Holdings
II Preferred Shares which Birmingham Steel, Midwest Holdings
or any of their affiliates may receive on or after the date of
the Purchase Agreement which relate to the Period.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The rights and privileges of the Preferred Stock, including
the terms of the conversion rights, are more fully set forth
in the Certificate of Designations, Preferences, and Rights of
Series A Preferred Stock of the Company (the "Certificate of
Designations"), a copy of which is attached hereto as Exhibit
C and incorporated herein by reference.
At the Closing, Birmingham Steel also took an assignment of
certain demand registration rights attaching to the Holdings
II Preferred Shares (and the Holdings II Conversion Shares)
under that certain Registration Rights Agreement dated as of
July 30, 1996 between Ivaco, the Company and certain other
purchasers specified therein (the "Registration Rights
Agreement"). These registration rights are more fully
described in the
<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 12 of 13
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Registration Rights Agreement, a copy of which is attached
hereto as Exhibit D and incorporated herein by reference.
Except as contemplated by the Purchase Agreement, the Proxy,
the Certificate of Designations and the Registration Rights
Agreement, there are no contracts, understandings or
relationships (legal or otherwise) among the persons named in
Item 2 hereof and between such persons and any person with
respect to any securities of the Company, including but not
limited to transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies, naming any
persons listed in Item 2 hereof.
Item 7. Material to be Filed as Exhibits.
Exhibit A Purchase Agreement (including Proxy).
Exhibit B Press Release, dated September 26, 1997.
Exhibit C Certificate of Designations.
Exhibit D Registration Rights Agreement.
<PAGE>
SCHEDULE 13D
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CUSIP No.: 505606 10 3 Page 13 of 13
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 6, 1997 (Date)
BIRMINGHAM STEEL CORPORATION
By:/s/William R. Lucas, Jr.
William R. Lucas, Jr.
Its: Executive Vice President -
Administration and General
Counsel
MIDWEST HOLDINGS, INC.
By:/s/William R. Lucas, Jr.
William R. Lucas, Jr.
Its: Executive Vice President -
Administration and General
Counsel
LCL HOLDINGS II, LLC
By:/s/William R. Lucas, Jr.
William R. Lucas, Jr.
Its: Manager
<PAGE>
Joint Filing Agreement
In accordance with Rule 13d-1(f) under the Securities Exchange Act of
1934, as amended, each of the persons named below agrees to the joint filing of
a Statement on Schedule 13D (including amendments thereto) with respect to the
common stock, par value $.01 per share, of Laclede Steel Company, a Delaware
corporation, and further agrees that this Joint Filing Agreement be included as
an exhibit to such filings; provided that, as contemplated by Section
13d-1(f)(l)(ii), no person shall be responsible for the completeness or accuracy
of the information concerning the other persons making the filing, unless such
person knows or has reason to believe that such information is inaccurate.
BIRMINGHAM STEEL CORPORATION
By:/s/William R. Lucas, Jr.
William R. Lucas, Jr.
Its: Executive Vice President -
Administration and General
Counsel
MIDWEST HOLDINGS, INC.
By:/s/William R. Lucas, Jr.
William R. Lucas, Jr.
Its: Executive Vice President -
Administration and General
Counsel
LCL HOLDINGS II, LLC
By:/s/William R. Lucas, Jr.
William R. Lucas, Jr.
Its: Manager
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Birmingham Steel Corporation Directors:
<S> <C> <C>
Name Residence or Business Address Principal Employment
and Address of Employer*
William J. Cabaniss, Jr. Precision Grinding, Inc. President of Precision Grinding, Inc., a
2101 Wenonah Oxmoor Road metal machining company serving metal machining
Birmingham, Alabama 35211 industries in the Southeast, since 1971.
C. Stephen Clegg Globe Building Materials, Inc. Chairman of the Board and Chief Executive
500 Northwestern Avenue, Suite 212 Officer of Globe Building Materials, Inc.,
Lake Forest, Illinois 60045 Midwest Spring Manufacturing Company,
and Diamond Home Services.
E. Mandell de Windt 36 Riverview Road Retired; Former Chairman of the Board of
Hobe Sound, Florida 33455 Birmingham Steel.
Robert A. Garvey Birmingham Steel Corporation Chairman of the Board and Chief Executive
1000 Urban Center Parkway, Suite 300 Officer of Birmingham Steel.
Birmingham, Alabama 35242
Harry Holiday, Jr. 1 Sandpiper Drive Retired; Former Chairman of the Board and
Village of Golf, Florida 33436 Chief Executive Officer of ARMCO, Inc.
E. Bradley Jones 3881-2 Lander Road Retired; Former Chairman of the Board and
Chegrin Falls, Ohio 44022 Chief Executive Officer of LTV Steel Company.
Reginald H. Jones 742 Lake Avenue Retired; Former Chairman of the Board and
Greenwich, Connecticut 06830 Chief Executive Officer of General Electric
Company.
Robert D. Kennedy 2061 Ponus Ridge Road Retired; Former Chairman of the Board and
New Canaan, Connecticut 06840 Chief Executive Officer of Union Carbide
Corporation.
George A. Stinson Hunting Country Road, P.O. Box 670 Retired; Former Chairman of the Board and
Tryon, North Carolina 28782 Chief Executive Officer of National Steel
Corporation.
T. Evans Wyckoff 1001 Logan Bldg. President of Wyco Corporation, private
Seattle, Washington 98101 investment company.
<FN>
* Each person named above who is not retired has given his business address,
which is the same as the address of the employer indicated.
</FN>
</TABLE>
<PAGE>
<TABLE>
Birmingham Steel Corporation Executive Officers who are not also Directors:
<S> <C> <C>
Principal Employment
Name Business Address and Address of Employer
Joseph Alvarado Birmingham Steel Corporation Executive Vice President - Commercial of
1000 Urban Center Parkway, Suite 300 Birmingham Steel
Birmingham, Alabama 35242
William R. Lucas, Jr. Birmingham Steel Corporation Executive Vice President - Administration
1000 Urban Center Parkway, Suite 300 and General Counsel of Birmingham Steel
Birmingham, Alabama 35242
Frederick J. Rocchio Birmingham Steel Corporation Executive Vice President - Development and
1000 Urban Center Parkway, Suite 300 Technology of Birmingham Steel
Birmingham, Alabama 35242
Jack R. Wheeler Birmingham Steel Corporation Vice President - Plant Operations of
1000 Urban Center Parkway, Suite 300 Birmingham Steel
Birmingham, Alabama 35242
</TABLE>
<TABLE>
Midwest Holdings, Inc. Directors and Executive Officers:
<S> <C> <C>
Principal Employment
Name Business Address and Address of Employer
Robert A. Garvey Birmingham Steel Corporation Chairman of the Board and Chief Executive
1000 Urban Center Parkway, Suite 300 Officer of Birmingham Steel.
Birmingham, Alabama 35242
William R. Lucas, Jr. Birmingham Steel Corporation Executive Vice President - Administration
1000 Urban Center Parkway, Suite 300 and General Counsel of Birmingham Steel.
Birmingham, Alabama 35242
Catherine W. Pecher Birmingham Steel Corporation Vice President and Corporate Secretary of
1000 Urban Center Parkway, Suite 300 Birmingham Steel.
Birmingham, Alabama 35242
</TABLE>
<PAGE>
<TABLE>
LCL Holdings II, LLC Manager:
<S> <C> <C>
Principal Employment
Name Business Address and Address of Employer
William R. Lucas, Jr. Birmingham Steel Corporation Executive Vice President - Administration
1000 Urban Center Parkway, Suite 300 and General Counsel of Birmingham Steel.
Birmingham, Alabama 35242
</TABLE>
Beneficial Ownership of Common Stock. To the best knowledge of the Reporting
Persons, the only Covered Person who beneficially owns any shares of Common
Stock of the Company is Mr. Garvey, who beneficially owns approximately 250
shares, or less than 1%, of the currently outstanding Common Stock. Mr. Garvey
possesses sole voting and sole investment, or dispositive, power with respect to
all shares of Common Stock beneficially owned by him.
<PAGE>
EXHIBIT A
Purchase Agreement
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;
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.
<PAGE>
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
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
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
<PAGE>
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.
(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.
<PAGE>
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.
(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.
(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.
<PAGE>
(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.
(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
<PAGE>
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:
(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
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.
<PAGE>
(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.
(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
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
<PAGE>
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 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 Section7, 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,
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 Section7 (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
<PAGE>
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.
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:
<PAGE>
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.
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
<PAGE>
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.
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
<PAGE>
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.
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
<PAGE>
EXHIBIT B
Press Release, dated September 26, 1997
Friday September 26 4:15 PM EDT
Company Press Release
BIRMINGHAM STEEL CORPORATION ANNOUNCES INVESTMENT
IN LACLEDE
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Sept. 26, 1997--Birmingham Steel Corporation
(NYSE:BIR) today announced that it had purchased approximately 24.9% of the
outstanding common shares and approximately 44.0% of the non-voting convertible
preferred shares of Laclede Steel Company. The Company also stated that it had
acquired certain rights relating to other common and preferred shares which,
combined with its other holdings of Laclede shares, entitle Birmingham Steel to
vote 50.3% of the outstanding voting shares of Laclede.
Laclede, headquartered in St. Louis, Missouri, is a manufacturer of carbon and
alloy steel products, including pipe products, hot rolled products, wire
products and welded chain. Laclede operates facilities located in Illinois,
Indiana, Missouri, Pennsylvania, Tennessee and Oregon. Laclede's revenues for
the year ended December 31, 1996, were $335 million. The common stock of Laclede
is traded on the Nasdaq National Market under the symbol "LCLD."
Birmingham Steel announced that 1,009,325 outstanding common shares and 183,334
convertible non-voting preferred shares of Laclede had been purchased from
IVACO, Inc. for $14.9 million through a Birmingham Steel subsidiary. In
conjunction with the purchase of these shares, the Company obtained certain
rights which give Birmingham Steel voting control of a majority of the
outstanding shares of Laclede.
Robert A. Garvey, Chairman and Chief Executive Officer of Birmingham Steel,
commented, "We believe this significant investment in Laclede Steel Company
supports the strategic objectives of Birmingham Steel Corporation. Laclede's
operations and products complement our current facilities and products. In
addition, a relationship with Laclede provides Birmingham Steel with the
opportunity to access new steel product markets. We also believe that both
companies could benefit by working together to evaluate potential business
opportunities which capitalize upon the strengths of each organization."
Garvey continued, "We have secured voting control of the common shares in order
to influence decisions which will affect the long-term performance of the
Laclede operations. Our goal is to realize substantial appreciation of our
investment in Laclede, thereby improving the returns and value for all of
Laclede's shareholders."
Birmingham Steel operates in the mini-mill sector of the steel industry and
conducts operations at facilities located across the United States. The Company
specializes in
<PAGE>
producing steel reinforcing bar, merchant products and SBQ (special bar quality)
bar, rod and wire. The common stock of Birmingham Steel Corporation is traded on
the New York Stock Exchange under the symbol "BIR."
Safe Harbor statement under the Private Securities Litigation Reform Act of
1995: With the exception of historical information, the matters discussed in
this news release are forward-looking statements that involve risks and
uncertainties including, but not limited to, economic conditions, market demand
factors, unanticipated start-up expenses and financing considerations. For
additional discussion, refer to the section on Risk Factors in the Company's
most recently filed SEC form 10-Q.
<PAGE>
EXHIBIT C
Certificate of Designations
CERTIFICATE OF DESIGNATIONS,
PREFERENCES, AND RIGHTS OF
SERIES A PREFERRED
STOCK OF LACLEDE STEEL COMPANY.
--------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
--------------------
We, the undersigned, (i) President and Chief Executive Officer
and (ii) Vice President - Finance, Treasurer and Secretary, respectively, of
Laclede Steel Company (the "Company"), a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "General
Corporation Law"), in accordance with Sections 141(f) and 151(g) thereof, hereby
certify that the Board of Directors of the Company, at a meeting duly convened
and held on July 19, 1996, and by written consent dated July 30, 1996, pursuant
to authority expressly vested in the Board of Directors by the Company's
Certificate of Incorporation, adopted the following resolutions:
RESOLVED, that the Board of Directors of the Company (the
"Board") hereby approves and authorizes the creation, issuance and sale, either
in one or more public offerings or private placements, of up to One Million
Sixty Four Thousand Thirty Six (1,064,036) shares of Series A Preferred Stock
which shall be senior to all other classes of equity securities of the Company;
and
RESOLVED FURTHER, that in connection with the issuance of the
Series A Preferred Stock, the Board designates a committee (the "Committee")
consisting of John B. McKinney, a director of the Company, to fix the
designations and any of the preferences or rights ("Terms") of the shares of
Series A Preferred Stock relating to dividends, redemption, dissolution, any
distribution of assets of the Company or the conversion into, or the exchange of
such shares for, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the Company or fix the number of
shares of any series of stock or authorize the increase or decrease of the
shares of any series; provided that the Committee shall fix the Terms of the
Series A Preferred Stock as outlined at this meeting, with each share of Series
A Preferred Stock (a) having no voting power, (b) having a dividend rate of 6%
per annum, (c) to be recapitalized upon stockholder approval (the
"Recapitalization") such that such shares would be convertible, at the option of
the holders of such Series A Preferred Stock, into Common Stock of the
<PAGE>
Company (with a conversion price equal to 80% of the closing price of the
Company's Common Stock for the ten trading days prior to stockholder approval),
(d) having a dividend rate of 8% per annum if the Recapitalization is not
approved by stockholders and (e) being redeemable if the Recapitalization is not
approved by the stockholders; and
We, the undersigned, (i) President and Chief Executive Officer
and (ii) Vice President - Finance, Treasurer and Secretary, respectively, of the
Company, in accordance with Sections 141(f) and 151(g) of the General
Corporation Law, hereby certify that the Committee, at a meeting duly convened
and held on July 19, 1996, pursuant to authority expressly vested in the
Committee by the Board of Directors, adopted the following resolution:
RESOLVED, that pursuant to the authority expressly granted to
and vested in the Committee by the Board of Directors of the Company and the
provisions of the Certificate of Incorporation of the Company, as amended, this
Committee hereby creates and authorizes the issuance of a series of One Million
Sixty-Four Thousand and Thirty-Six (1,064,036) shares of the Company's Series A
Preferred Stock, no par value per share, and hereby fixes the designation,
dividend rate, redemption provisions, voting powers, rights on liquidation or
dissolution, and other preferences and relative, participating, optional or
other special rights, and the qualifications, limitations, or restrictions
thereof, as follows:
1. Designation; Rank.
(A) The series of preferred stock of the Company, no par value
per share (the "Preferred Stock"), created and authorized hereby shall be
designated as the "Series A Preferred Stock" (the "Series A Preferred Stock").
The number of shares of Series A Preferred Stock shall be One Million Sixty-Four
Thousand and Thirty-Six (1,064,036).
(B) The Series A Preferred Stock, with respect to dividend
rights and rights upon liquidation, dissolution or winding up of the Company,
shall rank senior to the Common Stock and to all other classes and series of
equity securities of the Company. Except as contemplated in Section 4.B, no
other classes or series of equity securities of the Company subsequently issued
shall rank senior to or on a parity with the Series A Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of the
Company. The Series A Preferred Stock shall be junior to indebtedness issued
from time to time, including debentures.
2. Dividends and Distributions.
(A) Holders of shares of Series A Preferred Stock are entitled
to receive, if, when and as declared by the Board of Directors of the Company
out of assets of the Company legally available for payment, cumulative cash
dividends, payable quarterly, at the rate of 6% per annum, or $0.90 per share
per annum, from the date of issuance and for each quarterly dividend period
thereafter. Dividends on the Series A Preferred Stock are payable quarterly in
arrears to holders of record on the last day of March, June, September and
December of each year to be paid on the 10th day thereafter; provided, however,
that the first dividend will be payable to holders of record on December 31,
1996, prorated
<PAGE>
from the date of issuance, and there will be no dividend payable on September
30, 1996. Each such dividend is payable to holders of record as they appear on
the books of the Company. Dividends on the Series A Preferred Stock are
cumulative and accrue on a daily basis from the date of original issuance of the
shares.
(B) The Company shall not declare or pay or set apart for
payment any dividends or other distribution on any series of its preferred
stock, or any other class of capital stock of the Company ranking, as to
dividends or upon liquidation, dissolution or winding up, on a parity with or
junior to the Series A Preferred Stock for any period (other than dividends
payable in Common Stock or another stock ranking junior to the Series A
Preferred Stock as to dividends and upon liquidation), unless full cumulative
dividends have been paid or declared and a sum sufficient for payment thereof is
set apart for payment for all dividends on the Series A Preferred Stock. When
dividends are not paid in full upon the Series A Preferred Stock and any other
series of preferred stock ranking on a parity therewith as to dividends with the
Series A Preferred Stock, all dividends declared upon shares of Series A
Preferred Stock and any other series of preferred stock ranking on a parity
therewith as to dividends shall be declared pro rata so that the amount of
dividends declared per share on the Series A Preferred Stock and such other
series of preferred stock ranking on a parity therewith shall in all cases bear
to each other the same ratio that the accrued dividends per share of the shares
of Series A Preferred Stock and such other series of preferred stock bear to
each other. No interest shall be payable in respect of any dividend payment on
the Series A Preferred Stock in arrears. Unless full cumulative dividends on the
Series A Preferred Stock have been paid for all past dividend payment periods or
declared and set apart for payment, no Common Stock or any other stock of the
Company ranking junior to or on a parity with the Series A Preferred Stock can
be redeemed, purchased, retired or otherwise acquired for consideration by the
Company, except by conversion into or exchange for stock of the Company ranking
junior to the Series A Preferred Stock as to dividends and upon liquidation,
dissolution or winding up.
(C) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (B) of this Section 2,
purchase or otherwise acquire such shares at such time and in such manner.
3. Optional Redemption. Subject to the approval by the
Company's stockholders of the Recapitalization as set forth in Section 11
hereof:
(A) (i) After September 15, 2005, the Company may, at its sole
option, redeem any or all of the outstanding shares of Series A Preferred Stock,
at a cash redemption price per share of $15.00, plus accrued and unpaid
dividends (whether or not earned or declared) thereon (the "Redemption Price"),
subject to the Common Stock having a Current Average Closing Price equal to at
least 200% of the Initial Average Closing Price. The term "Current Average
Closing Price" shall mean the average closing price for 20 consecutive trading
days prior to the date of notice of redemption on the principal national
securities exchange on which the Common Stock is listed or if such stock is not
then so listed, the closing price of the Common Stock as shown by the NASDAQ
National Market System or, if no such closing price is available, at the average
of the representative
<PAGE>
last bid and asked prices of such Common Stock in the over-the-counter market,
as shown by the NASDAQ System Level 1 (or comparable system). The term "Initial
Average Closing Price" shall mean the average closing price of the Common Stock
on the NASDAQ National Market System for the ten trading days prior to the date
on which the holders of shares of Common Stock of the Company approve and
authorize the Recapitalization. At least two (2) business days prior to
redemption, the Company shall deposit in escrow an amount sufficient to satisfy
the redemption obligation.
(ii) In the event that full dividends on the Series A
Preferred Stock
have not been paid or declared and set apart for payment for all past dividend
periods, the Series A Preferred Stock may not be redeemed by the Company.
(iii) The Company shall notify the holders of shares
of the Series A Preferred Stock to be redeemed, at their respective addresses as
the same appear upon the books of the corporation, not less than thirty (30) or
more than sixty (60) business days prior to the date fixed for redemption;
provided, however, that no defect in the notice to a holder shall affect the
ability of the Company to redeem the shares of Series A Preferred Stock pursuant
to this Section 3.(A). Payment of the redemption price of the shares of Series
A Preferred Stock redeemed shall be made at such place or places of
redemption as shall be determined by the Board of Directors of the Company
and shall be made against the surrender for cancellation of the certificates for
the shares redeemed. The notice of redemption provided for herein shall be
irrevocable.
(iv) If less than all of the outstanding shares of
the Series A Preferred Stock are to be redeemed pursuant to this Section 3.(A),
the Company will select the shares redeemed pro rata, provided that only whole
shares shall be selected for redemption.
(v) If the notice of redemption shall have been made
as hereinbefore provided and if on or before the redemption date specified in
such notice all funds necessary for such redemption shall have been set aside
by the Company pursuant to this Section 3.(A) so as to be available for the
benefit of the holders of the shares so called for such redemption, then from
and after the date fixed for redemption the shares of Series A Preferred Stock
so called for such redemption, notwithstanding that any certificate therefor
shall not have been surrendered or cancelled, shall no longer be deemed
outstanding, dividends thereon shall cease to accrue and all rights of the
holders with respect to such shares (including, without limitation, the
conversion rights provided for in Section 13) shall cease and terminate,
except only the right of the holders thereof to receive upon surrender of the
certificates therefor the amount payable upon redemption thereof, but without
interest.
(B) The Company may not redeem any shares of Series A
Preferred Stock prior to September 15, 2005. Except as set forth in Section
11(A), a holder of shares of Series A Preferred Stock has no right to cause the
Company to redeem such shares.
4. Voting Rights.
<PAGE>
(A) The holders of the Series A Preferred Stock shall not,
except as otherwise required by law or as set forth herein, have any right or
power to vote on any matter or in any proceeding or to be represented on any
matter or in any proceeding or to be represented at, or to receive notice of,
any meeting of stockholders.
(B) Each holder of the Series A Preferred Stock shall be
entitled to one vote for each share standing in his name on the transfer books
of the Company as of the record date fixed for such purpose, on any matter as to
which they shall be entitled to vote. Without the vote of the holders of at
least two-thirds (2/3) of the number of shares of Series A Preferred Stock then
outstanding, the Company shall not (i) amend, alter or repeal any of the
preferences or rights of the holders of the Series A Preferred Stock so as to
adversely affect such preferences and rights, or (ii) issue any shares of
capital stock ranking senior to or on a parity with the Series A Preferred Stock
with respect to the payment of dividends and the distribution of assets upon the
liquidation, dissolution or winding-up of the Company.
5. Liquidation Rights.
(A) In the event of any liquidation, dissolution or winding-up
of the Company, the holders of the shares of the Series A Preferred Stock shall
be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made to
holders of Common Stock or any other stock of the Company ranking junior to the
Series A Preferred Stock as to liquidation, dissolution or winding-up of the
Company, distributions in an amount equal to $15.00 per share (the "Liquidation
Preference"), plus an amount equal to the accrued and unpaid dividends thereon.
(B) If upon the voluntary or involuntary liquidation,
dissolution or winding-up of the Company, the amounts available with respect to
the Series A Preferred Stock and any other shares or series of capital stock of
the Company (the "Liquidation Parity Shares") ranking as to any distribution
upon the voluntary or involuntary liquidation, dissolution or winding-up of the
Company on a parity with the Series A Preferred Stock are insufficient to pay in
full the respective preferential amounts to which holders of shares of the
Series A Preferred Stock and the Liquidation Parity Shares are entitled upon
such liquidation, dissolution or winding-up, the holders of the Series A
Preferred Stock and the Liquidation Parity Shares shall share ratably in any
distribution of assets of the Company in proportion to the full respective
preferential amounts to which they are entitled upon such liquidation,
dissolution, or winding- up.
(C) Neither the consolidation of nor merging of the Company
with or into any other corporation or corporations, nor the sale of all or
substantially all of the assets of the Company shall be deemed to be a
liquidation, dissolution or a winding-up of the Company within the meaning of
any of the provisions of this Section 5.
6. "Common Stock" Defined. References to "Common Stock" in
Sections other than Sections 12.(A) and 12.(B) hereof shall mean any stock of
any class of the Company which has no preference in respect of dividends or of
amounts payable in the
<PAGE>
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which is not subject to redemption by the Company. References to
"Common Stock" in Sections 12.(A) and 12.(B) hereof shall include only shares of
the class designated as Common Stock as of the date of the original issuance of
shares of the Series A Preferred Stock, or shares of the Company of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which are not subject to redemption by the Company; provided
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from such
reclassification bears to the total number of shares of all classes resulting
from all such reclassifications.
7. No Preemptive Rights. The holders of the Series A
Preferred Stock shall not have any preemptive rights.
8. Holders. The term "holders" as used herein shall mean,
in all cases, holders of record.
9. Extension of Time Periods. To the extent there are any time
periods specified for action by the Company or the holders of Series A Preferred
Stock, such time periods shall be extended to the extent required by applicable
law, rule or regulatory requirement.
10. Reacquired Shares. Any shares of Series A Preferred Stock
converted, redeemed, purchased or otherwise acquired by the Company in any
manner whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation, and upon the filing of
an appropriate certificate with the Secretary of State of the State of Delaware,
become authorized but unissued shares of Preferred Stock, no par value, of the
Company subject to the conditions or restrictions on issuance set forth herein.
11. Recapitalization of Shares of Series A Preferred Stock.
(A) If the requisite holders of shares of Common Stock of the
Company do not approve and authorize, on or before October 31, 1996, (i) in
order to comply with NASD requirements regarding stockholder approval, the terms
and conditions of Section 12 hereof (whether at a stockholders meeting or by
written consent or otherwise), (ii) an increase in the number of authorized
shares of the Company's Common Stock from 5,000,000 to 25,000,000, and (iii) a
reduction of the par value per share of Common Stock from $13.33 per share to
$0.01 per share (collectively, the "Recapitalization"), then (1) the per annum
dividend rate of the Series A Preferred Stock shall automatically be increased
by 2% percent to 8% per annum, or $1.20 per share per annum, from January 1,
1997 and for each quarterly dividend period thereafter and (2) each holder of
shares of Series A Preferred Stock shall automatically be granted the right to
have the Company redeem all of its shares of Series A Preferred Stock upon 30
days prior notice to the Company at the Redemption Price.
<PAGE>
(B) If the holders of shares of Common Stock of the Company
approve and authorize, on or before December 31, 1996, the Recapitalization,
each share of the Series A Preferred Stock owned by such holder shall, without
any further action by the Company or such holder, be automatically recapitalized
and, in addition to the designations, rights, qualifications, limitations and/or
restrictions set forth above, the Series A Preferred Stock shall be subject to
the additional terms set forth in Section 12 hereof.
(C) The term "Recapitalization Approval Date" shall mean the
date on which the holders of shares of Common Stock of the Company approve and
authorize the Recapitalization.
12. Conversion into Common Stock.
(A) Upon the Recapitalization Approval Date, each share of
Series A Preferred Stock shall be immediately convertible, at the option of the
holders thereof, at the office of the Company or any transfer agent for the
Series A Preferred Stock, into the number of shares of Common Stock determined
by dividing 15 by the Conversion Price. The term "Conversion Price" shall mean
80 percent of the Initial Average Closing Price. The Conversion Price is subject
to adjustment as provided in this Section 12. Upon the conversion of any shares
of Series A Preferred Stock into shares of Common Stock, all declared, accrued
but unpaid dividends on shares of converted Series A Preferred Stock shall be
paid in cash by the Company to the holders of such converted Series A Preferred
Stock, subject to adjustment as provided in this Section 12.
(B) If the Company
(i) pays a dividend or makes a distribution on its
outstanding shares of Common Stock, in shares of its Common Stock;
(ii) subdivides its outstanding shares (by
reclassification or otherwise) of Common Stock into a greater number of shares;
(iii) combines, consolidates, or reclassifies its
outstanding shares of Common Stock into a smaller number of shares; or
(iv) issues by reclassification of its Common Stock
any shares of its capital stock;
then the Conversion Price in effect immediately before such action shall be
adjusted so that the holder of the Series A Preferred Stock thereafter exchanged
will be entitled to receive, upon the exchange thereof, the number of shares of
capital stock of the Company which he would have been entitled to receive
immediately prior to such action if the Series A Preferred Stock had been
exchanged immediately before the record date (or, if no record date, the
effective date) for such action.
The adjustment shall become effective immediately after the
close of business on the record date in the case of a dividend or distribution
and immediately after
<PAGE>
the close of business on the effective date in the case of a subdivision,
combination or reclassification.
If as a result of an adjustment, a holder of the Series A
Preferred Stock upon exchange of the Series A Preferred Stock may receive shares
of two or more classes of capital stock of the Company, the Company shall
determine the allocation of the adjusted Conversion Price between the classes of
capital stock. After such allocation, the Conversion Price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock contained in this Section 12.
(C) Other than in situations provided for in Section 12(A), if
the Company issues or sells (or in accordance with this Section 12 is deemed to
have issued or sold) any shares of its Common Stock for a consideration per
share less than the Conversion Price in effect immediately prior to the time of
such issue or sale and/or the Company issues or sells (or in accordance with
this Section 12 is deemed to have issued or sold) any shares of its Common Stock
for a consideration per share less than the then current market price on the
date of such issue or sale, then, forthwith upon such issue or sale, the
Conversion Price shall be reduced to the lower of the prices (calculated to the
nearest cent) determined as follows:
(I) by dividing (i) an amount equal to the sum of
(a) the number of shares of Common Stock outstanding immediately prior to
such issue or sale (including as outstanding all shares of Common Stock
issuable upon exchange of the then outstanding shares of Series A Preferred
Stock) multiplied by the then existing Conversion Price, and (b) the
consideration, if any, received by the Company upon such issue or sale, by
(ii) the total number of shares of Common Stock outstanding immediately after
such issue or sale (including as outstanding all shares of Common Stock issuable
upon exchange of the then outstanding shares of Series A Preferred Stock); and
(II) by multiplying the Conversion Price in effect
immediately prior to the time of such issue or sale by a fraction, the numerator
of which shall be the sum of (i) the number of shares of Common Stock
outstanding immediately prior to such issue or sale (including as outstanding
all shares of Common Stock issuable upon exchange of the then outstanding
shares of Series A Preferred Stock) multiplied by the then current market price
immediately prior to such issue or sale plus (ii) the consideration received
by the Company upon such issue or sale, and the denominator of which shall
be the product of (iii) the total number of shares of Common Stock outstanding
immediately after such issue or sale (including as outstanding all shares of
Common Stock issuable upon exchange of the then outstanding shares of Series A
Preferred Stock), multiplied by (iv) the then current market price immediately
prior to such issue or sale.
(D) If the Company in any manner grants, issues or sells
(whether directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options or warrants for the purchase of,
Common Stock or any stock or securities convertible into or exchangeable for
Common Stock (such rights or options or warrants being herein called "Options"
and such convertible or exchangeable stock or securities being herein called
"Convertible Securities") whether or not such Options or the right to convert
<PAGE>
or exchange any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such
Options or upon conversion or exchange of such Convertible Securities
(determined by dividing (I) the total amount, if any, received or receivable by
the Company as consideration for the granting, issuance or sale of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus, in the case of such Options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (II) the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options) shall be less than the
Conversion Price in effect immediately prior to the time of the granting,
issuance or sale of such Options (or less than the then current market price per
share of Common Stock, determined as of the date of granting, issuance or sale
of such Options, as the case may be), then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to have been issued for such
price per share as of the date of granting, issuance or sale of such Options and
thereafter shall be deemed to be outstanding. Except as otherwise provided in
Section 12(F), no adjustment of the Conversion Price shall be made upon the
actual issue of such Common Stock or of such Convertible Securities upon
exercise of such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
(E) If the Company in any manner issues (whether directly or
by assumption in a merger or otherwise) or sells any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon
such conversion or exchange (determined by dividing (I) the total amount
received and receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by (II) the total maximum number of shares of Common Stock issuable
upon the conversion or exchange of all such Convertible Securities) shall be
less than the Conversion Price in effect immediately prior to the time of such
issue or sale (or less than the then current market price, determined as of the
date of such issue or sale of such Convertible Securities, as the case may be),
then the total maximum number of shares of Common Stock issuable upon conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued for such price per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be outstanding,
provided that except as otherwise provided in Section 12(F) below, no adjustment
of the Conversion Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities, and if any such
issue or sale of such Convertible Securities is made upon exercise of any Option
to purchase any such Convertible Securities for which adjustments of the
Conversion Price have been or are to be made pursuant to other provisions of
this Section 12, no further adjustment of the Conversion Price shall be made by
reason of such issue or sale.
<PAGE>
(F) Upon the happening of any of the following events, namely,
if the purchase price provided for in any Option referred to in Section 12(D),
the additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities referred to in Section 12(D) or Section 12(E), or the
rate at which any Convertible Securities referred to in Section 12(D) or Section
12(E) are convertible into or exchangeable for Common Stock shall change at any
time (other than under or by reason of provisions designed to protect against
dilution), the Conversion Price in effect at the time of such event shall
forthwith be readjusted to the Conversion Price which would have been in effect
at the time of such event had such Options or Convertible Securities remaining
outstanding at the time of such event provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold: and on the expiration of any such Option or
the termination of any such right to convert or exchange such Convertible
Securities, the Conversion Price then in effect hereunder shall forthwith be
increased to the Conversion Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Security, to the
extent outstanding immediately prior to such expiration or termination, never
been issued, and the Common Stock issuable thereunder shall no longer be deemed
to be outstanding. If the purchase price provided for in any such Option
referred to in Section 12(D) or the rate at which any Convertible Securities
referred to in Section 12(D) or 12(E) are convertible into or exchangeable for
Common Stock shall be reduced at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then in case of the
delivery of Common Stock upon the exercise of any such Option or upon conversion
or exchange of any such Convertible Security, the Conversion Price then in
effect hereunder shall forthwith be adjusted to such respective amount as would
have been obtained had such Option or Convertible Security never been issued as
to such Common Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered as aforesaid (provided that the current market
price used in such determination shall be the current market price on the date
of issue of such Option or Convertible Security), but only if as a result of
such adjustment the Conversion Price then in effect hereunder is thereby
reduced.
(G) Other than in situations provided for in Section 12(B), if
the Company declares a dividend, or makes any other distribution, upon any stock
of the Company payable in Common Stock, Options or Convertible Securities, any
Common Stock, Options or Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to have been issued or
sold without consideration.
(H) If any shares of Common Stock, Options or Convertible
Securities are issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Company therefor, without
deduction therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection therewith. If any
shares of Common Stock, Options or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value of such
consideration as determined by the Board of Directors of the Company, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection therewith. In case any
Options shall be issued in connection
<PAGE>
with the issue and sale of other securities of the Company, together comprising
one integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been issued
without consideration. In case any shares of Common Stock, Options or
Convertible Securities shall be issued in connection with any merger or
consolidation in which the Company is the surviving corporation and the rights
of the holders of Common Stock are not affected, the amount of consideration
therefor shall be deemed to be the fair value as determined by the Board of
Directors of the Company of such portion of the assets and business of the
non-surviving corporation as such Board shall determine to be attributable to
such Common Stock, Options or Convertible Securities, as the case may be.
(I) In case the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them (i) to receive a dividend or
other distribution payable in Common Stock, Options or Convertible Securities,
or (ii) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
(J) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account or in
the treasury of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock for the purposes of this Section 12.
(K) In case of any consolidation or merger of the Company
(other than a merger or consolidation in which the Company is the surviving
corporation and the rights of the holders of Common Stock are not affected) or
in the event of any sale of all or substantially all of the assets of the
Company, the holder of each share of the Series A Preferred Stock then
outstanding shall have the right thereafter, subject to the terms and conditions
of this Section 12, to exchange such share into the kind and amount of shares of
stock and other securities and property receivable upon such consolidation,
merger, or sale by a holder of the number of shares of Common Stock into which
such share of Series A Preferred Stock would have been entitled to be exchanged
into immediately prior to such consolidation, merger, or sale; and effective
provision shall be made in the Certificate of Incorporation or Charter of the
resulting or surviving corporation or otherwise so that the provisions set forth
in this Section 12 shall thereafter be applicable, as nearly as practicable, to
any such other shares of stock and other securities and property deliverable
upon exchange of the Series A Preferred Stock remaining outstanding or other
exchangeable or convertible preferred stock received by the holders in place
thereof; and any such resulting or surviving corporation shall expressly assume
the obligation to deliver, upon the exercise of the exchange privilege, such
shares, securities or property as the holders of the Series A Preferred Stock
remaining outstanding, or other exchangeable or convertible preferred stock
received by the holders in place thereof, may be entitled to, and to make
provisions for the protection of the exchange right as provided (unless such
resulting or surviving corporation assumes such obligation). In case securities
or property other than shares of Common Stock shall be issuable or deliverable
upon exchange as aforesaid, then all
<PAGE>
reference in this Section (K) shall be deemed to apply, so far as appropriate
and as nearly as practicable, to such other securities or property. The
provisions of this Section (K) shall similarly apply to successive
consolidations, mergers, or sales.
(L) For the purpose of any computation under this Section 12,
the current market price per share of Common Stock at any date shall be deemed
to be the average closing price of the Company's Common Stock for any 30
consecutive trading days within the 45 trading days immediately prior to the
date in question. The closing price for each day shall be the last reported sale
of Common Stock on the principal national securities exchange on which the
Common Stock may be listed or if such stock is not then so listed, the closing
price of the Common Stock as shown by the NASDAQ National Market System or, if
no such closing price is available, at the average of the representative last
bid and asked prices of such Common Stock in the over-the-counter market, as
shown by the NASDAQ System Level 1 (or comparable system) or in the absence of
any of the foregoing, the fair market value as determined by the Board of
Directors (whose determination made in good faith shall be conclusive).
(M) The Company may at its option elect not to issue
fractional shares of Common Stock upon any exchange, in which case, the Company
shall pay in cash an amount equal to the current market price per share plus all
accrued but unpaid dividends multiplied by such fractional interest. Any
determination that the Company or the Board of Directors makes regarding
fractional shares is conclusive.
(N) (a) Notwithstanding the provisions of this Section 12,
(i) no adjustment of the Conversion Price
shall be required for three years after the Recapitalization Approval Date
unless such adjustment would require an increase or decrease of at least 1% in
the Conversion Price then in effect, but in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be
made at the time of and together with the next subsequent adjustment. All
calculations under this Section 12 shall be made and rounded to the nearest
one-hundredth of a share or the nearest one ten- millionth of a fraction in
the case of the Conversion Price, as the case may be:
(ii) no adjustment need be made for sales of
Common Stock pursuant to a plan for reinvestment of dividends or interest and no
adjustment need be made for a change in the par value of the Common Stock;
(iii) no adjustment need be made in
connection with the issuance of shares of Common Stock upon exchange of the
Series A Preferred Stock;
(iv) no adjustment need be made in
connection with the issuance of any rights or shares of Common Stock in
connection with the Company's rights offering pursuant to which rights to
purchase Series A Preferred Stock will be distributed to the Company's
stockholders;
<PAGE>
(v) no adjustment need be made by virtue of
the issue of any additional securities of the Company in accordance with the
terms of such securities (by way of dividend or otherwise); and
(vi) no adjustment need be made by virtue of
the exercise of presently outstanding employee stock options which are
exercisable at a cash price per share equal to or greater than the then current
market price per share of Common Stock at the date of issuance of such options.
(b) The Board of Directors shall have the power to
resolve any ambiguity or correct any error in this Section 12 and its action in
so doing, as evidenced by a Board resolution, shall be final and conclusive.
(c) The certificate of any independent firm of
public accountants of recognized national standing selected by the Board of
Directors shall be satisfactory evidence of the correctness of any computation
made in this Section 12.
(O) Whenever there is an adjustment requiring a change in the
Conversion Price, a statement signed by the Secretary of the Company describing
specifically the event giving rise to such adjustment and stating the adjustment
which shall be made to the Conversion Price shall be filed at the principal
office of the Company. The statement so filed shall be open to inspection by any
holder of record of shares of the Series A Preferred Stock. The Company shall at
the time of filing any such statement mail notice to the same effect to holders
of shares of the Series A Preferred Stock at their addresses appearing on the
books of the Company or supplied by them to the Company for the purpose of
notice. In addition, the Company shall include a notice of Conversion Price with
each dividend payment on the Series A Preferred Stock or otherwise give notice
thereof promptly after the due date for each such dividend, whenever there has
been a change in the Conversion Price since the last previous dividend due date.
(P) In order to convert any shares of Series A Preferred
Stock, a holder shall deliver to the Company at the office of the Company, or at
such other place or places, if any, as the Board of Directors of the Company may
determine (after giving written notice thereof to all holders), certificates,
duly endorsed to the Company or in blank, of the shares of Series A Preferred
Stock to be converted, together with appropriate evidence of the payment of any
transfer or similar tax, if required to be paid by the holder thereof pursuant
to the last sentence of this paragraph, and instructions in writing to the
Company to exchange such shares and specifying the name and address of the
person, corporation, firm or other entity to whom such shares are to be issued,
whereupon the Company will issue (i) the number of shares of Common Stock
issuable on exchange thereof as of the time of such surrender and as promptly as
practicable thereafter will deliver certificates for such shares of Common
Stock, (ii) cash for any remaining fraction of a share if the Company so elects,
as provided in Section 12(M) above, and (iii) cash in an amount equal to all
accrued but unpaid dividends, with respect to each share of Series A Preferred
Stock exchanged. The Company shall pay any documentary, stamp or similar issue
or transfer tax due on the issue of shares of Common Stock upon exchange;
provided, however, that
<PAGE>
the holder shall pay any such tax which is due because such shares are to be
issued in a name other than that of such holder.
If for any reason the Company is unable to pay any unpaid
dividends on the shares of Series A Preferred Stock being exchanged, the Company
will pay such unpaid dividends to the exchanging holder as soon thereafter as
funds of the Company are legally available for such payment. At the request of
any such exchanging holder, the Company will provide such holder with written
evidence of its obligation to such holder.
The Company shall from and after the Recapitalization Approval
Date take all necessary corporate action to reserve for issuance upon exchange
of the Series A Preferred Stock a sufficient number of shares out of the
authorized Common Stock for the exchange of each outstanding share of Series A
Preferred Stock in accordance with its terms.
(Q) If
(i) the Company takes any action that would require
an adjustment in the Conversion Price pursuant to this Section 12; or
(ii) there is a voluntary or involuntary liquidation,
dissolution or winding-up of the Company;
the Company shall provide notice of such action in the manner set forth in
Section 12(O), stating therein the proposed record date for a distribution or
the effective date of a reclassification, consolidation, merger, lease,
transfer, liquidation, dissolution or winding-up, at least fifteen (15) days in
advance of such date. Failure to mail the notice or any defect therein shall not
affect the validity of the transaction.
(R) Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value (if any) of the Common
Stock deliverable upon exchange of the Series A Preferred Stock, the Company
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
(S) The Company from time to time may decrease the Conversion
Price by an amount for any period of time if the period is at least 20 days and
if the decrease is irrevocable during the period. Whenever the Conversion Price
is decreased, the Company shall give notice of the decrease at least 15 days
prior to the date the decreased Conversion Price takes effect, in the manner set
forth in Section 12(O) above, which notice shall state the decreased Conversion
Price and the period it will be in effect. A decrease in the Conversion Price
pursuant to this Section 12(S) shall not otherwise change or adjust the
Conversion Price otherwise in effect for purposes of this Section 12.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation, Preferences, and Rights of Series A Preferred Stock of the Company
to be duly executed this 30th day of July, 1996.
LACLEDE STEEL COMPANY
/s/ John B. McKinney
-----------------------------
John B. McKinney
President and Chief Executive Officer
ATTEST:
/s/ Michael H. Lane
- ------------------------------
Michael H. Lane
Vice President - Finance, Treasurer and Secretary
(Corporate Seal)
<PAGE>
EXHIBIT D
Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of July 30, 1996, is made and entered into by and between LACLEDE STEEL
COMPANY, a Delaware corporation (the "Company"), IVACO INC., a Canadian
corporation ("Ivaco"), JOHN B. McKINNEY, MICHAEL H. LANE, J. WILLIAM
HEBENSTREIT, LARRY J. SCHNURBUSCH and H. BRUCE NETHINGTON
(collectively, the "Management Purchasers").
RECITALS
A. The Company and Ivaco have entered into a Stock Purchase
Agreement dated as of July 30, 1996 (the "Stock Purchase Agreement"), whereby
Ivaco has purchased 366,667 shares of the Company's Series A Preferred Stock, no
par value, (the "Series A Preferred Stock") at a price of $15.00 per share;
A. The Company and each of the Management Purchasers
separately entered into a Management Stock Purchase Agreement dated as of July
30, 1996 (the "Management Stock Purchase Agreements"), whereby the Management
Purchasers have purchased an aggregate of 50,000 shares of Series A Preferred
Stock at a price of $15.00 per share;
B. Upon approval by the stockholders of the Company of (1) a
reduction of the par value per share of the Company's common stock from $13.33
per share to $0.01 per share and (2) an increase in the number of authorized
shares of the Company's common stock from 5,000,000 to 25,000,000, and (3) the
recapitalization of Series A Preferred Stock, each share of Series A Preferred
Stock will become convertible at the option of the holder into shares of the
Company's common stock as contemplated by Section 11 of the Certificate of
Designation for such series.
C. Pursuant to a standby purchase agreement, Ivaco may also
purchase certain additional shares of Series A Preferred Stock.
D. Ivaco may desire, in the future, to sell to the public some
or all of the shares of Series A Preferred Stock, and/or any common stock issued
upon conversion of Series A Preferred Stock.
E. The Company therefore deems it to be in its best interest
to set forth the rights of Ivaco in connection with public offerings and sales
of such shares of Series A Preferred Stock and common stock issued upon
conversion of Series A Preferred Stock.
<PAGE>
NOW, THEREFORE, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, and intending to be legally
bound hereby, the Company and Ivaco hereby agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Effective Date" shall mean the date of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
The terms "register," "registered," and "registration" shall
mean a registration effected by the preparation and filing of a Registration
Statement in compliance with the Securities Act, and the declaration or ordering
of effectiveness of such Registration Statement by the SEC.
"Holder(s)" shall mean Ivaco and the Management Purchasers, so
long as it or they hold any Registrable Securities, and any person owning
Registrable Securities who is a permitted assignee of rights under Section 12 of
this Agreement.
"Registrable Securities" shall mean the shares of (1) any
Series A Preferred Stock issued to Ivaco pursuant to the Stock Purchase
Agreement and any common stock issued upon conversion of such Series A Preferred
Stock, (2) any Series A Preferred Stock issued to the Management Purchasers
pursuant to the Management Purchase Agreements and any common stock issued upon
conversion of such Series A Preferred Stock, and (3) any Series A Preferred
Stock issued to Ivaco pursuant to the Standby Agreement which is attached as
Exhibit I to the Stock Purchase Agreement and any common stock issued upon
conversion of such Series A Preferred Stock, and, in each case, all shares of
common stock or other securities issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, in exchange for, or in replacement of any
shares of Series A Preferred Stock. The term "Registrable Securities" excludes,
however, any security (i) the sale of which has been effectively registered
under the Securities Act and which has been disposed of in accordance with a
Registration Statement, (ii) that has been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof (including, without limitation, transactions pursuant to
Rules 144 and 144A of the Securities Act) such that the further disposition of
such securities by the transferee or assignee is not restricted under the
Securities Act, (iii) that have been sold in a transaction in which such rights
are not, or cannot be, assigned, or (iv) for which the Registration Rights have
expired pursuant to Section 11 of this Agreement.
"Registration Expenses" shall mean all expenses incident to
the Company's performance of or compliance with this Agreement, including,
without limitation, all (i) registration, qualification and filing fees; (ii)
fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of any Registrable Securities being registered); (iii)
<PAGE>
printing expenses; (iv) internal expenses of the Company (including, without
limitation, all salaries and expenses of officers and employees of the Company
performing legal or accounting duties); (v) fees and disbursements of counsel
for the Company and fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of comfort letters customarily requested by underwriters); and (vi)
fees and expenses of listing any Registrable Securities on any national
securities exchange.
"Registration Rights" shall mean the rights of the Holders to
cause the Company to register Registrable Securities pursuant to Sections 2 and
3 of this Agreement.
"Registration Statement" shall mean any registration statement
or similar document that covers any of the Registrable Securities pursuant to
the provisions of this Agreement, including the prospectus or preliminary
prospectus included therein, all amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits to such
Registration Statement and all material incorporated by reference in such
Registration Statement.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
2. Demand Registration.
(a) If the Company shall receive at any time on or after
September 15, 1996, a written request from any Holder(s) of Registrable
Securities (collectively, the "Initiating Holder") representing at least twenty
percent (20%) of the Registrable Securities or the amount of Registrable
Securities equivalent to 50,000 shares of Series A Preferred Stock in the case
of Ivaco, that the Company file a Registration Statement covering the
registration of no less than twenty percent (20%) of the Registrable Securities
or the amount of Registrable Securities equivalent to 50,000 shares of Series A
Preferred Stock in the case of Ivaco, as specified in the written request of the
Initiating Holder (the "Registration Request"), then the Company shall (i)
within five (5) days of the receipt of such Registration Request, give written
notice of such Registration Request to Ivaco, and (ii) use its reasonable best
efforts to as promptly as practicable file a Registration Statement covering the
registration of all Registrable Securities with respect to which the Company
receives, within the twenty (20) days immediately following the Registration
Request, a request for inclusion in the registration from the Holder(s) thereof
(an "Inclusion Request") and the Company shall effect as soon as practicable the
registration of such Registrable Securities. Each Inclusion Request shall also
specify the aggregate number of shares of Registrable Securities proposed to be
registered. Ivaco shall have the right to effect up to three (3) demand
registrations pursuant to this Section 2. Holders other than the Initiating
Holder shall have the right to participate in any registration pursuant to this
Section 2.
<PAGE>
(b) the Company shall not be obligated (i) to effect more than
three registrations pursuant to this Section 2 requested by Ivaco, (ii) to
effect any registration pursuant to this Section 2 within one (1) year after the
effective date of any registration of Registrable Securities pursuant to a
demand registration or any other registration of Registrable Securities which
the Holders were afforded the opportunity to register all Registrable Securities
under the Securities Act which the Holders desired to register, (iii) to effect
any registration pursuant to this Section 2 if, in the written opinion of
counsel to the Company, reasonably satisfactory to the requesting Holder, the
sale or disposition of such Holder's Registrable Securities, in the manner
proposed by such Holder, may be effected without registering such Securities
under the Securities Act.
(c) If any demand registration is an underwritten offering the
Holders of a majority of the Registrable Securities to be included in such
demand registration will select a managing underwriter or underwriters to
administer the offering, which underwriter or underwriters shall be reasonably
satisfactory to the Company.
3. Incidental Registration. In the event that (but without any
obligation to do so), after the Effective Date, the Company proposes to register
any shares of Registrable Securities in connection with the underwritten public
offering of such shares solely for cash on any form of Registration Statement in
which the inclusion of Registrable Securities is appropriate (other than a
registration (i) relating solely to the sale of securities to participants in a
Company stock plan, (ii) pursuant to a Registration Statement on Form S-4 or
Form S-8 (or any successor forms) or any form that does not include
substantially the same information, other than information relating to the
selling shareholders or their plan of distribution, as would be required to be
included in a demand registration statement under Section 2 covering the sale of
Registrable Securities, (iii) in connection with any dividend reinvestment or
similar plan or (iv) for the sole purpose of offering securities to another
entity or its security holders in connection with the acquisition of assets or
securities of such entity or any similar transaction), the Company shall
promptly give Ivaco written notice of such registration at least thirty (30)
days before the anticipated filing date of any such Registration Statement. Upon
the written request of any Holder within fifteen (15) days after the date of
such notice from the Company, the Company shall cause to be registered under the
Securities Act all of the Registrable Securities that such Holder has so
requested to be registered on such Registration Statement. The Company shall not
be required to proceed with, or maintain the effectiveness of, any registration
of its securities after giving the notice herein provided, and the right of any
Holder to have Registrable Securities included in such Registration Statement
shall be conditioned upon participation in any underwriting to the extent
provided herein. The Company shall not be required to include any Registrable
Securities in such underwriting unless the Holders thereof enter into an
underwriting agreement with the underwriter(s) selected by the Company in
customary form, and upon terms and conditions agreed upon between the Company
and such underwriter(s). In the event that the underwriter(s) shall advise the
Company that marketing or other factors require that less than 100% of the
Registrable Securities requested by the Holder or Holders of Registrable
Securities be underwritten, then the Company shall so advise all Holders of
Registrable Securities that would otherwise be underwritten pursuant hereto. The
underwriter(s) may exclude some or all of the Registrable Securities from such
underwriting to the extent and in the amount that the
<PAGE>
underwriter(s) advise the Company that less than 100% of the Registrable
Securities requested to be registered can be marketed and the number of
Registrable Securities, if any, that may be included in the underwriting shall
be allocated among all Holders thereof in proportion (as nearly as practicable)
to the number of Registrable Securities which each Holder requested be included
in such registration; provided, however, that the number of Registrable
Securities requested to be registered by the Management Purchasers shall be
reduced to zero before the number of Registrable Securities requested to be
registered by Ivaco shall be reduced by any amount. Nothing in this Section 3 is
intended to or shall diminish the number of securities to be included by the
Company in such underwriting. The Company and the underwriter(s) selected by the
Company shall make all determinations with respect to the timing, pricing and
other matters related to the offering of securities pursuant to this Section 3.
4. Registration Procedure. Whenever required under this
Agreement to effect the registration of the Registrable Securities, the Company
shall as expeditiously as reasonably possible:
(a) prepare and file with the SEC, as soon as practicable, a
Registration Statement with respect to such Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to become
effective, and keep such Registration Statement effective for up to one hundred
eighty (180) days or such shorter period as shall be required to sell all of the
Registrable Securities covered by such Registration Statement; notwithstanding
the foregoing, the Company shall have no obligation to cause any Registration
Statement to become effective prior to the date the Company has published its
financial results for the third fiscal quarter of 1996. If the Holders of a
majority of the Registrable Securities to be included in such registration
statement notify the Company in writing that they have selected one firm of
attorneys ("Sellers Counsel") to represent them in connection with such
registration, then at least five business days before filing with the Commission
such registration statement, the Company will furnish to Sellers Counsel copies
of such registration statement as proposed to be filed, and thereafter will
furnish to each seller of Registrable Securities such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such seller
and to change the registration statement (but not including any document
incorporated therein by reference) as it relates to such seller or Sellers
Counsel as requested by such seller or Sellers Counsel on a timely basis, and to
reasonably consider other changes to the registration statement (but not
including any document incorporated therein by reference) reasonably requested
by such seller or Sellers Counsel on a timely basis, in light of the
requirements of the Securities Act and any other applicable laws and
regulations;
(b) prepare and file with the SEC such amendments,
post-effective amendments and supplements to such Registration Statement and the
prospectus used in connection with such Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities covered by such Registration
Statement;
<PAGE>
(c) furnish to the Holders, without charge, such number of
copies of a prospectus, including a preliminary prospectus, and any amendments
or supplements thereto as such Holders may reasonably request and a reasonable
number of copies of the then-effective Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(d) promptly after the filing of any document that is to be
incorporated by reference into a Registration Statement or prospectus, provide
copies of such document to Ivaco;
(e) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a registration statement at the
earliest possible moment and to prevent the entry of such an order;
(f) use its reasonable best efforts to register and qualify
the securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders; provided, however, that the Company shall not be
required to qualify to do business, file a general consent to service of process
or subject itself to taxation in any such states or jurisdictions where it would
not otherwise be required to so qualify to do business or consent to service of
process or subject itself to taxation;
(g) if it knows thereof, notify the Holders of shares covered
by such Registration Statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the occurrence of any
event as a result of which in its judgment the prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing;
(h) use its reasonable best efforts to cause all Registrable
Securities covered by the Registration Statement to be listed on each national
securities exchange on which shares of the Company's Common Stock are then
listed, if eligible, or if the Common Stock is not then so listed, the NASDAQ
National Market System, if eligible, or in the over- the-counter market, as
shown by the NASDAQ System Level 1 (or comparable system), if eligible;
(i) cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends, and enable such Registrable
Securities to be in such denominations and registered in such names as the
Holders may request at least two (2) business days prior to any sale of
Registrable Securities; and
(j) pay or cause to be paid all Registration Expenses.
<PAGE>
5. Right to Withdraw Registration Request. The Holders may
withdraw a request for registration or inclusion hereunder at any time but shall
lose one (1) of their rights to cause the Company to register the Registrable
Securities pursuant to Section 2 hereof if a request for registration under
Section 2 was withdrawn; provided, however, that if the request is withdrawn as
a result of information concerning the business or financial condition of the
Company which materially and adversely differs from information regarding the
Company publicly available on the date on which such registration was requested,
the foregoing provisions shall not be applicable.
6. Right to Withdraw Registration. Notwithstanding anything
herein to the contrary, the Company may delay, suspend or withdraw any
registration or qualification of Registrable Securities required pursuant to
this Agreement if the Company in good faith determines that any such
registration would adversely affect an offering of any securities of the Company
which is then in process or if the Company is aware of other pending
developments or any material corporate event and the Company is not in a
position to timely prepare and file such Registration Statement, or to move
forward with the processing of such Registration Statement by the SEC. If the
Company exercises its right to withdraw a registration pursuant to this Section
6 or the registration fails to become effective for any reason, the related
request to register shall not be counted as an exercise of a demand registration
right under Section 2 hereof.
7. Obligation of Holders to Furnish Information. It shall be a
condition precedent to the obligations of the Company to take any action
pursuant to this Agreement with respect to the Registrable Securities that the
Holders thereof furnish to the Company such information regarding themselves,
the Registrable Securities held by them, and the intended method of disposition
of such Registrable Securities as shall be required under the Securities Act or
the Exchange Act to effect the registration of the Holders' Registrable
Securities.
The Holders agree that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in Section 4(f)
hereof, the Holders shall forthwith discontinue disposition of the Registrable
Securities pursuant to the then current prospectus until (i) the Holders are
advised in writing by the Company that a new Registration Statement covering the
offer of Registrable Securities has become effective under the Securities Act,
or (ii) the Holders receive copies of a supplemented or amended prospectus
contemplated by Section 4 hereof, or (iii) until the Holders are advised in
writing by the Company that the use of the then current prospectus may be
resumed. The Company shall use its reasonable best efforts to limit the duration
of any discontinuance of disposition of Registrable Securities pursuant to this
paragraph.
8. Effectiveness of Registration. Notwithstanding the
obligation of the Company to effect no more than three (3) registrations
requested pursuant to Section 2 hereof, a registration requested pursuant to
Section 2 hereof shall not be deemed to have been effected if (i) the
Registration Statement has not been kept effective for the period required under
Section 4(a) of this Agreement, or (ii) the offering of Registrable Securities
pursuant to such registration does not commence due to any reason other than
withdrawal by the Holder.
<PAGE>
9. Indemnification and Contribution.
(a) Indemnification by the Company. In the event any
Registrable Securities are included in a Registration Statement pursuant to this
Agreement, the Company hereby agrees to indemnify and hold harmless the Holders,
their partners, officers, employees and directors and each person who controls
such Holder (within the meaning of the Securities Act) and any agent thereof
against all losses, claims, damages, liabilities or expenses (including
reasonable expenses of investigation), joint or several, or actual or threatened
actions in respect thereof (collectively, "Losses") to which such Holders may
become subject under the Securities Act, or otherwise, to the extent such Losses
arise out of, or are based upon, any untrue statement or alleged untrue
statement of any material fact contained in such Registration Statement, any
related preliminary, final or summary prospectus, or any amendment or supplement
thereto, or any document incorporated by reference into any of the foregoing, or
arise out of, or are based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Holders for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Losses; provided, however, that the Company will not be so
liable to the extent that any such Losses arise out of, or are based upon, an
untrue statement or alleged untrue statement of a material fact or an omission
or alleged omission to state a material fact in such Registration Statement,
such preliminary, final or summary prospectus, or any such amendment or
supplement thereto, or any such document incorporated by reference into any of
the foregoing, in reliance upon, and in conformity with, information furnished
in writing to the Company by or on behalf of the Holders expressly for use in
such document; provided, further, that the Company shall not be liable, and this
indemnification agreement shall not apply, to the extent that any such Losses
are attributable to the failure of the Holders (or agent acting on their behalf)
to deliver a final prospectus (or amendment or supplement thereto) that corrects
a material misstatement or omission contained in the preliminary prospectus (or
final prospectus) or to any misstatement or omission of the Holders' selling
broker(s). In connection with an underwritten offering, the Company will
indemnify the underwriters thereof, their partners, officers, employees and
directors and each person who controls such underwriters (within the meaning of
the Securities Act) and any agent thereof at least to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities.
(b) Indemnification by the Holders of Registrable Securities.
With respect to written information furnished to the Company expressly for use
in connection with any registration pursuant to the terms of this Agreement by
or on behalf of any Holder for use in a Registration Statement, any related
preliminary, final or summary prospectus, or any supplement or amendment
thereto, or any document incorporated by reference into any of the foregoing,
the Holders whose shares are being registered pursuant to the Registration
Statement shall agree in writing to severally, and not jointly, indemnify and
hold harmless the Company, and its directors, officers and employees and each
person, if any, who "controls" (within the meaning of the Securities Act) the
Company (the "the Company Indemnitees") against any Losses to which the Company
or such other person entitled to indemnification hereunder may become subject
under the Securities Act, or otherwise, insofar as such Losses arise out of, or
are based upon, any untrue statement or alleged
<PAGE>
untrue statement of any material fact contained in such Registration Statement,
such preliminary, final or summary prospectus, or any such amendment or
supplement thereto, or any such document incorporated by reference into any of
the foregoing, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and such Holders shall
reimburse the Company Indemnitees for any legal or other expenses reasonably
incurred by it or them in connection with investigating or defending any such
Losses, in each case to the extent, but only to the extent, that the same arises
out of, or is based upon, an untrue statement or alleged untrue statement of a
material fact or an omission or alleged omission to state a material fact in
such Registration Statement, such preliminary, final or summary prospectus, any
such amendment or supplement thereto, or any such document incorporated by
reference into any of the foregoing, in reliance upon, and in conformity with,
such information.
(c) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party hereunder of notice of any claim or the
commencement of any action by a claimant not an indemnified party hereunder
("Third-Party Claim"), the indemnified party shall, if a claim for
indemnification in respect thereof is expected to be made by such indemnified
party against an indemnifying party, promptly notify such indemnifying party in
writing of such Third-Party Claim as soon as is reasonably practicable after
said claim is actually known to the indemnified party; provided, however, that
the right of an indemnified party to be indemnified hereunder in respect of
Third-Party Claims shall not be adversely affected by such indemnified party's
failure to notify the indemnifying party of such Third-Party Claim unless, and
then only to the extent that, an indemnifying party is actually damaged or
suffers any Loss or incurs any additional expense as a result thereof. The
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability that it may have to any indemnified party under law or
otherwise than under this Section 9. If any such Third-Party Claim is brought
against an indemnified party, and it promptly notifies the indemnifying party
thereof, the indemnifying party shall be entitled to assume the defense thereof
with counsel selected by the indemnifying party and reasonably satisfactory to
the indemnified party provided that the indemnifying party notifies the
indemnified party of its election to assume the defense of such claim within
twenty (20) days of receipt of notice of the claim from the indemnified party.
After the indemnifying party gives notice to the indemnified party of its
election to assume the defense of such Third-Party Claim, (i) except as set
forth below, the indemnifying party shall not be liable to the indemnified party
for any legal or other expense subsequently incurred by the indemnified party in
connection with the defense thereof, (ii) the indemnifying party shall not be
liable for the costs and expenses of any settlement of such claim or action
unless such settlement was effected with the written consent of the indemnifying
party, which shall not be unreasonable withheld, or the indemnified party waived
any rights to indemnification hereunder in writing, in which case the
indemnified party may effect a settlement without such consent at its own cost
and expense, and (iii) the indemnified party shall be obligated to cooperate
with the indemnifying party in the investigation of such claim or action and
shall not unreasonably prejudice the indemnifying party's subrogation rights.
The indemnified party will have the right to employ its counsel in any such
action, but the fees and expenses of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been
<PAGE>
authorized in writing by the indemnifying party, (ii) the indemnified party has
reasonably concluded that there may be a conflict of interest between the
indemnifying party and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying party will not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying party has not in fact employed counsel to assume the defense of
such action within twenty (20) days after receiving notice of the commencement
of the action, in each of which cases the fees and expenses of counsel will be
at the expense of the indemnifying party or parties. All such fees and expenses
will be reimbursed promptly as they are incurred.
(d) Contribution. If for any reason the
indemnification provided for in Sections 9(a) or (b) hereof is unavailable to an
indemnified party or is insufficient to hold it harmless as contemplated
therein, then the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such Loss in such proportion
as is appropriate to reflect not only the relative benefits received by the
indemnifying party and the indemnified party, but also the relative fault of the
indemnifying party and the indemnified party, as well as any other relevant
equitable considerations. With respect to any claim, no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) Survival of Indemnification. The obligations under this
Section 9 shall survive the completion of any offering of Registrable Securities
in a Registration Statement pursuant to this Agreement, and otherwise.
(f) Limitation. Anything to the contrary contained in this
Section 9 hereof notwithstanding, no Holder of Registrable Securities shall be
liable for indemnification and contribution payments aggregating an amount in
excess of the maximum amount received by such holder in connection with any sale
of Registrable Securities as contemplated herein.
10. Amendment of Registration Rights. Any provision of this
Agreement may be amended or the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Ivaco. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Holder of any Registrable Securities and the Company.
11. Assignment of Registration Rights. The Registration Rights
may be assigned by Ivaco to a permitted transferee or assignee of Registrable
Securities and such transferee or assignee shall be deemed a Holder for purposes
hereof, provided that (i) the Company is, promptly upon such transfer, furnished
with written notice of the name and address of such transferee or assignee and
the Registrable Securities with respect to which such Registration Rights are
being assigned, (ii) the transfer of such Registrable Securities is effected in
accordance with all applicable securities laws, (iii) immediately following such
transfer the further disposition of such Registrable Securities by the
transferee or assignee is restricted to comply with the Securities Act, and (iv)
the transferee executes and agrees to be bound by this Agreement, a counterpart
of which executed by transferee shall be furnished to the Company.
<PAGE>
12. Information Confidential. The Holders may not use any
information received by them pursuant to this Agreement in violation of the
Exchange Act or reproduce, disclose, or disseminate such information to any
other person (other than its employees or agents having a need to know the
contents of such information and its attorneys), except to the extent reasonably
related to the exercise of rights under this Agreement, unless such information
has been made available to the public generally (other than by such recipient in
violation of this Section 12) or such recipient is required to disclose such
information by a governmental body or regulatory agency or by law in connection
with a transaction that is not otherwise prohibited hereby.
13. Notices. All notices, requests, demands, and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given and made upon being delivered either
by courier or fax delivery to the party for whom it is intended, provided that a
copy thereof is deposited, postage prepaid, certified or registered mail, return
receipt requested, in the United States or Canadian mail, bearing the address
shown in this Section for, or such other address as may be designated in writing
hereafter by, such party:
If to the Company:
Laclede Steel Company
One Metropolitan Square
211 North Broadway
St. Louis, Missouri 63102-2738
Attention: Michael H. Lane
With a copy to:
Bryan Cave LLP
One Metropolitan Square, Suite 3600
St. Louis, Missouri 63102
Attention: Frank P. Wolff, Jr.
Telephone: (314) 259-2000
Facsimile: (314) 259-2020
If to Ivaco:
Ivaco Inc.
Place Mercantile
770 Rue Sherbrooke Ouest
Montreal, Quebec,
Canada H3A 1G1
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
<PAGE>
One New York Plaza
New York, New York 10004-1980
Attention: Jeffrey Bagner
14. Earnings Statement. The Company will make
generally available to its security holders as soon as possible, but no later
than 45 days after the close of the period covered thereby (or 90 days if the
period ends December 31), an earnings statement (in form complying with the
provisions of Rule 158 of the regulations promulgated under the Securities Act)
covering a twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the effective date (as defined in said
Rule 158) of the Registration Statement.
15. Successors. This Agreement shall inure to the benefit of
and be binding upon the successors of each of the parties and the assigns of
Ivaco.
16. Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
17. Headings. The headings to sections and paragraphs in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning or interpretation hereof.
18. Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the substantive laws of the State
of Delaware, without reference to its principles of choice of law.
19. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
20. Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and is 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. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first written above.
IVACO INC.
By: /s/ Paul Ivanier
----------------------------
Name: Paul Ivanier
Title: President and Chief Executive Officer
LACLEDE STEEL COMPANY
By: /s/ John B. McKinney
----------------------------
Name: John B. McKinney
Title: President and Chief Executive Officer
<PAGE>
