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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
BLISS & LAUGHLIN INDUSTRIES INC.
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(NAME OF ISSUER)
COMMON STOCK
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(TITLE OF CLASS OF SECURITIES)
093546109
----------------
(CUSIP Number)
ROBERT B. MCKEON
BRW STEEL CORPORATION
C/O VERITAS CAPITAL, INC.
TEN EAST FIFTIETH STREET
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 688-0020
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
WITH COPIES TO:
KEN M. BROWN
PILLSBURY MADISON & SUTRO
1050 CONNECTICUT AVENUE, NW, SUITE 1200
WASHINGTON, DC 20036
SEPTEMBER 18, 1995
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(DATE OF EVENT WHICH REQUIRES
FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box. / /
Check the following box if a fee is being paid with this statement. /x/
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for purpose of Section 18 of the Securities Exchange Act
of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 14 Pages
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1 NAME OF REPORTING PERSON BRW Steel Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /x/*
3 SEC USE ONLY
4 SOURCE OF FUNDS OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(E) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF 7 SOLE VOTING POWER N/A
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 774,059
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER N/A
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER 774,059
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON 774,059
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11) 19.5%
14 TYPE OF REPORTING PERSON CO
* BRW disclaims it is a "group" with the Management Stockholders (as defined
below). BRW Steel Corporation ("BRW"), B&L Acquisition Corporation ("BRW
Sub") and the Management Stockholders executed on September 18, 1995 a
Stock Option Agreement (the "Stock Option Agreement") which provides, among
other things, that the Management Stockholders will vote their Shares in
favor of a merger (the "Merger") of Bliss & Laughlin Industries Inc. (the
"Issuer") into BRW Sub pursuant to that certain Agreement and Plan of
Merger (the "Merger Agreement") executed on September 18, 1995 among BRW,
BRW Sub and the Issuer. The Management Stockholders are: Gregory H.
Parker, Roger G. Fein, as Trustee of the Gregory H. Parker Irrevocable
Family Trust under Trust Agreement dated October 31, 1988; F. Elizabeth
Parker; Anthony Romanovich, Barbara Romanovich; George W. Fleck; Joan E.
Fleck; Gerald E. Brady; Carole A. Brady; Michael A. DeBias; William P.
Daughtery Trust dated May 11, 1989, William P. Daughtery, Trustee; Ellen L.
Daughtery Trust dated May 11, 1989, Ellen L. Daughtery, Trustee; Chester J.
Pucilowski; Geraldine Pucilowski; Richard M. Bogdon; Phyllis Bogdon;
Carl H. Laib; and Richard W. Ressler. The Schedule 13D filed by the
Management Stockholders on September 26, 1995 relating to the Issuer's
Common Stock is incorporated in its entirety herein by reference.
Page 2 of 14 Pages
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1 NAME OF REPORTING PERSON B & L Acquisition Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /x/*
3 SEC USE ONLY
4 SOURCE OF FUNDS OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(E) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF 7 SOLE VOTING POWER N/A
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 774,059
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER N/A
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER 774,059
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON 774,059
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11) 19.5%
14 TYPE OF REPORTING PERSON CO
* BRW Sub disclaims it is a "group" with the Management Stockholders.
Pursuant to the Stock Option Agreement, the Management Stockholders have
agreed to vote all of the shares of the Issuer's common stock owned by such
Management Stockholder in favor of the Merger. The Schedule 13D filed by
the Management Stockholders on or about September 26, 1995 is incorporated
in its entirety herein by reference.
Page 3 of 14 Pages
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ITEM 1. SECURITY AND ISSUER.
This Schedule 13D filing relates to the common stock, par value $.01 per
share (the "Common Stock"), of Bliss & Laughlin Industries Inc. (the
"Issuer"), with principal executive offices at 281 East 155th Street, Harvey,
Illinois.
ITEM 2. IDENTITY AND BACKGROUND.
(1) BRW STEEL CORPORATION.
(a) Name of Person Filing: BRW Steel Corporation ("BRW")
(b) Address of Principal Business Office:
BRW Steel Corporation
c/o Veritas Capital Inc.
Ten East Fiftieth Street
New York, NY 10022
(c) Principal Business:
BRW Steel is a manufacturer of special quality engineered steel
bars with facilities in Johnstown, PA and Lackawanna, NY.
(d) Criminal Proceedings:
During the last five years, the Reporting Person has not been
convicted in any criminal proceeding.
(e) Civil Proceedings:
During the last five years, the Reporting Person has not been party
to any civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is
subject to any judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Citizenship:
United States of America.
(2) B & L ACQUISITION CORPORATION.
(a) Name of Person Filing: B & L Acquisition Corporation ("BRW Sub")
(b) Address of Principal Business Office:
B&L Acquisition Corporation
c/o Veritas Capital Inc.
Ten East Fiftieth Street
New York, NY 10022
(c) Principal Business:
BRW Sub is a wholly owned subsidiary of BRW formed for the purpose
of acquiring the Issuer.
Page 4 of 14 Pages
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(d) Criminal Proceedings:
During the last five years, BRW Sub has not been convicted in any
criminal proceeding.
(e) Civil Proceedings:
During the last five years, BRW Sub has not been party to any civil
proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to
any judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) Citizenship:
United States of America.
Information concerning the executive officers, directors and control persons
of BRW and BRW Sub is provided below.
(3) BRW STEEL HOLDINGS, L.P.
(a) Name of Person: BRW Steel Holdings, L.P.
(b) Address of Principal Business Office:
BRW Steel Corporation
c/o Veritas Capital Inc.
Ten East Fiftieth Street
New York, NY 10022
(c) Principal Business:
BRW Steel Holdings, L.P. is a Delaware limited partnership formed
to acquire the stock of BRW in connection with the acquisition of
BRW from Bethlehem Steel. BRW Steel Holdings, L.P. owns 100% of
the stock of BRW. The general partner of BRW Steel Holdings, L.P.
is BRW Partners, Inc., a corporation controlled by Messrs. McKeon,
Campbell and Brotman.
(d) Criminal Proceedings:
During the last five years, BRW Steel Holdings, L.P. has not been
convicted in any criminal proceeding.
(e) Civil Proceedings:
During the last five years, BRW Steel Holdings, L.P. has not been
party to any civil proceeding of a judicial or administrative body
of competent jurisdiction as a result of which such person was or
is subject to any judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Citizenship:
United States of America.
(4) BRW PARTNERS, INC.
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(a) Name of Person: BRW Partners, Inc.
(b) Address of Principal Business Office:
BRW Steel Corporation
c/o Veritas Capital Inc.
Ten East Fiftieth Street
New York, NY 10022
(c) Principal Business:
BRW Partners, Inc. is a Delaware corporation formed to act as
general partner of BRW Steel Holdings, L.P. BRW Partners, Inc. is
controlled by Messrs. McKeon, Campbell and Brotman.
(d) Criminal Proceedings:
During the last five years, BRW Partners, Inc. has not been
convicted in any criminal proceeding.
(e) Civil Proceedings:
During the last five years, BRW Partners, Inc. has not been party
to any civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is
subject to any judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Citizenship:
United States of America.
(5) ROBERT B. MCKEON.
(a) Name: Robert B. McKeon
(b) Address of Principal Business Office:
BRW Steel Corporation
c/o Veritas Capital Inc.
Ten East Fiftieth Street
New York, NY 10022
(c) Principal Business:
Mr. McKeon is a director and Co-Chairman of the Board of Directors
of BRW and a principal of Veritas Capital, an investment banking
firm. Mr. McKeon owns 57.5% of the stock of BRW Partners, Inc.
and is the president and a director of the corporation. BRW
Partners, Inc. is the general partner of BRW Steel Holdings, L.P.,
which is the sole stockholder of BRW. Mr. McKeon also owns 57.5%
of the stock of Johnstown Acquisition Corp. and is the president
and a director of that entity, which is a limited partner of BRW
Steel Holdings, L.P.
(d) Criminal Proceedings:
During the last five years, Robert B. McKeon has not been convicted
in any criminal proceeding.
Page 6 of 14 Pages
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(e) Civil Proceedings:
During the last five years, Robert B. McKeon has not been party to
any civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is
subject to any judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Citizenship:
United States of America.
(6) THOMAS J. CAMPBELL.
(a) Name: Thomas J. Campbell
(b) Address of Principal Business Office:
BRW Steel Corporation
c/o Veritas Capital Inc.
Ten East Fiftieth Street
New York, NY 10022
(c) Principal Occupation:
Mr. Campbell is a director and Co-Chairman of the Board of Directors
of BRW. He is also a principal of Veritas Capital, an investment
banking firm. Mr. Campbell owns 32.5% of BRW Partners, Inc. and is
the vice president and a director of the corporation (which is the
general partner of BRW Steel Holdings, L.P., which is the sole
stockholder of BRW). Mr. Campbell also owns 32.5% of Johnstown
Acquisition Corp. and is the vice president and a director of the
corporation, which is a limited partner of BRW Steel Holdings, L.P.
(d) Criminal Proceedings:
During the last five years, Thomas J. Campbell has not been
convicted in any criminal proceeding.
(e) Civil Proceedings:
During the last five years, Thomas J. Campbell has not been party
to any civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is
subject to any judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Citizenship:
United States of America.
(7) KENNETH M. BROTMAN.
(a) Name: Kenneth M. Brotman
Page 7 of 14 Pages
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(b) Address of Principal Business Office:
BRW Steel Corporation
c/o Veritas Capital Inc.
Ten East Fiftieth Street
New York, NY 10022
(c) Principal Occupation:
Mr. Brotman is a director of BRW and the Executive Vice President
and Chief Financial Officer, Treasurer and Secretary of BRW and a
principal of Veritas Capital, an investment banking firm.
Mr. Brotman owns 10% of BRW Partners, Inc. and is the vice
president, secretary and treasurer and a director of the
corporation. BRW Partners is the general partner of BRW Steel
Holdings, L.P., which is the sole stockholder of BRW Steel
Corporation. Mr. Brotman also owns 10% of Johnstown Acquisition
Corp. and is the vice president, secretary and treasurer and a
director of that corporation, which is a limited partner of BRW
Steel Holdings, L.P.
(d) Criminal Proceedings:
During the last five years, Kenneth R. Brotman has not been
convicted in any criminal proceeding.
(e) Civil Proceedings:
During the last five years, Kenneth R. Brotman has not been party
to any civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is
subject to any judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Citizenship:
United States of America.
(8) JAMES POWERS.
(a) Name: James Powers
(b) Address of Principal Business Office:
BRW Steel Corporation
c/o Veritas Capital Inc.
Ten East Fiftieth Street
New York, NY 10022
(c) Principal Occupation:
Mr. Powers is the President and Chief Executive Officer of BRW.
(d) Criminal Proceedings:
During the last five years, James Powers has not been convicted in
any criminal proceeding.
(e) Civil Proceedings:
Page 8 of 14 Pages
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During the last five years, James Powers has not been party to any
civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to
any judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) Citizenship:
United States of America.
(9) DENNY BOZIC.
(a) Name of Person Filing: Denny Bozic
(b) Address of Principal Business Office:
BRW Steel Corporation
c/o Veritas Capital Inc.
Ten East Fiftieth Street
New York, NY 10022
(c) Principal Occupation:
Mr. Bozic is the Executive Vice President of BRW.
(d) Criminal Proceedings:
During the last five years, Denny Bozic has not been convicted in
any criminal proceeding.
(e) Civil Proceedings:
During the last five years, Denny Bozic has not been party to any
civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to
any judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) Citizenship:
United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
BRW Sub, BRW and the Management Stockholders have entered into a Stock
Option Agreement dated as of September 16, 1995 (the "Stock Option
Agreement") which provides BRW Sub with the right to acquire 774,059 shares
(the "Shares") of Common Stock from the Management Stockholders at a price
per share of $7.75. The aggregate amount of funds necessary for BRW Sub to
acquire the Shares pursuant to the Stock Option Agreement and reported as
beneficially owned pursuant to Item 5 below will be approximately $6 million.
BRW Sub, BRW and the Issuer have entered into an Agreement and Plan of Merger
dated as of September 16, 1995 (the "Merger Agreement") which provides that
upon the Merger, each share of Common Stock will represent the right to
receive $7.75 per share. The amount of funds necessary to consummate the
Merger under the Merger Agreement will be approximately $31 million (assuming
BRW Sub has not previously exercised the Option, in which case the additional
funds necessary to consummate the Merger would be approximately $25 million).
BRW Steel intends to use the best available means for financing both the
exercise of the Stock Option Agreement and the consummation of the Merger,
including bank financing, a private placement of equity or debt securities or
other available financing.
Page 9 of 14 Pages
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ITEM 4. PURPOSE OF THE TRANSACTION.
The purpose of obtaining the right to acquire the Shares pursuant to
the Stock Option Agreement, a copy of which is attached hereto as Exhibit A,
is to facilitate BRW's acquisition of control of the Issuer. Concurrently
with the execution of the Stock Option Agreement, BRW, BRW Sub and the Issuer
executed the Merger Agreement, a copy of which is attached hereto as Exhibit
B and the terms of which are hereby incorporated by reference. The terms of
the Stock Option Agreement are discussed more fully in Item 6 below.
Upon consummation of the Merger, each issued and outstanding share of
the Issuer will be converted into the right to receive $7.75, and shares held
by BRW and BRW Sub and all unissued shares will be canceled. Shares of BRW
Sub will be converted into shares in the Issuer.
The Issuer is obligated to engage in a proxy solicitation and hold a
special shareholder meeting to obtain shareholder approval for the Merger.
Under the terms of the Merger, the Issuer shall not engage in activities
aimed at encouraging the submission of offers relating to the acquisition of
the equity interest in the Issuer.
Until the Merger is consummated, the Issuer's business will continue to
operate in the usual course of business. During that time period, the Issuer
is prohibited from issuing shares, splitting up, combining with another
entity, entering any agreements to lend or borrow money, and disposing of or
acquiring any material properties or assets, except in the ordinary course of
business.
BRW Sub has agreed that for one year following the Merger if it: (i)
sells or exchanges all or substantially all of the stock in the Issuer; (ii)
merges or consolidates the Issuer; or (iii) sells substantially all the
assets of the Issuer, BRW Sub will pay 50% of the profit from such
transaction to each stockholder whose shares were converted.
As a condition to consummation of the Merger, BRW must raise
$50,000,000 in debt financing by December 29, 1995. Also, the Issuer must
have received an independent evaluation of the expected solvency of BRW and
BRW Sub after the consummation of the Merger.
The Merger Agreement may be terminated by mutual written consent. It
may be unilaterally terminated by BRW if: (i) the Issuer publicly withdraws
its approval of the Merger; (ii) a third party becomes the beneficial owner
of forty-five percent or more of the Issuer's shares; (iii) Stelco Inc. takes
any legal action that would prevent the Merger from taking place before
December 29, 1995; (iv) a tender or exchange offer by a third party attempts
to take over twenty percent of the stock in the Issuer for more than $7.75
per share; (v) the Issuer breaches the Merger Agreement; (vi) BRW is not able
to raise a minimum of $50,000,000 in debt financing; (vii) the results of
BRW's environmental due diligence review of the Company are unsatisfactory;
or (viii) the conditions to BRW's obligations are not satisfied. The Merger
Agreement may be unilaterally terminated by the Issuer if (i) the Merger is
not consummated by December 29, 1995; (ii) BRW does not receive a "highly
confident" letter by October 9, 1995; (iii) the Board of Directors determine
that its failure to terminate the Merger Agreement could subject the Board to
liability for a breach of its fiduciary duties; (iv) the conditions to the
Issuer's obligations have not been satisfied; or (v) BRW breaches the Merger
Agreement. The Merger Agreement may be terminated by either party (i) by
order of a court; (ii) if the Merger does not take place by December 29,
1995; or (iii) if Stelco Inc. exercises all of its rights of first refusal
under the Bliss & Laughlin Right of First Refusal and Standstill Agreement
dated May 11, 1990 (the "First Refusal Agreement").
If BRW terminates the Merger Agreement because either (i) action by
Stelco Inc. has the effect of preventing the Merger or (ii) a third party
commences a tender or exchange offer to acquire twenty percent or more of the
Issuer's stock at a price greater than $7.75 per share, or the Issuer
terminates the Merger Agreement because its Board of Directors determine that
failure to terminate the Merger Agreement would result in a breach of its
fiduciary duties, the
Page 10 of 14 Pages
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Issuer must pay BRW a cash cancellation fee of $1,000,000 plus reimbursement
for all out-of-pocket expenses and fees incurred by BRW.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) BRW Sub has the right to acquire, pursuant to the Stock Option
Agreement, 774,059 shares, or approximately 19.5%, of Issuer Common
Stock. The 19.5% calculation is based on the total number of shares of
Common Stock which may be purchased under the Stock Option Agreement
(774,059) divided by the number of shares of Common Stock outstanding
as September 15, 1995 (3,969,518).
BRW Sub is the beneficial owner of the Shares to which this
Statement relates pursuant to its rights under the Stock Option
Agreement to acquire the Shares.
BRW and BRW Sub disclaim any membership in a "group" with the
Management Stockholders as defined in Rule 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Act"). Each of
the Management Stockholders has granted BRW Sub an option pursuant
to the Stock Option Agreement with respect to 774,059 shares of
Common Stock, or approximately fifty percent (50%) of shares of
Common Stock beneficially owned by such Management Stockholders.
Pursuant to the Stock Option Agreement, the Management
Stockholders have agreed to vote all their shares of Common Stock
(whether or not BRW Sub exercises its option) in favor of the
Merger. The Management Stockholders beneficially own approximately
1,559,759 shares of Common Stock, or 38% of the Common Stock. The
Management Stockholders have also filed Schedule 13D relating to
the transactions contemplated by the Stock Option Agreement. The
information in the Schedule 13D of the Management Stockholders
filed on or about September 26, 1995 relating to the Common Stock
is hereby incorporated by reference.
BRW owns beneficially 100% of the stock of BRW Sub; BRW Steel
Holdings, L.P. beneficially owns 100% of the stock of BRW; BRW
Partners, Inc. is the general partner of BRW Steel Holdings, L.P.;
Robert McKeon beneficially owns 57.5% of the stock of BRW
Partners, Inc. and Johnstown Acquisition Corp. (a limited partner
of BRW Steel Holdings, L.P.) and is a director and Co-Chairman of
BRW's Board of Directors; Thomas Campbell beneficially owns 32.5%
of the stock of BRW Partners, Inc. and Johnstown Acquisition Corp.
and is a director and Co-Chairman of BRW's Board of Directors;
and Ken Brotman beneficially owns 10% of the stock of BRW
Partners, Inc. and Johnstown Acquisition Corp. and is the
Executive Vice President and Chief Financial Officer, Treasurer
and Secretary of BRW. Neither the filing of this Statement nor
any of its contents shall be deemed to constitute an admission
that BRW Steel Holdings, L.P., BRW Partners, Inc., Robert McKeon,
Thomas Campbell or Ken Brotman is the beneficial owner of any of
the Shares or a member of a group together with BRW Sub or the
Management Stockholders for the purposes of Section 13(d) of the
Act or for any other purpose.
(c)-(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
BRW Sub, BRW and the Management Stockholders executed the Stock Option
Agreement on September 18, 1995, a copy of which is attached hereto as
Exhibit A and the terms of which are incorporated herein by reference. BRW
Sub, BRW and the Issuer executed the Merger Agreement on September 18, 1995,
a copy of which is attached hereto as Exhibit B and the terms of which are
incorporated herein by reference. The terms of the Merger Agreement are
discussed in more detail in Item 4 above.
Page 11 of 14 Pages
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Pursuant to the Stock Option Agreement, the Management Stockholders
have granted BRW Sub the right to purchase 774,059 shares of Common stock at
a price per share of $7.75. BRW Sub may exercise the Stock Option at any
time prior to December 29, 1995 or termination of the Merger Agreement due to
a material breach by BRW Sub. If a Management Stockholder sells the shares
covered by the Stock Option Agreement before September 16, 1996, 50% of the
proceeds in excess of $7.75 per share must be paid to BRW Sub. All shares
covered by the Stock Option Agreement have been delivered into an escrow
account pursuant to a Stock Escrow Agreement among BRW Sub, the Management
Stockholders and LaSalle National Trust, N.A., a copy of which is attached
hereto as Exhibit C-1 for all stockholders other than Gregory Parker and
Exhibit C-2 for Mr. Gregory Parker. During the term of the Stock Option
Agreement each Management Stockholder has agreed not to take certain actions,
including selling or otherwise transferring the shares, acquiring additional
shares, enter into a voting agreement or directly or indirectly initiate
discussions or engage in negotiation with any entity other than BRW Sub.
If BRW Sub sells the Shares on or before September 16, 1996, 50% of the
net sales proceeds must be paid to Management Stockholders, pro rata in
accordance with share holdings.
Each Management Stockholder has agreed to use his best efforts to
prevent the Company from taking additional action including issuing
additional stock or debt or selling any assets. Furthermore, each Management
Stockholder has agreed to vote the Shares in favor of the Merger and against
any action which would impede the Manager.
BRW has guaranteed each and every obligation of BRW Sub under the
Merger Agreement.
Stelco Inc. has certain rights of first refusal under the First Refusal
Agreement with respect to the Shares. If Stelco Inc. exercises certain
rights of first refusal Stelco Inc. has with respect to the Shares, the
Management Stockholders have agreed to pay BRW Sub a cancellation fee of
$1,250,000 plus expenses of up to $250,000.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A Stock Option Agreement between B & L Acquisition
Corporation, BRW Steel Corporation and the Management
Stockholders listed therein.
Exhibit B Agreement and Plan of Merger dated as of September 16, 1995
by and among BRW Steel Corporation, B & L Acquisition
Corporation and Bliss & Laughlin Industries Inc.
Exhibit C-1 Form of Stock Escrow Agreement by and among BRW Sub,
LaSalle National Trust, N.A. and the Management
Stockholders other than Gregory Parker.
Exhibit C-2 Form of Stock Escrow Agreement by and among BRW Sub,
LaSalle National Trust, N.A. and Gregory Parker.
Page 12 of 14 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated as of September 26, 1995.
B & L Acquisition Corporation
By /s/ Robert B. McKeon
-------------------------------------
Name Robert B. McKeon
------------------------------------
Title President
------------------------------------
Page 13 of 14 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated as of September 26, 1995.
BRW Steel Corporation
By /s/ Robert B. McKeon
-------------------------------------
Name Robert B. McKeon
------------------------------------
Title President
------------------------------------
Page 14 of 14 Pages
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, dated as of September 16, 1995, by and
among B & L ACQUISITION CORPORATION, a Delaware corporation (the
"Purchaser"), BRW STEEL CORPORATION, a Delaware corporation ("Parent"), and
the Management Stockholders (who are individually named on Schedule A hereto)
of the Company (as defined below) who are parties to that certain First
Refusal Agreement (as defined in Section 2) (each Management Stockholder, a
"Stockholder"; collectively all the Management Stockholders, the
"Stockholders"), being the owner of certain shares of common stock, $.01 par
value per share (the "Common Stock"), of BLISS & LAUGHLIN INDUSTRIES INC., a
Delaware corporation (the "Company").
WHEREAS, the Purchaser, Parent and the Company are concurrently
herewith entering into a Merger Agreement dated as of the date hereof (the
"Merger Agreement"), which provides, upon the terms and subject to the
conditions thereof, for the merger of the Purchaser with and into the Company
(the "Merger").
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, the Purchaser desires to acquire an option from the Stockholders
to purchase an aggregate of 774,059 shares of Common Stock of the Company.
The number of such shares pertaining to each Stockholder is set forth
opposite the Stockholder's name on Schedule A hereto (as to each Stockholder,
the "Shares"); and in order to induce the Purchaser to proceed with the
Merger, the Stockholders desire to grant an option to the Purchaser to
purchase the Shares, all upon the terms and conditions of this Agreement.
WHEREAS, the taking of various steps which are necessary in order to
accomplish the Merger will require the Purchaser and the Company to spend
significant sums of money and use substantial amounts of time of their key
employees.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto, intending legally to be bound, do hereby agree as follows:
1. GRANT OF STOCK OPTION. The Stockholder hereby grants to the
Purchaser an exclusive and irrevocable option (the "Stock Option") to
purchase during a period commencing on the date hereof (the "Option
Commencement Date"), subject to the provisions of Section 3 below, and ending
on the Termination Date (hereinafter defined), the Shares at a price per
share of $7.75, or any higher price paid by Purchaser for a share of Common
Stock of the Company in the Merger, payable as provided in Section 3 below
(the "Purchase Price"). The Option Price shall be paid in cash at the
Closing (as hereinafter defined).
<PAGE>
2. EXERCISE OF STOCK OPTION. Provided that (a) Stelco Inc. ("Stelco")
has not purchased the Shares pursuant to the exercise of Stelco's rights
under Section 3.3 of the Right of First Refusal and Standstill Agreement
dated May 11, 1990 (the "First Refusal Agreement") (such purchase a "First
Refusal Purchase"), (b) no preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the United
States of America shall be in effect which would prohibit the purchase or
delivery of Shares hereunder and (c) any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall
have expired with respect to such purchase and delivery, the Purchaser may
exercise the Stock Option, in whole, at any time or from time to time, from
the Option Commencement Date until that date (the "Termination Date") which
is the earlier of (i) December 29, 1995, or (ii) termination of the Merger
Agreement due to a material breach by the Purchaser of its obligations under
the Merger Agreement. Stockholder agrees that if, prior to the first
anniversary of the date of this Agreement, the Stockholder or any assignee of
the Stockholder or the Company enters into an agreement to (i) sell or
exchange all or substantially all of the Common Stock of the Company held by
the Stockholder or an affiliate of the Stockholder to or with a third party,
Stockholder or any assignee of the Stockholder will promptly pay Purchaser an
amount equal to fifty percent (50%) of the difference between the Subsequent
Share Price (as defined below) received for the Shares in such subsequent
transaction and the product of $7.75 and the number of Shares. For the
purposes of this Section 2, "Subsequent Share Price" shall mean the sum of
the aggregate consideration received by the Stockholder or any assignee of
the Stockholder in the transaction reduced by the expenses and out of pocket
fees incurred by Stockholder or its affiliates or on their behalf in
connection with the sale of the Shares. If the Stockholder or any assignee
of the Stockholder or the Company receives consideration other than cash, the
Stockholder may elect to pay the amount due the Purchaser under this Section
2 in like kind consideration or in cash. Prior to the Termination Date,
other than as permitted in Section 4 below, the Stockholder will not take,
and will refrain from taking, any action which would have the effect of
preventing or disabling the Stockholder from delivering the Shares to the
Purchaser upon exercise of the Stock Option or from otherwise performing its
obligations under this Agreement.
3. DELIVERY OF SHARES; ESCROW ARRANGEMENTS; PAYMENT FOR SHARES. Within
three (3) days after the date of this Agreement, the Stockholder shall
deliver in escrow to an escrow agent (the "Escrow Agent"), to be selected by
the Purchaser and reasonably acceptable to the Stockholder, (i) duly executed
share certificates representing the Shares accompanied by stock powers
endorsed in blank and with signatures guaranteed and such other documents as
may be reasonably necessary to transfer record ownership of Shares into the
Purchaser's name on the stock
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transfer books of the Company or (ii) book confirmation of the transfer of
Shares to the account of the Escrow Agent or its nominee with the Depository
Trust Company. If this Agreement is terminated, the unpurchased Shares and
any certificates for the unpurchased Shares and related stock powers and
other documents shall be returned to the Stockholder within two business days
following such termination; provided, however, if a cancellation fee and
expenses are owed under Section 14 hereof, the Shares shall remain in the
account of the Escrow Agent until the Stockholder has paid such cancellation
fee and expenses in full. The Stockholder and Purchaser agree to enter into
an escrow agreement (the "Escrow Agreement") with the Escrow Agent,
substantially in the form of Attachment A hereto. At any Closing hereunder,
the Purchaser shall deliver an aggregate principal amount of $7.75, or any
higher price paid by Purchaser for a share of Common Stock of the Company in
the Merger, times the number of Shares being purchased (the "Exercised Option
Shares") in cash or a certified or cashier's check or by wire transfer of
immediately available funds to a bank account designated by the Escrow Agent
(the "Purchase Price"), for distribution to Stockholder in compliance with
the terms of the Escrow Agreement.
4. COVENANTS OF THE STOCKHOLDER. Except in accordance with the
provisions of this Agreement, the Stockholder agrees, until the Termination
Date, not to:
(a) sell, transfer, pledge, assign or otherwise
dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale,
transfer, pledge, assignment or other disposition of, any
Shares, except that (i) if required by the terms of the
First Refusal Agreement, the Stockholder may sell the
Shares to Stelco pursuant to a First Refusal Purchase, or
(ii) the Stockholder, upon a minimum of three (3) days
prior written notice to the Purchaser and upon expiration
of any rights Stelco may have to purchase the Shares under
the First Refusal Agreement, may sell or transfer the
Shares to a purchaser or transferee that is a citizen of
the United States of America or Canada and executes with
the Purchaser an agreement containing the same terms
hereof; provided, however, that no sale or transfer shall
be permitted hereunder to any purchaser or transferee that
Parent believes, in its reasonable judgment, intends or may
intend to engage in any transaction which may involve a
change of control such as a merger, reorganization or
acquisition of the Company, other than the transactions
contemplated by the Merger Agreement or this Agreement;
(b) acquire any additional shares of Common Stock
without the prior consent of Purchaser other than pursuant
to the exercise of existing stock options or similar
rights;
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<PAGE>
(c) enter into a voting agreement with respect to any
Shares; or
(d) directly or indirectly, initiate discussions or
engage in negotiations with any corporation, partnership,
person or other entity or group (other than Purchaser)
concerning any possible acquisition of the Shares or any
possible merger, purchase of assets, purchase of stock or
similar transactions involving the Company or any major
asset of the Company.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PARENT. The
Purchaser and Parent jointly and severally hereby represent and warrant to
the Stockholder as follows:
(a) AUTHORITY RELATIVE TO THIS AGREEMENT. The
Purchaser and Parent each is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware. The Purchaser and Parent each has full
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized by all
necessary corporate action on the part of the Purchaser and
Parent, has been validly executed and delivered by a duly
authorized officer of the Purchaser and Parent, and,
constitutes a valid and binding agreement of the Purchaser
and Parent, enforceable against the Purchaser and Parent in
accordance with its terms.
(b) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT
WITH INSTRUMENTS TO WHICH PURCHASER OR PARENT IS PARTY.
The execution and delivery of this Agreement and the
performance by Parent or Purchaser of their respective
obligations hereunder will not (i) violate the charter or
bylaws of Parent or Purchaser; (ii) assuming satisfaction
of the requirements set forth in clause (iii) below, violate
any provision of law applicable to Parent or
Purchaser; (iii) except for (1) requirements under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and requirements, if any, arising out of the HSR
Act, require any consent, approval, filing or notice under
any provision of law applicable to Parent or Purchaser or
any of Parent's other subsidiaries; or (iv) require any
consent, approval or notice under, or violate or constitute
a default under, or permit the termination of any provision
of, or result in the acceleration of the maturity or
performance of any obligation of, or result in the creation
or imposition of any lien upon any properties, assets or
businesses of, Parent or Purchaser or any of Parent's other
subsidiaries under, any note, bond, indenture, mortgage,
deed of trust, lease, franchise, permit, authorization,
license, contract, instrument or other agreement or
commitment, or any order, judgment or decree, to which
Parent or Purchaser or any of Parent's other subsidiaries
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<PAGE>
is a party or by which Parent, Purchaser or any of Parent's
other subsidiaries or any of the assets or properties of
Parent, Purchaser or any of Parent's other subsidiaries is
bound or encumbered, which in any of the foregoing cases
would have a material adverse effect on Parent and its
subsidiaries taken as a whole or would prohibit or
interfere with the consummation of this Agreement.
(c) DISTRIBUTION. The Purchaser will acquire the
Shares upon exercise of the Stock Option for its own
account and not with a view to any resale or distribution
thereof and will not sell the Shares unless such Shares are
registered under the Securities Act of 1933 (the "Securities
Act") or unless an exemption from registration is available.
(d) RESALE PRIOR TO THE EFFECTIVE TIME. Purchaser
agrees that, if prior to the earlier of the Effective Time
(as defined in the Merger Agreement) or the first anniversary
of the date of this Agreement, the Purchaser or any
assignee of the Purchaser or the Company enters into an
agreement to sell or exchange all or substantially all of
the Common Stock of the Company held by the Purchaser or an
affiliate of the Purchaser to or with an unaffiliated third
party, Purchaser or any assignee of the Purchaser will
promptly pay Stockholder an amount equal to fifty percent
(50%) of the difference between the Subsequent Share Price
(as defined below) received for such subsequent transaction
and the product of $7.75 times the number of Shares. For
the purposes of this Section 6(d), "Subsequent Share Price"
shall mean the sum of the aggregate consideration received
by the Purchaser or any assignee of the Purchaser in the
transaction attributable to the Shares reduced by the
expenses and out of pocket fees incurred by Purchaser or
its affiliates or on their behalf in connection with the
sale of the Shares. If the Purchaser or any assignee of
the Purchaser receives consideration other than cash, the
Purchaser may elect to pay the amount due the Stockholder
under this Section 6(d) in like kind consideration or in
cash.
(e) RESALE SUBSEQUENT TO THE EFFECTIVE TIME.
Subsequent to the Effective Time, Purchaser agrees that, if
prior to the first anniversary of the date of this
Agreement, the Purchaser or any assignee of the Purchaser,
the Company or the Surviving Corporation (as defined in the
Merger Agreement) enters into an agreement to (i) sell or
exchange all or substantially all of the Common Stock of
the Company or the Surviving Corporation to or with, or
(ii) merge or consolidate the Company or the Surviving
Corporation with, or (iii) sell substantially all the
assets of the Company or the Surviving Corporation to, an
unaffiliated third party, Purchaser or any assignee of the
Purchaser, the Company and the Surviving Corporation will
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<PAGE>
jointly promptly pay Stockholder an amount equal to fifty
percent (50%) of the product of (y) the difference between
the Aggregate Transaction Value (as defined below) received
for such subsequent transaction and $55,000,000 and (z) a
fraction, the numerator of which is the number of Shares
and the denominator of which is the number equal to the
total of (1) the number of shares of Common Stock of the
Company issued and outstanding as of the Effective Time
plus (2) the number of shares of Common Stock of the
Company underlying stock options for which the option
holder is entitled to payment under Section 1.3(e) of the
Merger Agreement plus (3) the number of share equivalents
for which the participant under the Directors' Deferred
Compensation Plan is entitled to payment under Section
1.3(f) of the Merger Agreement. For the purposes of this
Section 5(e), "Aggregate Transaction Value" shall mean the
sum of the aggregate consideration received by the sellers
in the transaction (reduced by the present value of any
future or contingent obligations retained by the sellers)
plus the aggregate liabilities assumed by the acquiring
party in the transaction. If the Purchaser or any assignee
of the Purchaser, the Company or the Surviving Corporation
receives consideration other than cash, the Purchaser may
elect to pay the amount due the Stockholder under this
Section 5(e) in like kind consideration or in cash.
6. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
represents and warrants to the Purchaser the following:
(a) TITLE TO SHARES. The Stockholder has good and
marketable title to the Shares, not subject to any
hypothecation, pledge or lien, with no restrictions on
voting rights and other incidents of record and beneficial
ownership incident thereto, and the absolute right to grant
Purchaser the option to purchase the Shares and the right
to sell and transfer the Shares to the Purchaser free and
clear of all claims, liens, pledges, security interests,
restrictions or encumbrances of any nature whatsoever,
except for the restrictions under the First Refusal
Agreement. Solely for the purposes of this Agreement and
the Merger, Stockholder hereby waives and agrees not to
assign his rights of first refusal under all First Refusal
Agreements to which he or it and other stockholders of the
Company are parties, provided that such waiver and
agreement not to assign terminate when this Agreement
terminates. On consummation of the transactions
contemplated by this Agreement in accordance with the terms
hereof, the Purchaser will acquire good and marketable
title to the Shares free and clear of all claims, liens,
pledges, security interests, resolutions or encumbrances of
any nature whatsoever except for any rights of first
refusal held by other Stockholders of the Company under
First Refusal Agreements.
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<PAGE>
(b) AUTHORIZATION AND VALIDITY. The Stockholder has
the power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby. This Agreement constitutes a valid and binding
agreement of the Stockholder, enforceable in accordance
with its terms.
(c) COMPLIANCE WITH INSTRUMENTS. Neither the
execution or delivery of this Agreement nor the
consummation by the Stockholder of the transactions
contemplated hereby will violate any provisions of any law
applicable to the Stockholder or agreement to which the
Stockholder is a party, except for any rights of first
refusal held by other Stockholders of the Company under
First Refusal Agreements.
(d) SUPPORT OF MERGER. The Stockholder agrees that
he will vote all of his Shares in favor of the Merger
Agreement at any Stockholders Meeting at which it is
discussed, and at any adjournment thereof; provided
however, that Stockholder shall not have to vote in favor
of the Merger Agreement if it has been terminated.
7. COMPANY ACTIONS. If the Stockholder is a director of the Company or
an officer or stockholder of the Company that is a reporting person under
Section 16 of the Exchange Act, the Stockholder agrees to use his best
efforts during the term of this Agreement to prevent the Company, its Board
of Directors, its officers and its subsidiaries from:
(a) issuing additional capital stock except pursuant
to existing option plans or arrangements;
(b) approving a stock split, reverse stock split,
recapitalization, or other similar action which would result in an overall
adjustment of the number of outstanding shares of the Company's Common
Stock;
(c) increasing the dividend on the Company's Common Stock;
(d) issuing additional stock options or appreciation rights;
(e) selling any assets, except in the normal course
of business and except for assets presently under contract
for sale; and
(f) issuing or incurring additional debt, except in
the normal course of business.
8. HSR FILING. Promptly after the date hereof, and from time to time
thereafter if necessary, the Purchaser shall file with the Federal Trade
Commission and the Antitrust Division of
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<PAGE>
the United States Department
of Justice all required pre-merger notification and report forms and other
documents and exhibits required to be filed under the HSR Act to permit the
purchase of the Shares subject to the Stock Option.
9. UNITARY TRANSACTION. The parties hereto intend that this Agreement
and the Merger Agreement shall constitute a single unified transaction for
the acquisition of the Company by Purchaser. In accordance with that
intention, Purchaser represents the following:
(a) Purchaser was not an affiliate of and had no
affiliation with the Company at any time prior to the
execution of this Agreement and the Merger Agreement;
(b) Purchaser shall purchase all shares of Common
Stock pursuant to this Agreement and the Merger Agreement
at the same price per share; and
(c) Purchaser shall make no attempt to change the
management of, alter the operation of, or exercise control
over the Company prior to the Effective Time or termination
of the Merger Agreement.
10. CERTAIN UNDERTAKINGS. The Stockholder hereby agrees that, during
the term of this Agreement, at any meeting of the stockholders of the
Company, however called, and in any action by written consent of the
stockholders of the Company, the Stockholder shall (a) vote the Shares in
favor of the Merger; (b) not vote the Shares in favor of any action or
agreement which would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation of the Company
under the Merger Agreement; and (c) vote the Shares against any action or
agreement which would impede, interfere with or attempt to discourage the
Merger, including, but not limited to: (i) any extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving the
Company or any of its subsidiaries; (ii) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries; (iii) any change
in the management or board of directors of the Company, except as otherwise
agreed to in writing by Purchaser; (iv) any material change in the present
capitalization or dividend policy of the Company; or (v) any other material
change in the Company's corporate structure or business; provided however,
that Stockholder shall not have to take any action specified above in this
Section 10 if the Merger Agreement has been terminated by Purchaser or Parent.
11. ADJUSTMENTS. In the event of any increase or decrease or other
change in the Common Stock by reason of stock dividends, split-up,
recapitalizations, combinations, exchanges of shares or the like, the number
of shares of Common Stock subject to the Stock Option and the per Share
Purchase Price shall be equitably adjusted appropriately.
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<PAGE>
12. LEGEND. As soon as practicable after the execution of this
Agreement, the Stockholder shall cause the following legend to be placed on
the certificates representing the Shares:
"The Shares of common stock represented by this
certificate are subject to a Stock Option Agreement,
dated as of September 16, 1995, with B & L Acquisition
Corporation and BRW Steel Corporation."
Upon termination of this Agreement Stockholder will remove such legend
on any Shares returned to him; and Purchaser will cooperate therewith.
13. GUARANTEE. Parent hereby fully and unconditionally guarantees each
and every representation, warranty and obligation of the Purchaser hereunder
and of any assignee of the Purchaser.
14. CANCELLATION FEE. (a) If Stelco exercises its rights under the
First Refusal Agreement to purchase the Shares, or (b) if prior to December
29, 1995 the Board of Directors of the Company terminates the Merger
Agreement pursuant to Section 6.1(c)(iii) of the Merger Agreement and a
transaction is subsequently consummated, or (c) if prior to December 29, 1995
a tender or exchange offer shall have been commenced by any party to acquire
twenty percent (20%) or more of the capital stock of the Company at a price
in excess of $7.75, which tender or exchange offer is subsequently
consummated, then, upon consummation of Stelco's purchase with respect to
clause (a) above or within five (5) business days of the consummation of the
transaction in the case of clause (b) or (c) above, the Stockholder shall pay
to the Purchaser, a cash cancellation fee equal to the product of (i) the sum
of one million two hundred fifty thousand dollars ($1,250,000) plus all out
of pocket fees and expenses incurred by Purchaser, Parent or their affiliates
or on their behalf in connection with the Merger and the transactions
contemplated hereby (such out of pocket fees and expenses not to exceed two
hundred fifty thousand dollars ($250,000)) and (ii) a fraction, the numerator
of which is the number of Shares and the denominator of which is 774,059.
15. REMEDIES. The parties agree that the Purchaser would be
irreparably damaged if for any reason the Stockholder failed to deliver any
of the Shares upon exercise of the Stock Option or to perform any of its
other obligations under this Agreement, and that the Purchaser would not have
an adequate remedy at law for money damages in such event. Accordingly, the
Purchaser shall be entitled to specific performance and injunctive and other
equitable relief to enforce the performance hereof by the Stockholder. This
provision is without prejudice to any other rights that the Purchaser may
have against the Stockholder for any failure to perform its obligations under
this Agreement.
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<PAGE>
16. ENTIRE AGREEMENT; ASSIGNMENT; AMENDMENT. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings,
both written and oral, of the parties with respect to such subject matter.
Purchaser may assign any or all of its rights and obligations hereunder to
any wholly-owned affiliate of Purchaser or Parent. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto.
17. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
18. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be furnished by hand
delivery, by telegram or telex, or by mail (registered or certified, postage
prepaid, return receipt requested) to the parties at the addresses set forth
below or, if to the Escrow Agent, at its address set forth in the Escrow
Agreement. Any such notice shall be deemed duly given upon the date it is
actually received by the party to whom notice is intended to be given or is
actually delivered at its address as shown below or, if to the Escrow Agent,
at its address set forth in the Escrow Agreement:
If to the Purchaser:
B&L Acquisition Corporation
4 Northshore Center
Pittsburgh, PA 15212
Attention: President
With a copy to:
Ken M. Brown, Esq.
Pillsbury Madison & Sutro
1050 Connecticut Avenue, NW, #1200
Washington, DC 20037
If to the Stockholder:
At the address set forth for the Stockholder on
Schedule B hereto.
With a copy to the Company, at:
Bliss & Laughlin Industries Inc.
281 East 155th Street
Harvey, IL 60426
Attention: President
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<PAGE>
With copies to:
Company's Counsel
Wildman, Harrold, Allen & Dixon
225 West Wacker Drive, #3000
Chicago, IL 60606
Attention: Roger G. Fein
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
19. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without
reference to principles of conflicts of laws.
20. DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
21. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person or
entity any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
22. TIME OF THE ESSENCE. The parties agree that time shall be of the
essence in the performance of obligations hereunder.
23. BROKERS. Each party hereby represents and warrants to the other
that no broker or finder claiming through him is entitled to a fee in
connection with the sale of Shares hereunder, except for The Chicago
Corporation whose fee will be paid by the Company.
24. AGREEMENTS WITH OTHER STOCKHOLDERS. Purchaser agrees that if it
executes a Stock Option Agreement with any other stockholder of the Company
having terms more favorable to such stockholder than the terms of this
Agreement are to Stockholder, it will promptly amend this Agreement to
include such more favorable terms. Stockholder hereby appoints as his lawful
attorney-in-fact Gregory H. Parker to execute any and all notices and other
communications under the First Refusal
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Agreement as such attorney-in-fact shall execute in his sole discretion.
25. JURISDICTION. Any judicial proceeding brought against any of the
parties to this Agreement with respect to any dispute arising out of this
Agreement or any matter related hereto may be brought in the courts of the
State of Illinois located in Chicago, Illinois, or in the United States
District Courts in Chicago, Illinois, and, by execution and delivery of this
Agreement, each of the parties to this Agreement accepts the exclusive
jurisdiction of such courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. The foregoing
consents shall not constitute general consents to service of process in the
State of Illinois for any purpose except as provided above and shall not be
deemed to confer rights to any Person other than the respective parties to
this Agreement.
26. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its duly authorized representative, all as of the
day and year first above written.
BRW STEEL CORPORATION
By
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Title
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B & L ACQUISITION CORPORATION
By
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Title
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STOCKHOLDER
By
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Title
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<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 16, 1995, by and among BRW STEEL CORPORATION, a Delaware
corporation ("BarCo"), B & L ACQUISITION CORPORATION, a Delaware corporation
and a wholly owned subsidiary of BarCo ("Sub"), and BLISS & LAUGHLIN
INDUSTRIES INC., a Delaware corporation (the "Company"),
W I T N E S S E T H:
WHEREAS, the Board of Directors of BarCo has determined that it is in the
best interests of BarCo and its stockholders for Sub to acquire all of the
outstanding shares of the Company's common stock, $.01 par value per share
(the "Shares"), at a price of $7.75 per share, net to the stockholder of the
Company in cash, in accordance with the terms and conditions of this
Agreement; and
WHEREAS, the Board of Directors of the Company have received the opinion
of The Chicago Corporation that the price per share to be received by
stockholders of the Company in the Merger (as defined in Section 1.2) is fair
to such stockholders from a financial point of view; and
WHEREAS, the Board of Directors of the Company believes that the Merger
is in the best interests of its stockholders; and
WHEREAS, the respective Boards of Directors of BarCo, Sub and the Company
have each determined that it is advisable to merge Sub with and into the
Company pursuant to this Agreement with the result that the Company shall
become a wholly owned subsidiary of BarCo.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and covenants herein contained, BarCo, Sub and
the Company, intending to be legally bound, hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 COMPANY ACTION.
(a) The Company hereby consents to the Merger and represents that on
September 13, 1995, its board of directors (the "Board of Directors")
approved the Merger and approved recommending approval of the Merger and this
Agreement by the Company's stockholders. The Company further acknowledges and
<PAGE>
represents that the Board of Directors' approval of the Merger, this
Agreement, the transactions contemplated hereby and the consummation thereof
do not and will not fall within paragraph (A) of Article Ninth of the
Company's Certificate of Incorporation or otherwise cause the stockholder
vote required for approval of the Merger and this Agreement and the
transactions contemplated hereby to be greater than the minimum vote required
under section 251(c) of the Delaware General Corporation Law (the "Delaware
Law") provided that Sub and BarCo have not taken and do not take any action
to make either of them an "Interested Stockholder" as defined in Article
Ninth.
1.2 THE MERGER.
(a) Subject to the terms and conditions hereof, at the Effective Time
(as such term is defined in Section 1.2(b)), Sub will be merged with and into
the Company (the "Merger") in accordance with Delaware Law, the separate
existence of Sub (except as may be continued by operation of law) shall cease
and the Company shall continue as the surviving corporation in the Merger
(the "Surviving Corporation").
(b) At the Closing, the parties hereto shall cause the Merger to be
consummated by filing with the Secretary of State of Delaware an appropriate
agreement or certificate of merger (the "Merger Document") in such form as is
required by, and executed in accordance with, the relevant provisions of the
Delaware Law and with this Agreement (the date and time of such filing being
referred to herein as the "Effective Time"). The Merger shall have the
effects set forth in section 259 of the Delaware Law.
A closing of the Merger (the "Closing") shall take place (i) at Veritas
Capital, Inc., Ten East Fiftieth Street, New York, New York, at 12:00 noon,
local time, on the date on which the last of the conditions set forth in
Section 5 is fulfilled or waived (subject to applicable law), or (ii) at such
other time and place and on such other date as BarCo and a majority of the
directors of the Company shall agree (the "Closing Date").
1.3 CONVERSION OF SHARES. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Sub, the Company or the holder of any of the following
securities:
(a) Each Share then issued and outstanding, other than (i) Shares then
held, directly or indirectly, by BarCo, Sub or any direct or indirect
subsidiary of BarCo, or (ii) Shares held in the Company's treasury, or (iii)
Dissenting Shares (as such term is defined in Section 1.4) shall be converted
into and represent the right to receive (as provided in Section 1.5) $7.75,
without any interest thereon (such amount of cash being referred to herein as
the "Merger Consideration");
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(b) Each Share then held, directly or indirectly, by BarCo, Sub or any
direct or indirect subsidiary of BarCo shall be canceled and retired without
payment of any consideration therefor;
(c) Each Share held in the Company's treasury shall be canceled and
retired without payment of any consideration therefor;
(d) Each issued and outstanding share of common stock, par value $.01 per
share, of Sub shall be converted into and become one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation;
(e) Each of the Company's issued and outstanding stock options shall be
converted into the right to receive at Closing cash representing the positive
difference (if any) of $7.75 and the exercise price of such option multiplied
by the number of Shares covered by such option; and
(f) Each outstanding stock equivalency account of the Company under the
Directors' Deferred Compensation Plan shall be converted into the right to
receive at Closing cash in the amount of $7.75 for each unit equivalent to
one Share.
1.4 DISSENTING SHARES. Shares held by a stockholder who has not voted
such Shares in favor of the Merger and with respect to which such stockholder
becomes entitled to payment of the fair value of his Shares pursuant to the
provisions of section 262 of the Delaware Law ("Dissenting Shares"), shall
not be converted into, or represent the right to receive, or be exchangeable
for, the Merger Consideration unless and until such holder shall have failed
to perfect or shall have effectively withdrawn or lost the right to appraisal
and payment of the fair value of such Shares pursuant to the provisions of
such section 262. If such holder shall have failed to perfect or shall have
effectively withdrawn or lost such right, then, as of the Effective Time, or
the occurrence of the event which causes the failure to perfect or the
effective withdrawal or loss of such right, whichever last occurs, such
holder's Dissenting Shares shall cease to be Dissenting Shares and shall be
converted into and represent the right to receive, and be exchangeable (as
provided in Section 1.5) for, the Merger Consideration.
1.5 PAYMENT.
(a) Pursuant to an agreement (the "Disbursing Agent Agreement") to be
entered into on or before the Closing Date between BarCo and Sub and a
disbursing agent (the "Disbursing Agent") which shall be a commercial bank
with capital of at least $100,000,000, Sub or the Surviving Corporation shall
from time to time deposit with the Disbursing Agent such cash as the
Disbursing Agent shall require pursuant to this Section 1.5.
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(b) As soon as practicable after the Effective Time, the Disbursing Agent
shall send a notice and a transmittal form to each holder of certificates
formerly evidencing Shares (other than certificates formerly representing
Shares to be canceled pursuant to Sections 1.3(b) and 1.3(c)) advising such
holder of the effectiveness of the Merger and the procedure for surrendering
to the Disbursing Agent (who may appoint forwarding agents with the approval
of BarCo) such certificates for exchange into the Merger Consideration. Each
holder of certificates theretofore evidencing Shares, upon proper surrender
thereof to the Disbursing Agent together with and in accordance with such
transmittal form, shall be entitled to receive in exchange therefor the
Merger Consideration deliverable in respect of the Shares theretofore
evidenced by the certificates so surrendered. Upon such proper surrender, the
Disbursing Agent shall promptly, but in any event no later than three (3)
business days after such proper surrender, deliver the Merger Consideration.
Until properly surrendered, certificates formerly evidencing Shares shall be
deemed for all purposes to evidence only the right to receive the Merger
Consideration.
(c) If the Merger Consideration (or any portion thereof) is to be
delivered to a person other than the person in whose name the certificates
surrendered in exchange therefor are registered, it shall be a condition to
the payment of such Merger Consideration that the certificates so surrendered
shall be properly endorsed or accompanied by appropriate stock powers and
otherwise in proper form for transfer and that such transfer otherwise be
proper. Sub shall pay to the Disbursing Agent any transfer or other taxes
payable by reason of the foregoing or establish to the satisfaction of the
Disbursing Agent that such taxes have been paid or are not required to be
paid. No interest will be paid or accrued on the Merger Consideration
payable on the surrender of any such certificates.
(d) In the event any certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed, the Surviving
Corporation will, subject to the following sentence, issue in exchange for
such lost, stolen or destroyed certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article
1. Sub may, in its sole discretion and as a condition precedent to the
issuance of the Merger Consideration in exchange therefor, require the owner
of such lost, stolen or destroyed certificate to give the Surviving
Corporation a bond in such sum as it may reasonably direct as indemnity
against any claim that may be made against the Surviving Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
1.6 NO FURTHER RIGHTS. From and after the Effective Time, holders of
certificates formerly evidencing Shares shall cease
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to have any rights as stockholders of the Company, except as provided herein
or by law.
1.7 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of Shares shall
thereafter be made.
1.8 CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS. The Certificate of
Incorporation and Bylaws of the Company in effect immediately prior to the
Effective Time (except as such Certificate of Incorporation may be amended
pursuant to the Merger Document) shall be the Certificate of Incorporation
and Bylaws of the Surviving Corporation until thereafter amended as provided
therein and under the Delaware Law. The directors of the Company immediately
prior to the Effective Time shall be the directors of the Surviving
Corporation, in each case until their successors are duly elected and
qualified.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BARCO AND SUB
BarCo and Sub hereby jointly and severally represent and warrant to the
Company that:
2.1 ORGANIZATION. Each of BarCo and Sub is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as it is now
being conducted.
2.2 AUTHORIZATION AND VALIDITY OF AGREEMENTS. Each of BarCo and Sub has
all requisite corporate power and authority to enter into this Agreement and
to perform its respective obligations hereunder. The execution, delivery
and performance by each of BarCo and Sub of this Agreement and all other
agreements and documents contemplated hereby, and the consummation by each of
BarCo and Sub of the transactions contemplated hereby and thereby, have been
duly authorized by all necessary corporate action on the part of each of
BarCo and Sub. This Agreement and all other agreements and documents
contemplated hereby, have been or will be duly executed and delivered by
BarCo and Sub and are and will be valid and binding obligations of BarCo and
Sub enforceable against BarCo and Sub in accordance with their respective
terms.
2.3 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS TO
WHICH BARCO OR SUB IS PARTY. Neither the execution and delivery of this
Agreement and all other agreements and documents contemplated hereby, nor the
performance by BarCo or Sub of their respective obligations hereunder will
(a) violate the charter or bylaws of BarCo or Sub; (b) assuming satisfaction
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of the requirements set forth in clause (c) below, violate any provision of
law applicable to BarCo or Sub; (c) except for (i) requirements under the
Exchange Act, (ii) requirements, if any, arising out of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "Hart-Scott Act"), and
(iii) the filing of the Merger Document in accordance with the Delaware Law,
require any consent, approval, filing or notice under any provision of law
applicable to BarCo or Sub or any of BarCo's other subsidiaries; or (d)
require any consent, approval or notice under, or violate or constitute a
default under, or permit the termination of any provision of, or result in
the acceleration of the maturity or performance of any obligation of, or
result in the creation or imposition of any lien upon any properties, assets
or businesses of, BarCo or Sub or any of BarCo's other subsidiaries under,
any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment, or any order, judgment or decree, to which BarCo or Sub or any of
BarCo's other subsidiaries is a party or by which it or any of its assets or
properties is bound or encumbered, which in any of the foregoing cases would
have a material adverse effect on BarCo and its subsidiaries taken as a whole
or would prohibit or interfere with the consummation of the Merger by BarCo
or Sub.
2.4 GUARANTY. BarCo hereby agrees to fully and unconditionally guarantee
the performance by Sub and by any assignee of Sub of all of Sub's
representations, warranties, covenants and undertakings set forth in this
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to BarCo and Sub that except
as previously furnished to BarCo in writing:
3.1 ORGANIZATION. The Company and each of its Subsidiaries (as such
term is defined in Section 3.3) is a corporation duly organized, validly
existing and, to the best of the Company's knowledge, in good standing under
the laws of its jurisdiction of incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted. Each of the Company and each of its
Subsidiaries is duly qualified as a foreign corporation to do business and is
in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified will not
have a material adverse effect on the financial condition, results of
operations or business of the Company and its Subsidiaries taken as a whole.
The Company has previously delivered to BarCo true and complete copies of its
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Certificate of Incorporation and Bylaws, as amended to the date hereof.
3.2 CAPITALIZATION. The authorized capital stock of the Company consists
of (a) 6,000,000 shares of the Company's Common Stock, $.01 par value per
share ("Company Common Stock"), of which 3,969,518 are issued and outstanding
and (b) 1,500,000 shares of the Company's Preferred Stock, $1.00 par value
per share, none of which are issued and outstanding. The Company has
reserved (i) 65,000 shares of Company Common Stock for issuance under its
Directors' Stock Option Plan, as amended to date, of which options to
purchase 45,000 shares have been granted, no options have been exercised, and
no options have expired or have been forfeited and (ii) 130,000 shares of
Company Common Stock for issuance under its Employee Incentive Stock Option
Plan, as amended to date, of which options to purchase 114,000 shares have
been granted, no options have been exercised and options to purchase 21,500
shares have expired or have been forfeited. Except for the foregoing, and
except for its obligations regarding stock equivalency accounts under the
Directors' Deferred Compensation Plan, there are not now, and at the Closing
Date, the Company will not have, any outstanding options, warrants,
convertible securities, calls, subscriptions or other rights or agreements or
commitments of any character obligating the Company or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
securities of the Company or any of its Subsidiaries. All issued and
outstanding shares of Company Common Stock are validly issued, fully paid,
nonassessable and free of preemptive rights.
3.3 SUBSIDIARIES. As used herein, the term "Subsidiaries" shall mean
Canadian Drawn Steel Company Inc. and Bliss & Laughlin Steel Company. The
Company is, directly or indirectly, the record and beneficial owner of all of
the outstanding shares of capital stock of each of the Subsidiaries, there
are no irrevocable proxies with respect to such shares and no equity
securities of any of the Subsidiaries are or may become required to be issued
for any reason including, without limitation, by reason of any options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any capital stock of any Subsidiary, and there
are no contracts, commitments, understandings or arrangements by which any
Subsidiary is bound to issue additional shares of its capital stock or
securities convertible into or exchangeable for such shares. All of such
shares so owned by the Company or any of its Subsidiaries are validly issued,
fully paid and nonassessable and, to the best of the Company's knowledge, are
owned by it free and clear of any material claim, lien, encumbrance or
agreement with respect thereto.
3.4 AUTHORIZATION AND VALIDITY OF AGREEMENTS. The Company has all
requisite corporate power and authority to enter into
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this Agreement and to perform its obligations hereunder (subject, in the
case of performance of this Agreement, to obtaining any necessary approval of
its stockholders). The execution, delivery and performance by the Company of
this Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by the Board of Directors and no other
corporate action on the part of the Company is necessary to authorize the
execution and delivery by the Company of this Agreement and the consummation
by it of the transactions contemplated hereby (subject to obtaining the
necessary approval of its stockholders). This Agreement has been duly
executed and delivered by the Company and is a valid and binding obligation
of the Company.
3.5 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS TO
WHICH THE COMPANY IS PARTY. Neither the execution and delivery of this
Agreement nor the performance by the Company of its obligations hereunder
will (a) violate the charter documents, bylaws or other organizational
documents of the Company or any of its Subsidiaries; (b) assuming
satisfaction of the requirements set forth in clause (c) below, violate any
provision of law applicable to the Company or its Subsidiaries; (c) except
for (i) requirements under the Exchange Act, (ii) requirements, if any,
arising out of the Hart-Scott Act, and (iii) the filing of the Merger
Document in accordance with the Delaware Law, require any consent, approval,
filing or notice under any provision of law applicable to the Company or its
Subsidiaries; (d) except as required under any existing bank loan agreement,
a copy of which has been provided to BarCo, require any consent, approval or
notice under, or violate, or be in conflict with or constitute a default
under or permit the termination of any provision of, or result in the
acceleration of the maturity or performance of or result in the creation or
imposition of any lien upon any properties, assets or businesses of the
Company or its Subsidiaries under any note, bond, indenture, mortgage, deed
of trust, lease, franchise, permit, authorization, license, contract,
instrument or other agreement or commitment, or any order, judgment or decree
to which the Company or any of its Subsidiaries is a party or by which any of
them or any of their assets or properties is bound or encumbered, which in
any of the foregoing cases would have a material adverse effect on the
Company and its Subsidiaries taken as a whole or would prohibit or materially
interfere with the consummation of the Merger by the Company.
3.6 LEGAL PROCEEDINGS. Except as set forth in the Company Commission
Filings (as such term is defined in Section 3.7) as of the date hereof and in
the Company's audited consolidated financial statements for the fiscal year
ended September 30, 1994, there is no suit, action, proceeding or
investigation pending or, to the best knowledge of the Company, threatened
against or involving the Company or any of its Subsidiaries, properties or
rights, which, if adversely determined, would
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have, either individually or in the aggregate, a material adverse effect on
the financial condition, results of operations or business of the Company and
its Subsidiaries taken as a whole, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against the Company or any
of its Subsidiaries having any such effect. Neither the Company nor any of
its Subsidiaries is in violation of any term of any judgment, decree,
injunction, rule or order outstanding against it which would have, either
individually or in the aggregate, a material adverse effect on the financial
condition, results of operations or business of the Company and its
Subsidiaries taken as a whole.
3.7 COMPANY COMMISSION FILINGS; FINANCIAL STATEMENTS. As of the
respective dates of their filing with the Commission, all reports, statements
(including the Proxy Statement), registration statements and other filings
(including all notes, exhibits and schedules thereto and documents
incorporated by reference therein) filed by the Company with the Commission
(such reports, statements, registration statements and other filings,
together with any amendments thereto, being sometimes collectively referred
to as the "Company Commission Filings") and the Company's audited
consolidated financial statements dated September 30, 1994 did not contain,
at the time of the filing thereof, any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which
they were made, not misleading, provided that the Company shall not be
responsible and shall have no liability for information provided to it by
BarCo or Sub for inclusion in any Company Commission Filing. Each of the
audited consolidated financial statements and unaudited interim financial
statements (including any related notes or schedules) included in the Company
Commission Filings was prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and fairly presented
the financial position of the Company and its consolidated Subsidiaries as at
the dates thereof and the results of their operations and changes in
financial position for the periods then ended, subject, in the case of
unaudited interim financial statements, to normal year-end adjustments.
Neither the Company nor any of its Subsidiaries has any liabilities or
obligations on a consolidated basis, either accrued or contingent (to the
extent required to be reflected or disclosed in financial statements in
accordance with generally accepted accounting principles), and whether due or
to become due, which, individually or in the aggregate, (a) have not been
reflected in the audited consolidated balance sheet for the year ended
September 30, 1994 (the "Balance Sheet") or disclosed in the notes to the
audited financial statements relating thereto; or (b) do not consist of
liabilities of the kind specified or
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referred to in the Company's audited financial statements for the fiscal year
ended September 30, 1994 which have been incurred by the Company and its
Subsidiaries in the ordinary course of business since the date thereof,
except for its liabilities or obligations undertaken in connection with this
Agreement.
3.8 CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF CERTAIN CHANGES
AND EVENTS. Except as disclosed in the Company Commission Filings filed as
of the date hereof and the Company's audited consolidated financial
statements for the fiscal year ended September 30, 1994 previously delivered
to BarCo and except for changes affecting the steel bar industry or the
economy generally, since September 30, 1994, there has not been, occurred or
arisen, whether or not in the ordinary course of business:
(a) any material adverse change in the financial condition, results
of operations or business of the Company and its Subsidiaries taken as a
whole; or
(b) any damage or destruction in the nature of a casualty loss,
whether covered by insurance or not, materially and adversely affecting
any property or business of the Company or its Subsidiaries taken as a
whole; or
(c) any declaration, setting aside or payment of a dividend
(whether in cash, stock or property) in respect of the capital stock of
the Company or any of its Subsidiaries (other than a wholly owned
Subsidiary); or
(d) any actual or, to the knowledge of the Company, threatened
strike (whether asserted or unasserted) or other labor trouble or dispute
involving employees of the Company or its Subsidiaries which materially
and adversely affects the financial condition, results of operations or
business of the Company and its Subsidiaries taken as a whole; or
(e) any borrowing or lending of money or guarantee of any obligation
by the Company or any of its Subsidiaries, except in the ordinary course
of business; or
(f) any application, amendment, termination, renewal based on false
and misleading disclosures or failure to renew with respect to, any
agreement or insurance policy which has a material adverse effect on the
financial condition, results of operations or business of the Company and
its Subsidiaries taken as a whole; or
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(g) any disposition of any material (on a consolidated basis)
properties or assets used in the business of the Company or its
Subsidiaries, except sales from inventory made in the ordinary course of
business; or
(h) to the best of the Company's knowledge, any violation of or
conflict with any applicable laws, statutes, orders, rules and regulations
promulgated or judgment entered by any federal, state, county, local or
foreign court or governmental authority which, individually or in the
aggregate, materially and adversely affects the financial condition,
results of operations or business of the Company and its Subsidiaries
taken as a whole; or
(i) except as previously disclosed in writing to BarCo, any notice
of any violation, inquiry or investigation by any governmental authority
that materially and adversely affects the financial condition, results
of operations or business of the Company and its Subsidiaries taken as
a whole.
3.9 PATENTS, TRADEMARKS, ETC. To the best of the Company's knowledge,
the Company or its Subsidiaries have sufficient right, title and interest in
all Intangible Property Rights necessary for the business of the Company and
its Subsidiaries as now conducted, or the Company is able to obtain such
rights on terms which will not adversely affect its business. When used in
this Agreement, the term "Intangible Property Rights" means all United States
and foreign letters patent and pending applications, patent and "know-how"
licenses (or similar agreements), trade name and trademark registrations and
pending applications, service mark registrations and pending applications
and copyright registrations, those trade names and common law trademarks
which are currently in use by the Company or any of its Subsidiaries, and
unregistered copyrights directed to publications in current circulation by
the Company or any of its Subsidiaries now owned in whole or in part by the
Company or any of its Subsidiaries or under which the Company or any of its
Subsidiaries is licensed and the trade secrets and other proprietary
information of the Company and its Subsidiaries.
3.10 TAX MATTERS. Except where the failure of one or more of the
following representations would not have a material adverse effect on the
financial condition, results of operations or business of the Company and its
Subsidiaries taken as a whole: (a) all returns, reports and declarations for
franchise or income taxes required to be filed by the Company and its
Subsidiaries with the Internal Revenue Service and each applicable State have
been so filed; (b) all sales, use or value added taxes or assessments
(including interest and penalties) have been fully paid or adequately
provided for in the audited
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financial statements for the fiscal year ended September 30, 1994, except
where the failure to have so paid or provided for such taxes or assessments
or any other irregularities with respect to such taxes or assessments would
not result in a monetary obligation of the Company or its Subsidiaries in
excess of $25,000 in the aggregate; (c) for tax periods not closed by the
applicable statute of limitations, no issues have been asserted against the
Company or its Subsidiaries in a revenue agent's report or other written
document by the Internal Revenue Service or by any taxing authority in any
State in connection with any of the returns, reports and declarations filed
with the Internal Revenue Service or appropriate governmental agencies in
such State; (d) no waivers of statutes of limitation are currently
outstanding nor are any requests for such waivers pending with respect to the
Company or its Subsidiaries; (e) all required payroll and employment taxes
and withholding of income, employment and payroll taxes attributable to
employees of the Company and its Subsidiaries have been properly determined,
withheld and paid on a timely basis to the appropriate federal, state or
local governmental agency or adequately provided for in the audited financial
statement for the fiscal year ended September 30, 1994; (f) the United States
federal income tax returns in respect to the Company and its Subsidiaries for
the fiscal year ended September 30, 1991 and thereafter have not been
examined by the Internal Revenue Service; nor is any such examination
pending; and (g) neither the Company nor its Subsidiaries has filed any
consent or agreement under section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code") (or corresponding provisions of any applicable
foreign, state, county or local law).
3.11 INSURANCE. The Company maintains insurance policies for the assets
and operations of the Company and its Subsidiaries in amounts deemed adequate
by the Company, in each case issued by insurers of recognized national
standing. True and correct copies of the foregoing policies will be
delivered to BarCo within five (5) business days of the date hereof.
3.12 EMPLOYMENT RELATIONS. There (a) is no unfair labor practice
complaint against the Company pending before the National Labor Relations
Board, (b) is no labor strike, dispute, slowdown or stoppage pending or, to
the best knowledge of the Company, threatened against or involving the
employees of the Company, (c) except as set forth on Schedule 3.12, is no
labor union that claims to represent the employees of the Company, (d) is
pending no grievance that might have a material adverse effect upon the
Company and its Subsidiaries considered as a whole, and no pending
arbitration proceeding arising out of or under any collective bargaining
agreement of the Company and no claim therefor has been asserted which, in
either case, might have a material adverse effect upon the Company and its
Subsidiaries considered as whole, (e) except as set forth on Schedule 3.12,
is no collective bargaining agreement that is in
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effect or is currently being negotiated (or pending) by the Company with
respect to its employees, and (f) has not been any labor difficulty giving
rise to a material adverse effect experienced by the Company and its
Subsidiaries considered as whole during the last three calendar years. To
the best of its knowledge, the Company has not taken or failed to take any
action that could form the basis for a valid claim or charge of an unfair
labor practice or discriminatory employment practice under any federal, state
or local law or regulation relating to labor-management relations or
employment discrimination that could have a material adverse effect on the
Company and its Subsidiaries considered as a whole.
3.13 ENVIRONMENTAL MATTERS.
(a) To the best of its knowledge the Company possesses all necessary
permits, licenses and other approvals and authorizations for its operations
that are required under Environmental Laws and that it is in compliance with
such permits, licenses, approvals and authorizations. "ENVIRONMENTAL LAWS"
means all federal, state and local laws, ordinances, rules and regulations
relating to or regulating human health or safety or environmental matters, or
protection of the environment, or pollution or contamination of the air,
soil, surface water, or groundwater. The Company is and since October 30,
1984 has been in compliance with all applicable Environmental Laws except
where non-compliance would not have a material adverse effect on the
financial condition of the Company and its Subsidiaries considered as a whole.
(b) The Company is not subject to any outstanding order, demand, action
or claim from any person or entity pursuant to, nor has the Company received
any written notice from any person or entity of any violations of or alleged
violations of, any Environmental Law.
(c) Except as disclosed on Schedule 3.13(c), since October 30, 1984, the
Company has not owned or leased storage tanks (whether above ground or
underground).
(d) Since October 30, 1984, the Company has not caused or permitted the
Release of any Hazardous Substance onto and is unaware of any Hazardous
Substance present on the properties owned, operated or leased by the Company.
"HAZARDOUS SUBSTANCE" means those substances as defined by Section 101(14)
of Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), 42 U.S.C. Section 9601(14), and its implementing
regulations or any other applicable Environmental Law. "RELEASE" means any
spilling, leaking, pumping, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment of hazardous
substances into or through soil, air, surface water or groundwater that is
required to be reported pursuant to
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Section 103(a) of CERCLA, 42 U.S.C. Section 9603(a), and its implementing
regulations or any other applicable Environmental Law.
(e) There are no disposal sites for Hazardous Wastes under any
Environmental Law located on the real estate now or previously owned,
occupied or leased by the Company. "HAZARDOUS WASTE" means any waste as
defined by Section 1004(5) of the Resource Conservation and Recovery Act, 42
U.S.C. Section 6903(5), and its implementing regulations. To the best of its
knowledge, and except as disclosed on Schedule 3.13(e) the Company is not
liable or a responsible party or potentially liable or responsible party at
any Superfund site.
ARTICLE 4
COVENANTS
4.1 PROXY STATEMENT. As soon as practicable, the Company shall file
with the Commission under the Exchange Act, and shall use all reasonable
efforts to have cleared by the Commission, and as promptly as practicable
after such clearance shall mail to its stockholders, a proxy statement or
information statement, as appropriate, and all amendments and supplements
thereto required by law (the "Proxy Statement"), with respect to the Special
Meeting (as such term is defined in Section 4.2). Each of BarCo, Sub and the
Company represent that the information supplied or to be supplied for
inclusion by BarCo, Sub or the Company in the Proxy Statement, as the case
may be, will not, at the time the Proxy Statement is filed with the
Commission, at the time it is mailed to stockholders of the Company or at the
time of the Special Meeting be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements therein not misleading. The Proxy Statement shall contain the
recommendation of the Board of Directors that stockholders approve the
Merger; provided, however, that nothing in this Section 4.1 shall require the
Board of Directors to act, or refrain from acting, in any manner which, in
the opinion of the Board of Directors after consultation with its counsel
and/or investment advisors, could subject the Board of Directors to claims
that it failed to properly discharge its fiduciary duties under applicable
law.
4.2 MEETING OF STOCKHOLDERS OF THE COMPANY. As soon as practicable, the
Company shall take all action necessary, in accordance with Delaware Law and
its Certificate of Incorporation and Bylaws, to convene a meeting of its
stockholders (the "Special Meeting") as promptly as practicable to consider
and vote on the Merger and to vote on this Agreement. The stockholder vote or
consent required for approval of the Merger and this Agreement shall be no
greater than that provided for by Delaware Law, the Company's Certificate of
Incorporation or its Bylaws. The Company shall use its best efforts to
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solicit from stockholders of the Company proxies in favor of the approval of
this Agreement and to take all other action necessary or, in the reasonable
judgment of BarCo, helpful to secure a vote of stockholders in favor of the
Merger and to approve this Agreement; provided, however, that nothing in this
section 4.2 shall require the Board of Directors to act, or refrain from
acting, in any manner which, in the opinion of the Board of Directors after
consultation with its counsel and/or investment advisors, could subject the
Board of Directors to claims that it failed to properly discharge its
fiduciary duties under applicable law. At the Special Meeting, BarCo and
each subsidiary of BarCo shall vote, or cause to be voted, all of the Shares
then owned by BarCo or such affiliate in favor of the Merger and this
Agreement. The Company will notify BarCo both orally and in writing at least
24 hours prior to the mailing of the Proxy Statement to the stockholders of
the Company of its intent to mail the Proxy Statement. Anything to the
contrary contained herein notwithstanding, the Company shall not include in
the Proxy Statement any information with respect to BarCo or its affiliates
or associates, the form and content of which information shall not have been
approved by BarCo prior to such inclusion, subject to requirements of
applicable law (but in any event only after the Company has consulted with
BarCo in advance). If required by applicable law, BarCo and the Company
shall file with the Commission and make available to the Company's
stockholders, as required by applicable law, a joint Schedule 13E-3 (the
"Schedule 13E-3") with respect to the Special Meeting and the Merger. Each
of BarCo, Sub and the Company represent that information supplied or to be
supplied for inclusion by BarCo, Sub or the Company, as the case may be, in
any Proxy Statement and the Schedule 13E-3 will not, at the time of the
filing thereof with the Commission and at the time of the mailing thereof to
stockholders and at the date of the Special Meeting, be false or misleading
with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading and BarCo,
Sub and the Company agree promptly to correct any such information provided
by them for use in a Proxy Statement and/or a Schedule 13E-3 which shall have
become false or misleading in any material respect and take all steps
necessary to cause such documents as so corrected to be filed with the
Commission and to be disseminated to holders of Shares, in each case as and
to the extent required by applicable law. The Company agrees that any Proxy
Statement filed by it, and the Company and BarCo agree that any Schedule
13E-3 filed by them, shall comply as to form in all material respects with
the provisions of applicable law.
4.3 ACQUISITION PROPOSALS. The Company and its Subsidiaries shall
not, directly or indirectly, through any officer, director, agent or
otherwise, solicit, initiate or encourage submission of proposals or offers
from any person relating to any acquisition or purchase of all or
substantially all of the assets of, or any equity interest in, the Company or
any of its
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Subsidiaries or any merger, consolidation or business combination with the
Company or any of its Subsidiaries, or participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any other person to do
or seek any of the foregoing. Notwithstanding the foregoing, however,
nothing in this Section 4.3 shall require the Board of Directors to act, or
refrain from acting, in any manner which, in the opinion of the Board of
Directors after consultation with its counsel and/or investment advisors,
could subject the Board of Directors to claims that it failed to properly
discharge its fiduciary duties under applicable law. The Company shall
promptly notify BarCo if any such proposal or offer, or any inquiry or
contact with any person with respect thereto, is made.
4.4 INTERIM OPERATIONS. During the period from the date of this
Agreement to the Effective Time, except as specifically contemplated by this
Agreement or otherwise as consented to or approved in writing by BarCo:
(a) The business of the Company and each of its Subsidiaries
shall be conducted only in the ordinary and usual course of business
and consistent with past practice;
(b) The Company shall use reasonable efforts to preserve
intact the business organization of the Company and each of its
Subsidiaries, to keep available the services of its and their
present officers and key employees in good standing, and to
preserve the goodwill of those having business relationships
with it and its Subsidiaries;
(c) Neither the Company nor any Subsidiary shall amend its
charter documents or similar governing documents;
(d) Except for Shares issuable upon exercise of currently
outstanding stock options under the Company's Directors' Stock
Option Plan and Employees' Incentive Stock Option Plan or issuable
pursuant to the Company's Directors' Deferred Compensation Plan,
neither the Company nor any Subsidiary shall authorize for issuance,
issue or deliver any additional debt or equity securities or any
class or series thereof or any securities convertible into the same
or issue or grant any right, option or other commitment for the
issuance of any of the foregoing securities;
(e) Neither the Company nor any Subsidiary shall split, combine,
reclassify or otherwise modify the
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terms and provisions of any of its debt or equity securities or declare, set
aside or pay any dividend (whether in cash, stock or property) in respect of
its debt or equity securities or redeem or otherwise acquire any of its debt
or equity securities except as contemplated hereby;
(f) Neither the Company nor any Subsidiary shall dispose of or
acquire any material properties or assets except in the ordinary course
of business;
(g) Neither the Company nor any Subsidiary shall enter into or
amend any consulting agreements or other agreements with employees,
increase the compensation payable or to become payable by it to any of
its officers, employees or agents over the amount payable as of the
date of this Agreement, adopt or amend any employee benefit plan or
arrangement, or make any advances to employees (other than advances for
reimbursable expenses) except with respect to any of the above, such as
are generally consistent with the Company's existing guidelines and are
made in the ordinary course of business; provided, however, the Company
shall be authorized to negotiate and execute the renewal of the union
contract or contracts at its Harvey, Illinois facility with such terms
as the Company, using its commercially reasonable judgment, may
determine;
(h) Neither the Company nor any Subsidiary shall borrow or enter
into any agreements to borrow money or guarantee or agree to guarantee
the obligations of others, excluding (i) any amounts borrowed, net of
any repayments, in the ordinary course of business pursuant to and in
accordance with the terms and conditions of its existing lines of
credit as the same may be reasonably amended, modified or extended
hereafter by the Company using its commercially reasonable judgment and
(ii) guarantees, net of the extinguishment of any existing guarantees,
of the debt of the Subsidiaries of the Company;
(i) Except as contemplated hereby, neither the Company nor any
Subsidiary shall directly or indirectly redeem, purchase or otherwise
acquire, commit to acquire or change the terms of any of its debt or
equity securities or any class or series thereof or any securities
convertible into the same or directly or indirectly terminate or reduce
or commit to terminate or reduce any bank line of credit or the
availability of any funds under any other loan or financing agreement;
provided, however, that the Company or any Subsidiary may exercise any
option or
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right to repurchase securities issued pursuant to a Company
or Subsidiary benefit plan at a price at or below the Merger
Consideration for Shares; and provided, further, that the Company may
borrow under existing credit facilities under the terms existing as of
the date hereof as the same may be reasonably amended, modified or
extended hereafter by the Company using its commercially reasonable
judgment;
(j) Neither the Company nor any Subsidiary shall fail to pay or
otherwise satisfy its monetary obligations as they become due, except
where the consequences of failure to pay are not material to the
Company and its Subsidiaries considered as a whole;
(k) Neither the Company nor any Subsidiary shall cancel,
materially amend or fail to renew any insurance policy; and
(l) Neither the Company nor any Subsidiary shall agree in
writing or otherwise to take any of the foregoing actions set forth in
clauses (b) through (k) above or take any actions which would make any
representation or warranty in this Agreement untrue or incorrect in
any material respect.
4.5 ACCESS AND INFORMATION.
(a) Subject to and in accordance with the terms of those certain
letters dated July 24, 1995 and July 28, 1995 between BarCo and the Company
(the "Confidentiality Agreement"), relating to the exchange of information
between the parties and certain other matters, the Company has previously
afforded (and will afford prior to the termination of this Agreement) to
BarCo and to BarCo's accountants, counsel and other representatives full
access in a reasonable manner throughout the period prior to the Effective
Time to all of its properties, books, contracts, commitments and records, and
has furnished (and will furnish) to BarCo and BarCo's accountants, counsel
and other representatives all information concerning its business, properties
and personnel, including certain proprietary and confidential information of
the disclosing party, as BarCo has requested (or may reasonably request).
The Company shall furnish BarCo with drafts of any proposed filings with the
Commission as the same are distributed internally within the Company as well
as copies of such reports and documents concurrently upon their filing with
the Commission.
(b) Any furnishing of information pursuant hereto or any investigation
by either party shall not affect that party's right to rely on the
representations and warranties made by the other party in this Agreement.
Except as otherwise provided by law, BarCo, the Company and Sub each agrees
to maintain all
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information received pursuant to the terms of this Agreement and the
Confidentiality Agreement in accordance with the terms and conditions of
the Confidentiality Agreement.
(c) In the event that between the date hereof and the Effective Date
any federal, state, local or foreign governmental authority shall commence
any examination, review, investigation, action, suit or proceeding against
the Company or BarCo with respect to the Merger, the party as to which such
examination, review, investigation, action, suit or proceeding is commenced
shall give prompt notice thereof to the other party, shall keep the other
party informed as to the status thereof and have access to and be consulted
in connection with any document filed or provided to such governmental
authority in connection with such examination, review, investigation, action,
suit or proceeding.
4.6 CERTAIN ACTIONS, FILINGS AND CONSENTS. 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 to
consummate and make effective the transactions contemplated by this
Agreement, including using all reasonable efforts promptly to obtain all
necessary waivers, consents and approvals and effect all necessary
registrations and filings, including, but not limited to, (a) filings under
the Hart-Scott Act, including responses to requests for additional
information, and (b) submissions of information requested by government
authorities. Each of the parties hereto shall cooperate with one another in
determining whether any filings are required to be made or consents,
approvals, permits or authorizations are required to be obtained under any
other federal, state or foreign law or regulation or any consents, approvals
or waivers are required to be obtained from other parties to loan agreements
or other contracts material to the Company's business in connection with the
consummation of the Merger and in making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such consents, permits, authorizations, approvals or waivers; provided,
however, that nothing in this Section 4.6 shall require the Board of
Directors to act, or refrain from acting, in any manner which, in the opinion
of the Board of Directors after consultation with its counsel and/or
investment advisors, could subject the Board of Directors to claims that it
failed to properly discharge its fiduciary duties under applicable law.
4.7 EXPENSES. Except as set forth in Section 6.2, whether or not the
transactions contemplated by this Agreement are consummated and made
effective, all expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
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4.8 OPINION OF COUNSEL. Two (2) business days prior to the Effective
Date, BarCo and Sub shall have received from Wildman, Harrold, Allen &
Dixon, counsel to the Company, an opinion, dated the date of delivery,
reasonably satisfactory to BarCo and Sub, substantially to the effect of
Section 3.2.
4.9 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION. (a) With
respect to all losses, claims, damages or liabilities arising out of actions
or omissions occurring at or prior to the Effective Time (collectively
"Losses") arising under Environmental Laws, until the death of all
Indemnified Parties (as defined below), and (b) with respect to all other
Losses, until the later of (i) five (5) years after the Effective Time or
(ii) the final resolution of all Losses and payment of all expenses described
below, BarCo shall, and shall cause the Sub, the Company and the Surviving
Corporation to, jointly and severally, indemnify, defend and hold harmless
the present and former officers and directors of the Company and present and
former officers and directors of the Subsidiaries who presently would be
indemnified under the Bylaws of the Company or its Subsidiaries or who have
indemnity agreements with the Company and the estates, descendants, heirs and
beneficiaries of the estates, of all such officers and directors (an
"Indemnified Party" and collectively the "Indemnified Parties") against all
Losses to the full extent permitted under and in accordance with Delaware
law, or the law of the jurisdictions under which the Subsidiaries are
incorporated, as appropriate, or the Certificate of Incorporation or Bylaws
of the Company or the Subsidiaries, as applicable, or applicable
indemnification agreements in effect at the date hereof (to the extent
consistent with applicable law), including provisions relating to advances of
expenses incurred in the defense of any action or suit. BarCo shall use its
best efforts to include the Indemnified Parties in any directors' and
officers' insurance policy BarCo may obtain, provided the additional cost of
adding the Indemnified Parties does not equal or exceed the cost of such
officers' and directors' insurance policy without the Indemnified Parties.
4.10 BEST EFFORTS. Each of BarCo and Sub shall use its best efforts to
consummate the transactions contemplated hereby, including the Financing, as
defined in Section 5.2 below.
4.11 RESALE. Sub agrees that, if prior to the first anniversary of the
date of this Agreement, Sub or any assignee of Sub, the Company or the
Surviving Corporation enters into an agreement to (i) sell or exchange all or
substantially all of the Common Stock of the Company or the Surviving
Corporation to or with, (ii) merge or consolidate the Company or the
Surviving Corporation with, or (iii) sell substantially all the assets of the
Company or the Surviving Corporation to, an unaffiliated third party, Sub or
any assignee of Sub, the Company and the Surviving Corporation will jointly
promptly use their commer-
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cially reasonable efforts to jointly promptly pay each stockholder of the
Company whose Shares were converted pursuant to Section 1.3(a) hereof
(including any stockholder that enters into a Stock Option Agreement with
BarCo and Sub as provided in such Stock Option Agreement), each option holder
entitled to payment under Section 1.3(e) hereof and each person entitled to
payment under Section 1.3(f) hereof an amount equal to fifty percent (50%) of
the product of (y) the difference between the Aggregate Transaction Value (as
defined below) for such subsequent transaction and $55,000,000 and (z) a
fraction, the numerator of which is the number equal to the total of (A) the
number of Shares of the stockholder of the Company whose Shares were
converted pursuant to Section 1.3(a) hereof, plus (B) the number of Shares
covered by stock options for which such person (or an option holder not
included in (A) of this clause) was entitled to payment under Section 1.3(e),
plus (C) the number of Share equivalents for which such person (or a
participant in the Directors' Deferred Compensation Plan not included in (A)
of this clause) was entitled to payment under Section 1.3(f) and the
denominator of which is the number equal to the total of (1) the number of
Shares issued and outstanding as of the Effective Time plus (2) the number of
Shares underlying stock options for which the option holder is entitled to
payment under Section 1.3(e) hereof plus (3) the number of Share equivalents
for which the participant under the Directors' Deferred Compensation Plan is
entitled to payment under Section 1.3(f) hereof. For the purposes of this
Section 4.11, "Aggregate Transaction Value" shall mean the sum of the
aggregate consideration received by the sellers in the transaction (reduced
by the present value of any future or contingent obligations retained by the
sellers) plus the aggregate liabilities assumed by the acquiring party in the
transaction. If the consideration received by the Sub or any assignee of the
Sub, the Company or the Surviving Corporation is other than cash, the amount
due the stockholder under this Section 4.11 may be paid in like kind
consideration or in cash.
ARTICLE 5
CONDITIONS
5.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The respective
obligations of each party hereto under this Agreement to consummate the
Merger shall be subject to the fulfillment at or prior to the Effective Time
of the following conditions:
(a) APPROVAL OF STOCKHOLDERS. The approval of the stockholders of the
Company referred to in Section 4.2 shall have been obtained, if required by
applicable law or by the Company's Certificate of Incorporation or Bylaws.
(b) LEGAL PROCEEDINGS. No preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission nor any
statute, rule,
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regulation or executive order promulgated or enacted by any governmental
authority shall be in effect, which would prevent the consummation of the
Merger; provided, however, that the parties shall use their best efforts to
seek to obtain the removal of any such order, decree or ruling.
(c) ANTITRUST. The Hart-Scott Act waiting period has expired.
5.2 ADDITIONAL CONDITION TO THE OBLIGATIONS OF BARCO AND SUB. The
obligations of BarCo and Sub under this Agreement to consummate the Merger
shall be subject to the following condition: BarCo shall have consummated a
debt financing raising a minimum of $50,000,000 (the "Financing") by December
29, 1995.
5.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company under this Agreement to consummate the Merger
shall be subject to the following conditions: the fairness opinion issued by
the Company's investment advisors shall be re-confirmed as of the Effective
Time; and the Company shall have received a letter or letters from a
valuation firm acceptable to the Company (which acceptance shall not be
unreasonably withheld) as to the solvency of the Company and its Subsidiaries
and the Surviving Corporation on a consolidated basis after giving effect to
BarCo's proposed Financing and the transactions contemplated by this
Agreement.
ARTICLE 6
MISCELLANEOUS
6.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether or not it has been approved by the stockholders
of the Company:
(a) By the mutual written consent of a majority of the Board of
Directors of the Company and the Board of Directors of BarCo;
(b) By BarCo:
(i) if the Company shall have (A) withdrawn or modified
publicly its approval or recommendation of this Agreement or the Merger
including by the approval of any offer by any other person or (B) taken
any public position inconsistent with such approval or recommendation
or failed to reconfirm publicly such approval or recommendation within
ten (10) business days of a request for such reconfirmation by BarCo or
Sub; or if the Board of Directors shall have resolved to do any of the
foregoing; or
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(ii) if any corporation, partnership, person, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act) other than
BarCo or Sub or any of their respective subsidiaries shall have become
the beneficial owner of forty-five percent (45%) or more of the Shares;
or
(iii) if Stelco Inc. shall have taken any legal action, or taken
any actions or engaged in transactions which have or in the reasonable
judgment of Purchaser will have the effect of preventing the Merger or
the transactions contemplated hereby from being consummated on or
before December 29, 1995, other than failing to vote for the
transaction; or
(iv) if a tender or exchange offer shall have been commenced by
any third party to acquire twenty percent (20%) or more of the capital
stock of the Company at a price in excess of $7.75 per share; or
(v) if on the date hereof or at any time prior to the Effective
Date, the representation and warranty of the Company contained in
Section 3.13 shall not be true and correct or the Company shall have
breached in any material respect or failed to perform in any material
respect any of its obligations, covenants or agreements under this
Agreement or any of the representations and warranties of the Company
set forth in this Agreement (other than the representation and warranty
contained in Section 3.13) shall not be true and correct in any
material respect; or
(vi) if as of December 29, 1995 BarCo shall not have raised a
minimum of $50,000,000 in a debt financing; or
(vii) if in BarCo's reasonable discretion the results of BarCo's
environmental due diligence review of the Company are unsatisfactory
and BarCo has so notified the Company within three (3) weeks from the
date hereof; or
(viii) the conditions to the obligations of BarCo set forth in
Article 5 have not been satisfied;
(c) By the Company:
(i) if the Closing shall not have taken place by December 29,
1995; or
(ii) if BarCo shall not have received a "highly confident" letter
substantially in the form of Annex I hereto within 3 weeks after the
date hereof; or
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(iii) if the Board of Directors has determined, in its opinion
after consultation with its counsel and/or its investment advisors,
that its failure to terminate this Agreement could subject the Board of
Directors to claims that it failed to properly discharge its fiduciary
duties under applicable law; or
(iv) if the conditions to the obligations of the Company set
forth in Article 5 have not been satisfied; or
(v) if on the date hereof or at any time prior to the
consummation of the Merger or any amendment or extension thereof, the
representations and warranties of BarCo and Sub contained in this
Agreement shall not be true and correct which shall materially impair
BarCo's or Sub's ability to perform this Agreement or BarCo and Sub
shall have breached in any material respect or failed to perform in any
material respect any of their obligations, covenants or agreements
under this Agreement which shall materially impair BarCo's or the Sub's
ability to perform this Agreement;
(d) By either BarCo or the Company:
(i) if a court of competent jurisdiction or a governmental,
regulatory or administrative agency or commission shall have issued an
order, decree or ruling or taken any other action, in each case
restraining, enjoining or otherwise prohibiting the Merger which is
still in effect on December 29, 1995; or
(ii) if the Merger shall not have been consummated on or before
December 29, 1995, which date may be extended by the mutual written
consent of the Board of Directors of the Company and the Board of
Directors of BarCo; or
(iii) if Stelco Inc. shall have exercised all of its rights of
first refusal under Section 3.3 of that certain Bliss & Laughlin Right
of First Refusal and Standstill Agreement dated May 11, 1990 with
respect to all shares of Common Stock of the Company of the Management
Stockholders (as such term is defined in such agreement).
In the event of such termination and abandonment, no party to this
Agreement (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, other than pursuant
to Section 4.5(c) or 6.2 hereof, or in the case of signers thereto, the Stock
Option Agreement and the Confidentiality Agreement, except that nothing
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herein will relieve any party from liability for any breach of this Agreement
prior to such termination.
6.2 EXPENSE AND CANCELLATION PAYMENT.
(a) If BarCo or Purchaser shall have terminated this Agreement pursuant
to Section 6.1(b)(iii) or (iv) or the Company shall have terminated this
Agreement pursuant to Section 6.1(c)(iii) hereof, then the Company shall
promptly pay Purchaser a cash cancellation fee (the "Cancellation Fee") of
one million dollars ($1,000,000) plus reimbursement for all out-of-pocket
expenses and fees incurred by Purchaser, BarCo or their affiliates or on
their behalf in connection with the Merger and the transactions contemplated
by this Agreement (provided that the amount of such expense reimbursement
shall not exceed four hundred thousand dollars ($400,000)).
(b) Each of the parties acknowledges that the agreement contained in
this Section 6.2 is an integral part of the transactions contemplated in this
Agreement, and that, without the agreement, BarCo and Purchaser would not
enter into this Agreement; accordingly, if the Company fails promptly to pay
the amount due pursuant to this Section 6.2, and, in order to obtain such
payment, BarCo or Purchaser commences a suit against the Company to collect
the fee provided for herein, the Company shall pay to BarCo or Purchaser its
reasonable costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest on the amount of such fee
at the prime rate publicly announced by Bank of America NT & SA on the date
such payment was required to be made, provided that BarCo or Purchaser
ultimately prevails by final judgment in such suit.
6.3 WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party which is, or whose stockholders are, entitled
to the benefits hereof and this Agreement may be amended or supplemented at
any time; provided, however, that, (a) any such waiver, amendment or
supplement by the Company shall be effective as against the Company only if
approved by a majority of the Board of Directors of the Company and (b) after
this Agreement has been adopted by the stockholders of the Company, no such
amendment shall reduce the amount or change the consideration to be paid to
the stockholders or alter or change any of the terms or conditions of this
Agreement if such alteration or change would adversely affect the
stockholders of the Company. No such waiver, amendment or supplement shall
be effective unless in writing and signed by the party or parties sought to
be bound thereby.
6.4 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement shall survive the
consummation of the Merger.
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6.5 AGREEMENT TO DEFEND. In the event any claim, action, suit,
investigation or any legal, administrative or other proceeding is commenced
by any governmental body or other person which questions the validity or
legality of the transactions contemplated by this Agreement, or seeks to
enjoin, restrain or prohibit such transactions, or seeks damages in
connection therewith, whether before or after the Effective Time, the parties
hereto agree as determined by their respective Boards of Directors in their
reasonable discretion, to the fullest extent permissible by law, to cooperate
and use their best efforts to vigorously defend against and respond thereto.
6.6 BROKERAGE FEES AND COMMISSIONS. Except for The Chicago
Corporation, the Company hereby represents and warrants to BarCo and Sub with
respect to the Company, and BarCo and Sub hereby represent and warrant to the
Company with respect to BarCo and Sub, that no person or entity is entitled
to receive from the Company or BarCo or Sub, respectively, any investment
banking, brokerage or finder's fee or fees for financial consulting or
financial advisory services in connection with this Agreement or the
transactions contemplated hereby.
6.7 PUBLIC ANNOUNCEMENTS. Neither BarCo nor Sub nor the Company will
issue any press release or otherwise make any public statement with respect
to the Merger without the prior approval of the other party (which approval
shall not be unreasonably withheld), except such as may be required by law or
by obligations pursuant to any listing agreement with any national securities
exchange or by NASDAQ (but only after BarCo, Sub or the Company, as the case
may be, shall have consulted with the other party in advance regarding the
form and substance of such press release or statement).
6.8 SECTION HEADINGS. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement.
6.9 FIDUCIARY DUTIES. Anything in this Agreement to the contrary
notwithstanding, nothing in this Agreement shall require the Board of
Directors to act, or refrain from acting, in the future in any manner which,
in the opinion of the Board of Directors after consultation with its counsel
and/or investment advisors, could subject the Board of Directors to claims
that it failed to properly discharge its fiduciary duties under applicable
law.
6.10 NOTICES. All notices or other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, postage prepaid, with
return receipt requested, addressed as follows:
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If to BarCo or Sub, to: BRW Steel Corporation
c/o Veritas Capital, Inc.
Ten East Fiftieth Street
New York, NY 10022
Attention: Co-Chairman
With copies to: Pillsbury Madison & Sutro
1050 Connecticut Avenue, NW, #1200
Washington, DC 20036
Attention: Ken M. Brown
If to the Company, to: Bliss & Laughlin Industries Inc.
281 East 155th Street
Harvey, IL 60426
Attention: President
With copies to: Company's Counsel
Wildman, Harrold, Allen & Dixon
225 West Wacker Drive, #3000
Chicago, IL 60606
Attention: Roger G. Fein
6.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of
which together shall be deemed to be one and the same instrument.
6.12 APPLICABLE LAW. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to the conflict of laws rules
thereof.
6.13 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, of the
parties with
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<PAGE>
respect to such subject matter (other than the Confidentiality Agreement).
6.14 JURISDICTION. Any judicial proceeding brought against any of the
parties to this Agreement with respect to any dispute arising out of this
Agreement or any matter related hereto may be brought in the courts of the
State of Illinois located in Chicago, Illinois, or in the United States
District Courts in Chicago, Illinois, and, by execution and delivery of this
Agreement, each of the parties to this Agreement accepts the exclusive
jurisdiction of such courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. The foregoing
consents shall not constitute general consents to service of process in the
State of Illinois for any purpose except as provided above and shall not be
deemed to confer rights to any Person other than the respective parties to
this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the date first above
written.
BRW STEEL CORPORATION
By
------------------------------------
--------------------
President and
Chief Executive Officer
B & L ACQUISITION CORPORATION
By
------------------------------------
Its
-----------------------------------
BLISS & LAUGHLIN INDUSTRIES INC.
By
------------------------------------
--------------------------
President, Chief Executive
Officer and
Chairman of the Board
<PAGE>
STOCKHOLDER ESCROW AGREEMENT
THIS STOCKHOLDER ESCROW AGREEMENT, dated as of September 19, 1995, by
and among the person listed on Schedule A hereto ("Stockholder"), B & L
ACQUISITION CORPORATION, a Delaware corporation ("Purchaser") and a wholly
owned subsidiary of BRW Steel Corporation, a Delaware corporation, and
LaSalle National Trust, N.A. as escrow agent (the "Escrow Agent"),
RECITALS:
A. The Stockholder and the Purchaser have entered into a Stock Option
Agreement, dated as of September 16, 1995 (the "Option Agreement"), providing
for the sale by the Stockholder to the Purchaser of the Shares (as defined in
the Option Agreement) upon the exercise by Purchaser of the Stock Option as
such terms are defined in the Option Agreement. The closing or closings
pursuant to the Option Agreement (a "Closing") will take place at such times
and dates designated by Purchaser in accordance with the terms of the Option.
The Option Agreement requires that upon the execution of the Option
Agreement, the Stockholder shall deliver to the Escrow Agent the number of
Shares set forth opposite the Stockholder's name on Schedule A hereto, by
delivery of certificates therefor with stock powers endorsed in blank and
with signatures guaranteed and such other documents as may be reasonably
necessary to transfer record ownership of the Shares to Purchaser. Such
Shares and any certificates, stock powers, other documents and confirmations
are referred to herein as the "Share Documents."
B. This Escrow Agreement is the Escrow Agreement referred to in the
Option Agreement and is intended to implement certain provisions of the
Option Agreement. The Escrow Agent is not a party to the Option Agreement,
is not bound by any of its terms and shall not be required to refer to the
Option Agreement for any instructions. Terms not defined herein shall have
the meaning given to them in the Option Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. DELIVERY OF SHARE DOCUMENTS.
(a) Contemporaneously with the execution and delivery of this Escrow
Agreement, Stockholder has delivered to the Escrow Agent all of the Share
Documents for the number of shares of Common Stock of Bliss & Laughlin
Industries Inc. ("the Company") set forth opposite Stockholder's name on
Schedule A hereto, duly executed, necessary to convey the number of Shares
set forth on Schedule B hereto to Purchaser. The receipt of the Share
Documents is hereby acknowledged by the Escrow Agent. Any certificates
representing the Shares held by the Escrow Agent
-1-
<PAGE>
shall continue to be registered in the name of the Stockholder or his/her
nominees, and Stockholder shall continue to have the right to vote such
Shares, until such time as such Shares are released from escrow and delivered
to Purchaser pursuant to the Option Agreement and this Escrow Agreement.
(b) The Escrow Agent shall hold the Share Documents in escrow upon the
terms and subject to the conditions set forth in this Escrow Agreement.
(c) As soon as practicable after receipt of the Share Documents, the
Escrow Agent, who is also acting as the transfer agent (the "Transfer
Agent"), shall (i) issue, release and distribute a share certificate to
Stockholder for the number of Shares remaining after subtraction of the
number of Shares set forth on Schedule B hereto opposite the Stockholder's
name from the number of shares of Common Stock of the Company set forth on
Schedule A hereto opposite the Stockholder's name, which share certificate
shall contain the legends set forth in Exhibit A hereto and (ii) issue a
share certificate for the number of Shares set forth on Schedule B hereto
opposite the Stockholder's name, which shall contain the legends set forth in
Exhibit B hereto (the "Option Shares Certificate").
2. RELEASE OF SHARE DOCUMENTS AND PURCHASE PRICE.
(a) Subject to the provisions of this Section 2, the Escrow Agent shall
hold the Option Shares Certificate and any Share Documents related thereto in
its possession until delivery to Purchaser at an Option Closing pursuant
Section 2(b) hereof, or delivery to Stockholder pursuant to Section 2(c)
hereof or delivery to Stelco Inc. pursuant to Section 2(d) hereof.
(b) Purchaser shall give written notice to the Escrow Agent and
Stockholder of its election to exercise the Stock Option, in whole. Such
notice shall state the number of Shares (the "Exercised Option Shares") to be
purchased, the Purchase Price and the place, date and time of the Closing
regarding such Shares. Stockholder shall give Escrow Agent and Purchaser
written notice within two business days of receipt of Purchaser's notice if
the Purchase Price specified in the Purchaser's notice is incorrect. Each of
Escrow Agent and Purchaser shall notify each other within two business days
if either receives such notice from Stockholder. If no such notice is
received from Stockholder or Purchaser, at each Closing with respect to the
exercise of the Stock Option (an "Option Closing") and upon receipt from
Purchaser of a certified or bank check payable to Stockholder in the amount
of the Purchase Price, or upon such payment by wire transfer as provided in
the Option Agreement (the "Payment"), for the Exercised Option Shares to be
purchased at such Option Closing, the Escrow Agent shall release and
distribute (i) to the Purchaser the Option Shares Certificate and any Share
Documents related thereto and (ii) the Payment to Stockholder for the
Exercised Option Shares.
-2-
<PAGE>
(c) In the event that Stockholder and Purchaser jointly notify the
Escrow Agent in writing that the Option Agreement has expired or been
terminated or that the Escrow Agreement has been terminated, then the Escrow
Agent shall, except as set forth in Section 2(d) below, within one business
day of receipt of such written notice, release and return all Share Documents
in its possession to Stockholder.
(d) If the Option Agreement is terminated and the Escrow Agent receives
notice from Purchaser that under Section 14 of the Option Agreement the
cancellation fee and expenses are owed by the Stockholder to Purchaser, the
Escrow Agent shall not release and return the Option Shares Certificate or
any Share Documents related thereto until the Stockholder and the Purchaser
jointly notify the Escrow Agent that the cancellation fee and expenses have
been paid in full. If the Escrow Agent receives notice from Purchaser and
Stockholder that Stelco Inc. has exercised its rights to purchase the Shares
pursuant to the First Refusal Agreement, the Escrow Agent shall deliver the
Shares to Stelco Inc. in exchange for payment thereof in accordance with the
terms of the First Refusal Agreement and Escrow Agent shall disburse to
Purchaser the cancellation fee and expenses due Purchaser from Stockholder
pursuant to the Stock Option Agreement with the remainder to the Stockholder.
If the cancellation fee and expenses have not been paid in full within five
(5) business days of the due date of the cancellation fee and expenses under
the Option Agreement, upon request from the Purchaser the Escrow Agent shall
sell the Shares and distribute proceeds therefrom (after paying all expenses
and fees of the Escrow Agent in connection with such sale) first to the
Purchaser in an amount equal to the amount owed under Section 14 of the
Option Agreement, and second the remainder thereof to the Stockholder. The
Stockholder agrees that any such sale if made on the open market by a
licensed broker-dealer will be commercially reasonable.
3. SETTLEMENT OF DISPUTES. Any dispute which may arise under the
Escrow Agreement with respect to the rights of the parties hereto or the
duties of the Escrow Agent hereunder shall be settled either by mutual
agreement of the parties concerned (evidenced by appropriate instructions in
writing to the Escrow Agent, signed by the Stockholder and the Purchaser) or
by a final order, decree or judgment of a court of competent jurisdiction in
the United States of America (the time for appeal having expired and no
appeal having been perfected), all costs and expenses of which shall be borne
equally by the Stockholder and the Purchaser. If a dispute arises between
any of the parties to this Escrow Agreement, Escrow Agent shall be entitled
at its option to tender into the register or custody of any court of
competent jurisdiction all money, property or Share Documents in its hands
under this Escrow Agreement and to begin such legal proceedings as it deems
appropriate. After taking such actions, Escrow Agent shall then be
discharged from any further duties and liability under this Escrow Agreement.
The
-3-
<PAGE>
Escrow Agent shall be under no duty whatsoever to institute or defend any
such proceedings.
4. CONCERNING THE ESCROW AGENT.
(a) The fee of the Escrow Agent for its services provided hereunder
shall be its customary fees for such services, payable on delivery of the
escrow. The payment of all fees, disbursements, expenses and advances
charged by the Escrow Agent shall be borne by the Purchaser except as set
forth in Section 2(d) above.
(b) The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving notice of such resignation to both the
Stockholder and the Purchaser specifying a date not less than ten business
days following the date of such notice when such resignation shall take
effect. Upon such notice, a successor escrow agent, which shall be a
national bank, shall be selected by the Purchaser, subject to the reasonable
approval of the Stockholder, such successor escrow agent to become the Escrow
Agent hereunder upon the resignation date specified in such notice. If the
Purchaser and the Stockholder are unable to agree upon a successor escrow
agent within ten business days after the date of such notice, the Escrow
Agent shall be entitled to appoint its successor, which shall be a national
bank. The Escrow Agent shall continue to serve until its successor accepts
the escrow and receives the Share Documents. The Purchaser, subject to the
reasonable approval of the Stockholder, may at any time substitute a new
Escrow Agent, which shall be a national bank, by giving notice thereof to the
Escrow Agent then acting.
(c) The Escrow Agent undertakes to perform only such duties as are
specifically set forth herein and may conclusively rely upon, and shall be
protected in acting or refraining from acting on, any written notice,
instrument or signature believed by it to be genuine and to have been signed
or presented by the proper party or parties duly authorized to do so. The
Escrow Agent shall have no responsibility for the contents of any writing
contemplated herein and may rely without any liability upon the contents
thereof. Notwithstanding anything to the contrary in this Escrow Agreement,
where Escrow Agent is required to take action upon delivery by the
Stockholder or the Purchaser (or both of them) of a notice, certificate or
instructions to the Escrow Agent, the Escrow Agent shall not be obligated to
take any action until the appropriate party (or parties) has acted by
delivering the certificate, notice or instructions to the Escrow Agent (none
of which shall be binding upon the Escrow Agent unless in writing) as to the
action to be taken hereunder indicating in writing that a copy of such
certificate, notice or instructions has been delivered to the other party.
The Stockholder and the Purchaser acknowledge that the Escrow Agent is bound
only by the terms of this Escrow Agreement and that the Escrow Agent shall
not be required to use
-4-
<PAGE>
its discretion with respect to any matter that is the subject of
this Escrow Agreement or with respect to instructions received
under this Escrow Agreement.
(d) The Escrow Agent shall not be liable for any action or omission in
good faith believed by it to be authorized hereby or within the rights or
powers conferred upon it hereunder, nor for action or omission in good faith
and in accordance with advice of outside counsel (which counsel may be of the
Escrow Agent's own choosing), and shall not be liable for any mistakes of
fact or error of judgment or for any acts or omissions of any kind unless
caused by its own willful misconduct or gross negligence.
(e) Except as set forth in the next sentence, the Purchaser and its
respective successors and assigns will indemnify and hold harmless Escrow
Agent against any and all losses, claims, damages, liabilities and expenses,
including reasonable costs of investigation, counsel fees and disbursements
that may be imposed on Escrow Agent or incurred by Escrow Agent in connection
with its acceptance of appointment or the performance of its duties under
this Escrow Agreement, including any litigation arising from this Escrow
Agreement or involving its subject matter, except as a result of Escrow
Agent's own gross negligence or willful misconduct. The Stockholder and its
respective successors and assigns will indemnify and hold harmless Escrow
Agent against any and all losses, claims, damages, liabilities and expenses,
including reasonable costs of investigation, counsel fees and disbursements
that may be imposed on Escrow Agent or incurred by Escrow Agent in connection
with or arising out of Section 2(d) of this Escrow Agreement, including any
litigation arising therefrom or involving its subject matter, except as a
result of Escrow Agent's own gross negligence or willful misconduct.
Notwithstanding the preceding two sentences, if a court finally determines
that any party hereto acted unreasonably in failing to give a notice or
acknowledgment hereunder, such party shall indemnify the Escrow Agent
pursuant to this clause (e) and the other party hereto shall be relieved of
any obligation to indemnify the Escrow Agent pursuant to this clause (e) to
the extent that such failure to act reasonably causes the Escrow Agent to
incur any losses, claims, damages, liabilities and expenses, including
reasonable costs, fees and disbursements referred to in the first sentence of
this clause (e), for which the Escrow Agent is entitled to indemnification
pursuant to this clause (e). Such indemnity shall survive the termination or
discharge of this Escrow Agreement or resignation of the Escrow Agent.
5. REMEDIES. Notwithstanding any provision in this Escrow Agreement to
the contrary, the parties agree that Purchaser would be irreparably damaged
if the Escrow Agent refused to deliver certificates representing any of the
Shares upon exercise of the Stock Option in accordance with the terms and
conditions of this Escrow Agreement or if the Escrow Agent
-5-
<PAGE>
refused to perform any of the Escrow Agent's other obligations under this
Escrow Agreement in accordance with the terms and conditions of the Escrow
Agreement, and that Purchaser would not have an adequate remedy at law for
money damages in such event. Accordingly, the Purchaser shall be entitled to
specific performance and injunctive and other equitable relief to enforce the
performance hereof by the Stockholder and the Escrow Agent. This provision is
without prejudice to any other rights that the Purchaser may have against the
Stockholder or the Escrow Agent for any failure to perform their respective
obligations under this Escrow Agreement. Notwithstanding any provision in
this Escrow Agreement to the contrary, the parties further agree that
Stockholder would be irreparably damaged if the Escrow Agent refused to
deliver the Purchase Price upon exercise of the Stock Option in accordance
with the terms and conditions of this Escrow Agreement or if the Escrow Agent
refused to perform any of the Escrow Agent's other obligations under this
Escrow Agreement in accordance with the terms and conditions of the Escrow
Agreement, and that Stockholder would not have an adequate remedy at law for
money damages in such event. Accordingly, the Stockholder shall be entitled
to specific performance and injunctive and other equitable relief to enforce
the performance hereof by the Purchaser and the Escrow Agent. This provision
is without prejudice to any other rights that the Stockholder may have
against the Purchaser or the Escrow Agent for any failure to perform their
respective obligations under this Escrow Agreement.
6. ENTIRE AGREEMENT; ASSIGNMENT; AMENDMENT. This Escrow Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings,
both written and oral, of the parties with respect to such subject matter
other than the Option Agreement. Purchaser may assign its rights and
obligations hereunder to any wholly-owned affiliate of Purchaser or BRW
Steel Corporation (an "Assignee"). This Escrow Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto.
7. VALIDITY. The invalidity or unenforceability of any provision of
this Escrow Agreement shall not affect the validity or enforceability of any
other provisions of this Escrow Agreement, which shall remain in full force
and effect.
8. NOTICES. Wherever this Escrow Agreement requires notice by any of
the parties, such notice shall not be unreasonably withheld. All notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be given (and shall be deemed duly given upon receipt) by
personal delivery, by cable, telegram or telex, or by mail (registered or
certified mail, postage prepaid, return receipt requested) to the respective
parties as follows:
-6-
<PAGE>
If to the Stockholder, to the address set forth with respect
to the Stockholder on Schedule C hereto
With a copy to: Bliss & Laughlin Industries Inc.
281 East 155th Street
Harvey, IL 60426
Attention: President
and:
Wildman, Harrold, Allen & Dixon
225 West Wacker Drive, #3000
Chicago, IL 60606
Attention: Roger G. Fein
If to Purchaser, to: B & L Acquisition Corporation
c/o BRW Steel Corporation
4 Northshore Center
Pittsburgh, PA 15212
Attention: President
with a copy to:
Ken M. Brown, Esq.
Pillsbury Madison & Sutro
1050 Connecticut Avenue, NW, #1200
Washington, DC 20037
If to Escrow Agent, to: LaSalle National Trust, N.A.
135 South LaSalle Street, Room 200
Chicago, IL 60603
or to such other person or address as any party may have furnished to the
others in writing in accordance herewith; provided, however, that notice of
change of address shall be effective only upon receipt. The Stockholder and
the Purchaser agree that each will timely provide to the other a copy of any
notice which it shall send to the Escrow Agent hereunder.
9. GOVERNING LAW. This Escrow Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware,
without reference to principles of conflicts of laws.
10. DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Escrow Agreement.
11. PARTIES IN INTEREST. This Escrow Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Escrow Agreement, express or implied, is intended to confer upon any other
person or entity any rights or remedies of any nature whatsoever under or by
reason of this Escrow Agreement.
-7-
<PAGE>
12. COUNTERPARTS. This Escrow Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
13. JURISDICTION. Any judicial proceeding brought against any of the
parties to this Agreement with respect to any dispute arising out of this
Agreement or any matter related hereto may be brought in the courts of the
State of Illinois located in Chicago, Illinois, or in the United States
District Courts in Chicago, Illinois, and, by execution and delivery of this
Agreement, each of the parties to this Agreement accepts the exclusive
jurisdiction of such courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. The foregoing
consents shall not constitute general consents to service of process in the
State of Illinois for any purpose except as provided above and shall not be
deemed to confer rights to any Person other than the respective parties to
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed and delivered on the date first written above.
B & L ACQUISITION CORPORATION
By
---------------------------------
Title
---------------------------------
Name
---------------------------------
STOCKHOLDER
---------------------------------------
ESCROW AGENT
By
---------------------------------
Title
---------------------------------
Name
---------------------------------
-8-
<PAGE>
FORM OF SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Gregory H. Parker ............................................... 279,729
Roger G. Fein, as Trustee of the Gregory H.
Parker Irrevocable Family Trust under Trust
Agreement dated October 31, 1988 .......................... 150,000
F. Elizabeth Parker ............................................. 50,000
Anthony J. Romanovich ........................................... 157,532
Barbara A. Romanovich ........................................... 53,000
George W. Fleck ................................................ 141,892
Joan E. Fleck .................................................. 50,000
Gerald E. Brady ................................................. 70,281
Carole A. Brady ................................................. 45,000
William P. Daugherty, as Trustee of the
William P. Daugherty Trust dated May 11, 1989 .............. 65,281
Ellen L. Daugherty, as Trustee of the
Ellen L. Daugherty Trust dated May 11, 1989 ................ 50,000
Michael A. DeBias ............................................... 115,281
Chester J. Pucilowski ........................................... 58,281
Geraldine Pucilowski ............................................ 57,000
Richard M. Bogdon ............................................... 42,200
Phyllis Bogdon .................................................. 20,000
Carl H. Laib .................................................... 57,641
Richard W. Ressler .............................................. 57,641
---------
TOTAL ...................................................... 1,520,759
=========
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Roger G. Fein, as Trustee of the Gregory H.
Parker Irrevocable Family Trust under Trust
Agreement dated October 31, 1988 .......................... 150,000
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
F. Elizabeth Parker ............................................. 50,000
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Anthony J. Romanovich ........................................... 157,532
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Barbara A. Romanovich ........................................... 53,000
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
George W. Fleck ................................................ 141,892
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Joan E. Fleck .................................................. 50,000
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Gerald E. Brady ................................................. 70,281
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Carole A. Brady ................................................. 45,000
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
William P. Daugherty, as Trustee of the
William P. Daugherty Trust dated May 11, 1989 .............. 65,281
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Ellen L. Daugherty, as Trustee of the
Ellen L. Daugherty Trust dated May 11, 1989 ................ 50,000
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Michael A. DeBias ............................................... 115,281
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Chester J. Pucilowski ........................................... 58,281
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Geraldine Pucilowski ............................................ 57,000
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Richard M. Bogdon ............................................... 42,200
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Phyllis Bogdon .................................................. 20,000
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Carl H. Laib .................................................... 57,641
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Richard W. Ressler .............................................. 57,641
<PAGE>
FORM OF SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Gregory H. Parker ................................................ 142,380*
Roger G. Fein, as Trustee of the Gregory H.
Parker Irrevocable Family Trust under Trust
Agreement dated October 31, 1988 .......................... 76,349
F. Elizabeth Parker ............................................. 25,450
Anthony J. Romanovich ........................................... 80,183
Barbara A. Romanovich ........................................... 26,976
George W. Fleck ................................................ 72,222
Joan E. Fleck .................................................. 25,450
Gerald E. Brady ................................................. 35,773
Carole A. Brady ................................................. 22,905
William P. Daugherty, as Trustee of the
William P. Daugherty Trust dated May 11, 1989 .............. 33,228
Ellen L. Daugherty, as Trustee of the
Ellen L. Daugherty Trust dated May 11, 1989 ................ 25,450
Michael A. DeBias ............................................... 58,677
Chester J. Pucilowski ........................................... 29,665
Geraldine Pucilowski ............................................ 29,013
Richard M. Bogdon ............................................... 21,480
Phyllis Bogdon .................................................. 10,180
Carl H. Laib .................................................... 29,339
Richard W. Ressler .............................................. 29,339
-------
TOTAL ...................................................... 774,059
=======
* Mr. Parker has agreed to place an additional 58,678 Shares
into escrow pending receipt by the Escrow Agent of the Shares of
William P. Daugherty and Ellen L. Daugherty.
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Roger G. Fein, as Trustee of the Gregory H.
Parker Irrevocable Family Trust under Trust
Agreement dated October 31, 1988 .......................... 76,349
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
F. Elizabeth Parker ............................................. 25,450
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Anthony J. Romanovich ........................................... 80,183
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Barbara A. Romanovich ........................................... 26,976
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
George W. Fleck ................................................ 72,222
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Joan E. Fleck .................................................. 25,450
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Gerald E. Brady ................................................. 35,773
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Carole A. Brady ................................................. 22,905
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
William P. Daugherty, as Trustee of the
William P. Daugherty Trust dated May 11, 1989 .............. 33,228
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Ellen L. Daugherty, as Trustee of the
Ellen L. Daugherty Trust dated May 11, 1989 ................ 25,450
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Michael A. DeBias ............................................... 58,677
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Chester J. Pucilowski ........................................... 29,665
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Geraldine Pucilowski ............................................ 29,013
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Richard M. Bogdon ............................................... 21,480
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Phyllis Bogdon .................................................. 10,180
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Carl H. Laib .................................................... 29,339
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Richard W. Ressler .............................................. 29,339
<PAGE>
FORM OF SCHEDULE C
Gregory H. Parker
20091 Tam O Shanter
Olympia Fields, IL 60461
F. Elizabeth Parker
20091 Tam O Shanter
Olympia Fields, IL 60461
Roger G. Fein, as Trustee of the Gregory H. Parker Irrevocable
Trust dated October 31, 1988
225 West Wacker Drive #3000
Chicago, IL 60606
Anthony J. Romanovich
2530 Glen Eagles Drive
Olympia Fields, IL 60461
Barbara A. Romanovich
2530 Glen Eagles Drive
Olympia Fields, IL 60461
George W. Fleck
1109 Brassie
Flossmoor, IL 60422
Joan E. Fleck
1109 Brassie
Flossmoor, IL 60422
Gerald E. Brady
1745 Winola Court
Naperville, IL 60565
Carole A. Brady
1745 Winola Court
Naperville, IL 60565
William P. Daugherty, as Trustee of the William P. Daugherty
Trust dated May 11, 1989
3452 Huntington Terrace
Crete, IL 60417
Ellen L. Daugherty, as Trustee of the Ellen L. Daugherty Trust
dated May 11, 1989
3452 Huntington Terrace
Crete, IL 60417
Michael A. DeBias
7132 West 64th Place
Chicago, IL 60638
-1-
<PAGE>
Richard M. Bogdon
2029 Dorchester Lane
Schererville, IN 46375
Phyllis Bogdon
2029 Dorchester Lane
Schererville, IN 46375
Carl H. Laib
11588 96th Avenue
St. John, IN 46373
Richard W. Ressler
5156 Andrus Avenue
North Olmsted, OH 44070
Chester J. Pucilowski
860 Smokerise Drive
Medina, OH 44256
Geraldine Pucilowski
860 Smokerise Drive
Medina, OH 44256
-2-
<PAGE>
SCHEDULE C
F. Elizabeth Parker
20091 Tam O Shanter
Olympia Fields, IL 60461
<PAGE>
SCHEDULE C
Roger G. Fein, as Trustee of the Gregory H. Parker Irrevocable
Trust dated October 31, 1988
225 West Wacker Drive #3000
Chicago, IL 60606
<PAGE>
SCHEDULE C
Anthony J. Romanovich
2530 Glen Eagles Drive
Olympia Fields, IL 60461
<PAGE>
SCHEDULE C
Barabara A. Romanovich
2530 Glen Eagles Drive
Olympia Fields, IL 60461
<PAGE>
SCHEDULE C
George W. Fleck
1109 Brassie
Flossmoor, IL 60422
<PAGE>
SCHEDULE C
Joan E. Fleck
1109 Brassie
Flossmoor, IL 60422
<PAGE>
SCHEDULE C
Gerald E. Brady
1745 Winola Court
Naperville, IL 60565
<PAGE>
SCHEDULE C
Carole A. Brady
1745 Winola Court
Naperville, IL 60565
<PAGE>
SCHEDULE C
William P. Daugherty, as Trustee of the William P. Daugherty
Trust dated May 11, 1989
3452 Huntington Terrace
Crete, IL 60417
<PAGE>
SCHEDULE C
Ellen L. Daugherty, as Trustee of the Ellen L. Daugherty Trust
dated May 11, 1989
3452 Huntington Terrace
Crete, IL 60417
<PAGE>
SCHEDULE C
Michael A. DeBias
7132 West 64th Place
Chicago, IL 60638
<PAGE>
SCHEDULE C
Richard M. Bogdon
2029 Dorchester Lane
Schererville, IN 46375
<PAGE>
SCHEDULE C
Phyllis Bogdon
2029 Dorchester Lane
Schererville, IN 46375
<PAGE>
SCHEDULE C
Carl H. Laib
11588 96th Avenue
St. John, IN 46373
<PAGE>
SCHEDULE C
Richard W. Ressler
5156 Andrus Avenue
North Olmsted, OH 44070
<PAGE>
SCHEDULE C
Chester J. Pucilowski
860 Smokerise Drive
Medina, OH 44256
<PAGE>
SCHEDULE C
Geraldine Pucilowski
860 Smokerise Drive
Medina, OH 44256
<PAGE>
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A PRIVATE
PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND IN
RELIANCE UPON THE HOLDER'S REPRESENTATION THAT SUCH SECURITIES WERE BEING
ACQUIRED FOR INVESTMENT AND NOT FOR RESALE. NO TRANSFER OF SUCH SECURITIES
MAY BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER MAY PROPERLY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR THAT SUCH SECURITIES
HAVE BEEN SO REGISTERED UNDER A REGISTRATION STATEMENT WHICH IS IN EFFECT AT
THE DATE OF SUCH TRANSFER.
THIS CERTIFICATE AND THE SHARES OF STOCK EVIDENCED HEREBY ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND STANDSTILL
AGREEMENT DATED AS OF MAY 11, 1990, BY AND AMONG THE COMPANY AND CERTAIN OF
THE SHAREHOLDERS THEREOF, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY, REFERENCE TO ALL THE TERMS AND CONDITIONS THEREOF BEING
HEREBY MADE, AND NO SALE, TRANSFER, ENCUMBRANCE, OR OTHER DISPOSITION OF THE
SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE MAY BE EFFECTED EXCEPT
PURSUANT TO THE TERMS AND CONDITIONS OF SAID AGREEMENT.
<PAGE>
EXHIBIT B
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A PRIVATE
PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND IN
RELIANCE UPON THE HOLDER'S REPRESENTATION THAT SUCH SECURITIES WERE BEING
ACQUIRED FOR INVESTMENT AND NOT FOR RESALE. NO TRANSFER OF SUCH SECURITIES
MAY BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER MAY PROPERLY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR THAT SUCH SECURITIES
HAVE BEEN SO REGISTERED UNDER A REGISTRATION STATEMENT WHICH IS IN EFFECT AT
THE DATE OF SUCH TRANSFER.
THIS CERTIFICATE AND THE SHARES OF STOCK EVIDENCED HEREBY ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND STANDSTILL
AGREEMENT DATED AS OF MAY 11, 1990, BY AND AMONG THE COMPANY AND CERTAIN OF
THE SHAREHOLDERS THEREOF, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY, REFERENCE TO ALL THE TERMS AND CONDITIONS THEREOF BEING
HEREBY MADE, AND NO SALE, TRANSFER, ENCUMBRANCE, OR OTHER DISPOSITION OF THE
SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE MAY BE EFFECTED EXCEPT
PURSUANT TO THE TERMS AND CONDITIONS OF SAID AGREEMENT.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCK OPTION AGREEMENT, DATED AS OF SEPTEMBER 16, 1995, WITH B & L
ACQUISITION CORPORATION AND BRW STEEL CORPORATION.
<PAGE>
STOCKHOLDER ESCROW AGREEMENT
THIS STOCKHOLDER ESCROW AGREEMENT, dated as of September 19, 1995, by
and among the person listed on Schedule A hereto ("Stockholder"), B & L
ACQUISITION CORPORATION, a Delaware corporation ("Purchaser") and a wholly
owned subsidiary of BRW Steel Corporation, a Delaware corporation, and
LaSalle National Trust, N.A. as escrow agent (the "Escrow Agent"),
RECITALS:
A. The Stockholder and the Purchaser have entered into a Stock Option
Agreement, dated as of September 16, 1995 (the "Option Agreement"), providing
for the sale by the Stockholder to the Purchaser of the Shares (as defined in
the Option Agreement) upon the exercise by Purchaser of the Stock Option as
such terms are defined in the Option Agreement. The closing or closings
pursuant to the Option Agreement (a "Closing") will take place at such times
and dates designated by Purchaser in accordance with the terms of the Option.
The Option Agreement requires that upon the execution of the Option
Agreement, the Stockholder shall deliver to the Escrow Agent the number of
Shares set forth opposite the Stockholder's name on Schedule A hereto, by
delivery of certificates therefor with stock powers endorsed in blank and
with signatures guaranteed and such other documents as may be reasonably
necessary to transfer record ownership of the Shares to Purchaser. Such
Shares and any certificates, stock powers, other documents and confirmations
are referred to herein as the "Share Documents."
B. This Escrow Agreement is the Escrow Agreement referred to in the
Option Agreement and is intended to implement certain provisions of the
Option Agreement. The Escrow Agent is not a party to the Option Agreement,
is not bound by any of its terms and shall not be required to refer to the
Option Agreement for any instructions. Terms not defined herein shall have
the meaning given to them in the Option Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. DELIVERY OF SHARE DOCUMENTS.
(a) Contemporaneously with the execution and delivery of this Escrow
Agreement, Stockholder has delivered to the Escrow Agent all of the Share
Documents for the number of shares of Common Stock of Bliss & Laughlin
Industries Inc. ("the Company") set forth opposite Stockholder's name on
Schedule A hereto, duly executed, necessary to convey the number of Shares
set forth on Schedule B hereto to Purchaser. The receipt of the Share
Documents is hereby acknowledged by the Escrow Agent. Any certificates
representing the Shares held by the Escrow Agent shall continue to be
registered in the name of the Stockholder or his/her nominees, and
Stockholder shall continue to have the
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<PAGE>
right to vote such Shares, until such time as such Shares are released
from escrow and delivered to Purchaser pursuant to the Option Agreement and
this Escrow Agreement.
(b) The Escrow Agent shall hold the Share Documents in escrow upon the
terms and subject to the conditions set forth in this Escrow Agreement.
(c) As soon as practicable upon receipt of the Share Documents, the
Escrow Agent, who is also acting as the transfer agent (the "Transfer
Agent"), shall (i) issue, release and distribute a share certificate to
Stockholder for the number of Shares remaining after subtraction of the
number of Shares set forth on Schedule B hereto opposite the Stockholder's
name from the number of shares of Common Stock of the Company set forth on
Schedule A hereto opposite the Stockholder's name, which share certificate
shall contain the legends set forth in Exhibit A hereto, (ii) issue a share
certificate for the number of Shares set forth on Schedule B hereto opposite
the Stockholder's name, which shall contain the legends set forth in Exhibit
B hereto (the "Option Shares Certificate") and (iii) issue, release and
distribute such share certificates as may be required pursuant to Section
2(e) hereof.
2. RELEASE OF SHARE DOCUMENTS AND PURCHASE PRICE.
(a) Subject to the provisions of this Section 2, the Escrow Agent shall
hold the Option Shares Certificate and any Share Documents related thereto in
its possession until delivery to Purchaser at an Option Closing pursuant to
Section 2(b) hereof, or delivery to Stockholder pursuant to Section 2(c)
hereof or delivery to Stelco Inc. pursuant to Section 2(d) hereof.
(b) Purchaser shall give written notice to the Escrow Agent and
Stockholder of its election to exercise the Stock Option, in whole. Such
notice shall state the number of Shares (the "Exercised Option Shares") to be
purchased, the Purchase Price and the place, date and time of the Closing
regarding such Shares. Stockholder shall give Escrow Agent and Purchaser
written notice within two business days of receipt of Purchaser's notice if
the Purchase Price specified in the Purchaser's notice is incorrect. Each of
Escrow Agent and Purchaser shall notify each other within two business days
if either receives such notice from Stockholder. If no such notice is
received from Stockholder or Purchaser, at each Closing with respect to the
exercise of the Stock Option (an "Option Closing") and upon receipt from
Purchaser of a certified or bank check payable to Stockholder in the amount
of the Purchase Price, or upon such payment by wire transfer as provided in
the Option Agreement (the "Payment"), for the Exercised Option Shares to be
purchased at such Option Closing, the Escrow Agent shall release and
distribute (i) to the Purchaser the Option Shares Certificate and any Share
Documents related thereto and (ii) the Payment to Stockholder for the
Exercised Option Shares.
-2-
<PAGE>
(c) In the event that Stockholder and Purchaser jointly notify the
Escrow Agent in writing that the Option Agreement has expired or been
terminated or that the Escrow Agreement has been terminated, then the Escrow
Agent shall, except as set forth in Section 2(d) below, within one business
day of receipt of such written notice, release and return all Share Documents
in its possession to Stockholder.
(d) If the Option Agreement is terminated and the Escrow Agent receives
notice from Purchaser that under Section 14 of the Option Agreement the
cancellation fee and expenses are owed by the Stockholder to Purchaser, the
Escrow Agent shall not release and return the Option Shares Certificate or
any Share Documents related thereto until the Stockholder and the Purchaser
jointly notify the Escrow Agent that the cancellation fee and expenses have
been paid in full. If the Escrow Agent receives notice from Purchaser and
Stockholder that Stelco Inc. has exercised its rights to purchase the Shares
pursuant to the First Refusal Agreement, the Escrow Agent shall deliver the
Shares to Stelco Inc. in exchange for payment thereof in accordance with the
terms of the First Refusal Agreement and Escrow Agent shall disburse to
Purchaser the cancellation fee and expenses due Purchaser from Stockholder
pursuant to the Stock Option Agreement with the remainder to the Stockholder.
If the cancellation fee and expenses have not been paid in full within five
(5) business days of the due date of the cancellation fee and expenses under
the Option Agreement, upon request from the Purchaser the Escrow Agent shall
sell the Shares and distribute proceeds therefrom (after paying all expenses
and fees of the Escrow Agent in connection with such sale) first to the
Purchaser in an amount equal to the amount owed under Section 14 of the
Option Agreement, and second the remainder thereof to the Stockholder. The
Stockholder agrees that any such sale if made on the open market by a
licensed broker-dealer will be commercially reasonable.
(e) Of the 201,058 Shares held in escrow by the Stockholder pursuant to
Schedule B, 58,678 Shares shall be released by the Escrow Agent and
distributed to Stockholder immediately upon the receipt by Escrow Agent of an
original signed Escrow Agreement and certificates representing 33,228 Shares
and 25,450 Shares, respectively, from stockholders William P. Daugherty, as
Trustee of the William P. Daugherty Trust dated May 11, 1989 and Ellen L.
Daugherty, as Trustee of the Ellen L. Daugherty Trust dated May 11, 1989.
3. SETTLEMENT OF DISPUTES. Any dispute which may arise under the
Escrow Agreement with respect to the rights of the parties hereto or the
duties of the Escrow Agent hereunder shall be settled either by mutual
agreement of the parties concerned (evidenced by appropriate instructions in
writing to the Escrow Agent, signed by the Stockholder and the Purchaser) or
by a final order, decree or judgment of a court of competent jurisdiction in
the United States of America (the time for appeal having expired and no
appeal having been perfected), all costs and expenses of which shall be borne
equally by the Stockholder
-3-
<PAGE>
and the Purchaser. If a dispute arises between any of the parties to this
Escrow Agreement, Escrow Agent shall be entitled at its option to tender into
the register or custody of any court of competent jurisdiction all money,
property or Share Documents in its hands under this Escrow Agreement and to
begin such legal proceedings as it deems appropriate. After taking such
actions, Escrow Agent shall then be discharged from any further duties and
liability under this Escrow Agreement. The Escrow Agent shall be under no
duty whatsoever to institute or defend any such proceedings.
4. CONCERNING THE ESCROW AGENT.
(a) The fee of the Escrow Agent for its services provided hereunder
shall be its customary fees for such services, payable on delivery of the
escrow. The payment of all fees, disbursements, expenses and advances
charged by the Escrow Agent shall be borne by the Purchaser except as set
forth in Section 2(d) above.
(b) The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving notice of such resignation to both the
Stockholder and the Purchaser specifying a date not less than ten business
days following the date of such notice when such resignation shall take
effect. Upon such notice, a successor escrow agent, which shall be a
national bank, shall be selected by the Purchaser, subject to the reasonable
approval of the Stockholder, such successor escrow agent to become the Escrow
Agent hereunder upon the resignation date specified in such notice. If the
Purchaser and the Stockholder are unable to agree upon a successor escrow
agent within ten business days after the date of such notice, the Escrow
Agent shall be entitled to appoint its successor, which shall be a national
bank. The Escrow Agent shall continue to serve until its successor accepts
the escrow and receives the Share Documents. The Purchaser, subject to the
reasonable approval of the Stockholder, may at any time substitute a new
Escrow Agent, which shall be a national bank, by giving notice thereof to the
Escrow Agent then acting.
(c) The Escrow Agent undertakes to perform only such duties as are
specifically set forth herein and may conclusively rely upon, and shall be
protected in acting or refraining from acting on, any written notice,
instrument or signature believed by it to be genuine and to have been signed
or presented by the proper party or parties duly authorized to do so. The
Escrow Agent shall have no responsibility for the contents of any writing
contemplated herein and may rely without any liability upon the contents
thereof. Notwithstanding anything to the contrary in this Escrow Agreement,
where Escrow Agent is required to take action upon delivery by the
Stockholder or the Purchaser (or both of them) of a notice, certificate or
instructions to the Escrow Agent, the Escrow Agent shall not be obligated to
take any action until the appropriate party (or parties) has acted by
delivering the certificate, notice or instructions to the Escrow Agent (none
of which shall be binding
-4-
<PAGE>
upon the Escrow Agent unless in writing) as to the action to be taken
hereunder indicating in writing that a copy of such certificate, notice or
instructions has been delivered to the other party. The Stockholder and the
Purchaser acknowledge that the Escrow Agent is bound only by the terms of
this Escrow Agreement and that the Escrow Agent shall not be required to use
its discretion with respect to any matter that is the subject of this Escrow
Agreement or with respect to instructions received under this Escrow
Agreement.
(d) The Escrow Agent shall not be liable for any action or omission in
good faith believed by it to be authorized hereby or within the rights or
powers conferred upon it hereunder, nor for action or omission in good faith
and in accordance with advice of outside counsel (which counsel may be of the
Escrow Agent's own choosing), and shall not be liable for any mistakes of
fact or error of judgment or for any acts or omissions of any kind unless
caused by its own willful misconduct or gross negligence.
(e) Except as set forth in the next sentence, the Purchaser and its
respective successors and assigns will indemnify and hold harmless Escrow
Agent against any and all losses, claims, damages, liabilities and expenses,
including reasonable costs of investigation, counsel fees and disbursements
that may be imposed on Escrow Agent or incurred by Escrow Agent in connection
with its acceptance of appointment or the performance of its duties under
this Escrow Agreement, including any litigation arising from this Escrow
Agreement or involving its subject matter, except as a result of Escrow
Agent's own gross negligence or willful misconduct. The Stockholder and its
respective successors and assigns will indemnify and hold harmless Escrow
Agent against any and all losses, claims, damages, liabilities and expenses,
including reasonable costs of investigation, counsel fees and disbursements
that may be imposed on Escrow Agent or incurred by Escrow Agent in connection
with or arising out of Section 2(d) of this Escrow Agreement, including any
litigation arising therefrom or involving its subject matter, except as a
result of Escrow Agent's own gross negligence or willful misconduct.
Notwithstanding the preceding two sentences, if a court finally determines
that any party hereto acted unreasonably in failing to give a notice or
acknowledgment hereunder, such party shall indemnify the Escrow Agent
pursuant to this clause (e) and the other party hereto shall be relieved of
any obligation to indemnify the Escrow Agent pursuant to this clause (e) to
the extent that such failure to act reasonably causes the Escrow Agent to
incur any losses, claims, damages, liabilities and expenses, including
reasonable costs, fees and disbursements referred to in the first sentence of
this clause (e), for which the Escrow Agent is entitled to indemnification
pursuant to this clause (e). Such indemnity shall survive the termination or
discharge of this Escrow Agreement or resignation of the Escrow Agent.
5. REMEDIES. Notwithstanding any provision in this Escrow Agreement to
the contrary, the parties agree that Purchaser
-5-
<PAGE>
would be irreparably damaged if the Escrow Agent refused to deliver
certificates representing any of the Shares upon exercise of the Stock Option
in accordance with the terms and conditions of this Escrow Agreement or if
the Escrow Agent refused to perform any of the Escrow Agent's other
obligations under this Escrow Agreement in accordance with the terms and
conditions of the Escrow Agreement, and that Purchaser would not have an
adequate remedy at law for money damages in such event. Accordingly, the
Purchaser shall be entitled to specific performance and injunctive and other
equitable relief to enforce the performance hereof by the Stockholder and the
Escrow Agent. This provision is without prejudice to any other rights that
the Purchaser may have against the Stockholder or the Escrow Agent for any
failure to perform their respective obligations under this Escrow Agreement.
Notwithstanding any provision in this Escrow Agreement to the contrary, the
parties further agree that Stockholder would be irreparably damaged if the
Escrow Agent refused to deliver the Purchase Price upon exercise of the Stock
Option in accordance with the terms and conditions of this Escrow Agreement
or if the Escrow Agent refused to perform any of the Escrow Agent's other
obligations under this Escrow Agreement in accordance with the terms and
conditions of the Escrow Agreement, and that Stockholder would not have an
adequate remedy at law for money damages in such event. Accordingly, the
Stockholder shall be entitled to specific performance and injunctive and
other equitable relief to enforce the performance hereof by the Purchaser and
the Escrow Agent. This provision is without prejudice to any other rights
that the Stockholder may have against the Purchaser or the Escrow Agent for
any failure to perform their respective obligations under this Escrow
Agreement.
6. ENTIRE AGREEMENT; ASSIGNMENT; AMENDMENT. This Escrow Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings,
both written and oral, of the parties with respect to such subject matter
other than the Option Agreement. Purchaser may assign its rights and
obligations hereunder to any wholly-owned affiliate of Purchaser or BRW
Steel Corporation (an "Assignee"). This Escrow Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto.
7. VALIDITY. The invalidity or unenforceability of any provision of
this Escrow Agreement shall not affect the validity or enforceability of any
other provisions of this Escrow Agreement, which shall remain in full force
and effect.
8. NOTICES. Wherever this Escrow Agreement requires notice by any of
the parties, such notice shall not be unreasonably withheld. All notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be given (and shall be deemed duly given upon receipt) by
personal delivery, by cable, telegram or telex, or by mail
-6-
<PAGE>
(registered or certified mail, postage prepaid, return receipt requested) to
the respective parties as follows:
If to the Stockholder, to the address set
forth with respect to the Stockholder on
Schedule C hereto
With a copy to: Bliss & Laughlin Industries Inc.
281 East 155th Street
Harvey, IL 60426
Attention: President
and: Wildman, Harrold, Allen & Dixon
225 West Wacker Drive, #3000
Chicago, IL 60606
Attention: Roger G. Fein
If to Purchaser, to: B & L Acquisition Corporation
c/o BRW Steel Corporation
4 Northshore Center
Pittsburgh, PA 15212
Attention: President
with a copy to: Ken M. Brown, Esq.
Pillsbury Madison & Sutro
1050 Connecticut Avenue, NW, #1200
Washington, DC 20037
If to Escrow Agent, to: LaSalle National Trust, N.A.
135 South LaSalle Street, Room 200
Chicago, IL 60603
or to such other person or address as any party may have furnished to the
others in writing in accordance herewith; provided, however, that notice of
change of address shall be effective only upon receipt. The Stockholder and
the Purchaser agree that each will timely provide to the other a copy of any
notice which it shall send to the Escrow Agent hereunder.
9. GOVERNING LAW. This Escrow Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware,
without reference to principles of conflicts of laws.
10. DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Escrow Agreement.
11. PARTIES IN INTEREST. This Escrow Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Escrow Agreement, express or implied, is intended to confer upon any other
person or entity any rights or remedies of any nature whatsoever under or by
reason of this Escrow Agreement.
-7-
<PAGE>
12. COUNTERPARTS. This Escrow Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
13. JURISDICTION. Any judicial proceeding brought against any of the
parties to this Agreement with respect to any dispute arising out of this
Agreement or any matter related hereto may be brought in the courts of the
State of Illinois located in Chicago, Illinois, or in the United States
District Courts in Chicago, Illinois, and, by execution and delivery of this
Agreement, each of the parties to this Agreement accepts the exclusive
jurisdiction of such courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. The foregoing
consents shall not constitute general consents to service of process in the
State of Illinois for any purpose except as provided above and shall not be
deemed to confer rights to any Person other than the respective parties to
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed and delivered on the date first written above.
B & L ACQUISITION CORPORATION
By
-------------------------------------
Title
----------------------------------
Name
----------------------------------
STOCKHOLDER
---------------------------------------
ESCROW AGENT
By
-------------------------------------
Title
----------------------------------
Name
----------------------------------
-8-
<PAGE>
SCHEDULE A
Name of Stockholder Number of Shares
- ------------------- ----------------
Gregory H. Parker ................................................... 279,729
<PAGE>
SCHEDULE B
Name of Stockholder Number of Shares
- ------------------- ----------------
Gregory H. Parker ................................................... 142,380*
* Mr. Parker has agreed to place an additional 58,678 Shares into escrow
pending receipt by the Escrow Agent of the Shares of William P. Daugherty and
Ellen L. Daugherty.
<PAGE>
SCHEDULE C
Gregory H. Parker
20091 Tam O Shanter
Olympia Fields, IL 60461
<PAGE>
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A PRIVATE
PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND IN
RELIANCE UPON THE HOLDER'S REPRESENTATION THAT SUCH SECURITIES WERE BEING
ACQUIRED FOR INVESTMENT AND NOT FOR RESALE. NO TRANSFER OF SUCH SECURITIES
MAY BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER MAY PROPERLY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR THAT SUCH SECURITIES
HAVE BEEN SO REGISTERED UNDER A REGISTRATION STATEMENT WHICH IS IN EFFECT AT
THE DATE OF SUCH TRANSFER.
THIS CERTIFICATE AND THE SHARES OF STOCK EVIDENCED HEREBY ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND STANDSTILL
AGREEMENT DATED AS OF MAY 11, 1990, BY AND AMONG THE COMPANY AND CERTAIN OF
THE SHAREHOLDERS THEREOF, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY, REFERENCE TO ALL THE TERMS AND CONDITIONS THEREOF BEING
HEREBY MADE, AND NO SALE, TRANSFER, ENCUMBRANCE, OR OTHER DISPOSITION OF THE
SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE MAY BE EFFECTED EXCEPT
PURSUANT TO THE TERMS AND CONDITIONS OF SAID AGREEMENT.
<PAGE>
EXHIBIT B
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A PRIVATE
PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND IN
RELIANCE UPON THE HOLDER'S REPRESENTATION THAT SUCH SECURITIES WERE BEING
ACQUIRED FOR INVESTMENT AND NOT FOR RESALE. NO TRANSFER OF SUCH SECURITIES
MAY BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER MAY PROPERLY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR THAT SUCH SECURITIES
HAVE BEEN SO REGISTERED UNDER A REGISTRATION STATEMENT WHICH IS IN EFFECT AT
THE DATE OF SUCH TRANSFER.
THIS CERTIFICATE AND THE SHARES OF STOCK EVIDENCED HEREBY ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND STANDSTILL
AGREEMENT DATED AS OF MAY 11, 1990, BY AND AMONG THE COMPANY AND CERTAIN OF
THE SHAREHOLDERS THEREOF, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY, REFERENCE TO ALL THE TERMS AND CONDITIONS THEREOF BEING
HEREBY MADE, AND NO SALE, TRANSFER, ENCUMBRANCE, OR OTHER DISPOSITION OF THE
SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE MAY BE EFFECTED EXCEPT
PURSUANT TO THE TERMS AND CONDITIONS OF SAID AGREEMENT.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCK OPTION AGREEMENT, DATED AS OF SEPTEMBER 16, 1995, WITH B & L
ACQUISITION CORPORATION AND BRW STEEL CORPORATION.
