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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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NEW JERSEY STEEL CORPORATION
(NAME OF SUBJECT COMPANY)
NEW JERSEY STEEL CORPORATION
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
646144 10 5
(CUSIP NUMBER OF CLASS OF SECURITIES)
GARY A. GIOVANNETTI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NEW JERSEY STEEL CORPORATION
NORTH CROSSMAN ROAD
SAYREVILLE, NEW JERSEY 08872
(732) 316-4100
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS ON
BEHALF OF THE PERSON FILING STATEMENT)
COPIES TO
THOMAS W. JACKSON, ESQ.
JACOBS PERSINGER & PARKER
77 WATER STREET
NEW YORK, NEW YORK 10005
(212) 607-6231
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This Solicitation/Recommendation Statement on Schedule 14D-9 (this "SCHEDULE
14D-9") relates to an offer by Co-Steel Merger Corporation, a Delaware
corporation (the "PURCHASER"), an indirect wholly-owned subsidiary of Co-Steel
Inc., a Canadian corporation ("CO-STEEL"), to purchase all of the Shares (as
defined below) of New Jersey Steel Corporation, a Delaware corporation (the
"COMPANY" or "NJ STEEL").
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is New Jersey Steel Corporation. The address
of its principal executive office is North Crossman Road, Sayreville, New Jersey
08872. The title of the class of equity securities to which this Schedule 14D-9
relates is the Common Stock, par value $.01 per share, of the Company (the
"SHARES").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule 14D-9 relates to the tender offer (the "OFFER") disclosed in
the Schedule 14D-1 dated November 28, 1997 (as amended or supplemented, the
"SCHEDULE 14D-1") filed with the Securities and Exchange Commission (the
"COMMISSION") by Purchaser, Co-Steel USA Holdings, Inc. and Co-Steel, relating
to an offer by the Purchaser to purchase all outstanding Shares at a price of
$23.00 per Share, net to the seller in cash, without interest (the "OFFER
PRICE"), upon the terms and subject to the conditions set forth therein. The
principal executive offices of Co-Steel are located at Scotia Plaza, 40 King
Street West, PO Box 130, Toronto, Ontario, Canada M5H 3Y2. The registered
offices of Purchaser and Holdings is 1013 Centre Road, Wilmington, Delaware.
ITEM 3. IDENTITY AND BACKGROUND.
(A) IDENTITY The name and business address of the Company, which is the
person filing this Schedule 14D-9, are set forth in Item 1 above. Unless the
context otherwise requires, references to the Company in this Schedule 14D-9 are
to the Company and its subsidiary, viewed as a single entity.
(B) CONTRACTS, AGREEMENTS, ETC.
GENERAL
The Offer is being made pursuant to a Tender Offer Agreement and Agreement
and Plan of Merger dated as of November 21, 1997 (the "TENDER AGREEMENT") among
the Company, the Company's majority stockholder Von Roll Holding AG ("VON
ROLL"), Purchaser and Co-Steel. A copy of the Tender Agreement is filed as
EXHIBIT A to this Schedule 14D-9 and is hereby incorporated by reference. The
Tender Agreement provides that, among other things, as soon as practicable after
the purchase of Shares pursuant to the Offer and the satisfaction of the other
conditions set forth in the Tender Agreement and in accordance with the relevant
provisions of the General Corporation Law of the State of Delaware ("DELAWARE
LAW" or the "DGCL"), Purchaser will be merged with the Company (the "MERGER").
Following consummation of the Merger, the Company will continue as the surviving
Company (the "SURVIVING COMPANY"). At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held by the Company or by any subsidiary of
the Company, or owned by the Purchaser or Shares held by stockholders who shall
have demanded and perfected appraisal rights, if any, under Delaware Law) will
be canceled and converted automatically into the right to receive the price per
Share paid pursuant to the Offer in cash, without interest (the "MERGER
CONSIDERATION"). The Tender Agreement is summarized in Item 3 of this Schedule
14D-9. Pursuant to a Stockholder Agreement dated November 21, 1997 between
Co-Steel and Von Roll (the "STOCKHOLDER AGREEMENT"), Von Roll has agreed to
tender the 3,561,500 shares of the Company owned by it in the Offer. The
Stockholder Agreement also provides that in the event the Offer is not completed
for any reason other than a failure of the Conditions to the Offer (other than
the condition prohibiting a change of
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recommendation by the Board of Directors of NJ Steel (the "NJ STEEL BOARD"), see
"The Tender Agreement--Conditions to the Offer" below), Co-Steel will purchase
the Shares owned by Von Roll for $23.00 per share. A copy of the Stockholder
Agreement is annexed hereto as EXHIBIT B.
INDEMNIFICATION AGREEMENTS
The Restated Certificate of Incorporation of the Company, as amended to date
(the "CERTIFICATE OF INCORPORATION"), provides that the Company shall indemnify
its officers and directors to the fullest extent permitted by Delaware Law, and
that no director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director.
The Certificate of Incorporation of the Company has been filed as EXHIBIT C to
this Schedule 14D-9 and is hereby incorporated by reference. Article VI of the
By-Laws of the Company also provides for indemnification of officers and
directors of the Company. Article VI of the By-Laws of the Company has been
filed as EXHIBIT D to this Schedule 14D-9 and is hereby incorporated by
reference.
See "The Tender Agreement--Indemnification" below for information with
respect to the Purchaser's agreement to continue the existing indemnification
arrangements with officers and directors of the Company for a period of 6 years.
PURCHASE OF OPTIONS
The Tender Agreement provides that at the time of the Merger, all
outstanding options under the Company's Incentive Stock Option Plan and 1996
Stock Option Plan, whether or not currently exercisable, will be purchased by
Co-Steel for a purchase price equal to the difference between the Offer Price of
$23.00 per share and the exercise price of such options. Options under the two
plans are held by two individuals--Mr. Gary Giovannetti, the President and Chief
Executive Officer, holds options covering 115,000 shares at an exercise price of
$5.00 per share, and a mill superintendent holds options covering 12,500 shares
at and exercise price of $11.75 per share.
THE TENDER AGREEMENT
VOTE REQUIRED TO APPROVE MERGER. The DGCL requires that the plan of merger
must be approved by the NJ Steel Board and, if the "short form" merger procedure
described below is not available, by the holders of a majority of the Company's
Common Stock. The NJ Steel Board approved the Offer, the Merger and the Tender
Agreement at its November 20, 1997 meeting and the only additional action of the
Company that may be necessary is approval by the holders of Common Stock if the
"short-form" merger procedure described below is not available. Under the DGCL,
the affirmative vote of holders of a majority of the outstanding Common Stock
(including any Common Stock owned by the Purchaser) is generally required to
approve a Merger. As Co-Steel and/or Purchaser will acquire a majority of the
outstanding Common Stock, through Von Roll's participation in the Offer or
otherwise through purchasing the 3,561,500 Common Stock owned by Von Roll
pursuant to the Stockholder Agreement, Co-Steel will have sufficient voting
power to effect the Merger without the vote of any other stockholder of the
Company. However, the DGCL also provides that if a corporation owns at least 90%
of each class of stock of a subsidiary, it can effect a "short-form" merger with
that subsidiary without the action of the subsidiary's other stockholders.
Accordingly, if, as a result of the Offer or otherwise, Co-Steel and/or
Purchaser acquires or controls the voting power of at least 90% of the
outstanding Common Stock, they could (and, under the Tender Agreement, are
required to) effect the Merger using the "short-form" merger procedures without
prior notice to, or any action by, any other stockholder of the Company.
CONDITIONS TO THE MERGER. The Tender Agreement provides that the Merger is
subject to the satisfaction of certain conditions, including the following: (1)
if required by applicable law, the Tender Agreement having been approved and
adopted by the affirmative vote of holders of a majority of the outstanding
Common Stock, (2) no statute, rule, regulation, executive order, decree,
temporary restraining
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order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other Federal, state or local government or any court,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "GOVERNMENTAL ENTITY"), or other legal restraint or
prohibition preventing the consummation of the Merger being in effect; provided,
however, that each of the parties shall have used reasonable efforts to prevent
the entry of any such injunction or other order and to appeal as promptly as
possible any injunction or other order that may be entered and (3) the Purchaser
shall have previously accepted for payment and paid for the Common Stock
pursuant to the Offer.
TERMINATION OF THE TENDER AGREEMENT. The Tender Agreement may be terminated
at any time prior to the Effective Time, whether before or after approval by the
stockholders of the Company (provided, however, that if Common Stock is
purchased pursuant to the Offer, neither Co-Steel nor Purchaser may terminate
the Tender Agreement), (1) by mutual written consent of Purchaser and the
Company, (2) by either Purchaser or the Company (a) if the Purchaser has not
accepted for payment any Common Stock pursuant to the Offer prior to May 5,
1998, PROVIDED, HOWEVER, that the right to terminate the Tender Agreement
pursuant to this sentence will not be available to (i) Purchaser, if Purchaser
has breached its obligations under the Tender Agreement or (ii) any party whose
failure to perform any of its obligations under the Tender Agreement results in
the failure of any such condition or if the failure of such condition results
from facts or circumstances that constitute a willful breach of a representation
or warranty under the Tender Agreement by such party, or (b) if any Governmental
Entity shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance for
payment of, or payment for, Common Stock pursuant to the Offer or the Merger and
such order, decree or ruling or other action has become final and nonappealable,
(3) by Purchaser prior to the purchase of Common Stock pursuant to the Offer in
the event of a breach or failure to perform by the Company of any
representation, warranty, covenant or other agreement contained in the Tender
Agreement which (i) would give rise to the failure of a condition set forth in
paragraph (e) or (f) under "Certain Conditions of the Offer" and (ii ) cannot be
or has not been cured within 30 days after the giving of written notice to the
Company, (4) by Co-Steel or the Purchaser if either Co-Steel or the Purchaser is
entitled to terminate the Offer as a result of the occurrence of any event set
forth in paragraph (d) under "Certain Conditions of the Offer," (5) by the
Company in accordance with the terms of the Tender Agreement described below in
"Takeover Proposals," provided that it has complied with all provisions thereof,
including the notice provisions therein, and that it complies with applicable
requirements relating to the payment (including the timing of any payment) of
the Termination Fee (as defined below) as provided in the terms of the Tender
Agreement described below in "Fees and Expenses" (it being understood that as
provided in the terms of the Tender Agreement described below in the second
paragraph of "Takeover Proposals" the Company will be required to terminate the
Tender Agreement) or (6) by the Company in the event of a material breach or
failure to perform in any material respect by Co-Steel or the Purchaser of any
representation, warranty, covenant or other agreement contained in the Tender
Agreement which cannot be or has not been cured within 30 days after the giving
of written notice to Co-Steel and the Purchaser.
TAKEOVER PROPOSALS. The Tender Agreement provides that the Company will
not, nor will it permit any of its subsidiaries to, nor will it authorize or
permit any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any subsidiary to, director or indirectly, (1) solicit, initiate or knowingly
encourage the submission of any Takeover Proposal (as defined below) or (2)
participate in any discussions or negotiations regarding, or furnish to any
person any nonpublic information with respect to, or take any other action
designed or reasonably likely to facilitate any inquiries or the making of any
proposal that constitutes any Takeover Proposal; provided, however, that if, at
any time prior to the acceptance for payment of Common Stock pursuant to the
Offer, the NJ Steel Board determines in good faith, after consultation with
outside counsel, that it is reasonably advisable to do so in order to comply
with its fiduciary duties to the Company's stockholders under applicable law,
the Company may, in response to a Takeover Proposal which was not solicited
subsequent to the date of the Tender Agreement, and subject to compliance with
the notification
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provisions discussed below, (a) furnish information with respect to the Company
to any person pursuant to a customary confidentiality agreement and (b)
participate in discussions and negotiations regarding such Takeover Proposal.
The Tender Agreement provides that any violation of the restrictions set forth
in the preceding sentence by any director, officer or employee of the Company or
any of its subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative or agent of the Company or any of its
subsidiaries will be deemed to be a breach of the Company's obligations under
the Tender Agreement. The Tender Agreement defines "TAKEOVER PROPOSAL" as any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of a substantial amount of assets of the Company and its
subsidiaries, taken as a whole (other than the purchase of the Company's
products in the ordinary course of business), or more than a 40% interest in the
total voting securities of the Company or any of its subsidiaries or any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 40% or more of any class of equity securities of the Company
or any of its subsidiaries or any merger, consolidation, business combination,
sale of substantially all the assets, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by the Tender Agreement.
The Tender Agreement provides further that unless the NJ Steel Board has
terminated the Tender Agreement as described above, neither the NJ Steel Board
nor any committee thereof may (1) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Co-Steel, the approval or recommendation by such
Board of Directors or such committee of the Offer, the Merger or the Tender
Agreement, (2) approve or recommend, or propose publicly to approve or
recommend, any Takeover Proposal or (3) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the acceptance for
payment of Common Stock pursuant to the Offer the NJ Steel Board determines in
good faith, after consultation with outside counsel, that it is reasonably
advisable to do so in order to comply with its fiduciary duties to the Company's
stockholders under applicable law, the NJ Steel Board may, in response to an
unsolicited Superior Proposal (as defined below) (subject to the following
proviso), (a) withdraw or modify its approval or recommendation of the Offer,
the Merger or the Tender Agreement or (b) approve or recommend any such Superior
Proposal if concurrently with such approval or recommendation the Company
terminates the Tender Agreement and enters into an Acquisition Agreement with
respect to a Superior Proposal; provided, that in the case of this clause (b),
only at a time that is after the later of (i) the third business day following
Co-Steel's receipt of written notice advising Co-Steel that the NJ Steel Board
has received a Superior Proposal, specifying the material terms of such Superior
Proposal and identifying the person making such Superior Proposal and (ii) in
the event of an amendment to the price or any material term of a Superior
Proposal, one business day following Co-Steel's receipt of written notice
containing the material terms of such amendment, including any change in price
(it being understood that each further amendment to the price or any material
terms of a Superior Proposal will necessitate an additional written notice to
Co-Steel and an additional one business day period prior to which the Company
can take the actions set forth in clause (b) above). The Tender Agreement
defines a "Superior Proposal" as any bona fide Takeover Proposal made by a third
party (1) that is on terms which the NJ Steel Board determines in its good faith
judgment (based on consultation with the Company's financial advisor) to be more
favorable to the Company's stockholders than the Offer and the Merger and (2)
for which financing, to the extent required, is then committed or which, in the
good faith judgment of the NJ Steel Board, is capable of being obtained by such
third party.
In addition to the obligations of the Company set forth in the preceding
paragraphs, the Tender Agreement provides that the Company must promptly advise
Co-Steel orally and in writing of any request for nonpublic information (except
in the ordinary course of business and not in connection with a possible
Takeover Proposal) or of any Takeover Proposal known to it, the material terms
and conditions of such request or Takeover Proposal and the identify of the
person making such request or Takeover Proposal.
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The Company must promptly inform Co-Steel of any material change in the details
(including amendments or proposed amendments) of any such request or Takeover
Proposal.
The Tender Agreement provides that nothing contained therein will prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-(a) promulgated under the Exchange Act or
from making any disclosure to the Company's stockholders if, in the good faith
judgment of the NJ Steel Board, after consultation with outside counsel, failure
to so disclose would be inconsistent with applicable law; provided, however,
that neither the Company nor its Board of Directors nor any committee thereof
may, except as permitted by the Tender Agreement, withdraw or modify, or propose
to withdraw or modify, its position with respect to the Offer, the Merger or the
Tender Agreement or approve or recommend, or propose to approve or recommend, a
Takeover Proposal.
FEES AND EXPENSES. The Tender Agreement provides that except as provided
below, all fees and expenses incurred in connection with the Offer, the Merger,
the Tender Agreement and the transactions contemplated by the Tender Agreement
will be paid by the party incurring such fees or expenses, whether or not the
Offer or the Merger is consummated. The Tender Agreement further provides that
the Company will pay, or cause to be paid, in same day funds to Co-Steel the
amount of Five Million ($5,000,000) Dollars (the "Termination Fee") under the
circumstances and at the times set forth as follows: (1) if the Company
terminates the Tender Agreement in accordance with the provisions described
above in clause 5 of "Termination of the Tender Agreement," the Company must pay
50% of the Termination Fee simultaneously with such termination, and 50% of the
Termination Fee upon consummation of the transactions contemplated by the
Superior Proposal giving rise to the Company's right to terminate the Tender
Agreement in accordance with the provisions described above in clause 5 of
"Termination of the Tender Agreement," or upon the earlier consummation of
another Company Acquisition (as defined below); provided that such other Company
Acquisition is consummated within twelve months following termination of the
Tender Agreement, (2) if Co-Steel or the Purchaser terminates the Tender
Agreement in accordance with the provisions described above in clause 4 of
"Termination of the Tender Agreement" and in addition, if within twelve months
after such termination the Company enters into an Acquisition Agreement
providing for a Company Acquisition or the Company recommends to its
stockholders that they accept a Company Acquisition of the type referred to in
clause 3 of the definition of Company Acquisition described below, the Company
must pay (a) 50% of the Termination Fee simultaneously with the entering into of
such Acquisition Agreement or making of such recommendation and (b) 50% of the
Termination Fee upon consummation of the Company Acquisition which was the
subject of such Acquisition Agreement or recommendation, or upon the
consummation, prior to the expiration of such twelve month period, of any other
Company Acquisition (it being understood that if any Company Acquisition is
consummated within such twelve month period and the Company shall not have paid
any amount pursuant to clause (a) above, that upon consummation of such Company
Acquisition the Company must pay 100% of the Termination Fee) and (3) if, at the
time of any termination of the Tender Agreement in accordance with the
provisions described above in clause 2(a) of "Termination of the Tender
Agreement" (as a result of a failure to obtain the Minimum Condition) or in
accordance with the provisions described above in clause 3 of "Termination of
the Tender Agreement," any person shall have publicly announced a proposal to
effect a Company Acquisition and if, within twelve months after such
termination, the Company shall enter into an Acquisition Agreement providing for
a Company Acquisition or the Company shall recommend to its stockholders that
they accept a Company Acquisition of the type referred to in clause 3 of the
definition of Company Acquisition described below, the Company must pay (a) 50%
of the Termination Fee simultaneously with the entering into of such Acquisition
Agreement or making of such recommendation and (b) 50% of the Termination Fee
upon consummation of the Company Acquisition which was the subject of such
Acquisition Agreement or recommendation, or upon the consummation, prior to the
expiration of such twelve month period, of any other Company Acquisition (it
being understood that if any Company Acquisition is consummated within such
twelve month period and the Company shall not have paid any amount pursuant to
clause (a) above, that upon consummation of such
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Company Acquisition the Company must pay 100% of the Termination Fee). The
Tender Agreement defines a "Company Acquisition" as any of the following
transactions: (1) a merger, consolidation, business combination or a
recapitalization pursuant to which the stockholders of the Company immediately
preceding such transaction hold less than 60% of the equity interests in the
surviving or resulting entity of such transaction (other than the transactions
contemplated by the Tender Agreement); (2) a sale by the Company of assets
(excluding the sale of the Company's products in the ordinary course of
business) representing in excess of 40% of the fair market value of the Company
immediately prior to such sale or the issuance by the Company to any person or
group of Common Stock representing in excess of 40% of the then outstanding
Common Stock of capital stock of the Company (other than in connection with an
underwritten public offering); or (3) the acquisition by any person or group, by
way of a tender offer, exchange offer, or by way of open market purchases, of
beneficial ownership of 40% or more of the then outstanding Common Stock of
capital stock of the Company.
CONDUCT OF BUSINESS BY THE COMPANY. The Tender Agreement provides that
until the earlier of termination of the Tender Agreement and consummation of the
Offer, the Company will, and will cause its subsidiaries to, carry on their
respective business in the ordinary course consistent with the manner conducted
prior to the execution of the Tender Agreement and, to the extent consistent
therewith, use commercially reasonable efforts to preserve intact their current
business organization, keep available the services of their current officers and
employees and preserve their relationships with customers, suppliers, and others
having business dealings with them. Without limiting the generality of the
foregoing, during the period from the date of the Tender Agreement until the
earlier termination of the Tender Agreement and consummation of the Offer,
except as otherwise contemplated by the Tender Agreement (or for certain matters
disclosed in connection therewith), the Company will not, and will not permit
any of its subsidiaries to, without Co-Steel's prior written consent (which will
not be unreasonably withheld):
(a) (1) increase the compensation payable to or to become payable to any
director, officer or employee (other than increases to employees, other than
officers, made in the ordinary course of business and consistent with past
practice); (ii) grant any severance or termination of pay (other than pursuant
to the normal severance policy of the Company as in effect on the date of the
Tender Agreement) to, or enter into any employment or severance agreement with,
any director, officer or employee; (iii) establish, adopt, enter into or amend
any employee benefit plan or arrangement except as may be required by applicable
law; or (iv) lend or contribute any funds to any director, officer, employee,
affiliate or associate of the Company;
(b) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of capital stock;
(c) (i) redeem, purchase or otherwise acquire any shares of its or any
securities or obligations convertible into or exchangeable for any shares of its
capital stock, or any options, warrants or conversion or other rights to acquire
any shares of its capital stock or any such securities or obligations; (ii)
effect any reorganization or recapitalization; or (iii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale (including the grant of any security
interest, liens, claims, pledges, limitations in voting rights, charges or other
encumbrances) of, any shares of any class of its capital stock (including shares
held in treasury), any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to acquire,
any such shares, other than the issuance of shares pursuant to the exercise of
Stock Options granted prior to the date hereof; or (ii) amend or otherwise
modify the terms of any such rights, warrants or options the effect of which
shall be to make such terms more favorable to the holders thereof; (provided
however, the Company may take action to accelerate the vesting of outstanding
stock options);
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(e) (i) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or (ii) otherwise acquire or agree to
acquire any assets of any other person (other than the purchase of assets from
suppliers or vendors in the ordinary course of business and consistent with past
practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose
of, or agree to sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, any of its assets or any assets of Subsidiary, except for
dispositions of inventories and of assets in the ordinary course of business and
consistent with past practice;
(g) release any third party from its obligations under any existing
standstill relating to a Competing Transaction or otherwise under
confidentiality agreements;
(h) propose or adopt any amendments to its Certificates of Incorporation or
By-Laws;
(i) (A) change any of its methods of accounting in effect at August 31,
1997, or (B) make or rescind any express or deemed election relating to taxes,
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, or change
any of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns for those employed in the preparation of the federal income tax returns
for the taxable year ending November 30, 1996, except, in the case of clause (A)
or clause (B), as may be required by law or changes in GAAP;
(j) incur any obligation for borrowed money or purchase money indebtedness,
whether or not evidenced by a note, bond, debenture or similar instrument (other
than Company Debt, as defined in the Tender Agreement, incurred in the ordinary
course of business (including previously budgeted capital expenditures), which
at November 30, 1997 (but not thereafter) shall not exceed $32 million exclusive
of any amount required to fund a settlement of the certain litigation, if
settled prior to November 30, 1997);
(k) enter into any arrangement, agreement or contract with any third party
(other than customers or suppliers in the ordinary course of business) which
provides for an exclusive arrangement with that third party or is more
restrictive on the Company or less advantageous to the Company than
arrangements, agreements or contracts existing on the date hereof;
(l) agree in writing or otherwise to do any of the foregoing.
BOARD OF DIRECTORS. The Tender Agreement provides the present directors
will serve as such until the Effective Time of the Merger. Upon the acceptance
for payment of, and payment for, Common Stock by the Purchaser pursuant to the
Offer, the Purchaser will have the power to replace all or part of the Board
with its own designees, subject to compliance with Section 14(f) of the Exchange
Act. Prior to replacing all or part of the Board, Purchaser will be required to
mail to the Company's stockholders an Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder--essentially the information on nominees required in a
Proxy Statement.
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INDEMNIFICATION. From and after the consummation of the Offer, Co-Steel
will, and will cause the Surviving Company to, fulfill and honor in all respects
the obligations of the Company pursuant to (1) each indemnification agreement in
effect at such time between the Company and each person who is or was a director
or officer of the Company at or prior to the Effective Time and (2) any
indemnification provisions under the Company's Restated Certificate of
Incorporation or By-Laws as each was in effect on the date of the Tender
Agreement (the persons to be indemnified pursuant to the agreements or
provisions referred to in clauses (1) and (2) of this sentence are referred to
as, collectively, the "INDEMNIFIED PARTIES"). Pursuant to the Tender Agreement,
the Certificate of Incorporation and By-Laws of the Surviving Company will
contain the provisions with respect to indemnification and exculpation from
liability set forth in the Company's Certificate of Incorporation and By-Laws on
the date of the Tender Agreement, which provisions will not be amended, repealed
or otherwise modified for a period of six years after the Effective Time in any
manner that would adversely affect the rights thereunder of any Indemnified
Party.
REASONABLE EFFORTS. Upon and subject to the terms and subject to the
conditions set forth in the Tender Agreement, Co-Steel, the Purchaser and the
Company have each agreed to use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with each other in doing, all things necessary, proper and advisable to
consummate and make effective, in the most expeditious manner practicable, the
Offer, the Merger and the other transactions contemplated by the Tender
Agreement, including using reasonable efforts to take the following actions: (1)
the taking of all reasonable acts necessary to cause the conditions of the Offer
to be satisfied, (2) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
avoid an action or proceeding by any Governmental Entity, (3) the obtaining of
all necessary consents, approvals or waivers from third parties, (4) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging the Tender Agreement or the consummation of the
transactions contemplated thereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (5) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, the Tender Agreement.
REPRESENTATIONS AND WARRANTIES. The Tender Agreement contains various
customary representations and warranties.
PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. The Tender
Agreement provides that after the acceptance for payment of Common Stock
pursuant to the Offer and prior to the Effective Time, the consent of Von Roll
is required for the Company to (1) amend or terminate the Tender Agreement, (2)
exercise or waive any of its rights or remedies under the Tender Agreement, (3)
extend the time for performance of Co-Steel and the Purchaser's respective
obligations under the Tender Agreement and (4) take any action to amend or
otherwise modify the Company's Certificate of Incorporation or By-Laws (or
similar governing instruments of the Company's subsidiaries) in violation of the
provisions of the Tender Agreement described above under "Indemnification."
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer or the Tender Agreement, the Purchaser will not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Common Stock after the termination or
withdrawal of the Offer), to pay for any Common Stock tendered pursuant to the
Offer unless (1) the Minimum Condition shall have been satisfied, (2) any
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the regulations thereunder (the "HSR Act") applicable to the
purchase of Common Stock pursuant to the Offer shall have expired or been
terminated and (3) the requirements of the New Jersey Industrial Site Recovery
Act are satisfied. Furthermore, Purchaser will not be required to accept for
payment or, subject as aforesaid, to pay for any Common Stock not theretofore
accepted for payment or paid for, and may, in accordance with the provisions of
the Tender Agreement described in the
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<PAGE>
subsection entitled "Termination of the Tender Agreement", terminate the Tender
Agreement or amend the Offer with the consent of the Company and Von Roll, if,
upon the scheduled expiration date of the Offer and before the acceptance of
such Common Stock for payment or the payment therefor, any of the following
conditions exist and is continuing and does not result principally from the
breach by Co-Steel or the Purchaser of any of their obligations under the Tender
Agreement:
(a) there shall be instituted or pending by any Governmental Entity any
suit, action or proceeding (i) challenging the acquisition by Co-Steel or
the Purchaser of any Common Stock under the Offer, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger, (ii) seeking
to prohibit or materially limit the ownership or operation by the Company,
Co-Steel or any of Co-Steel's subsidiaries of a material portion of the
business or assets of the Company or Co-Steel and its subsidiaries, taken as
a whole, or to compel the Company or Co-Steel to dispose of or hold separate
any material portion of the business or assets of the Company or Co-Steel
and its subsidiaries, taken as a whole, in each case as a result of the
Offer or the Merger or (iii) seeking to impose material limitations on the
ability of Co-Steel or the Purchaser to acquire or hold, or exercise full
rights of ownership of , any Common Stock to be accepted for payment
pursuant to the Offer including, without limitation, the right to vote such
Common Stock on all matters properly presented to the stockholders of the
Company or (iv) seeking to prohibit Co-Steel or any of its subsidiaries from
effectively controlling in any material respect any material portion of the
business or operations of the Company;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, by any Governmental Entity or court, other than the
application to the Offer or the Merger of ISRA and any applicable waiting
periods under the HSR Act, that would result in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred any material adverse change with respect
to the Company since the date of the Tender Agreement;
(d) the NJ Steel Board or any committee thereof shall have withdrawn or
modified in a manner adverse to Co-Steel or the Purchaser its approval or
recommendation of the Offer or the Merger or its adoption of the Tender
Agreement, or approved or recommended any Takeover Proposal;
(e) any of the representations and warranties of the Company set forth
in the Tender Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case at the date of the Tender Agreement and at the scheduled or extended
expiration of the Offer;
(f) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or material covenant of the Company to be performed or complied
with by it under the Tender Agreement;
(g) Parent and Sub shall not have received a certificate of the
President or Chief Financial Officer of the Company dated the expiration
date of the Offer (i) that the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality are true
and correct as and at such date, (ii) that the representations and
warranties that are not so qualified are true and correct in any material
respect as and at such date, and that (iii) the Company has performed in all
material respects any material obligation and complied in all material
respect with any material agreement or material covenant of the Company to
be performed or complied with by it; or
(h) the Tender Agreement shall have been terminated in accordance with
its terms;
which, in good faith judgment of Co-Steel or the Purchaser, in its sole
discretion, make it inadvisable to proceed with such acceptance of Common Stock
for payment or the payment therefor.
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<PAGE>
The Tender Agreement provides that (i) the conditions set forth in clause
(e) above shall be deemed not fulfilled only if the respects in which the
representations and warranties made by the Company (without giving effect to any
"materiality" limitations or references to "material adverse effect" set forth
therein) are inaccurate would have a material adverse effect on the Company, and
(ii) if the condition set forth in clause (f) is not fulfilled, Purchaser shall
not be obligated to purchase and pay for any Shares so long as such condition
remains unfulfilled, but Purchaser may not terminate the Offer due solely to
such failure until 30 days after it gives written notice to the Company of such
nonfulfillment and such nonfulfillment is not cured by the end of such 30-day
period.
The Tender Agreement provides that the foregoing conditions are for the sole
benefit of Co-Steel and the Purchaser and (except for the Minimum Condition)
may, subject to the terms of the Tender Agreement, be waived by Co-Steel and the
Purchaser in whole or in part at any time and from time to time in their sole
discretion. The failure by Co-Steel or the Purchaser at any time to exercise any
of the foregoing rights will not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances will
not be deemed a waiver with respect to any other facts and circumstances and
each such right will be deemed an ongoing right that may be asserted at any time
and from time to time.
The foregoing summary of the Tender Agreement is qualified in its entirety
by reference to the Tender Agreement, a copy of which is filed as Exhibit (c)(1)
to this Schedule 14D-9. The Tender Agreement should be read in its entirety for
a more complete description of the matters summarized above.
STOCKHOLDER AGREEMENT
TENDER OF SHARES. Pursuant to the Stockholder Agreement, Von Roll has
agreed to validly tender (or cause to be validly tendered) in accordance with
the terms of the Offer, and not to withdraw, all of the Shares owned by it (and
any shares acquired by Von Roll in any capacity after the date of the
Stockholder Agreement by means of purchase, dividend, distribution or in any
other way, the "Von Roll Shares").
SALE AND PURCHASE. The Stockholder Agreement also provides that in the
event the Von Roll shares are not purchased by the Parent pursuant to the Offer
because the Offer is terminated for any reason other than a failure of an Offer
Condition other than condition (d) thereof as described in Section 14, then Von
Roll shall sell its Shares to the Parent and the Parent has agreed to purchase
the Von Roll Shares at a purchase price of $23.00 per share (the "Purchase
Price"). In the event the Von Roll Shares are purchased as described in the
preceding sentence, Parent has agreed at the time of the purchase and sale to
(1) purchase from Von Roll the outstanding subordinated loans to the Company
held by Von Roll made pursuant to a Credit Agreement dated June 6, 1996 between
Company and Von Roll, at the face amount thereof, plus all interest accrued but
unpaid to the date of such purchase, (ii) provide or cause to be provided to the
Company on a timely basis substitute working capital financing and financing
sufficient to repay in full the Company's obligations to PNC Bank under that
certain Loan and Security Agreement dated June 6, 1996, if required by said
lender and (iii) provide, or cause the Company to provide a substitute guarantee
or otherwise act with Von Roll to effectuate the prompt release of Von Roll from
its guarantee of certain contractual obligations of the Company.
If the Von Roll shares are purchased under the Stockholder Agreement as
discussed above, the closing of the sale and conveyance of the Von Roll Shares
and the subordinated obligations shall take place on the third business day
following satisfaction or waiver of the conditions set forth in the Stockholder
Agreement or such other time as the parties thereto may agree (the "Closing
Date").
Under the Stockholder Agreement, Von Roll's obligation to sell its Shares
and the subordinated obligations on the Closing Date is subject to the
satisfaction of the following conditions, any or all of which to the extent
permitted by applicable law, may be waived in writing by Stockholder; (a) all
representations and warranties of Parent in the Stockholder Agreement shall be
true, correct and complete in all material respects on and as of the Closing
Date; (b) no injunction or order prohibiting the consummation of the
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<PAGE>
transactions contemplated by the Stockholder Agreement shall be outstanding; (c)
all waiting periods under the HSR shall have expired or been terminated; (d) a
satisfactory remediation agreement shall have been entered into with the NJDEP,
or the requirements of ISRA shall have otherwise been satisfied; and (e) Parent
shall have performed and complied with all obligations under the Stockholder
Agreement that are to be performed or complied with by Parent prior to or on the
Closing Date.
In addition, the Parent's obligation to purchase the Von Roll Shares on the
Closing Date is subject to the satisfaction of the following conditions, any or
all of which, to the extent permitted by applicable law, may be waived in
writing by the Parent; (a) all representations and warranties of Von Roll in the
Stockholder Agreement shall be true, correct and complete in all material
respects on and as of the Closing Date; (b) Von Roll shall have performed and
complied with all obligations under the Stockholder Agreement that are to be
performed or complied with by Stockholder prior to or on the Closing Date; (c)
all waiting periods under the HSR shall have expired or been terminated; (d) a
satisfactory remediation agreement shall have been entered into with the NJDEP,
or the requirements of ISRA shall have otherwise been satisfied; (e) Von Roll
and the Company shall have terminated without further payment by, or liability
of the Company for, any termination, severance or similar fees, (i) the
Management and Technical Services Agreement between them and (ii) the employment
by the Company of any Von Roll employees on an interim basis (including the
Chief Financial Officer); and (f) the closing condition of the Merger Agreement
with respect to injunctions and restraints shall have been satisfied or, to the
extent permitted by applicable law, waived.
The foregoing summary of the Stockholder Agreement is qualified in its
entirety by reference to the Stockholder Agreement, a copy of which is filed as
EXHIBIT B to this Schedule 14D-9. The Stockholder Agreement should be read in
its entirety for a more complete description of the matters summarized above.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors
The Board has unanimously approved the Offer and the Merger and determined
that the terms of the Offer and the Merger are fair to, and in the best
interests of, the stockholders of the Company and unanimously recommends that
stockholders of the Company accept the Offer and tender their Shares to
Purchaser.
As set forth in the Tender Agreement, the Purchaser will purchase Shares
tendered prior to the close of the Offer if the conditions to the Offer have
been satisfied (or waived).
(b) Background and Reasons for Recommendation
In December, 1993, Von Roll had advised the NJ Steel Board that Von Roll was
interested in selling its approximately 60% ownership of the Company. During
1994, the Company and Von Roll sought a purchaser for the Company and on October
5, 1994, the Company entered into a Plan and Agreement of Merger, and Von Roll
entered into a Stock Purchase Agreement, with International Metals Acquisition
Corp. ("IMAC") pursuant to which IMAC was to acquire all of the Shares at $18.00
per share. IMAC was unable to obtain financing for the transaction and that
agreement was terminated in February, 1995. No effort was made at that time to
find another acquiror because the Company began experiencing operational
problems with its newly-installed melt shop which made a sale at an attractive
price unlikely.
At a meeting of NJ Steel Board held on September 27, 1996, Von Roll
reaffirmed its intention to sell its interest in the Company at such time as the
Company's financial results made it attractive to do so. The NJ Steel Board
authorized interviews of prospective financial advisors to be retained by the
Company to explore in a transaction to realize maximum value for all
stockholders. At a meeting of the NJ Steel Board held on June 17, 1997, the NJ
Steel Board reviewed the candidates for financial advisor. Mr. Robert LeBuhn
agreed to act as a special committee, to make an independent determination as to
the fairness to
12
<PAGE>
the stockholders of NJ Steel other than Von Roll (the "MINORITY STOCKHOLDERS")
of any transaction proposed.
At a luncheon meeting in New York City on June 18, 1997, Lew C. Hutchinson,
President and Chief Executive Officer of Co-Steel, advised Georg Hahnloser,
Chairman of the Company and Chief Operating Officer of Von Roll, that Co-Steel
would be interested in exploring the possible purchase of the Company in the
event that a decision were made to sell. Mr. Hutchinson was advised that the
Company intended to retain an investment banker to advise it with respect to
such matters and that Co-Steel's interest would be kept in mind.
By letter dated July 21, 1997, the Company retained the firm of BT
Wolfensohn as its financial advisor to seek a purchaser for all of the stock of
the Company and to advise the NJ Steel Board as to the fairness of the proposed
transaction, from a financial point of view, to the Minority Stockholders.
During July and August, 1997, BT Wolfensohn developed a marketing strategy
and assisted the Company in producing an information memorandum describing the
Company. In August and September, 1997, BT Wolfensohn contacted potential
acquirors. On or about September 9, 1997, Ted Reilly, Vice President and Chief
Financial Officer of Parent, telephoned Alexander Prelat, Interim Chief
Financial Officer of the Company, and advised him of Co-Steel's continued
interest in exploring the possible purchase of the Company. Mr. Prelat referred
Mr. Reilly to Richard Bushnell, Managing Director of BT Wolfensohn, who
generally explained to Mr. Reilly the process that the Company and BT
Wolfensohn, as the Company's financial adviser, intended to follow in seeking a
purchaser for the Company. On September 9, 1997, Mr. Bushnell telefaxed to Lew
Hutchinson, Co-Steel's President and Chief Executive Officer, an executive
summary describing the Company and a form of confidentiality letter, which
Co-Steel executed and returned.
Initially, BT Wolfensohn contacted approximately 37 potential strategic and
financial acquirors to determine their level of interest in acquiring the
Company. As a result of such contacts, approximately 19 potential acquirors
signed confidentiality agreements and received the information memorandum on NJ
Steel. Following the receipt of the information memorandum, BT Wolfensohn sought
non-binding indications of interest from potential buyers specifying preliminary
terms and conditions of an acquisition.
On October 9, 1997, indications of interest were received from 10 potential
buyers. Based on these indications of interest and discussions with these
potential buyers, the Company selected six parties to perform detailed due
diligence on the Company, including management presentations and site visits.
These parties were also provided a form of tender offer and merger agreement for
their review.
On October 29 and 30, 1997, representatives of Co-Steel and its advisers
visited the Company, attended presentations by Company officials, toured its
facilities, received and reviewed copies of additional financial, legal and
other documents concerning the Company and met with various Company officials to
conduct a further due diligence review of the Company. Following such meetings,
representatives of Co-Steel and its advisers were in virtually daily contact
with representatives of the Company and its advisers, as Co-Steel sought to
obtain additional information and clarifications of information previously
provided. On November 14, 1997, final proposals for an acquisition of the
Company were received from five of these six parties with prices ranging from
approximately $14 to $23 per share and with varying terms and conditions.
Co-Steel proposed to acquire NJ Steel pursuant to a merger transaction in which
each outstanding share of Common Stock would be converted into the right to
receive $23.00 in cash and an agreement with Von Roll, pursuant to which
Co-Steel would purchase the Von Roll Shares for $23.00 per share in cash. The
Company determined that Co-Steel submitted the final proposal with the highest
price per share and the most attractive terms and conditions.
On November 17, 1997, BT Wolfensohn advised Co-Steel that it had submitted
the most attractive financial proposal and that the Company and Von Roll were
prepared to negotiate definitive agreements. During the week of November 17,
representatives of NJ Steel and Co-Steel, including legal counsel, had
discussions concerning the transaction and negotiating the terms of the
definitive agreement. At the
13
<PAGE>
request of the Company, Co-Steel agreed that the transaction would take the form
of a tender offer, followed by a second step merger.
A special meeting of the NJ Steel Board was held on November 20, 1997, at
which four of the five members of the NJ Steel Board were present. Also present
and participating in the meeting were representatives of BT Wolfensohn and
counsel for NJ Steel. At the meeting, the NJ Steel Board (one member being
absent) reviewed the proposed Tender Agreement in detail with counsel for NJ
Steel. The BT Wolfensohn representatives present at the meeting described their
analytic and valuation processes and rendered their oral opinion, subsequently
confirmed in writing, that the $23.00 per share in cash to be paid in the Offer
was fair from a financial point of view to the Minority Stockholders. The full
text of the written opinion is annexed hereto as EXHIBIT E and is incorporated
herein by reference. NJ Steel stockholders are urged to read the BT Wolfensohn
opinion carefully. Thereafter, the NJ Steel Board reviewed and discussed with BT
Wolfensohn its analytic and valuation processes with a view to understanding the
bases of its analysis and opinion. The NJ Steel Board noted that the Co-Steel
proposal was the best proposal received and appeared very attractive to NJ
Steel's stockholders. Following such reviews and presentations, the NJ Steel
Board voted unanimously (with one director absent) (i) to approve the Tender
Agreement , (ii) to approve the Merger and (iii) to recommend that the
stockholders of NJ Steel accept the Offer and tender their Shares.
On November 21, 1997, NJ Steel and Co-Steel executed the definitive Tender
Offer Agreement and Plan and Agreement of Merger and Von Roll and Co-Steel
simultaneously executed the definitive Stockholder Agreement.
During 1997, one of Co-Steel's subsidiaries purchased steel billets from the
Company at an aggregate purchase price of approximately $1.7 million.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The company retained BT Wolfensohn to provide financial advice and
assistance in connection with a possible sale of the Company. Pursuant to a
letter agreement dated July 21, 1997, the Company agreed to pay BT Wolfensohn an
initial fee of $100,000 which will be credited toward payment of any additional
fees, and additional fees to bring BT Wolfensohn's total fees up to 1% of the
transaction value, or approximately $1,680,000. The Company has also agreed to
reimburse BT Wolfensohn for its reasonable out-of-pocket expenses incurred in
connection with rendering its financial advisory services, including reasonable
fees and disbursements of its legal counsel. The Company has agreed to indemnify
BT Wolfensohn (and its control persons, officers, directors, agents and
affiliates) for certain costs, expenses, and liabilities to which it may be
subjected arising out of or related to its engagement as financial advisor.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Transactions
To the best knowledge of the Company, neither the Company nor Von Roll, nor
any director, executive officer, affiliate or subsidiary of either of them, has
effected any transaction in the Common Stock of the Company during the past 60
days.
(b) Intent
To the best knowledge of the Company, it is the present intention of all
directors, executive officers and Von Roll to tender all Shares held by them
pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
See item 3(b).
14
<PAGE>
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
STOCKHOLDERS CONSIDERING NOT TENDERING THEIR SHARES IN ORDER TO WAIT FOR THE
MERGER SHOULD NOTE THAT IF THE MINIMUM CONDITION IS NOT SATISFIED OR ANY OF THE
OTHER CONDITIONS TO THE OFFER ARE NOT SATISFIED, THE PURCHASER IS NOT OBLIGATED
TO PURCHASE ANY SHARES, AND CAN TERMINATE THE OFFER AND THE TENDER AGREEMENT AND
NOT PROCEED WITH THE MERGER.
Under Delaware Law, the approval of the board of directors and the
affirmative vote of the holders of a majority of the outstanding Shares (unless
at least 90% of the outstanding Shares are held by the Purchaser) are required
to approve the Merger. Accordingly, if the conditions to the Offer are
satisfied, the Purchaser will have sufficient voting power to cause the approval
of the Merger without the affirmative vote of any other stockholder. Under
Delaware Law, if Purchaser acquires, pursuant to the Offer or otherwise, at
least 90% of the then outstanding Shares, Purchaser will be able to approve and
adopt the Tender Agreement and the Merger, without a vote of the Company's
stockholders. Parent, Purchaser and the Company have agreed to use their
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Offer, the Merger and the other
transactions contemplated by the Tender Agreement. If Purchaser does not acquire
at least 90% of the then outstanding Shares pursuant to the Offer or otherwise
and a vote of the Company's stockholders is required under Delaware Law, a
longer period of time will be required to effect the Merger.
THE OFFER IS SCHEDULED TO EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
JANUARY 8, 1998, UNLESS THE PURCHASER EXTENDS THE PERIOD OF TIME FOR WHICH THE
OFFER IS OPEN. A copy of the press release issued jointly by the Company and
Parent on November 20, 1997 announcing the Tender Offer and the Merger is filed
as EXHIBIT F to this Schedule 14D-9 and is incorporated herein by reference in
its entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT A--Tender Offer Agreement and Agreement and Plan of Merger dated as
of November 21, 1997.
EXHIBIT B--Stockholder Agreement dated November 21, 1997 between the
Purchaser and Von Roll
EXHIBIT C--Restated Certificate of Incorporation of the Company
EXHIBIT D--Article VI By-Laws of the Company
EXHIBIT E--Opinion Letter of BT Wolfensohn dated November 20, 1997*
EXHIBIT F--Press Release dated November 21, 1997
- ------------------------
* Included in copies mailed to stockholders.
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<PAGE>
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.
Dated: November 28, 1997
<TABLE>
<S> <C> <C> <C>
NEW JERSEY STEEL CORPORATION
By:
<CAPTION>
/s/ GARY A. GIOVANNETTI
---------------------------------------
Gary A. Giovannetti
PRESIDENT
</TABLE>
16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- --------- -------------------------------------------------------------------------------------------------------
<C> <S>
A Tender Offer Agreement and Agreement and Plan of Merger dated November 21, 1997 among Co-Steel Inc.,
Co-Steel Merger Corporation, Von Roll, and Von Roll Steel Holdings AG
B Stockholder Agreement dated November 21, 1997 among Co-Steel Inc., Von Roll, and Von Roll Steel
Holdings AG
C Restated Certificate of Incorporation of the Company
D Article VI of the By-Laws of the Company
E Opinion Letter of BT Wolfensohn dated November 20, 1997
F Press Release Dated November 21, 1997
</TABLE>
17
<PAGE>
TENDER OFFER AGREEMENT
AND
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CO-STEEL INC.,
CO-STEEL MERGER CORPORATION,
NEW JERSEY STEEL CORPORATION
AND
VON ROLL HOLDING AG
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of November 21, 1997 (this
"AGREEMENT") by and among CO-STEEL INC., a Canadian corporation ("PARENT"),
CO-STEEL MERGER CORPORATION, a Delaware corporation and an indirect wholly-owned
subsidiary of Parent ("SUB"), NEW JERSEY STEEL CORPORATION, a Delaware
corporation (the "COMPANY") and VON ROLL HOLDING AG, a Swiss corporation ("VON
ROLL").
BACKGROUND
WHEREAS, in furtherance of the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement, Parent proposes
to cause Sub to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "OFFER") to purchase all the outstanding
shares (collectively, the "SHARES" and individually a "SHARE") of Common Stock,
par value $.01 per share, of the Company (the "COMPANY COMMON STOCK"), at a
purchase price (the "OFFER PRICE") of $23.00 per Share or such higher price as
may be paid in the Offer, net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, Von Roll, through its Von Roll Steel Holdings AG subsidiary, owns
3,561,500 Shares or approximately 60% of the Shares and, subject to the terms
and conditions hereof, has agreed to tender such Shares in the Offer; and
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the Offer and the merger of Sub with the Company (the "MERGER")
upon the terms and subject to the conditions set forth in this Agreement,
whereby each Share, other than Shares owned directly or indirectly by Parent or
the Company and Dissenting Shares (as defined in Section 3.01(d)), will be
converted into the right to receive the Offer Price; and
WHEREAS, Parent, Sub, the Company and Von Roll desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER. (a) Subject to the provisions of this Agreement, as
promptly as practicable but in no event later than five business days after the
date of the public announcement by Parent and the Company of this Agreement, Sub
shall, and Parent shall cause Sub to, commence the Offer. The initial expiration
date for the Offer shall be January 8, 1998. The obligation of Sub to, and of
Parent to cause Sub to, accept for payment, and pay for, any Shares tendered
pursuant to the Offer shall be subject only to the conditions set forth in
Exhibit A (the "OFFER CONDITIONS") (any of which may be waived in whole or in
part by Sub in its sole discretion, provided that, without the consent of the
Company, Sub shall not waive the Minimum Condition (as defined in Exhibit A))
and to the terms and conditions of this Agreement. Sub expressly reserves the
right to modify the terms of the Offer, except that, without the consent of the
Company, Sub shall not (i) reduce the number of Shares subject to the Offer,
(ii) reduce the Offer Price, (iii) amend or add to the Offer Conditions, (iv)
except as provided in the next sentence, extend the Offer, (v) change the form
of consideration payable in the Offer or (vi) amend any other term of the Offer
in any manner adverse to the holders of the Shares, Notwithstanding the
foregoing, Sub may, without the consent of the Company, (A) extend the Offer, if
at the scheduled or extended expiration date of the Offer any of the Offer
Conditions shall not be satisfied or waived, until such time as such conditions
are satisfied or waived, (B) extend the Offer for any period required by any
rule, regulation, interpretation or
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<PAGE>
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer and (C) extend the Offer on one or more
occasions for an aggregate period of not more than 10 business days beyond the
latest expiration date that would otherwise be permitted under clause (A) or (B)
of this sentence, if on such expiration date there shall not have been tendered
at least 90% of the Shares. Parent and Sub agree that if all of the Offer
Conditions are not satisfied on any scheduled expiration date of the Offer then,
provided that all such conditions are reasonably capable of being satisfied, Sub
shall extend the Offer from time to time until such conditions are satisfied or
waived, provided that Sub shall not be required to extend the Offer beyond May
5, 1998. Subject to the terms and conditions of the Offer and this Agreement,
Sub shall, and Parent shall cause Sub to, accept for payment, and pay for, all
Shares validly tendered and not withdrawn pursuant to the Offer that Sub becomes
obligated to accept for payment, and pay for, pursuant to the Offer as promptly
as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall file with
the SEC a Tender Offer Statement on Schedule 14D-1 (the "SCHEDULE 14D-1") with
respect to the Offer, which shall contain an offer to purchase and a related
letter of transmittal and summary advertisement, if required, (such Schedule
14D-1 and the documents included therein pursuant to which the Offer will be
made, together with any supplements or amendments thereto, the "Offer
Documents"). Parent and Sub agree that the Offer Documents shall comply as to
form in all material respects with the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and the rules and regulations promulgated
thereunder and the Offer Documents, on the date first published, sent or given
to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by Parent or Sub with respect to information
supplied by the Company or any of its stockholders specifically for inclusion or
incorporation by reference in the Offer Documents. Each of Parent, Sub and the
Company agree promptly to correct any information provided by it for use in the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and Parent and Sub further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the SEC and the other Offer Documents as so corrected to be disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
reasonable opportunity to review and comment upon the Offer Documents prior to
their filing with the SEC or dissemination to the stockholders of the Company.
Parent and Sub agree to provide the Company and its counsel any comments Parent,
Sub or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely basis
the funds necessary to accept for payment, and pay for, any Shares that Sub
becomes obligated to accept for payment, and pay for, pursuant to the Offer.
Parent shall (i) provide or cause to be provided to the Company on a timely
basis in connection with the transactions contemplated hereby substitute working
capital financing and funds or financing sufficient to repay in full the
Company's (A) obligations to PNC Bank under that certain Loan and Security
Agreement dated June 6, 1996, if required by said lender, (ii) at or prior to
the Closing, cause (x) all outstanding loans and accrued interest under the
Credit Agreement dated as of June 6, 1996 between the Company and Von Roll to be
paid in full, and (y) the termination of the Subordination and Intercreditor
Agreement date as of June 6, 1996 among Von Roll, the Company and PNC Bank
(formerly Midlantic Bank, National Association) and Von Roll's discharge or
release, in a manner satisfactory to Von Roll, from all obligations thereunder
(the Company's indebtedness under said Loan and Security Agreement and said
Credit Agreement, collectively, the "COMPANY DEBT"); and (iii) shall provide, or
cause the Company to provide Tube City, Inc., at or prior to the Closing, a
substitute guarantee or otherwise to effectuate the release of Von Roll from its
August 21, 1996 guarantee to Tube City, Inc. (the "TUBE CITY GUARANTEE").
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SECTION 1.02. COMPANY ACTIONS. (a) The Company hereby approves of and
consents to the Offer and represents that the Board of Directors of the Company,
at a meeting duly called and held, duly and unanimously adopted resolutions
adopting this Agreement, approving the Offer and the Merger, determining, as of
the date of such resolutions, that the terms of the Offer and the Merger are
fair to, and in the best interests of, the Company's stockholders, recommending
that the Company's stockholders accept the Offer, tender their Shares pursuant
to the Offer and approve this Agreement (if required) and approving the
acquisition of Shares by Sub pursuant to the Offer and the other transactions
contemplated by this Agreement. The Company has been advised by each of its
directors and executive officers that each such person currently intends to
tender all Shares (other than Shares, if any, held by such person that, if
tendered, could cause such person to incur liability under the provisions of
Section 16(b) of the Exchange Act) owned by such person pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (such Schedule 14D-9, as supplemented or amended
from time to time, the "SCHEDULE 14D-9") containing, subject to the terms of
this Agreement, the recommendation described in paragraph (a) and shall mail the
Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9 shall
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation or warranty is made by
the Company with respect to information supplied by Parent or Sub specifically
for inclusion in the Schedule 14D-9. Each of the Company, Parent and Sub agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that such information shall have become false or misleading
in any material respect, and the Company further agrees to take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Shares as of a recent date and of those
persons becoming record holders subsequent to such date, together with copies of
all lists of stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Shares, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Parent may reasonably request in communicating the Offer
to the Company's stockholders. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Merger, Parent and Sub and
their agents shall hold in confidence the information contained in any such
labels, listings and files, will use such information only in connection with
the Offer and the Merger and, if this Agreement shall be terminated, will
deliver, and will use their reasonable efforts to cause their agents to deliver,
to the Company all copies and any extracts or summaries from such information
then in their possession or control.
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ARTICLE II
THE MERGER
SECTION 2.01 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL"), at the Effective Time, Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL. At the election of Parent, to
the extent that any such action would not cause a failure of a condition to the
Offer or the Merger, (i) any direct or indirect wholly-owned subsidiary of
Parent may be substituted for and assume all of the rights and obligations of
Sub as a constituent corporation in the Merger or (ii) the Company may be merged
with and into Sub with Sub continuing as the Surviving Corporation with the
effects set forth above and in Section 2.04. In either such event, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
the foregoing.
SECTION 2.02 CLOSING. The closing of the Merger will take place at 10:00
a.m. (New York City Time) on a date to be specified by Parent or Sub, as soon a
practicable following satisfaction or waiver of the conditions set forth in
Article VIII (the "CLOSING DATE"; which date shall be no later than the tenth
business day following satisfaction or waiver of such conditions), at the
offices of Wilentz Goldman & Spitzer, 90 Woodbridge Center Drive, Woodbridge,
NJ, unless another date, time or place is agreed to in writing by the parties
hereto.
SECTION 2.03 EFFECTIVE TIME. As promptly as practicable after the Closing
Date, the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger or other appropriate documents (in any such case, the
"CERTIFICATE OF MERGER") with the Secretary of State of the State of Delaware,
in such form as required by, and executed in accordance with the relevant
provisions of, the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed, or at such other time as Sub and the
Company shall agree should be specified in the Certificate of Merger (the time
the Merger becomes effective being hereinafter referred to as the "EFFECTIVE
TIME").
SECTION 2.04 EFFECTS OF THE MERGER. At the Effective Time, the effects of
the Merger shall be as provided in Section 259 of The DGCL.
SECTION 2.05 CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) At the Effective Time, the Certificate of Incorporation of the Company,
as in effect immediately prior to the Effective Time, shall be amended as of the
Effective Time so that Articles FIRST and FOURTH thereof shall read in their
entirety as follows:
"FIRST: The name of the Corporation is:
Co-Steel Sayreville, Inc."
"FOURTH: The aggregate number of shares of all classes of stock which
the Corporation shall have authority to issue is 1,000 shares of common
stock, par value $1.00 per share."
and as so amended shall be the Certificate of Incorporation of the Surviving
Corporation.
(b) At the Effective Time, the By-Laws of Sub, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation
until thereafter changed or amended, subject to Section 7.02, as provided
therein or by applicable law.
SECTION 2.06 DIRECTORS AND OFFICERS. The directors of Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, and the officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, each to
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hold office in accordance with the Certificate of Incorporation and By-Laws of
the Surviving Corporation and in each case until their respective resignation or
removal or their respective successors are duly elected and qualified, as the
case may be.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 CONVERSION OF SECURITIES.
(A) CAPITAL STOCK OF SUB. Each share of capital stock of Sub ("SUB COMMON
STOCK") issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of Common Stock, par value $1.00 per share, of the Surviving Corporation.
(B) CANCELLATION OF TREASURY STOCK AND PARENT OWNED STOCK. Each share of
Company Common Stock held in the treasury of the Company and each Share owned by
Parent or any direct or indirect wholly-owned subsidiary of Parent or of the
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no consideration shall be
delivered in exchange therefor.
(C) CONVERSION OF COMPANY COMMON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Sub, the Company or the
holders of the Shares, each Share (other than Shares to be canceled in
accordance with Section 3.01(b) and Dissenting Shares) shall be converted into
the right to receive the Offer Price in cash, without interest (the "MERGER
CONSIDERATION").
(D) DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding Shares held by a person (a "DISSENTING
STOCKHOLDER") who objects to the Merger and complies with all the provisions of
Delaware law concerning the right of holders of Shares to dissent from the
Merger and require appraisal of their Shares ("DISSENTING SHARES") shall not be
converted as described in Section 3.01(c), but shall be converted into the right
to receive such consideration as may be determined to be due to such Dissenting
Stockholder pursuant to Delaware law. If, after the Effective Time, such
Dissenting Stockholder withdraws his demand for appraisal or fails to perfect or
otherwise loses his right to appraisal, in any case pursuant to the DGCL, his
shares shall be deemed to be converted as of the Effective Time into the right
to receive the Merger Consideration. The Company shall give Parent prompt notice
upon receipt by the Company of any written demands for appraisal rights,
withdrawal of such demands, and any other written communications delivered to
the Company pursuant to Section 262 of the DGCL, and the Company shall give
Parent the opportunity, to the extent permitted by law, to direct all
negotiations and proceedings with respect to such demands. The Company shall not
voluntarily make any payment with respect to any demands for appraisal rights
and shall not, except with the prior written consent of Parent, settle or offer
to settle any such demands.
SECTION 3.02 EXCHANGE OF CERTIFICATES.
(A) PAYING AGENT. Prior to the Effective Time, Parent shall designate a bank
or trust company to act as paying agent in the Merger (the "PAYING AGENT"), and,
from time to time on, prior to or after the Effective Time, Parent shall make
available, or cause the Surviving Corporation to make available, to the Paying
Agent cash in amounts and at the times necessary for the prompt payment of the
Merger Consideration upon surrender of certificates representing Shares as part
of the Merger pursuant to Section 3.01 (it being understood that any and all
interest earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to Parent).
(B) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Paying Agent to mail to each holder of
record of a certificate or certificates which
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immediately prior to the Effective Time evidenced outstanding Shares (other than
Shares held by Parent and Dissenting Shares) (the "CERTIFICATES") (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for cash. Upon surrender
of a Certificate for cancellation to the Paying Agent together with such letter
of transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive the Merger Consideration in exchange therefor and the
Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Shares which is not registered in
the transfer records of the Company, cash may be paid in accordance with this
Article II to a transferee if the Certificate evidencing such Shares is
presented to the Paying Agent, accompanied by all documents required to evidence
and effect such transfer and by evidence that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this Section 2.3,
each Certificate shall be deemed at any time after the Effective Time to
evidence only the right to receive the Merger Consideration upon such surrender
in accordance with the terms and conditions set forth herein.
(C) INTEREST. No interest shall be paid on the Merger Consideration.
(D) NO FURTHER RIGHTS IN SHARES. All cash paid upon the surrender for
exchange of certificates evidencing Shares in accordance with the terms and
conditions hereof shall be deemed to have been issued or paid in full
satisfaction of all rights pertaining to such Shares. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of Shares thereafter on the records of the
Company. On or after the Effective Time, any valid certificate evidencing Shares
presented to the Paying Agent or Parent for any reason shall evidence only the
right to receive the Merger Consideration in accordance with the terms and
conditions set forth herein.
(E) WITHHOLDING RIGHTS. Parent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Parent is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended
(the "CODE"), or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by Parent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Shares in respect of which such deduction and withholding were made by Parent.
(F) NO LIABILITY. None of Parent, Sub, the Company or the Paying Agent shall
be liable to any person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered immediately prior to such date on
which any payment pursuant to this Article III would otherwise escheat to or
become the property of any Governmental Entity (as defined in Section 4.05(b)),
the cash payment in respect of such Certificate shall, to the extent permitted
by applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interests of any person previously entitled thereto.
(G) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any certificates
evidencing Shares shall have been lost, stolen or destroyed, the Paying Agent
shall pay to such holder the Merger Consideration required pursuant to Section
3.01, in exchange for such lost, stolen or destroyed certificates, upon the
making of an affidavit of that fact by the holder thereof with such assurances
as the Paying Agent, in its discretion and as a condition precedent to the
payment of the Merger Consideration, may reasonably require of the holder of
such lost, stolen or destroyed certificates.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Sub that:
SECTION 4.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the
Company and its subsidiary, N.J.S.C. Investment Co., Inc., a New Jersey
corporation ("SUBSIDIARY"), is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, has all requisite corporate power and corporate authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly qualified and in good standing would not
have a Company Material Adverse Effect. The term "COMPANY MATERIAL ADVERSE
EFFECT," as used in this Agreement, shall mean any change or effect that,
individually or when taken together with all other such changes or effects,
would be materially adverse to the financial condition, business or operations
of the Company and Subsidiary, taken as a whole, at the time of such change or
effect, other than changes or effects attributable to (i) occurrences relating
to the economy in general or the Company's industry in general and not
specifically relating to the Company, (ii) the delay or cancellation of orders
for the Company's products directly attributable to the announcement of this
Agreement or (iii) in the case of the Company, stockholder litigation brought or
threatened against the Company or any member of its Board of Directors in
respect of this Agreement, the Offer or the Merger. All of the outstanding
capital stock of Subsidiary is owned by the Company. The Company does not own an
equity interest in any other corporation, partnership, joint venture or other
entity.
SECTION 4.02 CERTIFICATES OF INCORPORATION AND BY-LAWS. The Company has
furnished to Parent true, correct and complete copies of the Certificates of
Incorporation and the By-Laws, in each case as in effect on the date hereof, of
the Company and Subsidiary. Neither the Company nor Subsidiary is in violation
of any of the provisions of its Certificate of Incorporation or By-Laws.
SECTION 4.03 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of (i) 15,000,000
shares of Company Common Stock of which at the date hereof: (A) 5,920,500 shares
are issued and outstanding; (B) no shares are held in the treasury of the
Company; and (C) 127,500 shares are reserved for future issuance pursuant to
stock options (the "Stock Options") granted pursuant to the Company's Incentive
Stock Option Plan and 1996 Stock Option Plan (the "Option Plans") and 185,000
are reserved for future issuance pursuant to stock options available for grant
under the Option Plans; and (ii) 5,000,000 shares of preferred stock, par value
$.01 per share, of the Company ("COMPANY PREFERRED STOCK"), of which no shares
are issued or outstanding. No shares of capital stock of the Company are
reserved for any other purpose. Each of the outstanding shares of capital stock
of, or other equity interests in, the Company and Subsidiary has been duly
authorized and validly issued, and, in the case of shares of capital stock, are
fully paid and nonassessable, and such shares or other equity interests owned by
the Company are owned free and clear of all security interests, liens, claims,
pledges, agreements, limitations on the Company's voting rights, charges or
other encumbrances of any nature whatsoever, except that PNC Bank and Von Roll
hold security interests in all of the Company's assets pursuant to the
provisions of the Company Debt.
(b) Except as set forth in Section 4.03(a) above, there are no options,
warrants or other rights (including registration rights), agreements,
arrangements or commitments of any character to which the Company or Subsidiary
is a party relating to the issued or unissued capital stock of the Company or
Subsidiary or obligating the Company or Subsidiary to grant, issue or sell any
shares of the capital stock of the Company or Subsidiary, by sale, lease,
license or otherwise. There are no obligations, contingent or otherwise, of the
Company or Subsidiary to (x) repurchase, redeem or otherwise acquire any capital
stock
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or other equity interests of the Company or Subsidiary; or (y) provide material
funds to, or make any material investment in (in the form of a loan, capital
contribution or otherwise), or provide any guarantee with respect to the
obligations of, Subsidiary or any other person. Neither the Company nor
Subsidiary, directly or indirectly owns, or has agreed to purchase or otherwise
acquire, the capital stock of, or any interest convertible into or exchangeable
or exercisable for the capital stock of, any corporation, partnership, joint
venture or other business entity. Except as set forth in Section 4.03 of the
disclosure schedule attached to and forming a part of this Agreement (the
"COMPANY DISCLOSURE SCHEDULE"), there are no agreements, arrangements or
commitments of any character (contingent or otherwise) pursuant to which any
person is or may be entitled to receive any payment based on the revenues or
earnings, or calculated in accordance therewith, of the Company or Subsidiary.
There are no voting trusts, proxies or other agreements or understandings to
which the Company or Subsidiary is a party or by which either of them is bound
with respect to the voting of any shares of capital stock of the Company or
Subsidiary.
SECTION 4.04 AUTHORITY. The Company has all requisite corporate power and
corporate authority to execute and deliver this Agreement, and, subject to, if
required by law, the approval of the Merger by the holders of a majority of the
Shares in accordance with the DGCL (the "COMPANY STOCKHOLDER APPROVAL"), to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company, subject, in the case of this Agreement, to the Company Stockholder
Approval if such approval is required by law. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by Parent and Sub, constitutes the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except that (a) such enforcement may be subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
laws, now or hereafter in effect, relating to or limiting creditors' rights
generally and (b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Except as set forth in Section 4.04 of the Company Disclosure Schedule with
respect to written agreements between the Company and certain of its officers
and employees, the Company has taken all steps necessary to approve and to
exempt the transactions contemplated by this Agreement from the provisions of
Section 203 of the DGCL and any change of control, "anti-takeover" or similar
provisions of the Certificate of Incorporation or By-Laws of the Company or any
agreement, arrangement or understanding to which the Company is a party or which
is applicable to it.
SECTION 4.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws of the Company or
Subsidiary, (ii) conflict with or violate any federal, state, foreign or local
law, statute, ordinance, rule, regulation, order, judgment or decree, including,
such as protect human health (collectively, as used in this Section 4.05,
Section 4.07 and Section 5.05, "LAWS"), applicable to the Company or Subsidiary
or by which any of their respective properties is bound or subject to, or (iii)
except as set forth in Section 4.05 of the Company Disclosure Schedule, result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of a lien or encumbrance on, any of the
properties or assets of the Company or Subsidiary pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or Subsidiary is a party or
by which the Company or Subsidiary or any of their respective properties is
bound or subject to, except for any such breach, default, event, right of
termination, amendment, acceleration or cancellation, payment obligation
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or lien or encumbrance described in clause (iii) that would not, individually or
in the aggregate, have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, require the Company
or Parent to obtain any consent, approval, authorization or permit of, or to
make any filing with or notification to, any governmental or regulatory
authority, domestic or foreign ("GOVERNMENTAL ENTITIES"), or any other third
party, except for (i) applicable requirements, if any, of the Securities Act of
1933, as amended (the "SECURITIES ACT"), and the Exchange Act, state securities
or blue sky laws ("BLUE SKY LAWS"), the National Association of Securities
Dealers, Inc. ("NASD") and the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR ACT"), and the New Jersey Industrial Site Recovery
Act, N.J.S.A. ss. 13:1L-6 ET SEQ., as amended by P.L. 1993, c. 139 ("ISRA"), and
the filing and recordation of a Certificate of Merger as required by the DGCL
and (ii) the consents, approvals, authorizations, permits, filings and
notifications set forth in Section 4.05 of the Company Disclosure Schedule.
SECTION 4.06. INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9 or (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "INFORMATION STATEMENT"),
will, in the case of the Offer Documents, the Schedule 14D-9 and the Information
Statement, at the respective times the Offer Documents, the Schedule 14D-9 and
the Information Statement are filed with the SEC or first published, sent or
given to the Company's stockholders, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Schedule 14D-9 and the
Information Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference therein.
SECTION 4.07 REPORTS; FINANCIAL STATEMENTS. (a) Since December 1, 1996, (x) the
Company has filed all forms, reports, statements and other documents required to
be filed with (i) the SEC, including, (A) all Annual Reports on Form 10-K, (B)
all Quarterly Reports on Form 10-Q, (C) all proxy statements relating to
meetings of stockholders (whether annual or special) pursuant to Section 14 of
the Exchange Act, (D) all Reports on Form 8-K, (E) all other reports or
registration statements and (F) all amendments and supplements to all such
reports and registration statements (collectively referred to herein as the
"COMPANY SEC REPORTS"), and (ii) any other applicable state securities
authorities and (y) the Company and Subsidiary have filed all forms, reports,
statements and other documents required to be filed with any other applicable
federal or state, foreign or local regulatory authorities, except where such
failure to file did not have and could not reasonably be expected to have a
Company Material Adverse Effect (all such forms, reports, statements and other
documents in clauses (x) and (y) of this Section 4.07(a) being referred to
herein, collectively, as the "COMPANY REPORTS"). The Company Reports, including
all Reports filed after the date of this Agreement and prior to the Effective
Time, (i) were or will be prepared in accordance with the requirements of
applicable law (including, with respect to the Company SEC Reports, the
Securities Act and the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Reports) and
(ii) did not at the time they were filed, or will not at the time they are
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
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(b) The Company's consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports filed
prior to, on or after the date of this Agreement (i) have been or will be
prepared in accordance with the published rules and regulations of the SEC and
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except as disclosed in such financial
statements) and (ii) fairly present or will fairly present the consolidated
financial position of the Company and the consolidated results of operations and
cash flows as of and for the periods indicated, except that any unaudited
interim financial statements were or will be subject to normal and recurring
year-end adjustments and may not be prepared in accordance with GAAP to the
extent permitted by applicable SEC forms and regulations. Except as set forth in
Section 4.07 of the Company Disclosure Schedule, neither the Company nor
Subsidiary has incurred any liability or obligation other than (a) such as have
been reflected in the consolidated financial statements of the Company through
August 31, 1997 in accordance with GAAP or the applicable SEC accounting rules
and (b) such as have been incurred in the ordinary course of business since
August 31, 1997.
SECTION 4.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Company SEC Reports filed prior to the date of this Agreement or as
contemplated in this Agreement or as set forth in Section 4.08 of the Company
Disclosure Schedule, since August 31, 1997, (i) the Company has conducted its
businesses only in the ordinary course and in a manner consistent with past
practice, (ii) the Company has not taken any action which would be prohibited
pursuant to Section 6.02 if taken after the date hereof, and (iii) there has not
been any change in the results of operations, condition (financial or
otherwise), properties, assets or business of the Company or Subsidiary, which,
individually or in the aggregate, has had or could reasonably be expected to
have a Company Material Adverse Effect.
SECTION 4.09 PERMITS; COMPLIANCE. Each of the Company and Subsidiary is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (other than those required under Environmental Laws
(as hereinafter defined), the Company's representations as to which are
exclusively governed by Section 4.14 hereof) (collectively, the "COMPANY
PERMITS"), and there is no action, proceeding or investigation pending or, to
the knowledge of the Company, threatened regarding suspension or cancellation of
any of the Company Permits, except where the failure to possess, or the
suspension or cancellation of, such Company Permits would not have a Company
Material Adverse Effect. None of the Company Permits will lapse, terminate or
expire as a result of the transactions contemplated hereby. The Company and
Subsidiary are in compliance in all material respects with all Laws (other than
Environmental Laws, the Company's representations as to which are exclusively
governed by Section 4.14 hereof) and Company Permits (other than those required
under Environmental Laws, the Company's representations as to which are
exclusively covered by Section 4.14 hereof). During the period commencing on
December 1, 1996 and ending on the date hereof, neither the Company nor
Subsidiary has received from any Governmental Entity any notification with
respect to possible conflicts, defaults or violations of Laws (other than
Environmental Laws, the Company's representations as to which are exclusively
governed by Section 4.14 hereof).
SECTION 4.10 ABSENCE OF LITIGATION. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or as set forth in Section
4.10 of the Company Disclosure Schedule, (a) there is no claim, action, suit,
litigation, proceeding, arbitration or investigation of any kind, at law or in
equity (including actions or proceedings seeking injunctive relief), pending or,
to the knowledge of the Company, threatened against the Company or Subsidiary or
any properties or rights of the Company or Subsidiary (except for claims,
actions, suits, litigations, proceedings, arbitrations, or investigations which,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect), and (b) neither the Company nor Subsidiary is
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or continuing investigation by, any
Governmental Entity, or any judgment, order, writ, injunction, decree or award
of any Governmental Entity or arbitrator, including, cease-and-desist or other
orders.
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SECTION 4.11 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 4.11 of the Company Disclosure Schedule contains a true, correct
and complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization or
other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or arrangement,
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single employer"
within the meaning of Section 4001 of the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated thereunder
("ERISA") or Sections 414(b) or (c) of the Code, for the benefit of any employee
or former employee of the Company or any ERISA Affiliate, whether formal or
informal and whether legally binding or not (the "PLANS"). Section 4.11 of the
Company Disclosure Schedule identifies each of the Plans that is an "employee
benefit plan," as that term is defined in Section 3(3) of ERISA (such plans
being hereinafter referred to collectively as the "ERISA PLANS").
(b) No liability under Title IV of ERISA has been incurred by the Company or
any ERISA Affiliate since the effective date of ERISA that has not been
satisfied in full, and no condition exists that presents a material risk to the
Company or any ERISA Affiliate of incurring a liability under such Title, other
than liability for premiums due the Pension Benefit Guaranty Corporation
("PBGC") (which premiums have been paid when due). No reportable event within
the meaning of Section 4043 of ERISA (as to which notices would be required to
be filed) has occurred with respect to any ERISA Plan.
(c) The PBGC has not instituted proceedings to terminate any ERISA Plan and,
to the knowledge of the Company, no condition exists that presents a material
risk that such proceedings will be instituted.
(d) No ERISA Plan is subject to Title IV of ERISA.
(e) Neither the Company nor any ERISA Affiliate, nor any ERISA Plan, nor any
trust created thereunder, nor any trustee or administrator thereof has engaged
in a transaction in connection with which the Company or any ERISA Affiliate,
any ERISA Plan, any such trust, or any trustee or administrator thereof, or any
party dealing with any ERISA Plan or any such trust could be subject to either a
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code.
(f) Full payment has been made, or will be made in accordance with Section
404(a)(6) of the Code, of all amounts which the Company or any ERISA Affiliate
is required to pay under the terms of each ERISA Plan as of the last day of the
most recent plan year thereof ended prior to the date of this Agreement, and all
such amounts properly accrued through the Effective Time with respect to the
current plan year thereof will be paid by the Company on or prior to the
Effective Time or will be properly recorded in the Company's financial
statements in accordance with GAAP; and no ERISA Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each ERISA Plan ended prior to
the date of this Agreement; and all contributions required to be made with
respect thereto (whether pursuant to the terms of any ERISA Plan or otherwise),
on or prior to the Effective Time, have been timely made.
(g) No ERISA Plan is a "multi-employer plan," as such term is defined in
Section 3(37) of ERISA, nor is any ERISA Plan a plan described in Section
4063(a) of ERISA.
(h) Each Plan has been operated and administered in accordance with its
terms and applicable law, including, but not limited to, ERISA and the Code.
(i) Each ERISA Plan which is intended to be "qualified" within the meaning
of Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service (the "IRS"), and
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has made, or will make on or prior to the Effective Time, any amendments
required to be made before the Effective Time as a result of any amendments to
the Code since the date of the most recent determination letter, and the trusts
maintained thereunder are exempt from taxation under Section 501(a) of the Code.
(j) No Plan provides benefits, including, death or medical benefits (whether
or not insured), with respect to current or former employees of the Company or
any ERISA Affiliate beyond their retirement or other termination of service,
other than (i) coverage mandated by applicable law, (ii) retirement benefits
under the "employee pension plans" (as defined in Section 3(2) of ERISA)
identified in Section 4.11 of the Company Disclosure Schedule pursuant to
Section 4.11(a), or (iii) benefits the full cost of which is borne by the
current or former employee.
(k) Except as set forth in Section 4.11 of the Company Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee or officer of the Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
except as provided in this Agreement, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer, or (iii) result in any prohibited transaction described in Section 406
of ERISA or Section 4975 of the Code for which an exemption is not available.
(l) With respect to each Plan that is funded wholly or partially through an
insurance policy, there will be no liability of the Company or any ERISA
Affiliate, as of the Effective Time, under any such insurance policy or
ancillary agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring prior
to the Effective Time, except to the extent recorded in the Company's
consolidated financial statements contained in the Company SEC Reports.
(m) No ERISA Plan, whether or not terminated, holds, or has discharged any
of its liabilities through the acquisition of, any annuity contract.
(n) Except as set forth in Section 4.11(n) of the Company Disclosure
Schedule, the Company is not liable for any excise tax under Chapter 43 of the
Code.
SECTION 4.12 TAXES. Except as described in detail in Section 4.12 of the
Company Disclosure Schedule:
(a) The Company and Subsidiary have (i) duly filed all Tax Returns (as
hereinafter defined) required to be filed by them within the time and in the
manner prescribed by law and such Tax Returns are true, correct and complete in
all respects, and (ii) paid on a timely basis all Taxes (as hereinafter defined)
due and payable on such Tax Returns.
(b) (i) No deficiencies for any Taxes have been proposed, asserted or
assessed against the Company or Subsidiary by any taxing authority with respect
to liabilities for Taxes of any of them which have not been fully paid or
finally settled, (ii) any such deficiency set forth in Section 4.12 of the
Company Disclosure Schedule is being contested in good faith through appropriate
proceedings and (iii) an adequate reserve in accordance with GAAP has been
established in the consolidated financial statements included in the Company SEC
Reports for each of the Company or Subsidiary, as the case may be, with respect
to any Taxes which have been or may be proposed, assessed or asserted against
them.
(c) The Company and Subsidiary have established adequate reserves in
accordance with GAAP for all Taxes not yet due and payable.
(d) The applicable statutes of limitations with respect to the assessment of
federal income taxes of the Company and Subsidiary have expired through their
taxable years ended November 30, 1993, and audits of the Company and Subsidiary
for such taxes are complete through their taxable years ended November 30, 1992.
The applicable statutes of limitations with respect to the assessment of Taxes
of the Company by the State of New Jersey have expired through the Company's
taxable year ended November 30, 1993, and
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audits of the Company for such Taxes are complete through the Company's taxable
year ended November 30, 1995. Subsidiary has not been the subject of any audit
by the State of New Jersey. There are no outstanding agreements or waivers
extending the statute of limitations applicable to any taxable year or Tax
Return of the Company or Subsidiary.
(e) No Tax Returns of the Company or Subsidiary are currently under Audit
(as hereinafter defined) by the IRS or any other taxing authority and no notice
of any such Audit has been received.
(f) To the Company's knowledge, each transaction that could give rise to an
understatement of the federal income tax liability of the Company or Subsidiary
within the meaning of Section 6662(d) of the Code is either (i) a transaction as
to which there is or was, at the relevant time, substantial authority for its
treatment by the Company or Subsidiary within the meaning of Section 6662
(d)(2)(B) of the Code or (ii) adequately disclosed on Tax Returns in accordance
with Section 6662(d)(2)(B) of the Code.
(g) There are no liens for Taxes (other than current Taxes not yet due) on
the assets of the Company or Subsidiary
(h) Neither the Company nor Subsidiary has participated in, or cooperated
with, an international boycott within the meaning of Section 999 of the Code.
Neither the Company nor Subsidiary has made an election under Section 341(f) of
the Code.
(i) Neither the Company nor Subsidiary is a party to any contract, agreement
or other arrangement pursuant to which the Company could be required to make any
payment that would not be deductible by reason of Section 280G or 162(m) of the
Code.
(j) There has been no change in the method of accounting utilized by the
Company that would require any adjustment to taxable income pursuant to Section
481 of the Code, and the Company has no knowledge that the IRS has proposed any
such adjustment or change in the accounting method.
(k) Neither the Company nor Subsidiary is a party to any agreement providing
for the allocation or apportionment of any liability for Taxes, payments of
Taxes or Tax benefits or refunds.
(l) As used in this Agreement:
(i) "AUDIT" means any audit, assessment of Taxes, examination or other
proceeding by the IRS or any other Governmental Entity responsible for the
administration of any Taxes, proceeding or appeal of such proceeding
relating to Taxes;
(ii) "TAXES" means all federal, state, local and foreign taxes, charges
and fees and other assessments of a similar nature (whether imposed directly
or through withholding), including any interest, additions to tax, and
penalties applicable thereto; and
(iii) "TAX RETURNS" means all federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
SECTION 4.13 CERTAIN BUSINESS PRACTICES AND TRANSACTIONS.
(a) Neither the Company nor Subsidiary nor any directors, officers, agents
or employees of the Company or Subsidiary has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
(b) Except as set forth in Section 4.13 of the Company Disclosure Schedule,
no officer or director of the Company or Subsidiary, or any affiliate or
associate of any such officer or director, or any affiliate or
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associate of the Company or Subsidiary, including, Von Roll, has a material
interest in any contract or property (real or personal), tangible or intangible,
used in or pertaining to the business of the Company or Subsidiary.
SECTION 4.14 ENVIRONMENTAL MATTERS.
(a) As used in this Agreement:
(i) "CLEANUP" means all actions required to (A) prevent the Release (as
hereinafter defined) or threatened Release of, or (B) cleanup, remove, treat
or remediate, Hazardous Materials in the indoor or outdoor environment,
including but not limited to performance of studies and investigations and
response to any government requests for information or documents.
(ii) "ENVIRONMENTAL CLAIM" means any claim, action, cause of action,
investigation or written notice by any person or entity alleging potential
liability arising out of, based on or resulting from (A) the presence,
Release or threatened Release of Hazardous Materials into ambient air, water
or land or otherwise relating to the generation, use, treatment, storage,
disposal or handling of Hazardous Materials, or (B) circumstances forming
the basis of any violation (or alleged violation) of or any other liability
under any Environmental Law (as hereinafter defined) or any permit or
approval issued pursuant thereto.
(iii) "ENVIRONMENTAL LAWS" means all federal, state and local laws
relating to pollution or protection of human health or the environment,
including, laws relating to Releases or threatened Releases of Hazardous
Materials into ambient air, water or land or otherwise relating to the
manufacture, processing, distribution, generation, use, treatment, storage,
disposal or handling of Hazardous Materials.
(iv) "HAZARDOUS MATERIALS" means all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or
defined as such by, or regulated as such under, any Environmental Law.
(v) "RELEASE" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, dispersal, leaching or migration into
the indoor or outdoor environment.
(b) Except as described in Section 4.14 of the Company Disclosure Schedule,
the Company and Subsidiary are in compliance with all applicable Environmental
Laws (which compliance includes, but is not limited to, the possession by the
Company and Subsidiary of all permits and other governmental authorizations
required under applicable Environmental Laws), except where noncompliance,
individually or in the aggregate, has not had or would not reasonably be
expected to have a Company Material Adverse Effect. All such permits and
governmental authorizations are in full force and effect and the Company is in
compliance therewith, except where noncompliance, individually or in the
aggregate, has not had or would not reasonably be expected to result in a
Company Material Adverse Effect. Except as described in Section 4.14 of the
Company Disclosure Schedule, since December 1, 1992 the Company and Subsidiary
have not received written notice of any Environmental Claim which, individually
or in the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect.
(c) Except as set forth in Section 4.14 of the Company Disclosure Schedule,
to the Company's knowledge, no additional permits or other governmental
authorizations under Environmental Laws will be required to permit the Surviving
Corporation to conduct the business of the Company in full compliance with all
applicable Environmental Laws immediately following the Effective Time.
(d) Except as described in Section 4.14 of the Company Disclosure Schedule,
neither the Company nor Subsidiary has, and, to the Company's knowledge, no
other person has, Released, placed, stored, buried or disposed of any Hazardous
Material on, beneath, from or adjacent to any real property now or at
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any time owned, operated or leased by the Company or any of its predecessors (as
used in this Section 4.14, the "REAL PROPERTY"), except (1) for inventories of
such items used and to be used in the ordinary course of business of the Company
(which inventories were and are stored, tested, handled or disposed of
substantially in accordance with applicable Environmental Laws and in a manner
such that there has been no Release of any such items), or (2) where such
Release, placement, storage, burial or disposal of Hazardous Materials,
individually or in the aggregate, has not had or could not reasonably be
expected to have a Company Material Adverse Effect. No site or facility owned,
operated or used by the Company or Subsidiary nor the Real Property is or
contains a treatment, storage or disposal facility as defined by the federal
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, 42 U.S.C.
ss. 6901 ET SEQ., or any analogous state law. Except as set forth in Section
4.14 of the Company Disclosure Schedule, no person, including but not limited to
the Company, Subsidiary or the Surviving Corporation, will be required to
conduct closure, post closure or corrective action with respect to any site or
facility owned, operated or used by the Company or the Real Property, pursuant
to RCRA or any analogous state law, as a result of any act or omission of the
Company or Subsidiary or any use of or Release of any Hazardous Material at or
from the Real Property prior to the Closing Date.
(e) The Company has delivered or otherwise made available for inspection to
Parent and Sub true, complete and correct copies and results of any reports,
studies, analyses, tests or monitoring possessed, available to or initiated by
the Company pertaining to Hazardous Materials in, on, beneath or adjacent to the
Real Property, or regarding the Company's compliance with or liability under
applicable Environmental Laws.
(f) Except as described in Section 4.14 of the Company Disclosure Schedule,
the Real Property does not contain any underground storage tanks, asbestos,
polychlorinated biphenyls, underground injection wells, radioactive materials,
or septic tanks in which process wastewater or any Hazardous Materials have been
discharged or disposed, in each case, as the result of a Release by the Company,
or, to the Company's knowledge, by any other person.
(g) No Lien has been recorded under any Environmental Law with respect to
any assets, facility or Real Property owned, operated, leased or controlled by
the Company.
(h) No currently owned Real Property of the Company, or, to the Company's
knowledge, no previously owned Real Property of the Company is (i) listed or
proposed for listing on the National Priorities List under CERCLA or (ii) listed
in the Comprehensive Environmental Response, Compensation, Liability Information
System List promulgated pursuant to CERCLA, or on any comparable list maintained
by any governmental authority having jurisdiction over any such Real Property.
SECTION 4.15 REAL PROPERTY.
(a) Section 4.15 of the Company Disclosure Schedule describes all real
property to which the Company has legal or equitable title (the "OWNED REALTY").
The Company holds no leasehold interests in any real property.
(b) The Company is the sole owner of the Owned Realty free and clear of any
lien, claim, charge, encumbrance, pledge, easement, encroachment, security
interest or restriction on transfer or title ("ENCUMBRANCES"), including, rights
of first refusal, except (i) as set forth in Section 4.15 of the Company
Disclosure Schedule; (ii) mechanics', carriers', workers', repairmen's or other
like liens arising or incurred in the ordinary course of business, and liens for
taxes, assessments and other governmental charges, which as to any thereof are
not yet due and payable; (iii) zoning, building and other similar restrictions,
provided that the existing buildings and other improvements on the real property
do not violate such restrictions; and (iv) those Encumbrances that, individually
or in the aggregate, do not materially adversely affect the marketability of the
title to or the present use (or any proposed use currently contemplated by the
Company), or materially impair the value, of the property subject thereto or
otherwise impair the operation of the Company's business as now conducted or
proposed to be conducted
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(collectively, the items in clauses (ii), (iii) and (iv), the "Permitted
Liens"). Section 4.15 of the Company Disclosure Schedule sets forth a list of
all leases, subleases and rights of parties in possession (collectively,
"LEASES") to which the Owned Realty is subject. Each Lease may be terminated by
the Company upon no more than nine months' notice to the other parties thereto,
without penalty to, or the imposition of liability on, the Company or any of its
successors in interest.
SECTION 4.16 PERSONAL PROPERTY. Except as set forth in Section 4.16 of the
Company Disclosure Schedule, the Company or Subsidiary has good title to all
personal property reflected on the Company's balance sheet included in the
Company's Report on Form 10-Q for the nine-month period ended August 31, 1997
(the "August Balance Sheet") and all personal property acquired by the Company
or Subsidiary since the date of the August Balance Sheet (except such personal
property as has been disposed of in the ordinary course of business) free and
clear of any Encumbrances except Permitted Liens.
SECTION 4.17 CONTRACTS. Except as disclosed in the Filed SEC Documents, as
of the date hereof, there are no contracts or agreements that are of a nature
required to be filed as an exhibit under the Exchange Act and the rules and
regulations promulgated thereunder. The Company is not in violation of or in
default under any lease, permit, concession, franchise, license or any other
contract, agreement, arrangement or understanding to which it is a party or by
which it or any of its properties or assets is bound, except for violations or
defaults that individually or in the aggregate would not have a Company Material
Adverse Effect
SECTION 4.18 LABOR MATTERS. Except as described in Section 4.18 of the
Company Disclosure Schedule, the Company is not a party to any collective
bargaining agreement with any labor organization or other written contract
concerning employment, or to any affirmative action plan established pursuant to
any federal, state or local law or order of any governmental body or court, or
any binding oral contract concerning employment. Since November 30, 1996 (i)
there has not been, nor is there currently pending or, to the Company's
knowledge, threatened, any labor dispute between the Company and any labor
organization or any strike, slowdowns, jurisdictional disputes, work stoppage or
other similar organized disruptive labor activities involving the employees of
the Company generally and (ii) there has not been, nor is there currently in
progress, pending or, to the Company's knowledge, threatened, any union
organizing or election activities involving any employees of the Company. The
Company is in compliance in all material respects with all federal, state and
local laws regarding labor, employment and employment practices, conditions of
employment, occupational safety and health and wages and hours, including, any
bargaining or other obligations under the National Labor Relations Act. The
Company is not engaged in unfair labor practices, and there are no unfair labor
practice complaints pending or, to the Company's knowledge, threatened against
the Company, as the case may be, before the National Labor Relations Board or
otherwise.
SECTION 4.19 INVENTORIES. Inventories of raw materials, work in progress and
finished goods of the Company are in good condition and of a quality useable and
saleable in the ordinary course of business or have had appropriate financial
reserves established. All inventory disposed of by the Company since August 31,
1997 has been disposed of under terms consistent with past practices.
SECTION 4.20 INTELLECTUAL PROPERTY. The Company owns or has the right to use
all copyrights, trade names, trademarks, service marks, trade secrets, designs,
licenses, patents and other intellectual property rights (including pending
applications for any of the foregoing) (collectively referred to herein as
"INTELLECTUAL PROPERTY") material to the conduct of the business of the Company
taken as a whole. There is no claim presently pending, nor since August 31, 1997
has there been any claim made or, to the Company's knowledge, threatened, nor,
to the Company's knowledge, is there any basis for any valid claim, that (x) the
operations of the Company or any Company Subsidiary infringe upon or conflict
with the asserted rights of any other person in respect of any Intellectual
Property, or (y) any of such Intellectual Property is invalid or unenforceable.
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SECTION 4.21 OPINION OF FINANCIAL ADVISOR. The Company has received the
written opinion of BT Wolfensohn on the date of this Agreement to the effect
that the $23.00 in cash per share to be received by the holders of Shares in the
Offer is fair, from a financial point of view, to such holders other than Von
Roll.
SECTION 4.22 BROKERS. Except as described in Section 4.22 of the Company
Disclosure Schedule, no broker, finder or investment banker, including, any
officer, director, employee or affiliate of the Company, is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. Prior to the date of this Agreement, the Company has
made available to Parent a true, correct and complete copy of all agreements
between the Company and any such firm or person, pursuant to which such firm or
person will be entitled to any payment relating to the transactions contemplated
by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby jointly and severally represent and warrant to the
Company that:
SECTION 5.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted and Parent is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of the business conducted by it or the ownership or leasing of its
properties makes such qualification necessary, other than where the failure to
be so duly qualified and in good standing would not have a Parent Material
Adverse Effect. The term "PARENT MATERIAL ADVERSE EFFECT," as used in this
Agreement, shall mean any change or effect that, individually or when taken
together with all such other changes or effects, would be materially adverse to
the financial condition, business or operations of Parent and Sub, taken as a
whole, at the time of such change or effect.
SECTION 5.02 CERTIFICATE OF INCORPORATION AND BY-LAWS. Parent has furnished
to the Company a true, correct and complete copy of the Certificates of
Incorporation and the By-Laws, as amended or restated, of each of Parent and
Sub. Neither Parent nor Sub is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws.
SECTION 5.03 AUTHORITY. Parent and Sub have all requisite corporate power
and corporate authority to execute and deliver this Agreement, to perform their
respective obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Parent and Sub and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action and no other corporate proceedings on the part
of Parent or Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Sub and, assuming the due authorization, execution and
delivery thereof by the Company, constitutes the valid and binding obligation of
each of Parent and Sub, enforceable against Parent and Sub in accordance with
its terms, except that (a) such enforcement may be subject to any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other laws, now
or hereafter in effect, relating to or limiting creditors' rights generally and
(b) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefore may be brought.
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SECTION 5.04 NO CONFLICT: REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and Sub do not,
and the performance of this Agreement by Parent and Sub will not, (i) conflict
with or violate the Certificate of Incorporation or By-Laws, in each case as
amended or restated, of Parent or Sub, (ii) conflict with or violate any Laws
applicable to Parent or Sub by which any of their respective properties is bound
or (iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the properties or assets of
Parent or Sub pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Sub is a party or by which Parent or Sub or any of their
respective properties is bound or subject to, except for any such breach,
default, event, right of termination, amendment, acceleration or cancellation or
lien or encumbrance described in clause (iii) that would not have a Parent
Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Sub do not,
and the performance of this Agreement by Parent and Sub will not, as of the date
of this Agreement, require Parent or Sub to obtain any consent, approval,
authorization or permit of, or to make any filing with or notification to, any
Governmental Entities or third parties, except (i) for applicable requirements,
if any, of the Securities Act, the Exchange Act, Blue Sky Laws, the NASD, ISRA
and the HSR Act, and the filing and recordation of a Certificate of Merger as
required by the DGCL and (ii) the consents, approvals, authorizations, permits,
filings and notifications, if any, set forth in Section 5.04 of the disclosure
schedule attached hereto and made a part hereof (the "PARENT DISCLOSURE
SCHEDULE").
SECTION 5.05. INFORMATION SUPPLIED. None of the information supplied or to
be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
stockholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Offer Documents will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that (other than with respect to the Proxy Statement) no
representation or warranty is made by Parent or Sub with respect to statements
made or incorporated by reference therein based on information supplied by the
Company specifically for inclusion or incorporation by reference therein.
SECTION 5.06. BROKERS. No broker, investment banker, financial advisor or
other person, other than Merrill Lynch & Co., Inc., the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
SECTION 5.07. INTERESTED STOCKHOLDER. Neither Parent nor any of its
"affiliates" or "associates" within the meaning of Section 203 of the DGCL is or
has been an "interested stockholder" of the Company within the meaning of said
Section 203.
SECTION 5.08. FINANCING. At the expiration of the Offer and the Effective
Time, Parent and Sub will have available all the funds necessary for the
acquisition of all Shares pursuant to the Offer and to perform their respective
obligations under this Agreement, including without limitation, payment in full
for all Shares validly tendered into the Offer or outstanding at the Effective
Time, repayment in full of the Company's indebtedness to Von Roll as referred to
in Section 1.01(c), and effecting the release of the Tube City Guarantee.
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ARTICLE VI
COVENANTS
SECTION 6.01 AFFIRMATIVE COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Parent,
the Company will, and will cause Subsidiary, to:
(a) operate its business only in the usual and ordinary course consistent
with past practices;
(b) preserve intact its business organizations, maintain its rights and
franchises, use its best efforts to retain the services of its respective
officers and key employees and maintain its relationships and goodwill with its
respective customers and suppliers and others with which it has business
relationships;
(c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain
inventories in quantities consistent with its customary business practice; and
(d) keep in full force and effect insurance and bonds comparable in amount
and scope of coverage to that maintained on the date hereof.
SECTION 6.02 NEGATIVE COVENANTS OF THE COMPANY. Except as expressly
contemplated by this Agreement and except as set forth in Section 6.02 of the
Company Disclosure Schedule, or otherwise consented to in writing by Parent,
from the date of this Agreement until the Effective Time, the Company will not
do, and will not permit Subsidiary to do, any of the following:
(a) (1) increase the compensation payable to or to become payable to any
director, officer or employee (other than increases to employees, other than
officers, made in the ordinary course of business and consistent with past
practice); (ii) grant any severance or termination of pay (other than pursuant
to the normal severance policy of the Company as in effect on the date of this
Agreement) to, or enter into any employment or severance agreement with, any
director, officer or employee; (iii) establish, adopt, enter into or amend any
employee benefit plan or arrangement except as may be required by applicable
law; or (iv) lend or contribute any funds to any director, officer, employee,
affiliate or associate of the Company;
(b) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of capital stock;
(c) (i) redeem, purchase or otherwise acquire any shares of its or any
securities or obligations convertible into or exchangeable for any shares of its
capital stock, or any options, warrants or conversion or other rights to acquire
any shares of its capital stock or any such securities or obligations; (ii)
effect any reorganization or recapitalization; or (iii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale (including the grant of any security
interest, liens, claims, pledges, limitations in voting rights, charges or other
encumbrances) of, any shares of any class of its capital stock (including shares
held in treasury), any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to acquire,
any such shares, other than the issuance of shares pursuant to the exercise of
Stock Options granted prior to the date hereof; or (ii) amend or otherwise
modify the terms of any such rights, warrants or options the effect of which
shall be to make such terms more favorable to the holders thereof; (provided
however, the Company may take action to accelerate the vesting of outstanding
stock options);
(e) (i) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership,
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association or other business organization or division thereof, or (ii)
otherwise acquire or agree to acquire any assets of any other person (other than
the purchase of assets from suppliers or vendors in the ordinary course of
business and consistent with past practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose
of, or agree to sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, any of its assets or any assets of Subsidiary, except for
dispositions of inventories and of assets in the ordinary course of business and
consistent with past practice;
(g) release any third party from its obligations under any existing
standstill relating to a Competing Transaction or otherwise under
confidentiality agreements;
(h) propose or adopt any amendments to its Certificate of Incorporation or
By-Laws;
(i) (A) change any of its methods of accounting in effect at August 31,
1997, or (B) make or rescind any express or deemed election relating to taxes,
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, or change
any of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns for the taxable year ending November 30, 1996, except, in the case of
clause (A) or clause (B), as may be required by law or changes in GAAP;
(j) incur any obligation for borrowed money or purchase money indebtedness,
whether or not evidenced by a note, bond, debenture or similar instrument (other
than Company Debt incurred in the ordinary course of business (including
previously budgeted capital expenditures), which at November 30, 1997 (but not
thereafter) shall not exceed $32 million exclusive of any amount required to
fund a settlement of the NJDEP/PIRG litigation, if such shall occur prior to
November 30, 1997);
(k) enter into any arrangement, agreement or contract with any third party
(other than customers or suppliers in the ordinary course of business) which
provides for an exclusive arrangement with that third party or is more
restrictive on the Company or less advantageous to the Company than
arrangements, agreements or contracts existing on the date hereof;
(l) agree in writing or otherwise to do any of the foregoing.
SECTION 6.03 ACCESS AND INFORMATION. Subject to Section 6.04, the Company
shall (i) afford to Parent and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively, the
"PARENT Representatives") access at reasonable times to the officers, employees,
agents, properties, offices and other facilities of the Company and to the books
and records thereof and (ii) furnish promptly to Parent and the Parent
Representatives such information concerning the business, properties, contracts,
records and personnel of the Company (including, financial, operating and other
data and information) as may be requested, from time to time, by Parent.
SECTION 6.04 CONFIDENTIALITY. The parties will comply with all of their
respective obligations under the Confidentiality Agreement dated September 9,
1997 between Parent and the Company (the "CONFIDENTIALITY AGREEMENT").
SECTION 6.05 NOTIFICATION OF CERTAIN MATTERS. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, of
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause (x) any representation or
warranty contained in this Agreement to be untrue or inaccurate or (y) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied and (ii) any failure of Parent or the Company, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery
of any notice pursuant to this Section 6.05 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. STOCKHOLDER APPROVAL; PREPARATION OF PROXY STATEMENT. (a) If
Shares are purchased pursuant to the Offer and the Company Stockholder Approval
is required by law, the Company shall, as soon as practicable following the
expiration of the Offer, duly call, give notice of, convene and hold a meeting
of its stockholders (the "Stockholders Meeting") for the purpose of obtaining
the Company Stockholder Approval. Subject to Section 7.07 hereof, the Company
shall, through its Board of Directors, recommend to its stockholders that the
Company Stockholder Approval be given. Notwithstanding the foregoing, if Sub or
any other subsidiary of Parent shall acquire at least 90% of the outstanding
Shares, the parties shall take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after the expiration of the
Offer without a Stockholders Meeting in accordance with Section 253 of the DGCL.
(b) If the Company Stockholder Approval is required by law, the Company
shall, as soon as practicable following the expiration of the Offer, prepare and
file a preliminary Proxy Statement with the SEC and shall use its best efforts
to respond to any comments of the SEC or its staff and to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after responding to all such comments to the satisfaction of the staff. The
Company shall notify Parent promptly of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will supply
Parent with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger. If at any time prior to the
Stockholders Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company shall promptly
prepare and mail to its stockholders such an amendment or supplement.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer and
all other Shares owned by Parent or any subsidiary of Parent to be voted in
favor of the Company Stockholder Approval.
SECTION 7.02. INDEMNIFICATION.
(a) From and after the consummation of the Offer, the Surviving Corporation
will, and Parent will use its best efforts to cause the Surviving Corporation
to, fulfill and honor in all respects the obligations of the Company pursuant to
(i) each indemnification agreement in effect at such time between the Company
and each person who is or was a director or officer of the Company at or prior
to the Effective Time and (ii) any indemnification provisions under the
Company's Certificate of Incorporation or By-laws as each is in effect on the
date hereof (the persons to be indemnified pursuant to the agreements or
provisions referred to in clauses (i) and (ii) of this Section 7.02(a) shall be
referred to as, collectively, the "Indemnified Parties"). The Certificate of
Incorporation and By-laws of the Surviving Corporation shall contain the
provisions with respect to indemnification and exculpation from liability set
forth in the Company's Certificate of Incorporation and By-laws on the date of
this Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of any Indemnified Party. Without
limiting the foregoing, after the Effective Time the Surviving Corporation shall
pay all reasonable out-of-pocket fees and expenses, including reasonable legal
fees, for the Indemnified Parties incurred with respect to the foregoing to the
fullest extent permitted under applicable law promptly after statements therefor
are received by the Surviving Corporation; PROVIDED the person on whose behalf
the expenses are paid provides an undertaking to repay such payments if it is
ultimately determined that such person is not entitled to indemnification.
Parent will cause the Surviving Corporation to maintain for not less than six
years from the Effective Time, directors' and officers' liability insurance
covering the Indemnified Parties who are presently covered by the Company's
directors' and officers' liability insurance or will be so covered
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at the Effective Time with respect to actions and omissions occurring on or
prior to the Effective Time on terms no less favorable to the Indemnified
Parties than such insurance maintained in effect by the Company on the date
hereof in terms of coverage and amount; PROVIDED, that to the extent such
coverage is not obtainable at less than per annum premiums in the amount of
$175,000 for such insurance, Parent shall cause the Surviving Corporation to
purchase so much coverage as may then be obtained for $175,000 per annum.
(b) This Section 7.02 shall survive the consummation of the Merger at the
Effective Time, is intended to be for the benefit of, and enforceable by, the
Company, Parent, the Surviving Corporation and each Indemnified Party and such
Indemnified Party's heirs and representatives, and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.
(c) Notwithstanding anything to the contrary contained in this Agreement,
from and after the date hereof, the Company may enter into indemnification
agreements, or amended existing indemnification agreements, with current
directors and officers of the Company providing for customary provisions under
Delaware law.
7.03 REASONABLE EFFORTS. The Company and Parent shall each use their
reasonable efforts to (i) take, or cause to be taken, all appropriate action,
and do, or cause to be done, all things necessary, proper or advisable under
applicable law or otherwise to consummate and make effective the transactions
contemplated by this Agreement, (ii) obtain from any Governmental Entities or
third parties any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Parent or the
Company or any of their Subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein, including, the Merger, and (iii) make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the Merger, required under (A) the Exchange Act
and the rules and regulations thereunder, and any other applicable federal or
state securities laws, (B) the HSR Act and (C) any other applicable law;
PROVIDED that Parent and the Company shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the nonfiling party and its advisors prior to filing and,
if requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith. The Company and Parent shall furnish all information
required for any application or other filing to be made pursuant to the rules
and regulations of any applicable Law (including all information required to be
included in the Proxy Statement, if required) in connection with the
transactions contemplated by this Agreement.
SECTION 7.04 STOCK OPTIONS. The Company shall use its best efforts to obtain
the agreement of each holder of an employee stock option granted under the
Company's Stock Plans (whether or not exercisable) outstanding as of the date of
this Agreement, for the cancellation and settlement of such option as of the
Effective Time in consideration of the payment by Parent or Sub, as the case may
be, to such option holder of a dollar amount for each share of Company Common
Stock subject to such option equal to the Merger Consideration payable in
respect of a share of Company Common Stock less the applicable exercise price
per share of such option due and payable as of the Effective Time. All such
payments to optionees shall be subject to applicable withholding taxes. At or
immediately prior to the Closing, Parent or Sub, as the case may be, shall
deposit or cause to be deposited with the Paying Agent in trust for the benefit
of such option holders the cash necessary to allow the Paying Agent to pay the
amounts due under this Section 7.04 as of the Effective Time.
SECTION 7.05 ISRA. The Company will comply with applicable requirements of
ISRA in connection with the transactions contemplated by this Agreement, and the
Company will bear all costs associated therewith until such time as all ISRA
requirements have been satisfied and evidenced by documentation from the New
Jersey Department of Environmental Protection ("NJDEP"). If required, such
compliance will include: (i) obtaining NJDEP approval of a negative declaration
or approval and implementation of a remedial action work plan to the
satisfaction of NJDEP, or entry into a remediation agreement with
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NJDEP and (ii) furnishing any remediation funding source required by NJDEP.
Prior to taking or omitting any action with respect to compliance with
applicable requirements of ISRA (including, but not limited to, submitting any
required document to NJDEP), the Company shall notify Parent and provide Parent
with an opportunity to consult with and to inform the Company as to the
reasonableness of its actions or omissions; PROVIDED, HOWEVER, that the Company
shall not, on or prior to the Effective Time, take or omit any such action, the
result of which would be to bind or commit the Surviving Corporation after the
Effective Time, without the prior written consent of Parent (except that Parent
shall not unreasonably withhold its consent to the Company's entering into a
customary remediation agreement with the NJDEP providing for remediation
following the Effective Time).
SECTION 7.06 COMPANY DEBT. Parent shall provide or cause to be provided to
the Company on a timely basis in connection with the transactions contemplated
hereby substitute working capital financing and funds or financing sufficient to
repay in full the Company Debt as provided in Section 1.01(b) hereof, shall
cause the Company at or prior to the Effective Time to repay in full its
indebtedness to Von Roll Holding AG and shall obtain the release of Von Roll
from the Tube City Guarantee.
SECTION 7.07 NO SOLICITATION. (a) The Company shall not, nor shall it
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative or agent retained by it or any subsidiary to, directly or
indirectly, (i) solicit, initiate or knowingly encourage the submission of any
Takeover Proposal (as defined below) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any nonpublic information with
respect to, or taken any other action designed or reasonably likely to
facilitate any inquiries or the making of any proposal that constitutes any
Takeover Proposal; provided, however, that if, at any time prior to the
acceptance for payment of Shares pursuant to the Offer, the Board of Directors
of the Company determines in good faith, after consultation with outside
counsel, that it is reasonably advisable to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the Company
may, in response to a Takeover Proposal which was not solicited subsequent to
the date hereof, and subject to compliance with Section 7.07(c), (x) furnish
information with respect to the Company to any person pursuant to a customary
confidentiality agreement and (y) participate in discussions and negotiations
regarding such Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any director, officer or employee of the Company or any of its
subsidiaries or any investment banker, financial advisor, attorney, account or
other representative or agent of the Company or any of its subsidiaries shall be
deemed to be a breach of this Section 7.07(a) by the Company. For purposes of
this Agreement, "TAKEOVER PROPOSAL" means any inquiry, proposal or offer from
any person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company and its subsidiaries, taken as a
whole (other than the purchase of the Company's products in the ordinary course
of business), or more than 40% interest in the total voting securities of the
Company or any of its subsidiaries or any tender offer or exchange offer that if
consummated would result in any person beneficially owing 40% or more of any
class of equity securities of the Company or any of its subsidiaries or any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than the transactions contemplated by
this Agreement.
(b) Except as set forth in this Section 7.07 neither the Board of Directors
of the Company nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors or such committee of the Offer, the
Merger or this Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Takeover Proposal or (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement (each, an "Acquisition Agreement") related to any
Takeover Proposal. Notwithstanding the foregoing, in the event that prior to the
acceptance for payment of Shares pursuant to the Offer the Board of Directors of
the Company determines in good faith, after consultation with outside counsel,
that it is reasonably advisable to do so in order to comply with its
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fiduciary duties to the Company's stockholders under applicable law, the Board
of Directors of the Company may, in response to an unsolicited Superior Proposal
(as defined below) (subject to the following proviso), (x) withdraw or modify
its approval or recommendation of the Offer, the Merger or this Agreement or (y)
approve or recommend any such Superior Proposal if concurrently with such
approval or recommendation the Company terminates this Agreement and enters into
an Acquisition Agreement with respect to a Superior Proposal; provided, that in
the case of this clause (y), only at a time that is after the later of (i) the
third business day following Parent's receipt of written notice advising Parent
that the Board of Directors of the Company has received a Superior Proposal,
specifying the material terms of such Superior Proposal and identifying the
person making such Superior Proposal and (ii) in the event of any amendment to
the price or any material term of a Superior Proposal, one business day
following Parent's receipt of written notice containing the material terms of
such amendment, including any change in price (it being understood that each
further amendment to the price or any material terms of a Superior Proposal
shall necessitate an additional written notice to Parent and an additional one
business day period prior to which the Company can take the actions set forth in
clause (y) above.). For purposes of this Agreement, a "SUPERIOR PROPOSAL" means
any bona fide Takeover Proposal made by a third party (i) that is on terms which
the Board of Directors of the Company determines in its good faith judgment
(based on consultation with the Company's financial advisor) to be more
favorable to the Company's stockholders than the Offer and the Merger and (ii)
for which financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of the Company, is capable of
being obtained by such third party.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 7.07, the Company shall promptly advise Parent
orally and in writing of any request for nonpublic information (except in the
ordinary course of business and not in connection with a possible Takeover
Proposal) or of any Takeover Proposal known to it, the material terms and
conditions of such request or Takeover Proposal and the identity of the person
making such request or Takeover Proposal. The Company will promptly inform
Parent of any material change in the details (including amendments or proposed
amendments) of any such request or Takeover Proposal.
(d) Nothing contained in this Agreement shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule 14d-9
or Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with applicable law; PROVIDED,
HOWEVER, neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by this Section 7.07, withdraw or modify, or
propose to withdraw or modify, its position with respect to the Offer, the
Merger or this Agreement or approve or recommend, or propose to approve or
recommend, a Takeover Proposal.
SECTION 7.08 (A) FEES AND EXPENSES. Except as provided below in this Section
7.08, all fees and expenses in connection with the Offer, the Merger, this
Agreement and the transactions contemplated hereby shall be borne solely and
entirely by the party incurring such fees and expenses, whether or not the Offer
or the Merger are consummated.
(b) The Company shall pay, or cause to be paid, to Parent the amount of
$5,000,000 (the "Termination Fee") under the circumstances and at the times set
forth as follows:
(i) if the Company terminates this Agreement under Section 9.01(e), the
Company shall pay 50% of the Termination Fee simultaneously with such
termination, and 50% of the Termination Fee upon consummation of the
transactions contemplated by the Superior Proposal giving rise to the
Company's right to terminate this Agreement under Section 9.01(e), or upon
the earlier consummation of another Company Acquisition (as defined in
paragraph 7.08(c) below) provided that such other Company Acquisition is
consummated within twelve months following termination of this Agreement;
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(ii) if Parent or Sub terminates this Agreement under Section 9.01(d)
and in addition, if within twelve months after such termination the Company
shall enter into an Acquisition Agreement providing for a Company
Acquisition or the Company shall recommend to its stockholders that they
accept a Company Acquisition of the type referred to in Section
7.08(c)(iii), the Company shall pay (A) 50% of the Termination Fee
simultaneously with the entering into of such Acquisition Agreement of
making of such recommendation and (B) 50% of the Termination Fee upon
consummation of the Company Acquisition which was the subject of such
Acquisition Agreement or recommendation, or upon the consummation, prior to
the expiration of such twelve month period, of any other Company Acquisition
(it being understood that if any Company Acquisition shall be consummated
within such twelve month period and the Company shall not have paid any
amount pursuant to clause (A) above, that upon consummation of such Company
Acquisition the Company shall pay 100% of the Termination Fee); and
(iii) if, at the time of any termination of this Agreement pursuant to
Section 9.01(b)(i) (as a result of a failure to obtain the Minimum
Condition) or Section 9.01(c), any person shall have publicly announced a
proposal to effect a Company Acquisition and if, within twelve months after
such termination, the Company shall enter into an Acquisition Agreement
providing for a Company Acquisition or the Company shall recommend to its
stockholders that they accept a Company Acquisition of the type referred to
in Section 7.08(c)(iii), the Company shall pay (A) 50% of the Termination
Fee simultaneously with the entering into of such Acquisition Agreement or
making of such recommendation and (B) 50% of the Termination Fee upon
consummation of the Company Acquisition which was the subject of such
Acquisition Agreement or recommendation, or upon the consummation, prior to
the expiration of such twelve month period, of any other Company Acquisition
(it being understood that if any Company Acquisition shall be consummated
within such twelve month period and the Company shall not have paid any
amount pursuant to clause (A) above, that upon consummation of such Company
Acquisition the Company shall pay 100% of the Termination Fee.
(c) For purposes of this Agreement a "COMPANY ACQUISITION" shall mean any of
the following transactions (i) a merger, consolidation, business combination or
a recapitalization pursuant to which the stockholders of the Company immediately
preceding such transaction hold less than 60% of the equity interests in the
surviving or resulting entity of such transaction (other than the transactions
contemplated by this Agreement); (ii) a sale by the Company of assets (excluding
the sale of the Company's products in the ordinary course of business)
representing in excess of 40% of the fair market value of the Company
immediately prior to such sale or the issuance by the Company to any person or
group of shares representing in excess of 40% of the then outstanding shares of
capital stock of the Company (other than in connection with an underwritten
public offering); or (iii) the acquisition by any person or group, by way of a
tender offer, exchange offer, or by way of open market purchases of beneficial
ownership of 40% or more of the then outstanding shares of capital stock of the
Company.
SECTION 7.09 PUBLIC ANNOUNCEMENTS. Unless otherwise required by applicable
law, Parent and the Company shall consult with each other before issuing any
press release or otherwise making any public statement with respect to the
Merger and shall not issue any such press release or make any such public
statement prior to such consultation.
ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.01 CONDITIONS OF OBLIGATIONS OF EACH PARTY UNDER THIS AGREEMENT.
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction or waiver prior to the Closing Date of the following
conditions:
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(a) Company Stockholder Approval. If required by applicable law, the Company
Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; PROVIDED, HOWEVER, that each of
the parties shall have used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for payment and
paid for Shares pursuant to the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the terms of
this Agreement by the stockholders of the Company (provided, however, that if
Shares are purchased pursuant to the Offer, neither Parent nor Sub may in any
event terminate this Agreement):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if Sub shall not have accepted for payment and Shares pursuant to
the Offer prior to May 5, 1998; provided, however, that the right to
terminate this Agreement pursuant to this Section 9.01(b)(i) shall not be
available to (1) Parent, if Sub shall have breached its obligations under
the second to the last sentence of Section 1.01(a) or (2) any party whose
failure to perform any of its obligations under this Agreement results in
the failure of any such condition or if the failure of such condition
results from facts or circumstances that constitute a willful breach of
representation or warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree or ruling or
other action shall have become final and nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant to the Offer
in the event of a breach or failure to perform by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set forth in
paragraph (e) or (f) of Exhibit A and (ii) cannot be or has not been cured
within 30 days after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to terminate the
Offer as a result of the occurrence of any event set forth in paragraph (d) of
Exhibit A to this Agreement;
(e) by the Company in accordance with Section 7.07(b), provided that it has
complied with all provisions thereof, including the notice provisions therein,
and that it complies with applicable requirements relating to the payment
(including the timing of any payment) of the Termination Fee as provided in
Section 7.08 (it being understood that that, as provided in Section 7.07(b), the
Company will be required to terminate this Agreement); or
(f) by the Company in the event of a material breach or failure to perform
in any material respect by Parent or Sub of any representation, warranty,
covenant or other agreement contained in this Agreement which cannot be or has
not been cured within 30 days after the giving of written notice to Parent and
Sub.
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SECTION 9.02. EFFECT OF TERMINATION. In the event of a termination of this
Agreement by either the Company or Parent or Sub as provided in Section 9.01,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to the last sentence of Section
1.02(c), Section 4.18, Section 5.05, the last sentence of Section 7.02, Section
7.06, this Section 9.02 and Article X; provided, however, that nothing herein
shall relieve any party for liability for any willful breach hereof.
SECTION 9.03. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto, duly
authorized by action taken at any time before or after obtaining the Company
Stockholder Approval. After the purchase of Shares pursuant to the Offer, no
amendment shall be made which decreases the Merger Consideration. After the
Company Stockholder Approval, no amendment shall be made which by law requires
further approval by such stockholders without obtaining such further approval.
Prior to the Effective Time, the written consent of Von Roll shall be required
to (i) amend or terminate this Agreement, (ii) exercise or waive any of the
Company's rights or remedies under this Agreement, (iii) extend the time for
performance of Parent and Sub's obligations under this Agreement or (iv) take
any action to amend or otherwise modify the Company's Certificate of
Incorporation or By-laws in violation of Section 7.07 hereof.
SECTION 9.04. EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, subject to Section 9.03, (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
27
<PAGE>
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective Time
or, in the case of the Company, shall survive the acceptance for payment of, and
payment for, Shares by Sub pursuant to the Offer. This Section 10.01 shall not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time, including Section 7.02.
SECTION 10.02 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
(a) If to Parent or Sub:
Co-Steel Inc.
Scotia Plaza
40 King Street West
Toronto, Ontario
Canada M5H 3Y2
Attention: President
Telecopy: 416 366 4616
with copies to:
Goodman Phillips & Vineberg
250 Yonge Street
Toronto, Ontario
Canada M5B 2M6
Attention: Lorie Waisberg, Esq.
Telecopy: 416 979 1234
Wilentz Goldman & Spitzer
90 Woodbridge Center Drive
Woodbridge, NJ 07095
Attention: C. Kenneth Shank, Esq.
Telecopy: 908 855 6117
(b) If to the Company:
New Jersey Steel Corporation
North Crossman Road
Sayreville, New Jersey 08872
Attention: Mr. Gary Giovannetti
Telecopier No.: 732 721 8933
28
<PAGE>
with a copy to:
Jacobs Persinger & Parker
77 Water Street
New York New York 10005
Attention: Walter H. Beebe, Esq.
Telecopier No.: 212 742 0938
(b) If to Von Roll:
Von Roll Holding AG
CH-4563 Gerlafingen
Switzerland
Attention: Mr. H. Georg Hahnloser
Telecopy: 011-416-534-2208
with a copy to:
Jacobs Persinger & Parker
77 Water Street
New York New York 10005
Attention: Walter H. Beebe, Esq.
Telecopier No.: 212 742 0938
SECTION 10.03 INTERPRETATION. When a reference is made in this Agreement to
an Article or a Section, such reference shall be to an Article or a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is to be
made available. As used in this Agreement, the term "subsidiary" of any person
means another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 10.04 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.05 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 10.06 ENTIRE AGREEMENT. This Agreement (together with the Exhibits
attached hereto, the Company Disclosure Schedule and the Parent Disclosure
Schedule) and the Confidentiality Agreement constitute the entire agreement of
the parties and supersede all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof
SECTION 10.07 ASSIGNMENT. Except as contemplated by Section 2.01 hereof,
this Agreement shall not be assigned by operation of law or otherwise.
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<PAGE>
SECTION 10.08 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and no provision of this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, except for the provisions of Section 6.7 (which are intended
to be for the benefit of the persons indicated therein and may be enforced by
such persons).
SECTION 10.09 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 10.10 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
SECTION 10.11 COUNTERPARTS. This Agreement may be executed in counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
and Plan of Merger to be executed by their respective duly authorized officers
as of the date first written above.
<TABLE>
<S> <C> <C>
NEW JERSEY STEEL CORPORATION
By:
-----------------------------------------
Gary Giovannetti, PRESIDENT
VON ROLL HOLDING AG
By:
-----------------------------------------
H. Georg Hahnloser, CHIEF OPERATING
OFFICER
CO-STEEL INC.
By:
-----------------------------------------
Lew Hutchinson, PRESIDENT
CO-STEEL MERGER CORPORATION
BY:
-----------------------------------------
PRESIDENT
</TABLE>
30
<PAGE>
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered Shares after the termination
or withdrawal of the Offer), to pay for any Shares tendered pursuant to the
Offer unless (i) there shall have been validly tendered and not withdrawn prior
to the expiration of the Offer such number of Shares that would constitute at
least 80% of the outstanding Shares (determined on a fully diluted basis for all
outstanding stock options and any other rights to acquire Shares that are or
would be vested prior to December 31, 1997)(the "Minimum Condition"), (ii) any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer shall have expired or been terminated and (iii) the requirements of
ISRA have been satisfied through a remediation agreement with the NJDEP as
contemplated by Section 7.05 or otherwise. Furthermore, Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any Shares
not theretofore accepted for payment or paid for, and may, in accordance with
Section 9.01, terminate this Agreement or amend the Offer with the consent of
the Company and Von Roll, if, upon the scheduled expiration date of the Offer
(as extended, if required, pursuant to the second to the last sentence of
Section 1.01(a)) and before the acceptance of such Shares for payment or the
payment therefor, any of the following conditions exists and is continuing and
does not result principally from the breach by Parent or Sub of any of their
obligations under this Agreement:
(a) there shall be instituted or pending by any Governmental Entity any
suit, action or proceeding (i) challenging the acquisition by Parent or Sub
of any Shares under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any of
Parent's subsidiaries of a material portion of the business or assets of the
Company or Parent and its subsidiaries, taken as a whole, or to compel the
Company or Parent to dispose of or hold separate any material portion of the
business or assets of the Company or Parent and its subsidiaries, taken as a
whole, in each case as a result of the Offer or the Merger or (iii) seeking
to impose material limitations on the ability of Parent or Sub to acquire or
hold, or exercise full rights of ownership of, any Shares to be accepted for
payment pursuant to the Offer including, the right to vote such Shares on
all matters properly presented to the stockholders of the Company or (iv)
seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect any material portion of the business or
operations of the Company;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, by any Governmental Entity or court, other than the
application to the Offer or the Merger of ISRA and any applicable waiting
periods under the HSR Act, that would result in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred any material adverse change with respect
to the Company since the date of this Agreement;
(d) the Board of Directors of the Company or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent or Sub its approval
or recommendation of the Offer or the Merger or its adoption of this
Agreement, or approved or recommended any Takeover Proposal;
(e) any of the representations and warranties of the Company set forth
in this Agreement that are qualified as to materiality shall not be true and
correct or any such representations and warranties that are not so qualified
shall not be true and correct in any material respect, in each case at the
date of this Agreement and at the scheduled or extended expiration of the
Offer;
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<PAGE>
(f) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or material covenant of the Company to be performed or complied
with by it under this Agreement;
(g) Parent and Sub shall not have received a certificate of the
President or Chief Financial Officer of the Company dated the expiration
date of the Offer (i) that the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality are true
and correct as and at such date, (ii) that the representations and
warranties that are not so qualified are true and correct in any material
respect as and at such date, and that (iii) the Company has performed in all
material respects any material obligation and complied in all material
respect with any material agreement or material covenant of the Company to
be performed or complied with by it; or
(h) this Agreement shall have been terminated in accordance with its
terms;
which, in the good faith judgment of Parent or Sub, in its sole discretion, make
it inadvisable to proceed with such acceptance of Shares for payment or the
payment therefor.
Notwithstanding anything contained herein, (i) the conditions set forth in
clause (e) above shall be deemed not fulfilled only if the respects in which the
representations and warranties made by the Company (without giving effect to any
"materiality" limitations or references to "material adverse effect" set forth
therein) are inaccurate would have a material adverse effect on the Company, and
(ii) if the condition set forth in clause (f) is not fulfilled, Sub shall not be
obligated to purchase and pay for any Shares so long as such condition remains
unfulfilled, but Sub may not terminate the Offer due solely to such failure
until 30 days after it gives written notice to the Company of such
nonfulfillment and such nonfulfillment is not cured by the end of such 30-day
period.
The foregoing conditions are for the sole benefit of Parent and Sub and
(except for the Minimum Condition) may, subject to the terms of this Agreement,
be waived by Parent and Sub in whole or in part at any time and from time to
time in their sole discretion. The failure by Parent or Sub at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time. Terms used but not defined herein
shall have the meanings assigned to such terms in the Agreement to which this
Exhibit A is a part.
32
<PAGE>
STOCKHOLDER AGREEMENT
This Stockholder Agreement (the "AGREEMENT") made as of this 21st day of
November, 1997, by and between CO-STEEL INC., a Canadian corporation ("BUYER"),
and VON ROLL HOLDING AG, a Swiss corporation (formerly, Von Roll AG,
"STOCKHOLDER").
WHEREAS, concurrently with the execution and delivery of this Agreement,
Buyer, CO-STEEL MERGER CORPORATION, a Delaware corporation and an indirect
wholly-owned subsidiary of Buyer ("MERGER SUB"), and NEW JERSEY STEEL
CORPORATION, a Delaware corporation (the "COMPANY"), are entering into a Tender
Offer Agreement and Agreement and Plan of Merger dated the date hereof (the
"TENDER AGREEMENT"), pursuant to which, among other things, Buyer is agreeing to
make a tender offer (the "OFFER") for all of the outstanding shares of common
stock, par value $.01 per share, of the Company (the "COMPANY COMMON STOCK") at
$23.00 per share (or such higher price as may be paid in the Offer) and
following the Offer, Merger Sub will be merged with and into the Company (the
"MERGER");
WHEREAS, as a result of the Offer and Merger, the Company will become an
indirect wholly-owned subsidiary of Buyer, and the Company Common Stock not
tendered to and purchased by Buyer in the Offer will be converted into the right
to receive in cash the per share price paid in the Offer, subject to the terms
and conditions of the Tender Agreement; and
WHEREAS, Stockholder is the record and ultimate beneficial owner of an
aggregate of 3,561,500 shares of Company Common Stock which it holds through its
VON ROLL STEEL HOLDING AG subsidiary;
NOW, THEREFORE, to induce Buyer to enter into the Tender Agreement and in
consideration of the aforesaid and the mutual representations, warranties,
covenants and agreements set forth herein and in the Tender Agreement, the
parties hereto agree as follows:
1. TENDER OF SHARES. Stockholder hereby agrees to validly tender (or cause
to be validly tendered), and not to withdraw, pursuant to and in accordance with
the terms of the Offer, not later than the fifth business day after commencement
of the Offer pursuant to Section 1.01 of the Tender Offer Agreement and Rule
14d-2 under the Exchange Act, all of the 3,561,500 shares of the Company owned
by it (and any shares acquired by Stockholder in any capacity after the date
hereof and prior to the termination of this Agreement by means of purchase,
dividend, distribution or in any other way, collectively, the "SHARES").
Stockholder hereby acknowledges and agrees that Buyer's obligation to accept for
payment and pay for the Shares in the Offer is subject to the terms and
conditions of the Offer.
2. SALE AND PURCHASE OTHER THAN PURSUANT TO OFFER In the event the Shares
are not purchased by Buyer pursuant to the Offer because the Offer is terminated
for any reason other than a failure of an Offer Condition (as defined in the
Tender Agreement) other than condition (d) thereof, Stockholder hereby agrees to
sell, transfer and convey the Shares to Buyer, and Buyer hereby agrees to
purchase, acquire and accept the Shares from Stockholder, at a purchase price of
$23.00 per share (the "PURCHASE PRICE"), all subject to the terms and conditions
of this Agreement. In addition, at the time of the purchase and sale of the
Shares pursuant to this Section 2, Buyer hereby agrees that it (i) will purchase
from Stockholder the outstanding subordinated loans to the Company held by
Stockholder made pursuant to that certain Credit Agreement dated June 6, 1996
between the Company and Stockholder, at the face amount thereof, plus all
interest accrued but unpaid to the date of such purchase, (ii) will thereafter
provide or cause to be provided to the Company on a timely basis substitute
working capital financing and financing sufficient to repay in full the
Company's obligations to PNC Bank under that certain Loan and Security Agreement
dated June 6, 1996, if required by said lender and (iii) will provide, or cause
the Company to provide, Tube City Inc. a substitute guarantee or otherwise act
with Von Roll to effectuate the prompt release of Von Roll from its August 21,
1996 guarantee to Tube City, Inc. (the "TUBE CITY GUARANTEE") without further
obligation or liability.
3. DELIVERY AND PAYMENT. The closing of the sale, transfer and conveyance of
the Shares and the subordinated obligations by Stockholder to Buyer pursuant to
Section 2. hereof (the "CLOSING") shall take place on the third business day
following the satisfaction or waiver of the conditions set forth in
<PAGE>
Sections 5 and 6 hereof at the offices of Wilentz, Goldman & Spitzer, 90
Woodbridge Center Drive, Woodbridge, NJ, or such other time or place as the
parties hereto may agree. The time and date of the closing is referred to herein
as the Closing Date. At the Closing, the following shall occur simultaneously:
(a) Stockholder shall deliver to Buyer stock certificates evidencing the
Shares, accompanied by stock powers duly endorsed by Stockholder in favor of
Buyer as transferee, with all signatures properly guaranteed and an assignment,
in form and substance reasonably satisfactory to Buyer, of the subordinated
obligations. Stockholder shall execute and deliver to Buyer a certificate which
states that all representations and warranties made by Stockholder in this
Agreement are true, correct and complete in all material respects as of the
Closing Date.
(b) Buyer shall deliver to Stockholder, as full payment for the Shares and
the subordinated obligations, by wire transfer in immediately available funds,
the Purchase Price multiplied by the aggregate number of Shares (the "AGGREGATE
PURCHASE PRICE") and a amount equal to the face amount of the subordinated
obligations, plus all interest accrued but unpaid to the Closing Date.
Notwithstanding the foregoing, Buyer shall deduct and withhold from the
Aggregate Purchase Price a tax equal to the amount specified in Section 1445 of
the Internal Revenue Code of 1986, as amended (the "CODE"), unless Stockholder
delivers to buyer, at or prior to the Closing, a certificate of the Company in
the form of Exhibit A attached hereto, executed by the President of the Company,
or otherwise establishes to Buyer's satisfaction that no withholding is required
pursuant to Section 1445 of the Code and the Treasury regulations promulgated
thereunder.
4. CONDITIONS PRECEDENT TO STOCKHOLDER'S OBLIGATION TO SELL PURSUANT TO
SECTION 2. Stockholder's obligation to sell the Shares and the subordinated
obligations on the Closing Date is subject to the satisfaction of the following
conditions, any or all of which, to the extent permitted by applicable law, may
be waived in writing by Stockholder:
(a) All representations and warranties of Buyer in this Agreement shall be
true, correct and complete in all material respects on and as of the Closing
Date as though such representations and warranties were made on and as of the
Closing Date;
(b) No injunction or order prohibiting the consummation of the transactions
contemplated by this Agreement shall be outstanding;
(c) All waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR") shall have expired or been terminated;
(d) a satisfactory remediation agreement shall have been entered into with
the NJDEP, or the requirements of the New Jersey Industrial Site Recovery Act
("ISRA") shall have otherwise been satisfied; and
(e) Buyer shall have performed and complied with all obligations under this
Agreement that are to be performed or complied with by Buyer prior to or on the
Closing Date.
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO PURCHASE PURSUANT TO
SECTION 2. Buyer's obligation to purchase the Shares on the Closing Date is
subject to the satisfaction of the following conditions, any or all of which, to
the extent permitted by applicable law, may be waived in writing by Buyer:
(a) All representations and warranties of Stockholder in this Agreement
shall be true, correct and complete in all material respects on and as of the
Closing Date as though such representations and warranties were made on and as
of the Closing Date;
(b) Stockholder shall have performed and complied with all obligations under
this Agreement that are to be performed or complied with by Stockholder prior to
or on the Closing Date;
(c) All waiting periods under the HSR shall have expired or been terminated;
2
<PAGE>
(d) a satisfactory remediation agreement shall have been entered into with
the NJDEP, or the requirements of ISRA shall have otherwise been satisfied; and
(e) Von Roll and the Company shall have terminated without further payment
by, or liability of the Company for, any termination, severance or similar fees,
(I) the Management and Technical Services Agreement between them and (II) the
employment by the Company of any Von Roll employees on an interim basis
(including the Chief Financial Officer); and
(f) The condition set forth in Section 8.01(b) of the Tender Agreement shall
have been satisfied or, to the extent permitted by applicable law, waived.
6. STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES. In connection with a tender
pursuant to Section 1 above or a sale pursuant to Section 2 above, Stockholder
represents and warrants to Buyer as follows:
(a) Stockholder is a corporation duly organized, validly existing and in
good standing under the laws of Switzerland and has the corporate power and
corporate authority to enter into a perform its obligations under this
Agreement. Stockholder's execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and legally binding obligation of Stockholder enforceable
against Stockholder in accordance with its terms. Except as set forth in Section
4.04 of the Tender Agreement, the Company has taken all steps necessary to
approve and to irrevocably exempt the transactions contemplated by this
Agreement from the provisions of Section 203 of the General Corporation Law of
Delaware and any other applicable state takeover statute and from any applicable
charter or contractual agreement, arrangement or understanding to which the
Company is a party containing change of control, "antitakeover" or similar
provisions.
(b) The execution and delivery of this Agreement and the consummation of the
sale of the Shares to Buyer on the Closing Date will not (i) violate any term or
provision of the Certificate of Incorporation or By-laws of Stockholder or
similar organizational documents; (ii) result in the breach of any term,
condition or other provision of, or constitute a default under, any material
agreement or instrument to which Stockholder is a party or by which it is bound;
or (iii) violate or result in a breach of, or constitute a default under, any
judgment, order, decree, law, rule, regulation or other restriction of any
court, government or governmental agency to which Stockholder is subject other
than violations, breaches or defaults which, individually, or in the aggregate,
would not have a material adverse effect on the ability of Stockholder to
perform its obligations hereunder, except that the transfer of the Shares
hereunder will give PNC Bank the right to accelerate its portion of the Company
Debt (as defined in the Tender Agreement).
(c) Stockholder, or its subsidiary, Von Roll Steel Holdings AG, is the
record and beneficial owner of, and has good and valid title to, the Shares,
free and clear of all liens, encumbrances, claims, charges, assessments and
limitations of every kind whatsoever (collectively, "Liens"). There are no
outstanding warrants, subscriptions, rights, options, calls, commitments or
other agreements to purchase or acquire any of the Shares. Neither Stockholder
nor any of its affiliates or associates (as such terms are defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended) holds either
of record or beneficially any securities or capital stock of the Company or any
of the Company's direct or indirect subsidiaries other than the Shares. On the
Closing Date, Stockholder will sell, transfer and convey to Buyer good and valid
title to the Shares, free and clear of all Liens.
7. BUYER'S REPRESENTATIONS AND WARRANTIES. In connection with a purchase
pursuant to Section 1 or 2 above, Buyer represents and warrants to Stockholder
as follows:
(a) Buyer is a corporation duly organized, validly existing and in good
standing under the laws of Canada and has the corporate power and corporate
authority to enter into and perform its obligations under the Offer and this
Agreement. Buyer's execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and legally binding obligation of Buyer enforceable against
Buyer in accordance with its terms.
3
<PAGE>
(b) The execution and delivery of this Agreement and the consummation of the
purchase of the Shares from Stockholder pursuant to the Offer or on the Closing
Date will not (i) violate the Certificate of Incorporation or By-laws of Buyer;
(ii) result in the breach of any term, condition or other provision of, or
constitute a default under, any material agreement or instrument to which Buyer
is a party or by which Buyer is bound; or (iii) violate or result in a breach
of, or constitute a default under, any judgment, order, decree, law, rule,
regulation or other restriction of any court, government or governmental agency
to which Buyer is subject other than violations, breaches or defaults which,
individually or in the aggregate, would not have a material adverse effect on
the ability of Buyer to perform its obligations hereunder.
(c) Buyer is acquiring the Shares solely for its own account, for investment
and not with a view to, or for resale in connection with, any distribution of
the Shares or any part thereof in violation of applicable federal or state
securities laws and Buyer agrees with Stockholder, and such agreement shall be
for the benefit as well of the Company, that Buyer will not dispose of any of
the Shares except in compliance with applicable Federal and state securities
laws.
8. VOTING AGREEMENT. At any meeting or consent solicitation of the Company's
stockholders, or upon request of Buyer that it act alone without a meeting
pursuant to the Delaware General Corporation Law, during the term of this
Agreement, Stockholder shall vote, or express a consent with respect to, all of
the Shares in favor of approval and adoption of the Tender Agreement and the
transactions contemplated thereby, including, without limitation, the Merger,
and against any competing Takeover Proposal (as defined in the Tender
Agreement).
9. HSR ACT. Each party hereto shall use its reasonable efforts to make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement required under the HSR; provided that each party
hereto shall cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the non-filing
party and its advisors prior to filing and, if requested, to accept all
reasonable additions, deletions or changes suggested in connection therewith.
10. EXPENSES. Each party hereto shall pay its own expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, any fees and commissions, if
any, payable to any person, including, without limitation, financial
institutions, retained by such party. Stockholder agrees to pay all applicable
transfer taxes in connection with Buyer's purchase of the Shares.
11. EXCLUSIVE DEALING. Stockholder will not, directly or indirectly, through
any director, officer, agent, partner, shareholder or otherwise solicit,
initiate or encourage submission of offers or proposals from, or enter into any
discussions, negotiations, agreements, arrangements or understandings with, any
person in respect of the purchase or other acquisition, directly or indirectly,
of all or a portion of any equity or other ownership interest in the Company or
any merger, consolidation, business combination or equity investment (directly
or indirectly) with the Company, or participate in any discussions or
negotiations regarding or furnish or afford access to any other person to any
information regarding, or otherwise cooperate in any manner with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person with respect to any of the foregoing. Nothing contained herein shall
prohibit any designee of the Stockholder who is serving as a director from
taking any such action solely in his capacity as a director of the Company to
the extent permitted under Section 7.07(d) of the Tender Agreement.
12. CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS. Stockholder shall keep
confidential and shall cause its affiliates and instruct its and their officers,
directors, employees and advisors to keep confidential and non-public
information regarding the Company, its assets, business and operations, except
as required by applicable law. Unless otherwise required by applicable law,
Buyer and Stockholder shall consult with each other before issuing any press
release or otherwise making any public statement with
4
<PAGE>
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or make any such public statement prior to such
consultation.
13. INDEMNIFICATION.
(a) Stockholder shall indemnify, defend and hold harmless Buyer, the
Surviving Corporation (as defined in the Tender Agreement) and their respective
officers, directors, employees, agents, affiliates, successors and assigns
(collectively, the "BUYER GROUP"), from and after the Closing, from and against
all demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses (collectively, "DAMAGES"), including, without
limitations, interest, penalties and reasonable attorneys' fees and expenses,
directly or indirectly made or asserted against, resulting to, imposed upon or
incurred by the Buyer Group, or any of them, by reason of or resulting from (i)
a breach of any representation or warranty of Stockholder contained in or made
pursuant to this Agreement or any facts or circumstances constituting such a
breach or (ii) non-fulfillment of any agreement or covenant of Stockholder
contained in or made pursuant to this Agreement or any facts or circumstances
constituting such non-fulfillment (collectively, "BUYER CLAIMS").
(b) The obligations and liabilities of Stockholder with respect to Buyer
Claims which arise or result from claims for Damages made by third parties
("THIRD-PARTY CLAIMS") shall be subject to the following terms and conditions:
(i) The indemnified party will give the indemnifying party prompt notice of
any such Third-Party Claim, setting forth therein in reasonable detail the basis
for such Third-Party Claim, and the indemnifying party shall have the right to
undertake the defense thereof by representatives chosen by it;
(ii) If the indemnifying party, within a reasonable time after notice of any
such Third-Party Claim, fails to defend the indemnified party against which such
Third-Party Claim has been asserted, the indemnified party shall (upon further
notice to the indemnifying party) have the right to undertake the defense,
compromise or settlement of such Third-Party claim on behalf of and for the
account and risk of the indemnifying party subject to the right of the
indemnifying party to assume the defense of such Third-Party Claim at any time
prior to settlement, compromise or final determination thereof; and
(iii) Any provision hereof to the contrary notwithstanding, (A) if there is
a reasonable probability that a Third-Party Claim may materially and adversely
affect the indemnified party other than as a result of money damages or other
money payments, the indemnified party shall have the right, at its own cost and
expense, to defend, compromise or settle such Third-Party Claim; PROVIDED,
HOWEVER, that if such Third-Party Claim is settled without the indemnifying
party's consent, the indemnified party shall be deemed to have waived all rights
hereunder against the indemnifying party for money damages arising out of such
Third-Party Claim; and (B) the indemnifying part shall not, without the written
consent of the indemnified party, settle or compromise any Third-Party Claim or
consent to the entry of any judgment which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the indemnified
party a release from all liability in respect to such Third-Party Claim.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, covenants and agreements made herein shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement.
15. REASONABLE EFFORTS. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts promptly to
take, or cause to be taken, all actions and to do or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, the satisfaction of all conditions and receipt of
consents of all third parties and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement.
5
<PAGE>
16. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof and
supersedes all prior or contemporaneous written or verbal agreements,
understandings and negotiations in connection herewith. This Agreement may be
amended, modified, terminated or cancelled only by the written agreement of the
parties hereto.
17. NOTICE. Any notices or other communications required or permitted
hereunder or otherwise in connection herewith shall be in writing and shall be
deemed to have been duly given and received on the date of delivery if delivered
in person or by overnight express delivery or when transmitted and confirmed by
facsimile transmission, or three business days after dispatch by registered or
certified mail, postage prepaid, addressed as follows (or at such other address
for a party as shall be specified by like notice, which notice shall not be
deemed to have been given until received by the addressee):
(a) If to Stockholder:
Von Roll Holding AG
CH-4563 Gerlafingen
Switzerland
Attention: Mr. H. Georg Hahnloser
Telecopy: 011-416-534-2208
with a copy to:
Jacobs Persinger & Parker
77 Water Street
New York, New York 10005
Attention: Walter H. Beebe, Esq.
Telecopy: 212-742-0938
(b) If to Buyer:
Co-Steel Inc.
Scotia Plaza
40 King Street West
PO Box 130
Toronto, Ontario
Canada M5H 3Y2
Attention: President
Telecopy: 416 366 4616
with copies to:
Goodman Phillips & Vineberg
250 Yonge Street
Toronto, Ontario
Canada M5B 2M6
Attention: Lorie Waisberg, Esq.
Telecopy: 416 979 1234
Wilentz Goldman & Spitzer
90 Woodbridge Center Drive
Woodbridge, NJ 07095
Attention: C. Kenneth Shank, Esq.
Telecopy: 908 855 6117
6
<PAGE>
18. ASSIGNMENT. This Agreement shall be binding upon and shall inure solely
to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement shall not be assigned by any party without the
prior written consent of the other party, except that Buyer may assign this
Agreement to a subsidiary or affiliate of Buyer.
19. SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges that, in
view of the uniqueness of the transactions contemplated hereby, Buyer would not
have an adequate remedy at law for money damages in the event that this
Agreement were not performed in accordance with its terms, and therefore agrees
that Buyer shall be entitled to specific enforcement of the terms hereof in
addition to any other remedy to which Buyer may be entitled at law or in equity.
20. PARTIES IN INTEREST. No provision of this Agreement, express or implied,
is intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
21. WAIVER. The application of any provision of this Agreement may be waived
by any party entitled to the benefit thereof; PROVIDED, HOWEVER, that no delay
or failure on the part of any party in exercising any right hereunder, and no
waiver or partial or single exercise thereof, shall constitute a waiver of any
other rights under this Agreement.
22. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to the principles of conflicts of laws thereof.
23. JURISDICTION; FORUM; SERVICE OF PROCESS.
(a) Any legal suit, action or proceeding bought by Stockholder or Buyer, or
any of their respective affiliates, arising out of or based upon this Agreement
shall be instituted exclusively in any federal or state court in the State of
New York, and each of Stockholder and Buyer (on its behalf and on behalf of such
affiliates) waives any objection which it may now or hereafter have to the
laying of venue of any such proceeding, and irrevocably submits to the
jurisdiction of such courts in any such suit, action or proceeding.
(b) Stockholder has appointed Jacobs Persinger & Parker as its authorized
agent (the "STOCKHOLDER'S AUTHORIZED AGENT") upon which process may be served in
any action based on this Agreement which may be instituted in any federal or
state court in the State of New York by Buyer and expressly accepts the
jurisdiction of any court in respect of such action. Such appointment shall be
irrevocable. Stockholder represents and warrants that Stockholder's Authorized
Agent has agreed to act as said agent for service of process, and Stockholder
agrees to take any and all action, including, without limitation, the filing of
any and all documents and instruments, which may be necessary to continue such
appointment in full force and effect. Service of process upon Stockholder's
Authorized Agent and written notice of such service to Stockholder shall be
deemed, in every respect, effective service of process upon Stockholder.
(c) Buyer has appointed Goodman Phillips & Vineberg as its authorized agent
(the "BUYER'S AUTHORIZED AGENT") upon which process may be served in any action
based on this Agreement which may be instituted in any federal or state court in
the State of New York by Stockholder and expressly accepts the jurisdiction of
any court in respect of such action. Such appointment shall be irrevocable.
Buyer represents and warrants that the Buyer's Authorized Agent has agreed to
act as said agent for service of process, and Buyer agrees to take any and all
action, including, without limitation, the filing of any and all documents and
instruments, which may be necessary to continue such appointment in full force
and effect. Service of process upon Buyer's Authorized Agent and written notice
of such service to Buyer shall be deemed, in every respect, effective service of
process upon Buyer.
7
<PAGE>
24. SEVERABILITY. In the event that any one or more of the provisions
contained herein or any application thereof shall be deemed invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement or any application thereof shall not in
any way be affected or impaired thereby, unless the invalidity, illegality or
unenforceability of such provisions frustrates the purpose of the parties
hereto.
25. HEADINGS. The headings to the sections of this Agreement are for
convenience only and in no way define, limit or describe the scope or intent of
this Agreement or any party hereto, nor in any other way affect this Agreement
or any part hereof.
26. MISCELLANEOUS. Whenever the context shall require, the use of any gender
shall include all genders, and the use of any singular shall include the plural,
and vice versa.
27. EXHIBITS. All exhibits attached to this Agreement are incorporated
herein by this reference.
28. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and
the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Stockholder
Agreement to be duly executed as of the day and year first above written.
<TABLE>
<S> <C> <C>
CO-STEEL INC.
By:
-----------------------------------------
Name: Lew Hutchinson
Title: President
</TABLE>
<TABLE>
<S> <C> <C>
VON ROLL HOLDING AG
By:
-----------------------------------------
Name: H. Georg Hahnloser
Title: Chief Operating Officer
</TABLE>
<TABLE>
<S> <C> <C>
VON ROLL STEEL HOLDING AG
By:
-----------------------------------------
Name: Georg Hahnloser
Title: Chairman
</TABLE>
8
<PAGE>
EXHIBIT A
<TABLE>
<S> <C> <C>
STATE OF )
: ss.:
COUNTY OF )
</TABLE>
Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"),
provides that a purchaser of a "U.S. real property interest", as defined in
Section 897 of the Code, from a foreign person may be required to withhold tax
under certain circumstances.
Pursuant to, and in compliance with the provisions of, Treasury Regulation
Section 1.897-2(h), the undersigned certifies the following to Co-Steel Inc. on
behalf of New Jersey Steel Corporation:
1. The shares of stock of New Jersey Steel Corporation owned by Von Roll
Holding AG do not constitute a "United States real property interest", as
defined in Section 897 of the Code;
2. New Jersey Steel Corporation's U.S. employer identification number is
22-2137967;
3. New Jersey Steel Corporation's office address is:
North Crossman Road
Sayreville, New Jersey 08872;
4. Von Roll Holdings AG's office address is:
CH-4563 Gerlafingen
Switzerland
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of New Jersey Steel Corporation.
--------------------------------------
President
SWORN TO AND SUBSCRIBED
before me this day
of , 199 .
- ---------------------------------------------
Notary Public
9
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
NEW JERSEY STEEL CORPORATION
New Jersey Steel Corporation, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is New Jersey Steel Corporation. The date of
filing its original Certificate of Incorporation with the Secretary of State is
November 18, 1976 under the name of Steel Holdings Corporation. An amendment to
the Certificate of Incorporation was filed December 1, 1978, changing the
corporate name to the present one.
2. This Restated Certificate of Incorporation restates and integrates and
further amends the Certificate of Incorporation of the Corporation by (i)
amending ARTICLE FOURTH to authorize additional shares of Class A Common Stock
(redesignated "Common Stock") and Class B Common Stock, to provide, under
certain circumstances, for the automatic conversion of the Class B Common Stock
into Common Stock, and to authorize a new class of Preferred Stock, par value
$.01 per share, to be issued in series; and (ii) adding a new ARTICLE FIFTH
relating to liability of directors in certain circumstances; and (iii) amending
ARTICLE SEVENTH by inserting the words "authorized or" immediately preceding the
word "permitted" in the second line thereof and by placing the words "officers
and directors" instead of the words "persons" in the third line thereof.
3. The text of the Certificate of Incorporation of the Corporation, as
amended, or supplemented heretofore is further amended hereby to read as herein
set forth in full:
FIRST: The name of the corporation is
NEW JERSEY STEEL CORPORATION
SECOND: The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporation may be organized under the General Corporation
Law of Delaware.
FOURTH: (A) The aggregate number of shares of all classes of stock which
the Corporation shall have authority to issue is Twenty Million (20,000,000)
shares, divided into classes as follows:
(1) Fourteen Million Five Hundred Thousand (14,500,000) shares of
Common Stock, par value $.01 per share (hereinafter called the "Common
Stock");
(2) Five Hundred Thousand (500,000) shares of Class B Non-Voting Common
Stock, par value $.01 per share (hereinafter called "Class B Non-Voting
Common Stock"); and
(3) Five Million (5,000,000) shares of Preferred Stock, par value $.01
per share (herein called the "Preferred Stock"), to be issued in series.
(B) The following is a statement of the designations, and the powers,
preferences and rights, and the qualifications, limitations or restrictions, in
respect of the stock of the Corporation:
(1) Common Stock and Class B Non-Voting Common Stock shall be identical
in all respects except with respect to voting rights. With respect to
voting, except as otherwise provided by law and this Certificate of
Incorporation, (a) the holders of Common Stock shall vote together as a
class on all matters to be voted on by stockholders of the Corporation,
including the election of all directors of the Corporation, with each holder
of Common Stock entitled to one vote per share, and (b) the holders of Class
B Non-Voting Common Stock shall not be entitled to vote. Upon the closing of
the sale to the public by the company of shares of Common Stock pursuant to
an offering registered under the Securities Act of 1933 (a "Public Sale"),
each outstanding share of Class B Common Stock shall be
<PAGE>
converted into, and shall automatically become, a share of Common Stock and
the authorized but unissued Class B Common Stock shall become authorized and
unissued Common Stock and the Class B Common Stock shall no longer be an
authorized class of capital stock of the Corporation.
(2) The shares of Preferred Stock may be issued in one or more series,
and each series shall be so designated as to distinguish the shares thereof
from the shares of all other series. Authority is hereby expressly granted
to the Board of Directors of the Corporation to fix, subject to the
provisions herein set forth, before the issuance of any shares of a
particular series, the number, designation, and relative rights, preferences
and limitations of the shares of such series including (1) voting rights, if
any, which may include the right to vote separately and the right to vote
together as a single class with the Common Stock and any other series of the
Preferred Stock with the number of votes per share accorded to shares of
such series being the same as or different from that accorded to such other
shares, (2) the divided rate per annum, if any, and the terms and conditions
pertaining to dividends and whether such dividends shall be cumulative, (3)
the amount or amounts payable upon such shares and the priority thereof, if
any, in the event of voluntary or involuntary liquidation, (4) the
redemption price or prices, if any, and the terms and conditions of the
redemption, (5) sinking fund provisions, if any, for the redemption or
purchase of such shares, (6) the terms and conditions on which such shares
are convertible, in the event the shares are to have conversion rights, and
(7) any other rights, preferences and limitations pertaining to such series
which may be fixed by the Board of Directors pursuant to the General
Corporation Law of the State of Delaware.
FIFTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as director. This provision, however, shall not eliminate or limit the
liability of a director, (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omission not in good faith
or which involve intentional misconduct or knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
SIXTH: The by-laws of the corporation may be made, altered, amended,
changed, added to or repealed by the Board of Directors without the assent or
vote of the stockholders.
SEVENTH: The corporation shall, to the full extent authorized or permitted
by Section 145 of the Delaware General Corporation Law of the State of Delaware,
as amended from time to time, indemnify all officers and directors whom it may
indemnify pursuant thereto.
EIGHTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate in the manner now or
hereafter prescribed by law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved power.
4. This Restated Certificate of Incorporation was duly adopted by written
consent of the sole stockholder in accordance with the applicable provisions of
Sections 228, 242 and 245 of the General Corporation Law of the State of
Delaware and written notice of the adoption of this Restated Certificate of
Incorporation has been given as provided by Section 228 of the General
Corporation Law of the State of Delaware to sole stockholder entitled to such
notice.
2
<PAGE>
IN WITNESS WHEREOF, said New Jersey Steel Corporation has caused this
certificate to be signed by Robert J. Pasquarelli, its President, and attested
by Walter H. Beebe, its Secretary, this 7th day of April, 1987.
NEW JERSEY STEEL CORPORATION
By: /s/Robert J. Pasquarelli
- --------------------------------------------------------------------------------
President
ATTEST:
By: /s/ Walter H. Beebe
- ---------------------------------
Secretary
3
<PAGE>
BY-LAWS
ARTICLE VI
INDEMNIFICATION
Section 6.01. INDEMNIFICATION. To the extent permitted and in the manner
provided by law, the Company shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, or investigative by
reason of the fact that he is or was a director or officer of the Company or is
or was serving at the request of the Company as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding. The foregoing rights of indemnification shall not be
deemed exclusive of any other rights to which any person seeking indemnification
may be entitled under any agreement, vote of stockholders or disinterested
Directors or otherwise, and shall continue as to a person who has ceased to be a
Director or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 6.02. INSURANCE. By action of the Board of Directors,
notwithstanding any interest of the Directors in the action, the Company may
purchase and maintain insurance, in such amounts as the Board of Directors may
deem appropriate, on behalf of any person who is or was a Director, officer,
employee or agent of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Company would have the power to indemnify him
against such liability under applicable provisions of law.
<PAGE>
[LOGO]
November 20, 1997
The Board of Directors
New Jersey Steel Corporation
Gentlemen:
BT Wolfensohn has acted as financial advisor to New Jersey Steel Corporation
(the "Company") in connection with the proposed acquisition of the Company by
Co-Steel Inc. ("Parent") pursuant to an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which (i) Co-Steel Merger Corporation, a wholly
owned subsidiary of Parent (the "Acquisition Sub") will commence a tender offer
(the "Tender Offer") for all the outstanding shares of the Company's common
stock, par value $.01 per share, (the "Company Shares"), at a price of $23.00
per share (the "Per Share Price"), net to the seller in cash, and (ii) after the
consummation of the Tender Offer, Acquisition Sub will merge with and into the
Company (the "Merger", and the Merger and the Tender Offer together, the
"Transaction"), and each Company Share not acquired in the Tender Offer, other
than Company Shares held in treasury or held by the Parent or any direct or
indirect wholly owned subsidiary of Parent or the Company or as to which
dissenters' rights have been perfected will be converted into the right to
receive in cash, without interest, the consideration per share paid in the
Tender Offer. The terms and conditions of the Transaction are more fully set
forth in the Merger Agreement.
You have requested BT Wolfensohn's opinion, as investment bankers, as to the
fairness, from a financial point of view, of the Per Share Price to the
Company's stockholders (other than Von Roll Holding, AG ("Von Roll")).
In connection with BT Wolfensohn's role as financial advisor to the Company
and in arriving at its opinion, BT Wolfensohn has, among other things:
(i) reviewed the publicly available filings concerning the Company as well
as the consolidated financial statements of the Company for recent years
and interim periods to date and certain other relevant financial and
operating data of the Company available from public sources or provided
to BT Wolfensohn by the Company;
(ii) reviewed certain internal financial and operating information,
including certain projections, relating to the Company, provided to BT
Wolfensohn by the Company;
(iii) discussed the business, financial condition and prospects of the
Company with certain officers and certain members of management of the
Company;
(iv) considered the strategic objectives of the Company as outlined to BT
Wolfensohn by the Company's management;
(v) reviewed the trading history of the Company Common Shares, including
trading prices and activity;
(vi) reviewed the financial terms of the Merger Agreement and other related
agreements as set forth in the final drafts thereof;
(vii) reviewed the financial terms of selected transactions in the mini mill
steel industry which BT Wolfensohn believed to be relevant;
(viii) reviewed certain public information pertaining to companies engaged in
businesses that BT Wolfensohn believed to be generally comparable to
those of the Company, including, without limitation, the trading prices
for the equity securities of such companies; and
<PAGE>
The Board of Directors
November 20, 1997
Page 2
(ix) performed such other analyses and examinations and considered such
other information, financial studies, analyses and investigations and
financial, economic and market data as BT Wolfensohn deemed relevant.
BT Wolfensohn has not assumed responsibility for independent verification of
any information, whether publicly available or furnished to it, concerning the
Company, including, without limitation, any financial information, forecasts or
projections, considered in connection with the rendering of its opinion.
Accordingly, for purposes of its opinion, BT Wolfensohn has assumed and relied
upon the accuracy and completeness of all such information and BT Wolfensohn has
not conducted a physical inspection of any of the properties or assets, and has
not prepared or obtained any independent evaluation or appraisal of any of the
assets or liabilities, of the Company. With respect to the financial forecasts
and projections made available to BT Wolfensohn and used in its analysis, BT
Wolfensohn has assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of the Company as to the matters covered thereby and in rendering its
opinion BT Wolfensohn expresses no view as to the reasonableness of such
forecasts and projections or the assumptions on which they are based. BT
Wolfensohn's opinion is necessarily based upon economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
This opinion is addressed to, and for the use and benefit of, the Board of
Directors of the Company and is not a recommendation to the stockholders of the
Company to tender their Company Shares in the Tender Offer.
In connection with its opinion, BT Wolfensohn has assumed that the
Transaction will be consummated on the terms and subject to the conditions
described in the Merger Agreement and that all conditions to the consummation of
the Transaction contained in the Merger Agreement will be satisfied without the
waiver of such conditions. BT Wolfensohn has also assumed that all necessary
governmental and regulatory approvals and consents of third parties will be
obtained on terms and conditions that will not have a material adverse effect on
the Company or Parent.
BT Wolfensohn will receive a fee for its financial advisory services
rendered in connection with the currently contemplated Transaction, a
substantial portion of which fee is contingent on the consummation of the
Transaction. In addition, the Company has agreed to indemnify BT Wolfensohn for
certain liabilities that may arise out of rendering this opinion. In the
ordinary course of business, BT Wolfensohn or its affiliates may actively trade
equity securities of the Company or Parent for its own account or for the
accounts of its customers and, accordingly, may from time to time hold a long or
short position in such securities.
BT Wolfensohn is engaged in the merger and acquisition and client advisory
business of Bankers Trust and, for legal and regulatory purposes, is a division
of BT Alex. Brown Incorporated, a registered broker dealer and member of the New
York Stock Exchange.
<PAGE>
The Board of Directors
November 20, 1997
Page 3
Based upon and subject to the foregoing, it is BT Wolfensohn's opinion as
investment bankers that the Per Share Price is fair, from a financial point of
view, to the Company's stockholders (other than Von Roll).
Very truly yours,
<TABLE>
<S> <C> <C>
BT WOLFENSOHN
By: /s/ RICHARD BUSHNELL
-----------------------------------------
Name: Richard Bushnell
Title: Managing Director
</TABLE>
<PAGE>
PRESS RELEASE
CONTACT: GARY A. GIOVANNETTI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CO-STEEL INC. TO ACQUIRE NEW JERSEY STEEL CORPORATION
SAYREVILLE, NEW JERSEY -- November 21, 1997, -- Co-Steel Inc. (C:CEI) and
New Jersey Steel Corporation (NASDAQ:NJST) announced today that they have
entered into a definitive tender offer agreement providing for the acquisition
of NJST by Co-Steel. Pursuant to the tender offer, Co-Steel is offering to pay
$23.00 in cash for each share of NJST common stock tendered.
Under the terms of the tender offer agreement, Von Roll Holding AG, the
holder of 60.2% of the outstanding shares of NJSCO, has agreed to tender the
3,561,500 shares of NJST common stock owned by it to Co-Steel in response to the
offer.
New Jersey Steel Corporation's Board of Directors unanimously approved the
transaction and recommended it to the shareholders. A Board spokesperson stated
that this sale represents the culmination of a turnaround effort spanning
several years. After the Company made a commitment to remain in New Jersey, it
expended some $65,000,000 on a new Consteel manufacturing process, and other
capital improvements, revamped the senior management and substantially improved
productivity and financial results, before accepting the present purchase offer.
Following the tender offer, there will be a merger of a wholly owned
subsidiary of Co-Steel, with and into NJST and any remaining NJST Common Stock
will be converted into the right to receive $23.00 per share.
The offer is subject to certain conditions, including the expiration of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended. This transaction is expected to close in early January,
1998.
Co-Steel is one of the world's largest mini-mill steel producers with
current annual capacity of 3.4 million tons of finished steel. With plants in
Canada, the United States and Europe, Co-Steel manufactures and markets a wide
variety of steel products used principally in the construction, automotive,
appliance, machinery and equipment industries. Co-Steel's common shares are
listed on the Toronto Stock Exchange and the Montreal Exchange. NJST owns and
operates a mini-mill in Sayreville, New Jersey, producing steel products. The
principal product manufactured by NJST's mill is rebar, which is used in the
construction industry. NJST's common stock is listed on the NASDAQ National
Market System.
