SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
JANUARY 29, 1997
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
HAYNES INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 333-5411 06-118540
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER
INCORPORATION) IDENTIFICATION NUMBER)
1020 WEST PARK AVENUE 46904-9013
KOKOMO, INDIANA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (317) 456-6000
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2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Haynes Holdings, Inc., a Delaware corporation (the "Company"), and Haynes
International, Inc., a Delaware corporation ("Registrant"), entered into a
Stock Purchase Agreement on January 24, 1997 with Blackstone Capital Partners
II Merchant Banking Fund L.P., a Delaware limited partnership ("Blackstone"),
and two of Blackstone's affiliates (together with Blackstone, the
"Purchasers"), pursuant to which the Purchasers purchased from the Company on
January 29, 1997 (the "Closing") shares of the Company's common stock, $0.01
par value ("Holdings Common Stock"), representing approximately 79.9% of the
shares of Holdings Common Stock outstanding after giving effect to all of the
redemptions of Holdings Common Stock described herein at a purchase price of
$10.15 per share in cash (the "Purchase Transaction").
In connection with the Purchase Transaction, the Company entered into (a)
a Stock Redemption Agreement dated as of January 24, 1997 (the "Fund
Redemption Agreement"), with MLGA Fund II, L.P., a Connecticut limited
partnership and the majority stockholder of the Company prior to the Closing
(the "Fund"), and MLGAL Partners, L.P., a Connecticut limited partnership and
the general partner of the Fund ("MLGAL"), (b) an Exercise and Repurchase
Agreement dated as of January 24, 1997 (the "Management Redemption Agreement")
with the Management Holders (as defined herein), (c) the Redemption Offer (as
defined herein), (d) an Amended Stockholders Agreement (as defined herein) and
(e) a Loan Agreement Amendment (as defined herein). Also, in connection with
the Purchase Transaction Registrant paid fees to an affiliate of the
Purchasers in the amount of $2,300,000, to PaineWebber Incorporated, the
investment banker for the Purchasers, in the amount of $1,250,000, and to
MLGAL in the amount of $1,750,000.
The effect of the transactions referred to above is to transfer control
of the Company and Registrant from the Fund to the Purchasers, to permit the
existing stockholders to sell a majority of their shares of Holdings Common
Stock for cash at a price of $10.15 per share, to enable Registrant to
increase the maximum amount available for borrowing under Registrant's
revolving credit facility from $50 million to $60 million and give Registrant
greater access to additional sources of financing by reason of its affiliation
with the Purchasers, to amend the Existing Stockholders Agreement (as defined
herein) and to effect the other transactions described herein.
Pursuant to the Fund Redemption Agreement, the Company has agreed to
redeem that number of shares of Holdings Common Stock held by the Fund and
MLGAL which, when combined with the number of shares of Holdings Common Stock
held by the Management Holders and the Offeree Stockholders (as defined
herein) and redeemed by the Company, equals 79.9% of the issued and
outstanding shares of Holdings Common Stock.
The redemption of the shares of Holdings Common Stock pursuant to the
Fund Redemption Agreement occurs on two separate dates, the first of which has
already occurred. At the first closing, which occurred on the same date as
the Closing of the Purchase Transaction, the Company redeemed from the Fund
and MLGAL 4,393,915 shares of Holdings Common Stock, which is the number of
shares of Holdings Common Stock which, when combined with the shares of
Holdings Common Stock redeemed from the Management Holders and the maximum
number of shares to be redeemed from the Offeree Stockholders if the
Redemption Offer is fully subscribed, will equal the number of shares of
Holdings Common Stock purchased by the Purchasers. The Company will redeem
the shares of Holdings Common Stock tendered for redemption by the Offeree
Stockholders in accordance with the Redemption Offer, and such additional
shares of Holdings Common Stock held by the Fund and MLGAL so that the total
shares of Holdings Common Stock held by the Fund, MLGAL, the Management
Holders and the Offeree Stockholders and redeemed by the Company equals the
number of shares of Holdings Common Stock purchased by the Purchasers. At the
time of the first closing, the funds necessary to redeem the shares of
Holdings Common Stock from the Offeree Stockholders and to redeem the shares
of Holdings Common Stock from the Fund and MLGAL at the second closing were
placed in escrow pursuant to an Escrow Agreement between the Company and
National City Bank.
Pursuant to the Management Redemption Agreement, the Management Holders
exercised options to acquire 106,114 shares of Holdings Common Stock which
were already fully vested, and the Company redeemed the shares of Holdings
Common Stock acquired pursuant to such exercises for $10.15 per share in cash.
The members of management of the Company from whom shares of Holdings Common
Stock were redeemed (the "Management Holders") and the numbers of shares
redeemed from each such Management Holder are as follows: Michael D. Austin,
40,000 shares; Joseph F. Barker, 23,644 shares; F. Galen Hodge, 35,470 shares;
and Charles J. Sponaugle, 7,000 shares. Because of the simultaneous exercise
of options and redemption by the Company pursuant to the Management Redemption
Agreement, the aggregate exercise price with respect to the options held by
each Management Holder was deducted, together with required tax withholdings,
from the proceeds to be received by the Management Holders pursuant to the
redemption of their respective shares of Holdings Common Stock.
Pursuant to the Redemption Offer, the Company is (a) offering to redeem a
number of outstanding shares of Holdings Common Stock (determined in the
manner set forth in the following paragraph) held by certain holders of
Holdings Common Stock ("Offeree Stockholders") at $10.15 per share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Consent Solicitation and Offer to Redeem and in the related
Letter of Transmittal (which together constitute the "Redemption Offer"), and
(b) seeking consent to the amendment of the Stockholders Agreement, dated as
of August 31, 1989, by and among the Company and the investors listed on the
signature pages thereof (the "Existing Stockholders Agreement") by adoption of
the Amended Stockholders Agreement. The Redemption Offer is being made to all
stockholders of the Company other than the Fund, MLGAL and certain members of
management of the Company who currently own options to acquire Holdings Common
Stock. Tendering Offeree Stockholders will not be obligated to pay brokerage
fees or commissions or, except as set forth in the Letter of Transmittal,
transfer taxes with respect to the redemption of Holdings Common Stock by the
Company pursuant to the Redemption Offer.
Subject to the terms and conditions of the Redemption Offer, the Company
will redeem from each Offeree Stockholder (a) first, up to 79.575% of the
outstanding shares of Holdings Common Stock held by such Offeree Stockholder,
and (b) second, to the extent that less than all of the Offeree Stockholders
tender 79.575% of their shares of Holdings Common Stock for redemption, such
additional shares of Holdings Common Stock desired to be redeemed by such
Offeree Stockholder as represent such Offeree Stockholder's pro rata portion
(based on the total number of shares of Holdings Common Stock owned by such
Offeree Stockholder prior to any redemption in relation to the total number of
shares of Holdings Common Stock owned, prior to any redemption, by all Offeree
Stockholders desiring to sell additional shares of Holdings Common Stock, plus
the total number of shares of Holdings Common Stock owned by the Fund and
MLGAL prior to the transactions described above) of the additional shares of
Holdings Common Stock needed for the Company to redeem from the Fund, MLGAL
and the Offeree Stockholders an aggregate of 5,217,685 shares of Holdings
Common Stock. The effect of the formula described in the foregoing sentence
is to give all of the Offeree Stockholders the opportunity to have redeemed
the same percentage of their shares of Holdings Common Stock as the percentage
of the shares of Holdings Common Stock owned by the Fund and MLGAL to be
redeemed. Because the exact number of shares of Holdings Common Stock which
may be redeemed from each Offeree Stockholder cannot be determined at this
time, Offeree Stockholders have been encouraged to tender for redemption the
maximum number of shares of Holdings Common Stock which such Offeree
Stockholder desires the Company to redeem without regard to the number which
may actually be redeemed.
If none of the Offeree Stockholders accept the Redemption Offer, then a
total of 5,217,685 shares of Holdings Common Stock will be purchased from the
Fund and MLGAL, and the Fund and MLGAL will continue to beneficially own
approximately 4.5% of the shares of Holdings Common Stock outstanding after
giving effect to all of the redemptions of Holdings Common Stock described
herein. If Offeree Stockholders tender for redemption the maximum number of
shares of Holdings Common Stock which will be redeemed pursuant to the
Redemption Offer, then the Fund and MLGAL will continue to beneficially own
approximately 16.7% of the shares of Holdings Common Stock outstanding after
giving effect to all of the redemptions of Holdings Common Stock described
herein.
Pursuant to an Amended Stockholders Agreement (the "Amended Stockholders
Agreement") among the Company and certain stockholders of the Company,
including the Purchasers, the Fund, MLGAL, the Management Holders and the
Offeree Stockholders who become parties thereto (collectively, the
"Investors"), the Purchasers, the Fund and MLGAL have agreed to vote all
shares of Holdings Common Stock owned by such parties in favor of the election
as members of the Board of Directors of the Company of (i) those individuals
nominated by the Purchasers and (ii) one individual nominated by the Fund and
MLGAL so long as the Fund and MLGAL continue to own 25% of the Holdings Common
Stock held by such parties immediately following the second closing under the
Fund Redemption Agreement. The Amended Stockholders Agreement imposes certain
restrictions on, and provides Investors with certain rights in connection
with, transfers of shares of Holdings Common Stock, including provisions that
(i) with certain exceptions, the parties may not grant any proxy or enter into
or agree to be bound by any voting trust with respect to the Holdings Common
Stock; (ii) if the Purchasers or certain of their transferees propose to sell
any of their shares of Holdings Common Stock, the other Investors shall,
subject to certain exceptions, have the right to participate ratably in the
proposed sale; (iii) if the Purchasers propose to sell all of their Holdings
Common Stock to a third party, the Purchasers, so long as they collectively
own a majority of the shares of Holdings Common Stock, can compel the
Investors and certain transferees of the Investors (other than transferees of
the Fund, MLGAL and their current and former partners and employees) to sell
their shares of Holdings Common Stock; (iv) give the Purchasers rights of
first refusal with respect to transfers by Management Holders; and (v) subject
to certain exceptions, require the Fund and MLGAL to obtain the consent of the
Purchasers before selling or otherwise disposing of, in one transaction or a
series of transactions, 25% or more of the shares of Holdings Common Stock
owned by the Fund and MLGAL immediately following the second closing under the
Fund Redemption Agreement. Pursuant to the Amended Stockholders Agreement,
the Investors are able to transfer shares of Holdings Common Stock in a
private transaction to any person, other than certain affiliates of the
Investors, and those transferees will have (A) the right to participate in the
sale of shares of Holdings Common Stock by the Purchasers (as described in
clause (ii) of the preceding sentence), (B) the right to participate in the
registration of shares of Holdings Common Stock (as described below) and (C)
no other material restrictions on the further transfer of such shares of
Holdings Common Stock other than those imposed by applicable securities laws.
The Amended Stockholders Agreement also contains a commitment on the part
of the Company to, under certain circumstances, register shares of Holdings
Common Stock held by the Investors under the Securities Act of 1933, as
amended (the "Securities Act"), upon request by the Fund, MLGAL or the
Purchasers, or if the Company otherwise proposes to register shares of
Holdings Common Stock, subject to certain conditions and limitations. Each
time the Company proceeds to register shares of Holdings Common Stock, each
Investor will have the right, subject to certain conditions and limitations,
to include a certain number of its shares of Holdings Common Stock in such
registration.
In addition, the Amended Stockholders Agreement provides for the payment
of a monitoring fee of $500,000 per annum to Blackstone Management Partners,
L.P. ("Blackstone Partners"), provided that Blackstone Partners shall not,
without additional approval of the Board of Directors of Registrant and a
majority of the disinterested directors of the Board of Directors of
Registrant, receive total fees pursuant to the Amended Stockholders Agreement
in excess of $2.5 million. The Amended Stockholders Agreement requires the
Company, in certain instances following an initial public offering by the
Company, to disclose information and to file reports necessary to permit the
Investors to sell shares of Holdings Common Stock pursuant to Rule 144
promulgated under the Securities Act. Furthermore, the Amended Stockholders
Agreement prohibits the Company and its subsidiaries from entering into any
transaction or conducting any business with the Purchasers and their
affiliates (other than payment of the monitoring fees and reasonable and
customary investment banking fees for services rendered by the Purchasers or
their affiliates) unless such transaction or business: (i) has been either (A)
approved by a majority of the disinterested directors of the Company, or (B)
the Company has received a written opinion from an independent investment
banking firm that such transaction is fair to the Company and its subsidiaries
from a financial point of view; and (ii) in the case of any transaction or
series of related transactions involving an aggregate payment in excess of $5
million by or to the Purchasers and their affiliates, the Company has received
a written opinion from a nationally recognized independent investment banking
firm that the transaction or the series of related transactions is fair to the
Company and its subsidiaries from a financial point of view. The Amended
Stockholders Agreement terminates upon the tenth anniversary of the initial
effective date of the Amended Stockholders Agreement.
On January 24, 1997, the Company entered into Amendment No. 2 (the "Loan
Agreement Amendment") to the Amended and Restated Loan and Security Agreement
with CoreStates Bank, N.A. and Congress Financial Corporation (Central), as
lenders (the "Lenders"), and Congress Financial Corporation (Central), as
agent (the "Agent") for the Lenders (the "Loan Agreement"). The Loan
Agreement Amendment provides that: (i) the maximum amount available for
borrowing under the Loan and Security Agreement is increased from $50 million
to $60 million, and a fee of $100,000 was paid to the Lenders in consideration
for such increase; (ii) the Lenders and the Agent consent to the Purchase
Transaction and the Fund Redemption Agreement; (iii) the commissions, fees,
costs, expenses and other charges incurred by Registrant in connection with
the Purchase Transaction and the redemptions of shares of Holdings Common
Stock contemplated in the Fund Redemption Agreement will not be considered in
determining Registrant's compliance with covenants related to the adjusted net
worth or consolidated net income of Registrant; (iv) the unused line fee will
be based upon the amount by which $48 million (instead of $40 million) exceeds
the average daily principal balance of the outstanding loans; and (v)
Registrant will be permitted to incur such indebtedness as is necessary to
finance any redemptions pursuant to the change of control offer described
below in respect of Registrant's 11 5/8% Senior Notes due 2004 (the "Senior
Notes").
The proceeds received by the Company from the Purchase Transaction, and
amounts remaining within the Company after the exercise of options by the
Management Holders and redemption of the shares thereby acquired, were and
will be applied by the Company to finance the redemptions of Holdings Common
Stock described herein and to pay certain fees. The remaining transaction
fees in connection with the purchase and redemption transactions described
herein were funded through additional borrowings under the Loan Agreement.
In connection with the consummation of the Purchase Transaction and the
other transactions contemplated thereby, all of the members of the Board of
Directors of the Company and Registrant resigned except for Michael D. Austin
and Ira Starr. Pursuant to the terms of the Amended Stockholders Agreement,
the following representatives of the Purchasers were elected to the Board of
Directors of the Company and Registrant: David A. Stockman, a Senior Managing
Director of the Blackstone Group (as hereinafter defined), Glenn Hutchins, a
Senior Managing Director of the Blackstone Group, Chinh Chu, a Managing
Director of the Blackstone Group, and David Blitzer, an Associate of the
Blackstone Group. Michael D. Austin, President and Chief Executive Officer of
the Company and Registrant, remained on the Board of Directors of the Company
and Registrant as a nominee of the Purchasers, and Ira Starr, a general
partner of MLGAL, remained on the Board of Directors of the Company and
Registrant as a nominee of the Fund and MLGAL.
The Purchase Transaction constitutes a Change of Control as defined in
the Indenture dated August 23, 1996 by and between Registrant and National
City Bank with respect to the Senior Notes (the "Indenture"). As a result,
Registrant is required to offer to redeem the Senior Notes (the "Change of
Control Offer") at the price of 101% of the principal balance of the Senior
Notes plus accrued and unpaid interest thereon on the date of redemption (the
"Note Redemption Price"). Registrant made the Change of Control Offer on
February 4, 1997, and the Change of Control Offer will expire on March 6,
1997. Because the Board of Directors of Registrant is aware that the Senior
Notes have recently been trading at prices significantly above the Note
Redemption Price, Registrant currently does not anticipate that any of the
Senior Notes will be tendered for redemption pursuant to the Change of Control
Offer. If any of the Senior Notes are tendered pursuant to the Change of
Control Offer, Registrant currently anticipates that replacement financing
will be obtained through additional borrowings under the Loan Agreement or
through the issuance of additional Senior Indebtedness, as defined in the
Indenture.
The Purchasers are affiliates of The Blackstone Group, a private
investment bank based in New York and founded in 1985 by Peter G. Peterson,
its current Chairman, and Stephen A. Schwarzman, its current Chief Executive
Officer (the "Blackstone Group"). The Blackstone Group's main businesses
include strictly friendly principal investment, real estate investing and
asset management, restructuring and merger and acquisition advisory services.
Blackstone, the group's principal investment vehicle, has approximately $1.3
billion of committed equity capital.
The total amount of funds required to finance the Purchase Transaction,
the Fund Redemption Agreement and the Redemption Offer (including estimated
fees and expenses to be paid by Registrant in connection therewith) is
estimated to be approximately $61 million. Of such amount, approximately $54
million will be obtained from the Purchase Transaction and the remainder is
expected to be obtained through borrowings by Registrant under the Loan
Agreement, as amended.
A copy of Registrant's press releases dated January 24, 1997 and January
29, 1997 are attached hereto as Exhibits No. 99.1 and 99.2, respectively and
are incorporated herein by reference.
The foregoing descriptions of documents are summaries that do not purport
to be complete and are qualified in their entirety by reference to the actual
terms and provisions of such documents filed as exhibits hereto.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
2.1 Stock Purchase Agreement, dated as of January 24, 1997, among
Blackstone Capital Partners II Merchant Banking Fund L.P.,
Blackstone Offshore Capital Partners II Merchant Banking
Fund L.P., Blackstone Family Investment Partnership L.P., Haynes
Holdings, Inc. and Haynes International, Inc.
2.2 Stock Redemption Agreement, dated as of January 24, 1997, among
MLGA Fund II, L.P., MLGAL Partners, L.P. and Haynes
Holdings, Inc.
2.3 Exercise and Repurchase Agreement, dated as of January 24, 1997,
among Haynes Holdings, Inc. and the holders as listed therein.
2.4 Consent Solicitation and Offer to Redeem dated January 30, 1997.
2.5 Letter of Transmittal dated January 30, 1997.
4.1 Amended Stockholders' Agreement dated as of January 29, 1997,
among Haynes Holdings, Inc. and the investors listed therein.
4.2 Fifth Amendment to Stock Subscription Agreement dated as of
January 29, 1997 among Haynes Holdings, Inc., Haynes
International, Inc. and the persons on the signature pages thereof.
10.1 Amendment No. 2 to Amended and Restated Loan and Security
Agreement, dated January 29, 1997 among CoreStates Bank, N.A.
and Congress Financial Corporation (Central), as lenders, Congress
Financial Corporation (Central), as agent for lenders, and Haynes
International, Inc.
99.1 Press Release dated January 24, 1997.
99.2 Press Release dated January 29, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HAYNES INTERNATIONAL, INC.
By: /s/ Joseph F. Barker
Name: Joseph F. Barker
Title: Chief Financial Officer
February 13, 1997
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EXHIBIT INDEX
Number
Assigned on
Regulation S-K
Item 601
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(1) No Exhibit
(2) 2.1 Stock Purchase Agreement, dated as of January 24, 1997, among Blackstone
Capital Partners II Merchant Banking Fund L.P., Blackstone Offshore Capital
Partners II Merchant Banking Fund L.P., Blackstone Family Investment
Partnership L.P., Haynes Holdings, Inc. and Haynes International, Inc.
2.2 Stock Redemption Agreement, dated as of January 24, 1997, among MLGA
Fund II, L.P., MLGAL Partners, L.P. and Haynes Holdings, Inc.
2.3 Exercise and Repurchase Agreement, dated as of January 24, 1997, among
Haynes Holdings, Inc. and the holders as listed therein.
2.4 Consent Solicitation and Offer to Redeem dated January 30, 1997.
2.5 Letter of Transmittal dated January 30, 1997.
(4) 4.1 Amended Stockholders' Agreement dated as of January 29, 1997, among Haynes
Holdings, Inc. and the investors listed therein.
4.2 Fifth Amendment to Stock Subscription Agreement dated as of January 29, 1997
among Haynes Holdings, Inc., Haynes International, Inc. and the persons on the
signature pages thereof.
(10) 10.1 Amendment No. 2 to Amended and Restated Loan and Security Agreement,
dated January 29, 1997 among CoreStates Bank, N.A. and Congress Financial
Corporation (Central), as lenders, Congress Financial Corporation (Central), as
agent for lenders, and Haynes International, Inc.
(16) No Exhibit
(17) No Exhibit
(20) No Exhibit
(23) No Exhibit
(24) No Exhibit
(27) No Exhibit
(99) 99.1 Press Release dated January 24, 1997.
99.2 Press Release dated January 29, 1997.
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STOCK PURCHASE AGREEMENT
dated as of January 24, 1997
by and among
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.,
BLACKSTONE OFFSHORE
CAPITAL PARTNERS II MERCHANT
BANKING FUND L.P.,
BLACKSTONE FAMILY
INVESTMENT PARTNERSHIP L.P.,
HAYNES HOLDINGS, INC.,
and
HAYNES INTERNATIONAL, INC.
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TABLE OF CONTENTS
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Page
ARTICLE I. DEFINITIONS 2
ARTICLE II. PURCHASE AND SALE 6
Section 2.01. Purchase of New Shares 6
Section 2.02. Per Share Purchase Price 7
Section 2.03. Aggregate Purchase Price 7
Section 2.04. Fair Consideration 7
Section 2.05. Use of Proceeds 7
ARTICLE III. CLOSING 7
Section 3.01. Closing, Time and Place 7
Section 3.02. Deliveries to the Purchasers at the Closing 7
Section 3.03. Deliveries to Issuer at the Closing 9
ARTICLE IV. JOINT AND SEVERAL REPRESENTATIONS AND 9
WARRANTIES OF THE ISSUER AND INTERNATIONAL
Section 4.01. Organization; Good Standing; Qualification; 9
and Power
Section 4.02. Authority 9
Section 4.03. No Conflict or Violation 10
Section 4.04. Governmental Consents 10
Section 4.05. Capital Structure of the Corporation and Related 10
Matters
Section 4.06. No Default; Third Party Consents 11
Section 4.07. Subsidiaries 11
Section 4.08. Financial Statements 12
Section 4.09. Absence of Certain Changes 12
Section 4.10. Employee Benefit Matters 13
Section 4.11. Collective Bargaining Agreements, Employment 15
Agreements and Benefit Plans
Section 4.12. Intellectual Property 16
Section 4.13. Environmental Matters; Compliance with Laws 16
Section 4.14. Certain Matters 17
Section 4.15. Taxes 17
Section 4.16. Compliance with Laws 18
Section 4.17. Broker's or Finder's Commissions 18
Section 4.18. Representations and Warranties 18
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE 19
PURCHASERS
Section 5.01. Organization; Good Standing; Qualification; 19
and Power
Section 5.02. Authority 19
Section 5.03. No Conflict or Violation 19
Section 5.04. No Consent 19
Section 5.05. Investment Intent 19
Section 5.06. Bankruptcy 20
Section 5.07. ERISA 20
Section 5.08. Access to Information 20
Section 5.09. Sophistication of the Purchasers 20
Section 5.10. Accredited Investor 20
Section 5.11. Brokers or Finders Commissions 21
Section 5.12. Representations and Warranties 21
ARTICLE VI. COVENANTS OF THE ISSUER AND INTERNATIONAL 21
Section 6.01. Actions Before the Closing Date 21
Section 6.02. Stand Still 22
Section 6.03. Notification of Certain Matters 22
Section 6.04. Redemption Offer 22
ARTICLE VII. COVENANTS OF THE PURCHASERS 23
Section 7.01. Actions Before the Closing Date 23
Section 7.02. Confidentiality 23
Section 7.03. Notification of Certain Matters 23
Section 7.04. Financial Accommodations 23
ARTICLE VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE 24
ISSUER
Section 8.01. Representations and Warranties of the 24
Purchasers
Section 8.02. Performance of the Obligations of the 24
Purchasers
Section 8.03. No Violation of Orders 24
Section 8.04. Required Approvals 24
Section 8.05. Amended Stockholders Agreement 24
Section 8.06. Section 280G Approval 24
ARTICLE IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE 25
PURCHASERS
Section 9.01. Representations and Warranties of the Issuer 25
and International
Section 9.02. Performance of the Obligations of the Issuer 25
Section 9.03. Certificates of Fund II and MLGAL 25
Section 9.04. Certificate of the Option Holders 25
Section 9.05. No Violation of Orders 25
Section 9.06. Required Approvals 26
Section 9.07. Amended Stockholders Agreement 26
Section 9.08. Fifth Amendment to Subscription Agreement 26
Section 9.09. Other Transactions 26
Section 9.10. Waiver of Management Holders' Bid Right 26
Section 9.11. Waiver of Right of First Refusal 26
ARTICLE X. TERMINATION 26
Section 10.01. Conditions of Termination 26
Section 10.02. Effect of Termination 27
Section 10.03. Exclusive Remedy 27
ARTICLE XI. MISCELLANEOUS 28
Section 11.01. Public Announcements 28
Section 11.02. Expenses 28
Section 11.03. Notices 28
Section 11.04. Headings 29
Section 11.05. Construction 30
Section 11.06. Severability 30
Section 11.07. Entire Agreement 30
Section 11.08. Amendments; Waivers 30
Section 11.09. Parties in Interest 31
Section 11.10. Successors and Assigns 31
Section 11.11. Governing Law 31
Section 11.12. Counterparts 31
Section 11.13. Survival 31
Section 11.14. Subsequent Documentation 31
Section 11.15. Specific Performance 31
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Purchase Agreement") is entered into as
of the 24th day of January, 1997, by and among Blackstone Capital Partners II
Merchant Banking Fund L.P., a Delaware limited partnership ("BCPII"),
Blackstone Offshore Capital Partners II Merchant Banking Fund, L.P., a Cayman
Islands limited partnership ("BOCP"), Blackstone Family Investment
Partnership, a Delaware limited partnership ("BFIP"; together with BCPII and
BOCP, collectively the "Purchasers"), Haynes Holdings, Inc., a Delaware
corporation (the "Issuer"), and Haynes International, Inc., a Delaware
corporation ("International").
RECITALS
The Issuer is the sole stockholder of International. International is in
the business of developing, manufacturing and marketing technologically
advanced, high performance alloys for use primarily in the aerospace and
chemical processing industries (the "Business").
The Purchasers are willing to assist International in obtaining an
increase in its existing line of credit and in securing additional financing
for certain obligations of International and for the growth and expansion of
the Business.
The authorized capital stock of the Issuer consists of 20,000,000 shares
of common stock, $.01 par value per share (the "Common Stock"), of which
6,556,963 shares are currently issued and outstanding, and 2,000,000 shares of
blank check preferred stock (the "Preferred Stock"), none of which is
currently issued and outstanding.
The Purchasers desire to purchase from the Issuer 5,323,799 shares of the
Common Stock (the "New Shares"), and the Issuer desires to issue and sell the
New Shares to the Purchasers, on the terms and conditions set forth in this
Purchase Agreement.
Simultaneously with the closing of the transaction contemplated by this
Purchase Agreement, the Issuer will (a) redeem 4,393,915 shares of the Common
Stock from MLGA Fund II, L.P., a Connecticut limited partnership ("Fund II"),
and MLGAL Partners, L.P., a Connecticut limited partnership ("MLGAL") pursuant
to that certain Stock Redemption Agreement, dated as of January 24, 1997, by
and among Fund II, MLGAL and the Issuer in the form of Exhibit I-Dattached
hereto (the "Redemption Agreement"), and (b) redeem the Option Shares (as
hereinafter defined) from the Option Holders (as hereinafter defined) pursuant
to that certain Exercise and Repurchase Agreement in the form of Exhibit I-B
attached hereto.
Following the closing of the transaction contemplated by this Purchase
Agreement, the Issuer will redeem an aggregate of 823,770 shares of the Common
Stock from (a) certain stockholders of the Issuer that elect to tender their
shares of the Common Stock pursuant to that certain Consent Solicitation and
Offer to Redeem for Cash of the Issuer to be extended to its stockholders
other than Fund II, MLGAL and the Option Holders on or about January 24, 1997,
and (b) Fund II and MLGAL pursuant to the "Subsequent Closing" as provided
under the Redemption Agreement.
AGREEMENT
In consideration of the foregoing and of the respective representations,
warranties, covenants, and agreements herein contained, and intending to be
legally bound, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Purchase Agreement, the following terms have the meanings
indicated below:
"Adverse Claim" shall have the meaning contained in 8-302 of the New
York Uniform Commercial Code.
"Affiliate" with respect to any Person means any Person that directly or
indirectly controls, or is under common control with, or is controlled by such
Person. As used in this definition, "control" (including its correlative
meanings "controlled by" and "under common control with") means possession,
directly or indirectly, of power to direct or cause the direction of
management or policies of such other Person (whether through ownership of
securities or partnership or other ownership interest, by contract or
otherwise); provided, however, any Person that owns, directly or indirectly,
any general partnership interest in another Person that is a general
partnership or 5% or more of the securities having ordinary voting power for
the election of directors, managers, or other governing body of any other
Person shall be deemed to control such other Person.
"Aggregate Purchase Price" has the meaning specified in Section 2.03.
"Amended Stockholders Agreement" means the Amended Stockholders
Agreement, by and among the Issuer and the Investors listed on the signature
pages thereof, in the form of Exhibit I-Aattached hereto.
"Audited Financial Statements" has the meaning specified in Section 4.08.
"BCPII" has the meaning specified in the Recitals of this Purchase
Agreement.
"BFIP" has the meaning specified in the Recitals of this Purchase
Agreement.
"BOCP" has the meaning specified in the Recitals of this Purchase
Agreement.
"Blue Sky Law" means or refers to the law or laws of any state or states
affecting the issuance, sale or transfer of any security of the Issuer.
"Business" has the meaning specified in the Recitals of this Purchase
Agreement.
"Business Day" means any day other than Saturday, Sunday, and any day on
which commercial banks in New York, New York or in Chicago, Illinois are
authorized by law to be closed.
"Change of Control Offer" means the offer of International to each holder
of the 11 5/8% Senior Notes due 2004 of International to repurchase such notes
in cash in an amount equal to 101% of the principal amount of such notes,
plus accrued and unpaid interest, as required as a result of the transactions
provided for in the Transaction Documents pursuant to Section 10.13 of the
Senior Note Indenture.
"Closing" has the meaning specified in Section 3.01.
"Closing Date" has the meaning specified in Section 3.01.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" has the meaning specified in the Recitals of this Purchase
Agreement.
"Employee Benefit Plans" has the meaning specified in Section 4.09(a).
"Environmental Laws" has the meaning specified in Section 4.13.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any similar or successor Federal statute and the rules and regulations of the
Commission thereunder.
"Exercise and Repurchase Agreement" means the Exercise and Repurchase
Agreement in the form of Exhibit I-B attached hereto to be executed by the
Option Holders and the Issuer prior to the Closing.
"Fifth Amendment to Subscription Agreement" means the Fifth Amendment to
the Stock Subscription Agreement in the form of Exhibit I-C attached hereto.
"Files and Records" means all files and records of the Issuer and
International, whether in hard copy or magnetic or other format, including
customer and supplier records, equipment maintenance records, equipment
warranty information, plant plans, specifications and drawings, sales and
advertising material, computer software, and records relating to employees.
"Foreign Subsidiaries" means each of Haynes International, S.A.R.L., a
French corporation, Haynes International, Ltd., a United Kingdom corporation,
and Nickel Contor, A.G., a Swiss corporation.
"Fund II" has the meaning specified in the Recitals of this Purchase
Agreement.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Infringement" has the meaning specified in Section 4.12.
"Intellectual Property" shall mean all United States and foreign
intellectual property of the Issuer, International and any of the
Subsidiaries, including, without limitation, all patents, copyrights,
trademarks, service marks, trade names, trade dress, inventions, technology,
know-how, trade secrets and confidential information, all registrations,
applications, goodwill and common-law rights related thereto, and all licenses
and similar agreements related thereto.
"International" has the meaning specified in the first paragraph of this
Purchase Agreement.
"Issuer" has the meaning specified in the first paragraph of this
Purchase Agreement.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
(statutory or other), option, charge, or sale agreement.
"Management Holders" means each of Michael D. Austin, Joseph F. Barker,
F. Galen Hodge and Charles J. Sponaugle.
"Material Adverse Effect," when used with respect to a Person, means a
material adverse effect on the assets, operations, business or financial
condition of that Person.
"MLGAL" has the meaning specified in the Recitals of this Purchase
Agreement.
"New Shares" has the meaning specified in the Recitals of this Purchase
Agreement.
"Option" means an option to purchase Common Stock granted pursuant to the
Option Plan.
"Option Holders" means collectively Michael D. Austin, Joseph F. Barker,
F. Galen Hodge and Charles J. Sponaugle.
"Option Plan" means the Haynes Holdings, Inc. Employee Stock Option Plan
as in effect on the date hereof.
"Option Shares" means the aggregate of 106,114 shares of the Common Stock
acquired by the Option Holders upon exercise of certain Options pursuant to
the Exercise and Repurchase Agreement and repurchased by the Issuer pursuant
to the Exercise and Repurchase Agreement.
"Permitted Fees" means the following fees payable by International in
connection with this Purchase Agreement: (i) the $2,380,000 fee payable to
Blackstone Management Partners, (ii) $1,750,000 fee payable to MLGAL, and
(iii) the $1,250,000 fee payable to PaineWebber, Incorporated.
"Per Share Price" has the meaning specified in Section 2.02.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, or
unincorporated organization, or any governmental agency, officer, department,
commission, board, bureau, or instrumentality thereof.
"Personnel" means the officers, employees and/or agents of the Issuer.
"Preferred Stock" has the meaning specified in the Recitals of this
Purchase Agreement.
"Purchase Agreement" has the meaning specified in the Recitals of this
Purchase Agreement.
"Purchasers" has the meaning specified in the first paragraph of this
Purchase Agreement.
"Redemption Agreement" has the meaning specified in the Recitals of this
Purchase Agreement.
"Redemption Offer" means the Issuer's Consent Solicitation and Offer to
Redeem for Cash a certain percentage of the outstanding shares of Common Stock
owned by the stockholders of the Issuer other than Fund II or MLGAL at $10.15
per share, which shall be made by a Consent Solicitation and Offer to Redeem
for Cash in substantially the form of, and containing only those material
terms and conditions set forth in, Exhibit I-E attached hereto.
"Returns" has the meaning specified in Section 4.15.
"Securities Act" means the Securities Act of 1933, as amended, and any
similar or successor Federal statute and the rules and regulations of the
Commission thereunder.
"Senior Note Indenture" means that certain Indenture, dated as of August
23, 1996, by and between International and National City Bank, N.A., as
Trustee, with respect to the 11 5/8% Senior Notes due 2004 of International.
"Stockholders Agreement" means the Stockholders Agreement, dated as of
August 31, 1989, by and among the Issuer and the other Persons who are parties
thereto.
"Subscription Agreement" means that certain Stock Subscription Agreement,
dated as of August 31, 1989, among the Issuer, International and the other
Persons named on the signature pages thereof.
"Subsidiaries" means collectively Haynes Sour Gas Tubulars, Inc., a
Delaware corporation, and the Foreign Subsidiaries.
"Tax Returns" means any return, report, information return, or other
document (including any related or supporting information) filed or required
to be filed with any governmental agency, department, commission, board,
bureau, or instrumentality in connection with the determination, assessment,
collection, or administration of any Taxes.
"Taxes" means all federal, state, local, or foreign taxes (including
excise taxes, occupancy taxes, employment taxes, unemployment taxes, ad
valorem taxes, custom duties, transfer taxes, and fees), levies, imposts,
fees, impositions, assessments, or other governmental charges of any nature
imposed upon a Person including all taxes or governmental charges imposed upon
any of the personal properties, real properties, tangible or intangible
assets, income, receipts, payrolls, transactions, stock transfers, capital
stock, net worth or franchises of a Person (including all sales, use,
withholding or other taxes which a Person is required to collect and/or pay
over to any government), and all related additions to tax, penalties or
interest thereon.
"Transaction Documents" mean collectively this Purchase Agreement, the
Redemption Agreement, the Escrow Agreement, the Exercise and Repurchase
Agreement, the Amended Stockholders Agreement and the Fifth Amendment to
Subscription Agreement.
"1996 10-K" has the meaning specified in Section 4.14.
ARTICLE II.
PURCHASE AND SALE
Section 1.021. Purchase of New Shares. Subject to the terms and
conditions set forth in this Purchase Agreement, on the Closing Date, the
Issuer shall issue and sell to the Purchasers the New Shares, and the
Purchasers shall purchase from the Issuer the New Shares. The purchase
obligation of the Purchasers shall be allocated among the Purchasers as
follows: (i) BCPII shall purchase 3,812,721 of the New Shares; (ii) BOCP
shall purchase 1,131,661 of the New Shares; and (iii) BFIP shall purchase
379,417 of the New Shares.
Section 1.022. Per Share Purchase Price. The purchase price of each
share of Common Stock sold to the Purchasers, as provided for in Section 2.01,
shall be Ten Dollars and Fifteen Cents ($10.15) ("Per Share Price").
Section 1.023. Aggregate Purchase Price. As full payment for the
issuance, sale, and delivery of the New Shares, the Purchasers shall pay the
aggregate amount of Fifty-Four Million Thirty-Six Thousand Five Hundred
Fifty-Nine Dollars and Eighty-Five Cents ($54,036,559.85) to the Issuer (the
"Aggregate Purchase Price"), to be paid in accordance with Section 3.02.
Section 1.024. Fair Consideration. The parties acknowledge and agree
that the consideration provided for in this Article II represents fair
consideration and reasonable equivalent value for the issuance and sale of the
New Shares and the transactions, covenants, and agreements set forth in this
Purchase Agreement, which consideration was agreed upon as the result of
arm's- length, good-faith negotiations among the parties and their respective
representatives.
Section 1.025. Use of Proceeds. The proceeds from the issuance and sale
of the New Shares shall be used by the Issuer solely for the redemption and
repurchase of the Common Stock pursuant to the Redemption Agreement and the
Redemption Offer, the redemption of the Option Shares and to pay related costs
and expenses.
ARTICLE III.
CLOSING
Section 1.031. Closing, Time and Place. The closing (the "Closing") of
the transactions contemplated herein shall take place at the offices of Ice
Miller Donadio & Ryan, Indianapolis, Indiana at 11:00 A. M. (Eastern Standard
Time) on January 29, 1997 (the "Closing Date") or at such other time as shall
be mutually agreed by the Issuer and the Purchasers.
Section 1.032. Deliveries to the Purchasers at the Closing. At the
Closing and simultaneously with the deliveries to the Issuer specified in
Section 3.03, the Issuer shall deliver or cause to be delivered to the
Purchasers the following:
(a) Stock Certificates representing the New Shares issued in the
names of the Purchasers bearing the legend referred to in Section 5.05 and in
the Amended Stockholders Agreement;
(b) Certificates of Good Standing pertaining to the Issuer and
International issued by the Secretary of State of the State of Delaware and
dated within ten (10) days of the Closing Date;
(c) Certified copies of the Certificates of Incorporation, as
amended, of the Issuer and International issued by the Secretary of State of
the State of Delaware and dated within ten (10) days of the Closing Date;
(d) Copies of the By-laws of the Issuer and International certified
by the respective Secretaries of the Issuer and International and dated within
ten (10) days of the Closing Date;
(e) Certified copies of the resolutions of the Board of Directors
of the Issuer approving this Purchase Agreement, the Redemption Agreement, the
Escrow Agreement, the Exercise and Repurchase Agreement, the Redemption Offer
and the transactions contemplated thereby.
(f) One or more counterparts of the Amended Stockholders Agreement,
duly executed by the Issuer, International, Fund II, MLGAL and the Management
Holders;
(g) One or more counterparts of the Fifth Amendment to Subscription
Agreement, duly executed by all parties thereto.
(h) The certificate of the Issuer and International specified in
Section 9.01;
(i) The certificate of the Issuer specified in Section 9.02;
(j) The copies of the certificates of Fund II, MLGAL and the Option
Holders specified in Sections 9.03 and 9.04;
(k) The resignations of each director of the Issuer and
International (other than Michael D. Austin);
(l) A certificate signed by the Secretary of the Issuer
acknowledging delivery by the Purchasers of the items set forth in Section
3.03; and
(m) Stockholders' consents signed by each of Fund II, MLGAL and the
Management Holders resolving to elect as directors of the Issuer and
International five nominees designated by the Purchasers and one nominee
designated by Fund II and MLGAL.
Section 3.03. Deliveries to Issuer at the Closing. At the Closing and
simultaneously with the deliveries to the Purchasers specified in Section
3.02, the Purchasers shall deliver or cause to be delivered to the Issuer the
following:
(a) The Aggregate Purchase Price by wire transfer in immediately
available federal funds to an account designated by the Issuer prior to the
Closing Date;
(b) One or more counterparts of the Amended Stockholders Agreement,
duly executed by each of the Purchasers;
(c) The certificate of the Purchasers specified in Section 8.01;
(d) The certificate of the Purchasers specified in Section 8.02;
and
(e) A certificate signed by a general partner of each of the
Purchasers acknowledging delivery by the Issuer of the items set forth in
Section 3.02.
ARTICLE IV.
JOINT AND SEVERAL REPRESENTATIONS
AND WARRANTIES OF THE ISSUER AND INTERNATIONAL
The Issuer and International hereby jointly and severally represent and
warrant to the Purchasers and each of them as follows:
Section 4.01. Organization; Good Standing; Qualification; and Power.
Each of the Issuer and International is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
Each of the Subsidiaries is a corporation duly incorporated or organized,
validly existing and, to the extent recognized in such jurisdiction, in good
standing under the laws of the jurisdiction in which it is incorporated. Each
of the Issuer, International and each of the Subsidiaries has all requisite
corporate power and authority and all material governmental licenses,
authorizations, consents and approvals to own, lease and operate its
respective properties and to carry on its respective business or businesses as
is now being conducted. Each of the Issuer, International and each of the
Subsidiaries is duly qualified as a foreign corporation and is in good
standing to do business in every jurisdiction in which such qualification is
necessary because of the nature of the properties owned, leased or operated by
it or the nature of the businesses conducted by it, except for such
jurisdictions in which, in the aggregate, failure to so qualify would not have
a Material Adverse Effect on the Issuer, International and the Subsidiaries
taken as a whole.
Section 4.02. Authority. The execution and delivery of this Purchase
Agreement and each of the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby by the Issuer and
International, as applicable, have been authorized by all necessary corporate
action on the part of the board of directors and stockholders of the Issuer
and International, as applicable. The Redemption Offer has been authorized by
all necessary corporate action on the part of the board of directors and
stockholders of the Issuer. The Issuer and International have the full power
and authority to execute and deliver this Purchase Agreement and each of the
other Transaction Documents, as applicable, and to consummate the transactions
contemplated hereby and thereby. This Purchase Agreement and each other
Transaction Document to which the Issuer and/or International is a party
constitutes a valid and legally binding obligation of each of the Issuer and
International, enforceable against each of the Issuer and International in
accordance with its terms.
Section 4.03. No Conflict or Violation. The execution, delivery, and
performance of this Purchase Agreement and the other Transaction Documents by
the Issuer and International and the consummation of the Redemption Offer do
not and shall not: (a) violate the Certificate of Incorporation or bylaws of
the Issuer or International or the governing instruments any of the
Subsidiaries; or (b) violate any provision of law or any order, judgment, or
decree of any court or other governmental or regulatory authority applicable
to the Issuer, International or any of the Subsidiaries.
To the knowledge of the Issuer and International, there is no default by
any party to any of the material contracts, agreements and binding commitments
of the Corporation, International or any of the Subsidiaries which could
reasonably be expected to have a Material Adverse Effect on the Corporation,
International and the Subsidiaries taken as whole.
Section 4.04. Governmental Consents. No authorization, consent,
approval, exemption, or other action by or notice to or filing with any court
or administrative or governmental body (other than pursuant to the
Hart-Scott-Rodino Act) is required to permit the Issuer or International to
execute and deliver this Purchase Agreement or the other Transaction
Documents, to consummate the transactions contemplated by this Purchase
Agreement or the other Transaction Documents, to comply with and fulfill the
terms and conditions of this Purchase Agreement or the other Transaction
Documents, to issue and convey the New Shares to the Purchasers pursuant to
this Purchase Agreement, or to consummate the Redemption Offer.
Section 4.05. Capital Structure of the Corporation and Related Matters.
The total authorized capital stock of the Issuer consists of 22,000,000
shares, consisting of 20,000,000 shares of the Common Stock and 2,000,000
shares of the Preferred Stock. Of the total number of authorized shares of
capital stock of the Issuer, 6,574,263 are issued and 6,556,963 are
outstanding. The issued and outstanding shares of capital stock of the Issuer
consist entirely of shares of the Common Stock. Of the total number of
authorized but not outstanding shares of capital stock of the Issuer, 905,880
shares of the Common Stock are reserved for issuance pursuant to the terms of
the Option Plan. All outstanding shares of capital stock of the Issuer have
been duly authorized and validly issued and are fully paid and non-assessable.
No class of shares of capital stock of the Issuer is entitled to preemptive
rights. The Issuer has outstanding Options granted under the Option Plan for
the purchase of 687,114 shares of Common Stock, which Options are held by the
individuals and in the respective amounts set forth on Schedule 4.05 attached
hereto. Except for the Common Stock and the Options, the Issuer has no
outstanding shares of capital stock or securities convertible into or
exchangeable for any shares of its capital stock, nor, except for the Options,
does the Issuer, International or any of the Subsidiaries have outstanding any
options, warrants, agreements or commitments for the issuance or purchase,
redemption or other acquisition of any shares of capital stock of the Issuer
or any securities convertible into or exchangeable for any shares of capital
stock of the Issuer, other than the Issuer's agreement and commitment to
redeem its Common Stock pursuant to the Redemption Agreement and the
Redemption Offer and to redeem the Option Shares. The New Shares, when issued
pursuant to the terms and conditions of this Purchase Agreement, will be
validly issued, fully paid and non-assessable, and will be free of any
restrictions or limitations other than those (a) imposed by the Securities Act
and any applicable Blue Sky Law, and (b) provided for in the Amended
Stockholders Agreement.
Section 4.06. No Default; Third Party Consents. Assuming that Congress
Financial Corporation (Central) and CoreStates Bank N.A. have consented to the
Issuer and International executing and performing this Purchase Agreement and
the other Transaction Documents and the Issuer redeeming the Option Shares and
making and consummating the Redemption Offer, the execution, delivery, and
performance of this Purchase Agreement and the other Transaction Documents by
the Issuer and International and the consummation of the Redemption Offer do
not and shall not violate or result in a breach of or constitute (with due
notice or lapse of time or both) a default under any loan agreement, mortgage,
security agreement, indenture or other material agreement or instrument to
which the Issuer, International or any of the Subsidiaries is a party or by
which the Issuer, International or any of the Subsidiaries is bound or to
which any of their material properties or assets is subject. No
authorization, consent, approval, exemption or other action by or notice to
filing with any third party (other than Congress Financial Corporation
(Central) and CoreStates Bank N.A.) is required to permit the Issuer or
International to execute and deliver this Purchase Agreement, to consummate
the transactions contemplated by this Purchase Agreement or the other
Transaction Documents, to comply with and fulfill the terms and conditions of
this Purchase Agreement or the other Transaction Documents, to issue and
convey the New Shares to the Purchasers pursuant to this Purchase Agreement,
or to consummate the Redemption Offer.
Section 4.07. Subsidiaries. Schedule 4.07 attached hereto lists the
name of each of the Subsidiaries, its jurisdiction of incorporation or
organization and the beneficial and record owner or owners of its capital
stock. Separately set forth on Schedule 4.07 attached hereto are the names of
all other corporations, joint ventures or other entities in which the Issuer,
International or any of the Subsidiaries owns an equity interest (other than
publicly traded securities where beneficial ownership is less than 5%).
Except as set forth on Schedule 4.07 attached hereto, International or one of
the Subsidiaries owns of record and beneficially all of the ownership
interests of each of the Subsidiaries, except for qualifying shares owned by
directors of Foreign Subsidiaries, free and clear of all Liens and Adverse
Claims and free and clear of any other material limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such ownership interests) other than restrictions imposed under applicable
Federal and state securities laws, applicable foreign laws and applicable
charter provisions. All of the capital stock of each Subsidiary is duly
authorized, validly issued, fully paid and non-assessable, except to the
extent otherwise provided by foreign laws with respect to the Foreign
Subsidiaries. There are no outstanding options, warrants or other rights of
any kind to acquire any additional ownership interests of any of the
Subsidiaries, or securities convertible into or exchangeable for, or which
otherwise confer on the holder thereof any right to acquire any additional
ownership interests of any of the Subsidiaries, nor is any of the Subsidiaries
committed to issue any such option, warrant, right or security. Other than
pursuant to accommodation agreements relating to qualifying shares of
directors of Foreign Subsidiaries, there are no outstanding obligations of the
Issuer, International or any of the Subsidiaries to repurchase, redeem or
otherwise acquire any outstanding securities or other ownership interests of
any of the Subsidiaries, or securities convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests in
any of the Subsidiaries or options or other rights to acquire from the Issuer,
International or any of the Subsidiaries, any capital stock, voting securities
or other ownership interests in, or any securities convertible into or
exchangeable for any capital stock, voting securities or ownership interests
in any of the Subsidiaries.
Section 4.08. Financial Statements. True and complete copies of the
consolidated balance sheets, income statements and cash flow statements of
International and its subsidiaries, as audited by Coopers & Lybrand, L.L.P.,
as at September 30 in each of the years 1996 and 1995 (collectively, the
"Audited Financial Statements"), are attached hereto as Schedule 4.08. The
Audited Financial Statements (including any related schedules and/or notes)
are true and correct in all material respects, have been prepared in
accordance with generally accepted accounting principles that were, except as
otherwise stated therein, consistently followed throughout the periods
involved, and show all material liabilities, direct and contingent, of
International and its subsidiaries required to be shown in accordance with
such principles. The balance sheets included in the Audited Financial
Statements fairly present the consolidated financial condition of
International and its subsidiaries as at the dates thereof, and the income
statements and cash flow statements therein fairly present the consolidated
results of the operations and cash flow for the period then ended of
International and its subsidiaries for the periods indicated.
Section 4.09. Absence of Certain Changes. Since September 30, 1996, and
except as set forth on Schedule 4.09 attached hereto, the Issuer,
International and the Subsidiaries have conducted their businesses in the
ordinary and usual course and there has not been (a) any event, occurrence,
development or state of circumstances or facts related to the business,
financial condition, capitalization or results of operations of the Issuer,
International or the Subsidiaries having, or which could reasonably be
expected to have, a Material Adverse Effect on the Issuer, International and
the Subsidiaries taken as a whole, (b) any damage, destruction or other
casualty loss (whether or not covered by insurance) having, or which would
reasonably be expected to have, a Material Adverse Effect on the Issuer,
International and the Subsidiaries taken as a whole, (c) except for
compensation increases in the ordinary course of business of the Issuer,
International or any of the Subsidiaries consistent with past practices, any
increase in the compensation payable or to become payable by the Issuer,
International or any of the Subsidiaries to any of its respective officers or
employees or any increase in any bonus, insurance, pension or other employee
benefit plan, payment or arrangement made by the Issuer, International or any
of the Subsidiaries for or with any such officers or employees, (d) any labor
dispute having a Material Adverse Effect on the Issuer, International or any
of the Subsidiaries taken as a whole, or any material activity or proceeding
by a labor union or representative thereof to organize any employees of the
Issuer, International or any of the Subsidiaries, which employees were not
subject to a collective bargaining agreement at September 30, 1996, or any
material lockouts, strikes, slowdowns, work stoppages or threats thereof by or
with respect to such employees, (e) except as expressly contemplated by the
Transaction Documents or the Redemption Offer or in the ordinary course of
business, any material obligation or liability incurred by the Issuer,
International or any of the Subsidiaries or any creation or assumption by the
Issuer, International or any of the Subsidiaries of any material Lien on any
material asset or any making of any loan, advance or capital contribution to
or material investment in any Person other than loans, advances or capital
contributions to or investments in any of the Subsidiaries, (f) except as
expressly contemplated by the Transaction Documents, the Stock Subscription
Agreement, the Stockholders Agreement, the Redemption Offer or the Option
Plan, any declaration, setting aside or payment of any dividend, other
distribution in respect of the capital stock of the Issuer, International or
any of the Subsidiaries, any direct redemption, purchase or other acquisition
of such stock or granting or entering into of any option or commitment
relating to such stock, (g) except as expressly contemplated by the
Transaction Documents or the Redemption Offer, any payment, discharge or
satisfaction of any material obligation or liability of the Issuer,
International or any of the Subsidiaries, other than as required by changes in
generally accepted accounting principals, (h) any sale, transfer, or other
disposition of any material tangible or intangible asset of the Issuer,
International or any of the Subsidiaries, other than in the ordinary course of
business, (i) any material change in the accounting methods or practices
followed by the Issuer, International or any of the Subsidiaries, other than
in the ordinary course of business, or (j) except as expressly contemplated by
the Transaction Documents, the Stock Subscription Agreement, the Stockholders
Agreement, the Redemption Offer and the Option Plan, any agreement entered
into by the Issuer, International or any of the Subsidiaries to take any of
the actions specified in the foregoing subsections (a) through (i).
Section 4.10. Employee Benefit Matters.
(a) Schedule 4.10(a) attached hereto contains a true and complete
list of each "employee benefit plan" (within the meaning of Section 3(3) of
ERISA), including, without limitation, stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation and all other material
employee benefit plans, agreements, programs, policies or other arrangements,
whether or not subject to ERISA (including any funding mechanism therefor now
in effect or required in the future as a result of the transaction described
in this Purchase Agreement or otherwise), whether formal or informal, oral or
written, legally binding or not, under which any employee or former employee
of the Issuer, International or any of the Subsidiaries has any present or
future material rights and under which the Issuer, International or any of the
Subsidiaries has any present or future material liability. All such plans,
agreements, programs, policies and arrangements shall be collectively referred
to as the "Employee Benefit Plans". The Issuer has made available to the
Purchasers copies of all Employee Benefit Plans and all other material
documents requested by the Purchasers relating to compliance of such Employee
Benefit Plans with applicable law (other than such documents that constitute
or contain attorney-client privileged information).
(b) Except as set forth in Schedule 4.10(b) attached hereto, all
Employee Benefit Plans are in compliance with the terms of the applicable plan
and the requirements prescribed by applicable law currently in effect with
respect thereto, and the Issuer, International or any of the Subsidiaries has
performed in all material respects all obligations required to be performed by
it under, and is not in default under or in violation of, any of the terms of
the Employee Benefit Plans. Each Employee Benefit Plan intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
favorable determination letter that such plan is so qualified and the trusts
maintained thereunder are exempt from taxation under Section 501(a) of the
Code. Neither the Issuer, International nor any of the Subsidiaries has
engaged in a "prohibited transaction," as such term is defined under Code
Section 4975 or ERISA Section 406, which would subject the Issuer,
International or the Purchasers to any taxes, penalties or other liabilities
under the Code or ERISA. No Employee Benefit Plan has incurred any
"accumulated funding deficiency" as such term is defined in ERISA Section 302
and Code Section 412 (whether or not waived). The Issuer, International or
any "ERISA Affiliate" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code Section 414) has
not incurred, and no event, transaction or condition has occurred or exists
which is reasonably expected to result in the occurrence of, any material
liability to the Pension Benefit Guaranty Corporation or any Employee Benefit
Plan (other than contributions to the plan and premiums to the Pension Benefit
Guaranty Corporation, which in either event are not in default) or any
material "withdrawal liability" within the meaning of Section 4201 of ERISA,
or any other material liability pursuant to Title I or IV of ERISA or the
provisions of the Code, in any such case relating to any Employee Benefit Plan
or any pension plan maintained by an ERISA Affiliate. No event has occurred
and no condition exists that would subject the Issuer or International, either
directly or by reason of their affiliation with any ERISA Affiliate, to any
material tax, fine or penalty imposed by ERISA, the Code or other applicable
laws, rules and regulations. For each Employee Benefit Plan with respect to
which a Form 5500 has been filed, no material change has occurred with respect
to matters covered by the most recent Form since the date thereof.
(c) Neither the Issuer nor International (nor any ERISA Affiliate)
maintains (nor within the past six years has maintained), contributes or
otherwise has any material liability in respect of any multiemployer plan as
defined in Section 3(37) of ERISA.
(d) Except as set forth in Schedule 4.10(d) attached hereto, no
Employee Benefit Plan provides benefits, including, without limitation, death
or medical benefits (whether or not insured), with respect to current or
former employees of Issuer, International or any ERISA Affiliate beyond their
retirement or other termination of service (other than (i) coverage mandated
by applicable law or (ii) death benefits or retirements benefits under any
"employee pension plan" as that term is defined in Section 3(2) of ERISA).
Except as set forth in Schedule 4.09(d) attached hereto, the consummation of
the transactions contemplated by this Purchase Agreement will not (i) entitle
any current or former director, employee or officer of Issuer, International
or any ERISA Affiliate to severance pay, unemployment compensation or other
payment or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such director, employee or officer. To the
knowledge of the Issuer and International, no payments made to any Personnel
pursuant to the transactions contemplated by this Purchase Agreement shall be
nondeductible under Section 280G of the Code.
(e) Except as set forth in Schedule 4.10(e) attached hereto, there
are no pending, or, to the Issuer's or International's knowledge, threatened
material claims by or on behalf of any Employee Benefit Plan, by any employee
or beneficiary covered under any such plan, or otherwise involving any such
plan (other than routine claims for benefits).
(f) The consummation of the transaction contemplated by this
Purchase Agreement shall not result in a prohibited transaction, as such term
is defined under Code Section 4975 or ERISA Section 406, which would subject
the Issuer, International or the Purchasers to any taxes, penalties or other
liabilities under the Code or ERISA.
Section 4.11. Collective Bargaining Agreements, Employment Agreements
and Benefit Plans. Schedule 4.11 attached hereto lists all employee benefit
plans, all union, collective bargaining or other employee association
agreements, and all other agreements other than the Option Plan and the
agreements related thereto, the Employee Benefit Plans set forth on Schedule
4.10 attached hereto and at-will relationships with employees, providing for
any material salary, bonus, benefits, management fees or other compensation to
be paid to any director, officer, employee or agent (other than sales agents)
of the Issuer, International or any of the Subsidiaries. Except as set forth
on Schedule 4.11 attached hereto, neither the Issuer, International nor any of
the Subsidiaries (a) has breached or otherwise failed to comply with any
material provision of any plan or agreement set forth in Schedule 4.11
attached hereto, (b) is subject to any unfair labor practice complaints
pending before the National Labor Relations Board or is subject to any current
union representation questions involving persons employed by the Issuer,
International or any of the Subsidiaries, (c) is, or has been within the last
three (3) years, subject to any material activities or proceedings of any
labor union (or representatives thereof) to organize any unorganized
employees, or (d) is, or has been within the last three (3) years, subject to
any material strikes, organized slowdowns, work stoppages or lockouts. Except
as set forth on Schedule 4.11 attached hereto, neither the Issuer,
International nor any of the Subsidiaries is in violation in any material
respect, and neither the Issuer, International nor any of the Subsidiaries has
received within the last three (3) years written notice of any claim with
respect to a material violation or alleged material violation, of any Federal
or state civil rights law, the Fair Labor Standards Act, as amended, the Age
Discrimination in Employment Act, as amended, the National Labor Relations
Act, as amended, the Occupational Safety and Health Act of 1973, as amended,
other than claims that have been settled or dismissed and for which neither
the Issuer, International nor any of the Subsidiaries has any material
continuing monetary obligation.
Section 4.12. Intellectual Property. Schedule 4.12 attached hereto
lists all material Intellectual Property owned, possessed or used by the
Issuer, International or any of the Subsidiaries and the general nature of the
Issuer's, International's, the Subsidiary's, and/or third party's rights
therein. For any Intellectual Property for which disclosure on Section
4.12attached hereto would impair the rights therein of the Issuer,
International or any of the Subsidiaries, a summary description of such
Intellectual Property appears on Schedule 4.12attached hereto. The Issuer,
International and each of the Subsidiaries has taken reasonable steps to
maintain, protect and safeguard its Intellectual Property, including all
Intellectual Property that would be impaired or jeopardized by improper
disclosure. Except as set forth on Schedule 4.12 attached hereto, to the
knowledge of the Issuer and International: (i) the Intellectual Property is
free and clear of all material Liens, encumbrances or other defects, and all
outstanding orders, judgments, decrees or other agreements that would
materially affect its value or use, and is not subject to any royalty or other
payment obligations to third parties; (ii) no other Intellectual Property is
required to permit the Issuer, International or any of the Subsidiaries to
conduct its business as presently conducted; (iii) the conduct of the
Issuer's, International's, and each of the Subsidiary's businesses as
presently conducted does not result in the material infringement or other
material impairment of the intellectual property rights of any third party
("Infringement"); (iv) the Issuer, International, and any of the Subsidiaries
has not received notice and is not otherwise aware of any action, suit or
proceeding alleging such Infringement; and (v) the transactions contemplated
by the Transaction Documents and the Redemption Offer will not materially
impair the Issuer's, International's, and any of the Subsidiaries' rights in
or to any Intellectual Property owned by a third party.
Section 4.13. Environmental Matters; Compliance with Laws. Except as
disclosed in Schedule 4.13 attached hereto:
(a) The Issuer, International and each of the Subsidiaries is in
material compliance with all applicable foreign, federal, state and local
laws, statutes, rules and regulations relating to the protection of the
environment or human health ("Environmental Laws") and holds, and is in
material compliance with, all material permits or other authorizations
required under applicable Environmental Laws in order to conduct the current
business or businesses of the Issuer, International and each of the
Subsidiaries; and
(b) To the knowledge of the Issuer and International, there is no
event or condition that would reasonably be expected to result in a material
liability to Issuer, International or any of the Subsidiaries under
Environmental Laws and that would be subject to disclosure pursuant to the
requirements of the Securities Act or the Exchange Act or the regulations
promulgated pursuant to those Acts, if those requirements were currently
applicable to the Issuer, International or any of the Subsidiaries.
Section 4.14. Certain Matters. International's Annual Report on Form
10-K for the fiscal year ending September 30, 1996 (the "1996 10-K") complied
as to form when filed in all material respects with the requirements of the
Exchange Act. The 1996 10-K as of the date of its filing, did not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. Except as disclosed in Schedule 4.14 attached hereto
and other than as a result of the transactions contemplated by or resulting
from this Purchase Agreement, the Redemption Agreement or the Redemption
Offer, since September 30, 1996, there has been no event or circumstance of
which any individual person specified in Section 11.05(a) is aware that would
require any revision to the disclosure included in the 1996 10-K in response
to the following items of Regulation S-K: 101 (Description of Business), 102
(Description of Property), 103 (Legal Proceedings), 303 (Managements'
Discussion and Analysis of Financial Condition and Results of Operations), 304
(Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure), 401 (Directors, Executive Officers, Promoters and Control
Persons), 402 (Executive Compensation), 403 (Security Ownership of Certain
Beneficial Owners and Management) and 404 (Certain Relationships and Related
Transactions). All financial statements contained in the 1996 10-K or other
documents complied as to form and substance with all applicable rules and
regulations of the Commission. The Issuer has no assets other than the shares
of capital stock of International, and the Issuer has no material liabilities
or obligations other than those arising under the Stockholders Agreement, the
Stock Subscription Agreement, the Option Plan, the Transaction Documents, and
as contemplated by the Redemption Offer. International has filed all reports
and other documents required to be filed in accordance with the rules and
regulations of the Commission on a timely basis.
Section 4.15. Taxes. Since December 1, 1993, the Issuer, International
and each Subsidiary has or will have filed prior to or on the Closing Date all
material Tax returns, statements, reports and forms (including estimated Tax
returns and reports) required to be filed by it or them or on its or their
behalf on or before the Closing Date with any Taxing Authority (collectively,
the "Returns"). The Returns have been or will be filed when due in accordance
with all applicable laws and, as of the time of filing, were or will be
correct and complete in all material respects regarding the income, costs,
business, assets, operations, activities and status of the Issuer,
International and the Subsidiaries and any other items of information required
to be shown therein. Neither the Issuer, International nor any Subsidiary is
or will be delinquent in the payment of any Tax due and payable as shown on
any Return, or has requested or will request prior to or on the Closing Date
any extension of time within which to file or send any Return which has not
since been filed or sent. All tax years for the Issuer and International
prior to the fiscal year ending September 30, 1989 have been closed by
operation of law.
Section 4.16. Compliance with Laws. Except as set forth in Schedule
4.16 attached hereto, the Issuer, International and the Subsidiaries are not
in material violation of, and they have conducted their respective businesses
in all material respects in accordance with, all applicable laws, rules and
regulations, foreign and domestic, and neither the Issuer, International nor
any of the Subsidiaries is in default with respect to any order, judgment,
award, injunction or decree of any court, governmental authority, regulatory
authority or arbitrator.
Section 4.17. Broker's or Finder's Commissions. Except for the
Permitted Fees, no broker's or finder's fee or commission or investment
banking fee has been or will be payable, or asserted to be payable by the
Issuer, International or any of the Subsidiaries with respect to the issuance
and sale of the New Shares to the Purchasers or the transactions contemplated
by this Purchase Agreement or the Redemption Agreement as a result of any
action by or on behalf of the Issuer or International.
Section 4.18. Representations and Warranties. Subject to Section 9.01,
the representations and warranties contained in the foregoing Section 4.01
through Section 4.17 of this Purchase Agreement, inclusive, are made as of the
date of this Purchase Agreement and as of the Closing Date.
Notwithstanding any other provision of this Purchase Agreement or
otherwise, neither the Issuer nor International shall be deemed to have made
any representation or warranty other than those expressly made in Sections
4.01 through 4.17 hereof. Without limiting the generality of the foregoing,
and notwithstanding any otherwise express representation or warranty made by
the Issuer and International in Sections 4.01 through 4.17 hereof, neither
makes any representation and warranty to the Purchasers with respect to:
(a) any projections, estimates, or budgets heretofore delivered to
or made available to the Purchasers of future revenues, expenses or
expenditures, results of operations, profitability, budgets, market conditions
or new developments; or
(b) any other information or documents made available to the
Purchasers or their counsel, accountants or advisers with respect to the
Issuer or International, except as expressly covered by a representation or
warranty contained in Sections 4.01 through 4.17 hereof.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
The Purchasers hereby jointly and severally represent and warrant to the
Issuer and International and each of them as follows:
Section 5.01. Organization; Good Standing; Qualification; and Power.
Each of BCPII, BOCP and BFIP is a limited partnership duly organized and
existing in good standing under the laws of the State of Delaware, the Cayman
Islands and the State of Delaware, respectively. Each of BCPII, BOCP and BFIP
has all requisite power and authority and all material governmental licenses,
authorizations, consents and approvals to own, lease and operate its
respective properties and to carry on its respective business or businesses as
now being conducted. Each of BCPII, BOCP and BFIP is duly qualified as a
foreign limited partnership and is in good standing to do business in every
jurisdiction in which such qualification is necessary because of the nature of
the properties owned, leased or operated by it or the nature of the businesses
conducted by it, except in such jurisdictions in which, in the aggregate, the
failure to so qualify would not have a Material Adverse Effect on it.
Section 5.02. Authority. Each of the Purchasers has the full power and
authority to execute and deliver this Purchase Agreement and to consummate the
transactions contemplated hereby. This Purchase Agreement constitutes a valid
and legally binding obligation of each of the Purchasers, enforceable against
each Purchaser in accordance with its terms.
Section 5.03. No Conflict or Violation. The execution, delivery, and
performance of this Purchase Agreement by the Purchasers do not and shall not:
(a) violate the agreement of limited partnership of any Purchaser; (b) violate
any provision of law or any order, judgment, or decree of any court or other
governmental or regulatory authority applicable to any Purchaser; and (c)
violate or result in a breach of or constitute (with due notice or lapse of
time or both) a default under any loan agreement, mortgage, security
agreement, indenture, or other material agreement or instrument to which any
Purchaser is a party or by which any Purchaser is bound or to which any of its
material properties or assets is subject.
Section 5.04. No Consent. No authorization, consent, approval,
exemption, or other action by or notice to or filing with any court or
administrative or governmental body (other than pursuant to the
Hart-Scott-Rodino Act) or any third party is required to permit any of the
Purchasers to execute and deliver this Purchase Agreement, to consummate the
transactions contemplated by this Purchase Agreement, to comply with and
fulfill the terms and conditions of this Purchase Agreement, or to purchase
the New Shares.
Section 5.05. Investment Intent. Each of the Purchasers is acquiring
the New Shares for its own account for the purpose of investment and not with
a view to, or for sale in connection with, any distribution thereof within the
meaning of the Securities Act (subject to the disposition of the New Shares
remaining in the Purchasers control). Each of the Purchasers will not sell or
otherwise dispose of any of the New Shares in a manner which would require
registration under the Securities Act or any applicable Blue Sky Law unless
such registrations are effected. Each of the Purchasers acknowledges and
agrees that the certificates representing the New Shares shall bear a legend
in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE OR FOREIGN
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT IN
COMPLIANCE THEREWITH. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO A STOCKHOLDERS AGREEMENT, DATED AS OF JANUARY 29, 1997, COPIES OF
WHICH WILL BE FURNISHED BY HAYNES HOLDINGS, INC. OR ANY SUCCESSOR THERETO UPON
REQUEST AND WITHOUT CHARGE."
Section 5.06. Bankruptcy. None of Purchasers is involved in any
proceedings by or against it in any court under bankruptcy law or any other
insolvency or debtor's relief law, whether Federal, state or foreign, or for
the appointment of a trustee, receiver, liquidator, assignee, sequestrator, or
other similar official.
Section 5.07. ERISA. No part of the funds used by any of the Purchasers
to pay the Aggregate Purchase Price constitutes or will constitute assets
allocated to any separate account (as defined in Section 3(17) of ERISA,
including any pooled separate accounts) maintained by the Purchasers or any
Affiliate of any of the Purchasers, in which one or more of the employee
benefit plans set forth in Schedule 5.07 attached hereto participates in the
aggregate to the extent of more than ten percent (10%) of the value of such
separate account.
Section 5.08. Access to Information. Each of the Purchasers has
received and reviewed a copy of the Final Prospectus of International, dated
August 20, 1996, relating to the public offering of the 11 5/8% Senior Notes
due 2004 of International, a copy of the press release issued by International
on October 18, 1996, a copy of the 1996 10-K, a copy of the press release
issued by International on January 7, 1996, a copy of the Form 8-K filed with
the Commission on January 22, 1996, and a copy of the Senior Note Indenture.
Each of the Purchasers has had an opportunity to ask questions of, and receive
answers from, the management of the Issuer and International concerning the
operations and financial condition of the Issuer, International and the
Subsidiaries and the Business in order to make an informed decision to
purchase the New Shares.
Section 5.09. Sophistication of the Purchasers. Each of the Purchasers
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the New Shares.
Section 5.10. Accredited Investor. Each of the Purchasers is an
"accredited investor" as that term is defined by Rule 501 of Regulation D
promulgated by the Commission.
Section 5.11. Brokers or Finders Commissions. Except for the Permitted
Fees, no broker's or finder's fee or commission or investment banking fee has
been or will be payable, or asserted to be payable by any of the Purchasers,
the Issuer, International or any of the Subsidiaries with respect to the
purchase of the New Shares from the Issuer or the transactions contemplated by
this Purchase Agreement as a result of any action by or on behalf of any of
the Purchasers.
Section 5.12. Representations and Warranties. Subject to Section 8.01,
the representations and warranties contained in the foregoing Section 5.01
through 5.11 of this Purchase Agreement, inclusive, are made as of the date of
this Purchase Agreement and as of the Closing Date.
ARTICLE VI.
COVENANTS OF THE ISSUER AND INTERNATIONAL
Section 6.01. Actions Before the Closing Date. From the date hereof
until the Closing Date, the Issuer shall, and shall cause International and
the Subsidiaries to:
(a) (i) continue to conduct the affairs of the Issuer,
International and the Subsidiaries in the ordinary course consistent with past
practices (ii) not make any payments (including without limitation any
dividend payments) to or in respect of their respective stockholders,
directors, or Personnel, (iii) not grant any increase, or announce any
increase, in benefits payable by the Issuer, International or any of the
Subsidiaries to any Personnel under any Employee Benefit Plan, or establish or
increase, or promise to increase or accelerate, the payment or vesting of any
benefits under any Employee Benefit Plan with respect to Personnel, in any
case except (A) as required by law, or (B) that involve only increases
consistent with past practices; (iv) not make any change to the certificate of
incorporation (or other organizational document) or by-laws of the Issuer,
International or any of the Subsidiaries, (v) not issue any shares of capital
stock of the Issuer, International or any of the Subsidiaries or grant any
options or rights with respect thereto; and (vi) not take any action which
shall cause the Issuer or International to be in breach of any representation,
warranty, covenant or agreement contained in any Transaction Document or cause
the Issuer or International to be unable to perform in any material respect
its obligations hereunder or thereunder;
(b) afford to the Purchasers, and to the accountants, counsel,
actuaries and representatives of the Purchasers, full and complete access,
upon reasonable notice and during normal business hours prior to the Closing
Date (or the earlier termination of this Purchase Agreement pursuant to
Article X), to all books and records relating to the Issuer, International,
the Subsidiaries and the Business and make, during that period and upon the
preceding terms, their respective Personnel, counsel, actuaries and
independent accountants available to discuss with the Purchasers and their
counsel, actuaries and representatives those aspects of the Issuer,
International, the Subsidiaries and the Business which the Purchasers and
their counsel, actuaries and representatives may reasonably deem necessary or
desirable; and
(c) use commercially reasonable best efforts (subject to any
conditions set forth in this Purchase Agreement) to perform and satisfy all
obligations, covenants, agreements and conditions to Closing to be performed
or satisfied under this Purchase Agreement by the Issuer, International or the
Subsidiaries as the case may be, including action necessary to obtain all
consents and approvals of third parties required to be obtained by the Issuer
or International to effect the transactions contemplated by this Purchase
Agreement.
Section 6.02. Stand Still. Except as expressly provided for in the
Transaction Documents or as expressly contemplated by the Redemption Offer, so
long as this Purchase Agreement is in effect and until the Closing, the Issuer
shall not, directly or indirectly, solicit any inquiries or proposals or enter
into or continue any discussions, negotiations, or agreements relating to the
sale or exchange of securities of the Issuer or International, or the merger
or consolidation of the Issuer or International with, or any direct or
indirect disposition of a significant amount of the Business to, any Person
other than Purchasers, or provide any assistance or any information to or
otherwise cooperate with any Person in connection with any such inquiry,
proposal, or transaction.
Section 6.03. Notification of Certain Matters. The Issuer shall give
prompt notice to the Purchasers of (a) the occurrence, or failure to occur, of
any event which occurrence or failure would be likely to cause any
representation or warranty of the Issuer or International contained in this
Purchase Agreement to be untrue or inaccurate in any material respect at any
time from the date hereof to the Closing Date, and (b) any failure of the
Issuer or International to comply with or satisfy any covenant, condition, or
agreement to be complied with or satisfied by the Issuer or International
hereunder. The Issuer and International shall use their commercially
reasonable best efforts to remedy promptly any such failure.
Section 6.04. Redemption Offer. The Issuer shall, as soon as
practicable after the Closing Date, commence the Redemption Offer. The Issuer
shall use its commercially reasonable best efforts to consummate the
Redemption Offer on substantially the same terms and conditions as are stated
in the Consent Solicitation and Offer to Redeem for Cash set forth as Exhibit
I-E hereto as soon as legally permissible. The Issuer agrees that it shall
not deliver any other offer to redeem or purchase shares of capital stock
(other than pursuant to the Exercise and Repurchase Agreement) or any other
document in connection with the Redemption Offer without the prior approval of
the Purchasers, which approval shall not be unreasonably withheld or delayed.
ARTICLE VII.
COVENANTS OF THE PURCHASERS
Section 7.01. Actions Before the Closing Date. None of the Purchasers
shall take any action which shall cause it to be in breach of any
representation, warranty, covenant, or agreement contained in this Purchase
Agreement or cause it to be unable to perform in any material respect its
obligations hereunder, and each of the Purchasers shall use commercially
reasonable best efforts (subject to any conditions set forth in this Purchase
Agreement) to perform and satisfy all conditions to Closing to be performed or
satisfied by such Purchaser under this Purchase Agreement, including action
necessary to obtain all consents and approvals of third parties required to be
obtained by such Purchaser to effect the transactions contemplated by this
Purchase Agreement.
Section 7.02. Confidentiality. If the Closing hereunder shall not
occur, (a) none of the Purchasers shall directly or indirectly use, for its
own benefit or otherwise, or disclose to any other Person any of the
information acquired from the Issuer, International, the Subsidiaries or their
representatives pursuant to this Purchase Agreement or in connection with the
transactions contemplated hereby, except to the extent that such information
(i) is or becomes generally available to the trade or the public other than as
a result of a disclosure by such Purchaser or its representatives, (ii)
becomes available to the Purchaser from a source other than the Issuer,
International, the Subsidiaries or their representatives, which source was not
itself bound by a confidentiality agreement with the Issuer, International,
the Subsidiaries or their representatives, or (iii) is required to be
disclosed by law or order of a court or governmental body, and (b) upon the
request of Issuer or International, each Purchaser shall return to the Issuer
or International, as the case may be, all documents and copies thereof
delivered to such Purchaser by the Issuer, International, the Subsidiaries or
their representatives hereunder or in connection herewith. The obligations
set forth above shall be in addition to and shall not supersede the
obligations set forth in that certain Confidentiality Agreement, dated
November 8, 1996, by and among the Issuer, International and the Blackstone
Group.
Section 7.03. Notification of Certain Matters. The Purchasers shall
give prompt notice to the Issuer and International of (a) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty of the Purchasers contained in this
Purchase Agreement to be untrue or inaccurate in any material respect at any
time from the date hereof to the Closing Date, and (b) any failure of any of
the Purchasers to comply with or satisfy any covenant, condition, or agreement
to be complied with or satisfied by any of the Purchasers hereunder. Each of
the Purchasers shall use commercially reasonable best efforts to remedy
promptly any such failure.
Section 7.04. Financial Accommodations. The Purchasers shall use
commercially reasonable efforts to arrange for International to obtain (a)
such financing as shall be required for International to (i) satisfy its
obligations in respect of the Change of Control Offer and (ii) make such
capital expenditures and investments and consummate such acquisitions as shall
be approved by International's Board of Directors and stockholders and (b) an
increase of $10,000,000 in its existing line of credit from Congress Financial
Corporation (Central) and CoreStates Bank N.A.
ARTICLE VIII.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ISSUER
The obligation of the Issuer to issue and sell the New Shares to the
Purchasers on the Closing Date is subject to the fulfillment, at or before the
Closing, of the following conditions, any one or more of which may be waived
in writing by the Issuer in its sole discretion:
Section 8.01. Representations and Warranties of the Purchasers. All
representations and warranties made by the Purchasers in this Purchase
Agreement shall be true and correct on and as of the Closing Date as if made
by the Purchasers on and as of that date, and the Issuer shall have received a
certificate to that effect from the Purchasers dated the Closing Date.
Section 8.02. Performance of the Obligations of the Purchasers. The
Purchasers shall have performed in all material respects all obligations
required under this Purchase Agreement to be performed by the Purchasers on or
before the Closing Date, and the Issuer shall have received a certificate to
that effect from the Purchasers dated the Closing Date.
Section 8.03. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, that declares this Purchase Agreement or any
of the other Transaction Documents or the Redemption Offer invalid or
unenforceable in any respect or prevents the consummation of the transactions
contemplated hereby or thereby shall be in effect, and no proceeding relating
to any order shall have commenced.
Section 8.04. Required Approvals. All consents and approvals of any
governmental authority or any third party (including Congress Financial
Corporation (Central) and Corestates Bank N.A.) necessary to permit the
consummation of the transactions contemplated by this Purchase Agreement or
any of the other Transaction Documents, including the Redemption Offer, shall
have been received. The applicable waiting period, including extensions
thereof, under the Hart-Scott-Rodino Act shall have expired or been terminated
early.
Section 8.05. Amended Stockholders Agreement. Each of the Purchasers
shall have duly executed the Amended Stockholders Agreement.
Section 8.06. Section 280G Approval. Those stockholders of the Issuer
who own more than 75% of the voting power of all outstanding stock of the
Issuer immediately before the Closing Date shall have approved, pursuant to a
vote satisfying the requirements of Section 280G(b)(5) of the Code, all
payments and deemed payments that, absent such approval, would be "parachute
payments" within the meaning of Code Section 280G(b)(2).
ARTICLE IX.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASERS
The obligation of the Purchasers to purchase, acquire, and accept the New
Shares from the Issuer on the Closing Date is subject to the fulfillment, at
or before the Closing, of the following conditions, any one or more of which
may be waived in writing by the Purchasers in their sole discretion:
Section 9.01. Representations and Warranties of the Issuer and
International. All representations and warranties made by the Issuer and
International in this Purchase Agreement and the other Transaction Documents
shall be true and correct on and as of the Closing Date as if made by the
Issuer and International on and as of such date, and the Purchasers shall have
received a certificate to that effect from the Issuer and International dated
the Closing Date; provided, however, such certificate shall be subject to
Section 10.03.
Section 9.02. Performance of the Obligations of the Issuer. The Issuer
shall have performed in all material respects all obligations required under
this Purchase Agreement to be performed by the Issuer on or before the Closing
Date, and the Purchasers shall have received a certificate to that effect from
the Issuer dated the Closing Date.
Section 9.03. Certificates of Fund II and MLGAL. The Purchasers shall
have received copies of the certificates delivered by Fund II and MLGAL
pursuant to Section 3.02(c) of the Redemption Agreement related to their
representations and warranties in the Redemption Agreement.
Section 9.04. Certificate of the Option Holders. The Purchasers shall
have received copies of the certificates delivered by the Option Holders
pursuant to Section 7 of the Exercise and Repurchase Agreement related to the
Option Holders' representations and warranties in the Exercise and Repurchase
Agreement.
Section 9.05. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, which declares this Purchase Agreement or any
of the other Transaction Documents or the Redemption Offer invalid or
unenforceable in any respect or prevents the consummation of the transactions
contemplated hereby or thereby shall be in effect, and no proceeding relating
to any such order shall have commenced.
Section 9.06. Required Approvals. All consents and approvals of any
governmental authority or any third party (including Congress Financial
Corporation (Central) and Corestates Bank N.A.) necessary to permit the
consummation of the transactions contemplated by this Purchase Agreement or
any of the other Transaction Documents, including the Redemption Offer, shall
have been received. The applicable waiting period, including extensions
thereof, under the Hart-Scott-Rodino Act shall have expired or been terminated
early.
Section 9.07. Amended Stockholders Agreement. The Issuer, Fund II,
MLGAL and the Management Holders shall have duly executed the Amended
Stockholders Agreement.
Section 9.08. Fifth Amendment to Subscription Agreement. The Issuer,
International and the Management Holders shall have duly executed the Fifth
Amendment to Subscription Agreement.
Section 9.09. Other Transactions. The Stock Redemption Agreement, the
Escrow Agreement and the Exercise and Repurchase Agreement shall have been
executed and delivered by all parties thereto and all conditions precedent to
the performance of the parties' obligations thereunder shall have been
satisfied or waived.
Section 9.10. Waiver of Management Holders' Bid Right. The Management
Holders shall have waived their right to bid granted in Section 2.5 of the
Stockholders Agreement.
Section 9.11. Waiver of Right of First Refusal. The Holders (as defined
in the Subscription Agreement) shall have waived their right of first refusal
in Section 9.4 of the Subscription Agreement.
ARTICLE X.
TERMINATION
Section 10.01. Conditions of Termination.
(a) Notwithstanding anything to the contrary contained herein, this
Purchase Agreement may be terminated, and the transactions contemplated hereby
may be abandoned, at any time before completion of the Closing, by mutual
consent of the Issuer and the Purchasers. This Purchase Agreement shall
terminate without action by any party hereto if completion of the Closing does
not occur on or before February 28, 1997, if any condition to the Closing
shall not have been satisfied or waived by such date; provided, however, that
this Purchase Agreement may not be terminated by a party if the failure of the
Closing to occur by such date is due to the breach of any provision hereof by
such party.
(b) This Purchase Agreement may, by notice given in the manner
hereinafter provided, be terminated and abandoned at any time prior to
completion of the Closing:
(i) by the Issuer or International if there has been a material
misrepresentation in Article V hereof by the Purchasers (or any of them) or a
material default or breach by the Purchasers (or any of them) with respect to
the Purchasers' due and timely performance of any of the Purchasers' covenants
and agreements contained in this Purchase Agreement, and such
misrepresentation, default, or breach shall not have been cured within ten
(10) days after receipt by the Purchasers of notice specifying particularly
such misrepresentation, default, or breach; or
(ii) by the Purchasers if there has been a material
misrepresentation in Article IV hereof by the Issuer or International or a
material default or breach by the Issuer or International with respect to the
Issuer's or International's due and timely performance of any of the Issuer's
or International's covenants and agreements contained in this Purchase
Agreement, and such misrepresentation, default or breach shall not have been
cured within ten (10) days after receipt by the Issuer of notice specifying
particularly such misrepresentation, default or breach.
Section 10.02. Effect of Termination. In the event of termination
pursuant to Section 10.01, this Purchase Agreement shall terminate and have no
further effect except for the provisions set forth in Sections 4.17, 5.11,
7.02 and 11.02 which shall remain in effect for a period of ten (10) years
following the termination date (but no party shall have any obligation to pay
the Permitted Fees if this Purchase Agreement is terminated), with no
liability on the part of any party hereto, other than liability arising out of
a material breach by that party of any representation, warranty, covenant, or
agreement contained herein prior to the termination date.
Section 10.03. Exclusive Remedy. In the event of any breach of the
representations and warranties set forth in Article IV of this Purchase
Agreement (other than those contained in Sections 4.01 through 4.05,
inclusive, and Section 4.17) or any breach or misrepresentation in the
certificate delivered by the Issuer and International pursuant to Section 9.01
with respect to the representations and warranties set forth in Article IV of
this Purchase Agreement (other than those contained in Sections 4.01 through
4.05, inclusive, and Section 4.17), the Purchasers' sole and exclusive remedy
shall be to terminate this Purchase Agreement prior to completion of the
Closing pursuant to Section 10.01 (b)(ii) of this Purchase Agreement, and no
legal action at law or in equity shall be initiated or maintained against the
Issuer, International or any other Person which is directly or indirectly
related to a breach of such representations and warranties (or a breach or
misrepresentation in such certificate related to such representations and
warranties), including a breach of the obligations of the Issuer and
International under Section 6.01 or Section 6.03.
ARTICLE XI.
MISCELLANEOUS
Section 11.01. Public Announcements. No party shall make any press
release or public announcement concerning the transactions contemplated by
this Purchase Agreement prior to or after the Closing Date, except as required
by law or as agreed upon by the Issuer and the Purchasers.
Section 11.02. Expenses. The Issuer shall cause International to pay on
the Closing Date all legal expenses of the parties incurred in connection with
this Purchase Agreement, and the Issuer shall cause International to pay on
the Closing Date all of the Permitted Fees.
Section 11.03. Notices. All notices, requests, demands, and other
communications under this Purchase Agreement shall be in writing and shall be
deemed to have been duly given (a) on the date of service if served personally
on the party to whom notice is to be given, (b) on the day of transmission if
sent via facsimile transmission to the facsimile number given below, provided
that telephonic confirmation of receipt is obtained promptly after completion
of transmission, (c) on the day after delivery to a nationally recognized
overnight courier service or the Express Mail service maintained by the United
States Postal Service, or (d) on the fifth (5th) day after mailing, if mailed
to the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and addressed as follows:
If to Issuer or International, to:
Haynes International, Inc.
1020 West Park Avenue
Kokomo, IN 46904
Attn: Michael D. Austin
Tel. No. 317-456-6000
Fax No. 317-456-6905
With a copy to:
John R. Thornburgh, Esq.
Ice Miller Donadio & Ryan
One American Square
Box 82001
Indianapolis, IN 46282
Tel. No. 317-236-2405
Fax No. 317-236-2219
which copy alone shall not constitute notice for the purposes of this
Purchase Agreement.
If to any of the Purchasers, to:
The Blackstone Group
345 Park Avenue, 31st Floor
New York, New York 10154
Attn: David S. Blitzer
Tel. No. (212) 935-2626
Fax. No. (212) 754-8710
With a copy to:
Peter J. Gordon, Esq.
Simpson Thatcher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Tel. No. (212) 455-2000
Fax. No. (212) 455-2502
which copy alone shall not constitute notice for the purposes of this
Purchase Agreement.
Any party may change its address for the purpose of this Section 11.03 by
giving the other parties written notice of its new address in the manner set
forth above.
Section 11.04. Headings. The article, section, and paragraph headings
in this Purchase Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Purchase Agreement.
Section 11.05. Construction.
(a) As used herein, "knowledge of the Issuer," "knowledge of
International" and "knowledge of the Issuer and International" shall mean the
actual, collective knowledge of Michael D. Austin, Joseph F. Barker, Theodore
T. Brown, August A. Cijan, F. Galen Hodge, Frank J. LaRosa, Michael F. Rothman
and Charles J. Sponaugle.
(b) The words "hereof", "herein", "hereto", "hereunder" and
"hereinafter" and words of similar import, when used in this Purchase
Agreement, shall refer to this Purchase Agreement as a whole and not to any
particular provision of this Purchase Agreement.
(c) The parties have participated jointly in the negotiation and
drafting of this Purchase Agreement, and, in the event of an ambiguity or a
question of intent or a need for interpretation arises, this Purchase
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any of the provisions of this Purchase
Agreement.
(d) Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(e) The word "including" means "including, without limitation."
Section 11.06. Severability. If any provision of this Purchase
Agreement is declared by any court or other governmental body to be null,
void, or unenforceable, this Purchase Agreement shall be construed so that the
provision at issue shall survive to the extent it is not so declared and that
all of the other provisions of this Purchase Agreement shall remain in full
force and effect.
Section 11.07. Entire Agreement. This Purchase Agreement, the Stock
Redemption Agreement and the Escrow Agreement (and the exhibits and schedules
hereto and thereto) contain the entire understanding among the parties hereto
with respect to the transactions contemplated hereby and supersedes and
replaces all prior and contemporaneous agreements, understandings,
representations or warranties, oral or written, with regard to those
transactions. All Exhibits and Schedules hereto are expressly made a part of
this Purchase Agreement as fully as though completely set forth herein.
Section 11.08. Amendments; Waivers. This Purchase Agreement may be
amended or modified, and any of the terms, covenants, representations,
warranties, or conditions hereof may be waived, only by a written instrument
executed by the parties hereto, or in the case of a waiver, by the party
waiving compliance. Any waiver by any party of any condition, or of the
breach of any provision, term, covenant, representation, or warranty contained
in this Purchase Agreement, in any one or more instances, shall not be deemed
to be or construed as a further or continuing waiver of any condition or of
the breach of any other provision, term, covenant, representation, or warranty
of this Purchase Agreement.
Section 11.09. Parties in Interest. Nothing in this Purchase Agreement
is intended to confer any rights or remedies under or by reason of this
Purchase Agreement on any Person other than the Issuer, International and the
Purchasers and their respective successors and permitted assigns.
Section 11.10. Successors and Assigns. No party hereto shall assign or
delegate this Purchase Agreement or any rights or obligations hereunder
without the prior written consent of the other parties hereto, and any
attempted assignment or delegation without prior written consent shall be void
and of no force or effect. This Purchase Agreement shall inure to the benefit
of and shall be binding upon the successors and permitted assigns of the
parties hereto.
Section 11.11. Governing Law. This Purchase Agreement shall be
construed and enforced in accordance with, and governed by, the laws of the
State of New York applicable to contracts made and to be performed in such
state.
Section 11.12. Counterparts. This Purchase Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
shall together constitute the same instrument.
Section 11.13. Survival. The representations and warranties contained
in Article IV of this Purchase Agreement (other than those in Sections 4.01
through 4.05, inclusive, and in Section 4.17) and contained in, or deemed
contained in, the certificate delivered by the Issuer and International
pursuant to Section 9.01 (other than the confirmation of the representations
and warranties made in Sections 4.01 through 4.05, inclusive, and in Section
4.17) shall expire on the Closing Date immediately following the Closing. The
representations and warranties in Section 4.01 through 4.05, inclusive, and
Section 4.17 of this Purchase Agreement and in Article V of this Purchase
Agreement shall survive the Closing for a period of three (3) years.
Section 11.14. Subsequent Documentation. At any time and from time to
time after the Closing Date, the Issuer shall, upon the request of the
Purchasers, and the Purchasers shall, upon the request of the Issuer, promptly
execute, acknowledge, and deliver, or cause to be executed, acknowledged, and
delivered, such further instruments and other documents, and perform or cause
to be performed such further acts, as may be reasonably required to evidence
or effectuate the issuance, sale, and delivery hereunder of the New Shares,
the performance by the parties of any of their other respective obligations
under this Purchase Agreement, and to carry out the purposes and intent of
this Purchase Agreement.
Section 11.15. Specific Performance. Each of the parties agrees that
damages for a breach of or default under this Purchase Agreement would be
inadequate and that in addition to all other remedies available at law or in
equity the parties and their successors and assigns shall be entitled to
specific performance or injunctive relief, or both, in the event of a breach
or a threatened breach of this Purchase Agreement.
(The remainder of this page intentionally left blank.)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their duly authorized representatives, this Purchase Agreement as
of the date first above written.
"PURCHASERS"
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
By: BLACKSTONE MANAGEMENT ASSOCIATES II L.L.C., Its General Partner
By: /s/ David A. Stockman
David A. Stockman, Member
BLACKSTONE OFFSHORE
CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
By: BLACKSTONE MANAGEMENT ASSOCIATES II L.L.C., Its General Partner
By: /s/ David A. Stockman
David A. Stockman, Member
BLACKSTONE FAMILY
INVESTMENT PARTNERSHIP L.P.
By: BLACKSTONE MANAGEMENT ASSOCIATES II L.L.C., Its General Partner
By: /s/ David A. Stockman
David A. Stockman, Member
"ISSUER"
HAYNES HOLDINGS, INC.
By: /s/ J F Barker
Its: Vice President, Finance
"INTERNATIONAL"
HAYNES INTERNATIONAL, INC.
By: /s/ Michael D. Austin
Its: President
<PAGE>
Listed below is a summary of the Schedules and Exhibits to the Stock
Purchase Agreement. Copies of the Schedules and Exhibits may be obtained upon
request to the Registrant.
1. Schedule 4.05-List of Option Holders
2. Schedule 4.07-Subsidiaries
3. Schedule 4.08-Financial Statements
4. Schedule 4.09-Absence of Certain Changes
5. Schedule 4.10(a)-Employee Benefit Plans
6. Schedule 4.10(b)-Employee Benefit Plan Funding and Compliance
7. Schedule 4.10(d)-Retiree Benefits
8. Schedule 4.10(e)-Material Claims
9. Schedule 4.11-Collective Bargaining Agreements,Employment
Agreements and Benefit Plans
10. Schedule 4.12-Intellectual Property
11. Schedule 4.13-Environmental Matters; Compliance with Laws
12. Schedule 4.14-Certain Matters
13. Schedule 4.16-Compliance with Laws
14. Schedule 5.07- ERISA
15. Exhibit I-A- Amended Stockholders Agreement
16. Exhibit I-B-Exercise and Repurchase Agreement
17. Exhibit I-C- Fifth Amendment to Stock Subscription Agreement
18. Exhibit I-D- Redemption Agreement
19. Exhibit I-E- Redemption Offer
STOCK REDEMPTION AGREEMENT
dated as of January 24, 1997
by and among
MLGA Fund II, L.P.,
MLGAL PARTNERS, L.P.,
and
HAYNES HOLDINGS, INC.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I. DEFINITIONS 1
ARTICLE II. REDEMPTION AND SALE 4
Section 2.01. Redemption and Repurchase of the Redeemed Shares 4
Section 2.02. Per Share Purchase Price 4
Section 2.03. Time and Manner of Redemption and Repurchase 5
Section 2.04. Fair Consideration 5
ARTICLE III. CLOSINGS 5
Section 3.01. Closing, Time and Place 5
Section 3.02. Deliveries to the Corporation at the Initial Closing 5
Section 3.03. Deliveries to Sellers at the Initial Closing 6
Section 3.04. Deliveries at the Subsequent Closing 6
ARTICLE IV. SEVERAL REPRESENTATIONS AND WARRANTIES OF THE 7
SELLERS
Section 4.01. Organization of Fund II 7
Section 4.02. Organization of MLGAL 7
Section 4.03. Title to Shares 7
Section 4.04. Authority 7
Section 4.05. No Conflict or Violation 7
Section 4.06. No Consent 8
Section 4.07. Broker's or Finder's Commissions 8
Section 4.08. Representations and Warranties 8
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION 8
Section 5.01. Organization; Qualification 8
Section 5.02. Authority 8
Section 5.03. No Conflict or Violation 9
Section 5.04. No Consent 9
Section 5.05. Bankruptcy 9
Section 5.06. Broker's or Finder's Commissions 9
Section 5.07. Representations and Warranties 9
ARTICLE VI. COVENANTS OF THE CORPORATION 10
Section 6.01. Redemption of the Redemption Share 10
Section 6.02. Fees 10
ARTICLE VII. TAXES 10
Section 7.01. Taxes 10
Section 7.02. Cooperation on Tax Matters 10
ARTICLE VIII. TERMINATION 10
Section 8.01. Conditions of Termination 10
Section 8.02. Effect of Termination 10
ARTICLE IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS 11
Section 9.01. Conditions Precedent to the Obligations of the Sellers. 11
ARTICLE X. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CORPORATION 11
Section 10.01. Conditions Precedent to the Obligations of the Corporation 11
ARTICLE XI. MISCELLANEOUS 11
Section 11.01. Public Announcements 11
Section 11.02. Expenses 11
Section 11.03. Headings 11
Section 11.04. Construction 11
Section 11.05. Severability 12
Section 11.06. Entire Agreement 12
Section 11.07. Survival 12
Section 11.08. Notices 12
Section 11.09. Amendments; Waivers 13
Section 11.10. Parties in Interest 13
Section 11.11. Successors and Assigns 13
Section 11.12. Governing Law 13
Section 11.13. Counterparts 13
Section 11.14. Subsequent Documentation 13
</TABLE>
<PAGE>
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT ("Agreement") is entered into as of the
24th day of January, 1997 by and among MLGA Fund II, L.P., a Connecticut
limited partnership ("Fund II"), MLGAL PARTNERS, L.P., a Connecticut limited
partnership ("MLGAL"; and together with Fund II, the "Sellers") and Haynes
Holdings, Inc., a Delaware corporation (the "Corporation").
RECITALS
The authorized capital stock of the Corporation consists of 20,000,000
shares of common stock, $.01 par value per share (the "Common Stock"), of
which 6,556,963 shares are issued and outstanding, and 2,000,000 shares of
blank check preferred stock, none of which is issued and outstanding.
Fund II is the record and beneficial owner of 5,434,894 shares of the
Common Stock represented by certificates numbered 173 and 334 (the "Fund II
Shares").
MLGAL is the record and beneficial owner of 86,857 shares of the Common
Stock represented by certificate number 171 (the "MLGAL Shares"; and together
with the Fund II Shares, the "Sellers Shares").
The remaining 1,035,212 shares of the Corporation's issued and
outstanding Common Stock (the "Investors Shares") are owned by certain
individual and other investors (the "Investors").
The Corporation desires to redeem and repurchase from the Sellers, and
the Sellers desire to sell to the Corporation, up to a maximum of 5,217,685 of
the Sellers Shares on the terms and conditions of this Agreement.
AGREEMENT
In consideration of the foregoing and of the respective representations,
warranties, covenants, and agreements herein contained, and intending to be
legally bound, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms have the meanings
indicated below:
"Adverse Claims" has the meaning contained in 8-302 of the New York
Uniform Commercial Code.
"Agreement" means this Stock Redemption Agreement as the same may be
amended, restated, supplemented or modified from time to time in accordance
with its terms.
"Blue Sky Law" means or refers to the law or laws of any state or states
affecting the issuance, sale or transfer of any security of the Corporation.
"Business Day" means any day other than Saturday, Sunday, and any day on
which commercial banks in New York, New York are authorized by law to be
closed.
"Common Stock" has the meaning specified in the Recitals of this
Agreement.
"Corporation" has the meaning specified in the first paragraph of this
Agreement.
"Escrow Agent" means National City Bank, N.A., Indianapolis, Indiana.
"Escrow Agreement" means that certain Escrow Agreement, of even date
herewith, by and among the Escrow Agent, Fund II, MLGAL and the Corporation, a
copy of which is attached hereto as Exhibit I-A.
"Escrow Amount" means $8,361,265.50.
"Escrow Shares" means 823,770 of the Sellers Shares, 810,837 of which are
Fund II Shares and 12,933 of which are MLGAL Shares.
"Files and Records" means all files and records of the Corporation and
International, whether in hard copy or magnetic or other format.
"Fund II" has the meaning specified in the first paragraph of this
Agreement.
"Fund II Shares" has the meaning specified in the Recitals to this
Agreement.
"Initial Closing" has the meaning specified in Section 3.01.
"Initial Closing Date" has the meaning specified in Section 3.01.
"Initial Closing Purchase Price" shall mean $44,598,237.55,
$43,898,049.65 of which is payable to Fund II and $700,187.60 of which is
payable to MLGAL.
"Initial Closing Shares" means 4,393,915 of the Sellers Shares, 4,324,931
of which are Fund II Shares and 68,984 of which are MLGAL Shares.
"International has the meaning specified in Section 6.02.
"Investors" has the meaning specified in the Recitals of this Agreement.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
(statutory or other), option, charge, or sale agreement.
"Material Adverse Effect," when used with respect to a Person, means a
material adverse effect on the assets, operations, business or financial
condition of that Person.
"MLGAL" has the meaning specified in the first paragraph of this
Agreement.
"MLGAL Shares" has the meaning specified in the Recitals to this
Agreement.
"Per Share Price" has the meaning specified in Section 2.02.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, or
unincorporated organization, or any governmental agency, officer, department,
commission, board, bureau, or instrumentality thereof.
"Redemption Offer" means the Issuer's Consent Solicitation and Offer to
Redeem for Cash a certain percentage of the outstanding shares of Common Stock
owned by the stockholders of the Corporation other than Fund II or MLGAL at
$10.15 per share, which shall be made by a Consent Solicitation and Offer to
Redeem for Cash in substantially the form of, and containing only those
material terms and conditions set forth in, Exhibit I-D attached to the Stock
Purchase Agreement.
"Redemption Purchase Price" means that amount equal to the Redemption
Shares multiplied by the Per Share Price.
"Redemption Shares" means the shares of the Common Stock tendered to the
Corporation by the Investors prior to the expiration of the Redemption Offer
which are actually redeemed and repurchased by the Corporation.
"Securities Act" means the Securities Act of 1933, as amended, and any
similar or successor Federal statute and the rules and regulations of the
Securities and Exchange Commission thereunder.
"Sellers" has the meaning specified in the first paragraph of this
Agreement.
"Sellers Shares" has the meaning specified in the Recitals to this
Agreement.
"Stock Purchase Agreement" means that certain Stock Purchase Agreement,
of even date herewith, by and among Blackstone Capital Partners II Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners II Merchant Banking
Fund L.P., Blackstone Family Investment Partnership, L.P., the Corporation and
International.
"Subsequent Closing" has the meaning specified in Section 3.01.
"Subsequent Closing Date" has the meaning specified in Section 3.01.
"Subsequent Closing Shares" means the Escrow Shares less the Redemption
Shares.
"Tax Returns" means any return, report, information return, or other
document (including any related or supporting information) filed or required
to be filed with any governmental agency, department, commission, board,
bureau, or instrumentality in connection with the determination, assessment,
collection, or administration or any Taxes.
"Taxes" means all federal, state, local, or foreign taxes (including
excise taxes, occupancy taxes, employment taxes, unemployment taxes, ad
valorem taxes, custom duties, transfer taxes, and fees), levies, imposts,
fees, impositions, assessments, or other governmental charges of any nature
imposed upon a Person including all taxes or governmental charges imposed upon
any of the personal properties, real properties, tangible or intangible
assets, income, receipts, payrolls, transactions, stock transfers, capital
stock, net worth or franchises of a Person (including all sales, use,
withholding or other taxes which a Person is required to collect and/or pay
over to any government), and all related additions to tax, penalties or
interest thereon.
"Total Shares" means 5,217,685 of the Sellers Shares tendered to the
Corporation by the Sellers to enable the Corporation to satisfy its redemption
obligation under this Agreement, 5,135,768 of which shall be Fund II Shares
and 81,917 of which shall be MLGAL Shares.
ARTICLE II.
REDEMPTION AND SALE
Section 1.021. Redemption and Repurchase of the Redeemed Shares.
Pursuant to Section 2.03 of this Agreement, the Corporation agrees to redeem
and repurchase up to a maximum of 5,217,685 of the Sellers Shares and the
Sellers agree to tender and sell to the Corporation a sufficient number of the
Sellers Shares to enable the Corporation to redeem and repurchase the Sellers
Shares as contemplated hereby. All redemptions of the Sellers Shares
hereunder shall be allocated between the Sellers as follows: (i) 98.43% to
Fund II and (ii) 1.57% to MLGAL.
Section 1.022. Per Share Purchase Price. The redemption price of each
of the Sellers Shares redeemed and repurchased by the Corporation on both the
Initial Closing Date and the Subsequent Closing Date shall be Ten Dollars and
Fifteen Cents ($10.15) ("Per Share Price").
Section 1.023. Time and Manner of Redemption and Repurchase. On the
Initial Closing Date, (i) the Corporation shall redeem and repurchase from the
Sellers, and the Sellers shall sell to the Corporation, the Initial Closing
Shares, and (ii) the Sellers shall deposit the Escrow Shares with the Escrow
Agent and the Corporation shall deposit the Escrow Amount with the Escrow
Agent, in each case to be held and applied as provided in the Escrow
Agreement. On the Subsequent Closing Date and in accordance with the
procedures specified in the Escrow Agreement, the Corporation shall redeem and
repurchase from the Sellers, and the Sellers shall sell to the Corporation,
the Subsequent Closing Shares and the remaining Escrow Shares, if any, shall
be returned to the Sellers.
Section 1.024. Fair Consideration. The parties acknowledge and agree
that the consideration provided for in this Article II represents fair
consideration and reasonable equivalent value for the sale and transfer of the
Initial Closing Shares, the Subsequent Closing Shares and the transactions,
covenants, and agreements set forth in this Agreement, which consideration was
agreed upon as the result of arm's-length, good-faith negotiations between the
parties and their respective representatives.
ARTICLE III.
CLOSINGS
Section 1.031. Closing, Time and Place. The initial closing (the
"Initial Closing") of the redemption of the Initial Closing Shares as
contemplated herein shall take place at the offices of Ice Miller Donadio &
Ryan, Indianapolis, Indiana simultaneously with the "Closing" under the Stock
Purchase Agreement (the "Initial Closing Date"). The subsequent closing (the
"Subsequent Closing") of the redemption of the Subsequent Closing Shares as
contemplated herein shall take place at the offices of Ice, Miller, Donadio &
Ryan, Indianapolis, Indiana at 11:00 a.m. (Eastern Standard Time) on two (2)
Business Days after the Redemption Offer expires (the "Subsequent Closing
Date").
Section 1.032. Deliveries to the Corporation at the Initial Closing. At
the Initial Closing and simultaneously with the deliveries to the Sellers
specified in Section 3.03, the Sellers shall deliver or cause to be delivered
to the Corporation the following:
(a) Certificates representing the Total Shares, duly endorsed or
accompanied by stock powers duly executed in blank (and any stock powers which
may be required for transfer of the Escrow Shares), of which Total Shares the
Initial Closing Shares shall be delivered to the Corporation for redemption
and the Escrow Shares shall be delivered for deposit with the Escrow Agent.
(b) A counterpart of the Escrow Agreement duly executed by each of
the Sellers;
(c) A certificate signed by each of the Sellers stating that each
of the representations and warranties of the Sellers in Article IV of this
Agreement are true, correct and complete on the Initial Closing Date; and
(d) A certificate of signed by a general partner of Fund II and
MLGAL:
(i) acknowledging delivery by the Corporation of the items
set forth in Section 3.03; and
(ii) certifying the incumbency of the individuals signing
this Agreement on behalf of Fund II and MLGAL.
Section 1.033. Deliveries to Sellers at the Initial Closing. At the
Initial Closing and simultaneously with the deliveries to the Corporation
specified in Section 3.02, the Corporation shall deliver or cause to be
delivered to the Sellers or the Escrow Agent, as applicable, the following:
(a) The Initial Closing Purchase Price by wire transfer in
immediately available federal funds, $43,898,049.65 of which shall be wired to
Account No. 000-68-985, ABA Routing No. 021-000238 at Morgan Guaranty Trust
Company of New York for the benefit of Fund II, and $700,187.60 of which shall
be wired to Account Number 000-26-118, ABA Routing No. 021-000238 at Morgan
Guaranty Trust Company of New York for the benefit of MLGAL;
(b) A counterpart of the Escrow Agreement duly executed by the
Escrow Agent and the Corporation;
(c) The Escrow Amount and the certificates representing the Escrow
Shares (together with the stock powers referred to in Section 3.02(a)) shall
be delivered to the Escrow Agent to be held and delivered pursuant to the
terms and conditions of the Escrow Agreement; and
(d) A certificate of the Corporation's Secretary acknowledging
delivery by the Sellers of the items set forth in Section 3.02.
Section 1.034. Deliveries at the Subsequent Closing. At the Subsequent
Closing, the Escrow Agent shall make the deliveries to the parties
contemplated by the terms and conditions of the Escrow Agreement. The parties
hereto shall take all such other steps and actions in connection therewith as
may be reasonably necessary to facilitate the redemption of the Subsequent
Closing Shares as contemplated herein.
ARTICLE IV.
SEVERAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller severally (and not jointly) represents and warrants to the
Corporation that the following statements are true as to such Seller (the
representations and warranties in Section 4.01are made solely by Fund II and
the representations and warranties in Section 4.02 are made solely by MLGAL):
Section 1.041. Organization of Fund II. Fund II is a limited
partnership duly organized and existing and in good standing under the laws of
the State of Connecticut, and is duly qualified as a foreign limited
partnership and is in good standing to do business in every jurisdiction in
which such qualification is necessary because of the nature of the properties
owned, leased or operated by it or the nature of the businesses conducted by
it, except in such jurisdictions in which, in the aggregate, the failure to so
qualify would not have a Material Adverse Effect on Fund II.
Section 1.042. Organization of MLGAL. MLGAL is a limited partnership
duly organized and existing and in good standing under the laws of the State
of Connecticut, and is duly qualified as a foreign limited partnership and is
in good standing to do business in every jurisdiction in which such
qualification is necessary because of the nature of the properties owned,
leased or operated by it or the nature of the businesses conducted by it,
except in such jurisdictions in which, in the aggregate, the failure to so
qualify would not have a Material Adverse Effect on MLGAL.
Section 1.043. Title to Shares. The Seller has legal, valid, and
marketable title to the Sellers Shares being sold by it hereunder, and upon
the consummation of the transactions contemplated by this Agreement, the
Corporation shall acquire good and unencumbered title to any and all of such
shares it redeems and repurchases from the Seller, free of all Adverse Claims
and Liens, buy-sell agreements, cross-purchase agreements, shareholder
agreements, or restrictions or rights of any kind, other than those imposed by
the Securities Act and any applicable Blue Sky Law.
Section 1.044. Authority. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
authorized by all necessary action on the part of the Sellers. The Seller has
the full power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement constitutes a
valid and legally binding obligation of the Seller, enforceable against the
Seller in accordance with its terms.
Section 1.045. No Conflict or Violation. The execution, delivery, and
performance of this Agreement by the Seller do not and shall not: (a) violate
the agreement of limited partnership of the Seller; (b) violate any provision
of law or any order, judgment, or decree of any court or other governmental or
regulatory authority applicable to the Seller; and (c) violate or result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any loan agreement, mortgage, security agreement, indenture or other
material agreement or instrument to which the Seller is a party or by which
the Seller is bound or to which any of its material properties or assets is
subject.
Section 1.046. No Consent. Except as expressly contemplated by the
Stock Purchase Agreement as conditions to the obligations of the parties
thereunder to consummate the transactions contemplated thereby, no
authorization, consent, approval, exemption, or other action by or notice to
or filing with any court or administrative or governmental body or any third
party is required to permit the Seller to execute and deliver this Agreement,
to consummate the transactions contemplated by this Agreement to, or to comply
with and fulfill the terms and conditions of this Agreement.
Section 1.047. Broker's or Finder's Commissions. No broker's or
finder's fee or commission or investment banking fee has been or will be
payable, or asserted to be payable, by the Corporation with respect to the
redemption of the Sellers Shares in accordance with the provisions of this
Agreement as a result of any action by or on behalf of the Seller; provided,
however, the Permitted Fees (as defined in the Stock Purchase Agreement) will
be payable by International in connection with the transactions contemplated
by the Stock Purchase Agreement.
Section 1.048. Representations and Warranties. The representations and
warranties contained in the foregoing Section 4.01 through Section 4.07 of
this Agreement, inclusive, are made as of the date of this Agreement, as of
the Initial Closing Date and as of the Subsequent Closing Date.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants to the Sellers and each of
them as
follows:
Section 1.051. Organization; Qualification. The Corporation is a
corporation duly organized and existing in good standing under the laws of
State of Delaware, and is duly qualified as a foreign corporation and is in
good standing to do business in every jurisdiction in which such qualification
is necessary because of the nature of the properties owned, leased or operated
by it or the nature of the businesses conducted by it, except in such
jurisdictions in which, in the aggregate, the failure to so qualify would not
have a Material Adverse Effect on the Corporation.
Section 1.052. Authority. The execution and delivery of this Agreement
by the Corporation and the consummation by the Corporation of the transactions
contemplated hereby have been authorized by all necessary corporate action on
the part of the Board of Directors and stockholders of the Corporation. The
Corporation has the full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This
Agreement constitutes a valid and legally binding obligation of the
Corporation, enforceable against the Corporation in accordance with its terms.
Section 1.053. No Conflict or Violation. The execution, delivery, and
performance of this Agreement by the Corporation do not and shall not: (a)
violate the certificate of incorporation or by-laws of the Corporation; (b)
violate any provision of law or any order, judgment, or decree of any court or
other governmental or regulatory authority applicable to the Corporation; and
(c) except as expressly contemplated by or referenced in the Stock Purchase
Agreement, violate or result in a breach of or constitute (with due notice or
lapse of time or both) a default under any loan agreement, mortgage, security
agreement, indenture, or other material agreement or instrument to which the
Corporation is a party or by which the Corporation is bound or to which any of
its material properties or assets is subject.
Section 1.054. No Consent. Except as contemplated by the Stock Purchase
Agreement as conditions to the obligations of the parties thereunder to
consummate the transactions consummated thereby, no authorization, consent,
approval, exemption, or other action by or notice to or filing with any court
or administrative or governmental body or any third party is required to
permit the Corporation to execute and deliver this Agreement, to consummate
the transactions contemplated by this Agreement or to comply with and fulfill
the terms and conditions of this Agreement.
Section 1.055. Bankruptcy. The Corporation is not involved in any
proceedings by or against it in any court under bankruptcy law or any other
insolvency or debtor's relief law, whether Federal, state or foreign, or for
the appointment of a trustee, receiver, liquidator, assignee, sequestrator, or
other similar official. The Corporation is solvent, meaning it is able to
satisfy its debts as they become due.
Section 1.056. Broker's or Finder's Commissions. No broker's or
finder's fee or commission or investment banking fee has been or will be
payable, or asserted to be payable, by either of the Sellers with respect to
the redemption of the Sellers Shares in accordance with the provisions of this
Agreement as a result of any action by or on behalf of the Corporation or
International or any of their subsidiaries.
Section 1.057. Representations and Warranties. The representations and
warranties contained in the foregoing Sections 5.01 through 5.06 of this
Agreement, inclusive, are made as of the date of this Agreement, as of the
Initial Closing Date and as of the Subsequent Closing Date.
ARTICLE VI.
COVENANTS OF THE CORPORATION
Section 1.061. Redemption of the Redemption Share . On the Subsequent
Closing Date and in accordance with the procedures specified in the Escrow
Agreement and the Redemption Offer, the Corporation shall redeem the
Redemption Shares and deliver the Redemption Purchase Price to those Investors
that tendered the Redemption Shares.
Section 1.062. Fees. On the Initial Closing Date, the Corporation shall
cause Haynes International, Inc. ("International"), its wholly-owned
subsidiary, to pay the "Permitted Fees" (as defined in the Stock Purchase
Agreement) in accordance with the Stock Purchase Agreement.
ARTICLE VII.
TAXES
Section 1.071. Taxes. All federal, state, foreign and local income
Taxes and any deficiency, interest or penalty asserted with respect thereto
that is imposed in connection with the repurchase and redemption of the
Initial Closing Shares and the Subsequent Closing Shares shall be paid by the
Sellers.
Section 1.072. Cooperation on Tax Matters. From and after the Initial
Closing Date, upon reasonable notice and during normal business hours, the
Corporation shall, and the Corporation shall cause International to, provide
access to the Sellers and their attorneys, accountants, and other
representatives to such Files and Records as the Sellers may reasonably deem
necessary to properly prepare for, file, prove, answer, prosecute, and/or
defend any Tax Return, filing, audit, protest, claim, suit, inquiry, or other
proceeding.
ARTICLE VIII.
TERMINATION
Section 1.081. Conditions of Termination. Notwithstanding anything to
the contrary contained herein, this Agreement shall terminate, and the
transactions contemplated hereby shall terminate without action by any party
hereto, if and only if the Stock Purchase Agreement is terminated for any
reason prior to the completion of the "Closing" thereunder.
Section 1.082. Effect of Termination. In the event of termination
pursuant to Section 8.01, this Agreement shall have not further effect, with
no liability on the part of any party hereto.
ARTICLE IX.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
Section 1.091. Conditions Precedent to the Obligations of the
SellersThe obligations of each Seller hereunder are subject to the
completion, simultaneously with the Initial Closing of the "Closing" under the
Stock Purchase Agreement.
ARTICLE X.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CORPORATION
Section 1.101. Conditions Precedent to the Obligations of the
Corporation. The obligations of the Corporation hereunder are subject to the
completion, simultaneously with the Initial Closing of the "Closing" under the
Stock Purchase Agreement.
ARTICLE XI.
MISCELLANEOUS
Section 1.111. Public Announcements. No party shall make any press
release or public announcement concerning the transactions contemplated by
this Agreement prior to or after the Closing Date, except as required by law
or as agreed upon by all parties.
Section 1.112. Expenses. The Corporation shall cause International to
pay on the Initial Closing Date all legal expenses of the parties incurred in
connection with this Agreement.
Section 1.113. Headings. The article, section, and paragraph headings
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
Section 1.114. Construction.
(a) The parties have participated jointly in the negotiation and
drafting of this Agreement, and, in the event of an ambiguity or a question of
intent or a need for interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement.
(b) Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(c) The word "including" means "including, without limitation."
Section 1.115. Severability. If any provision of this Agreement is
declared by any court or other governmental body to be null, void, or
unenforceable, this Agreement shall be construed so that the provision at
issue shall survive to the extent it is not so declared and that all of the
other provisions of this Agreement shall remain in full force and effect.
Section 1.116. Entire Agreement. This Agreement, the Stock Purchase
Agreement and the Escrow Agreement (and the exhibits and schedules to such
documents) contain the entire understanding among the parties hereto with
respect to the transactions contemplated hereby and supersedes and replaces
all prior and contemporaneous agreements and understandings, oral or written,
with regard to those transactions. All Exhibits and Schedules hereto are
expressly made a part of this Agreement as fully as though completely set
forth herein.
Section 1.117. Survival. The representations and warranties of the
parties in this Agreement shall survive the execution and delivery of this
Agreement and the closings hereunder for a period of three (3) years;
provided, however, the representations and warranties of the Sellers in
Section 4.03 hereof shall survive indefinitely.
Section 1.118. Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (a) on the date of service if served personally on the
party to whom notice is to be given, (b) on the day of transmission if sent
via facsimile transmission to the facsimile number given below, provided that
telephonic confirmation of receipt is obtained promptly after completion of
transmission, (c) on the day after delivery to a nationally recognized
overnight courier service or the Express Mail service maintained by the United
States Postal Service, or (d) on the fifth (5th) day after mailing, if mailed
to the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and addressed as follows:
If to the Corporation, to:
Haynes Holdings, Inc.
1020 West Park Avenue
Kokomo, IN 46904
Attn: President
Tel. No. 317-456-6000
Fax No. 317-456-6905
If to either of the Sellers, to:
Morgan Lewis Githens & Ahn
Two Greenwich Plaza
Greenwich, CT 06830
Attn: Perry J. Lewis and Ira Starr
Tel. No. (203) 869-3033
Fax. No. (203) 869-3544
Any party may change its address for the purpose of this Section 11.08 by
giving the other parties written notice of its new address in the manner set
forth above.
Section 1.119. Amendments; Waivers. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties, or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance.
Any waiver by any party of any condition, or of the breach of any provision,
term, covenant, representation, or warranty contained in this Agreement, in
any one or more instances, shall not be deemed to be or construed as a further
or continuing waiver of any condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
Section 11.10. Parties in Interest. Nothing in this Agreement is
intended to confer any rights or remedies under or by reason of this Agreement
on any Person other than the Sellers, and the Corporation and their respective
successors and permitted assigns.
Section 11.11. Successors and Assigns. No party hereto shall assign or
delegate this Agreement or any rights or obligations hereunder without the
prior written consent of the other parties hereto, and any attempted
assignment or delegation without prior written consent shall be void and of no
force or effect. This Agreement shall inure to the benefit of and shall be
binding upon the successors and permitted assigns of the parties hereto.
Section 11.12. Governing Law. This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the State of New
York applicable to contracts made and performed in such state.
Section 11.13. Counterparts. This Agreement is executed in
counterparts, each of which shall be deemed an original, but all of which
shall together constitute the same instrument.
Section 11.14. Subsequent Documentation. At any time and from time to
time after the Subsequent Closing Date, the Sellers shall, upon the request of
the Corporation, and the Corporation shall, upon the request of the Sellers,
promptly execute, acknowledge, and deliver, or cause to be executed,
acknowledged, and delivered, such further instruments and other documents, and
perform or cause to be performed such further acts, as may be reasonably
required to evidence or effectuate the redemption, repurchase, transfer,
assignment, and delivery hereunder of the Initial Closing Shares and the
Subsequent Closing Shares, the performance by the parties of any of their
other respective obligations under this Agreement, and to carry out the
purposes and intent of this Agreement.
(The remainder of this page intentionally left blank.)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their duly authorized representatives, this Agreement as of the
date first above written.
"SELLERS"
MLGAL PARTNERS, L.P.
By: /s/ Ira Starr
Its:
MLGA FUND II, L.P.
By: MLGA PARTNERS, L.P.,
Its General Partner
By: /s/ Ira Starr
Its:
"CORPORATION"
HAYNES HOLDINGS, INC.
By: J F Barker
Its:
EXERCISE AND REPURCHASE AGREEMENT
THIS EXERCISE AND REPURCHASE AGREEMENT ("Agreement") is made and entered
into as of the 24th day of January, 1997 by and among Haynes Holdings, Inc.
(the "Corporation") and Michael D. Austin, Joseph F. Barker, F. Galen Hodge
and Charles J. Sponaugle (individually an "Option Holder" and collectively the
"Option Holders").
RECITALS
The Corporation and the Option Holders have entered into the
Nonstatutory Stock Option Agreements specified on Exhibit A attached hereto
(the "Option Agreements"), pursuant to which the Option Holders have been
granted options to purchase shares of common stock, $.01 par value per share,
of the Corporation ("Common Stock") on the terms and conditions set forth in
the Option Agreements.
The Option Holders desire to exercise their options to acquire an
aggregate of 106,114 shares of Common Stock and to sell such shares of Common
Stock to the Corporation on the terms and conditions of this Agreement.
The Corporation desires to permit the Option Holders to exercise their
options to acquire an aggregate of 106,114 shares of Common Stock and to
repurchase such shares of Common Stock on the terms and conditions of this
Agreement.
The Corporation, Haynes International, Inc., Blackstone Capital Partners
II Merchant Banking Fund L.P., Blackstone Offshore Capital Partners II
Merchant Banking Fund L.P. and Blackstone Family Investment Partnership L.P.
previously entered into that certain Stock Purchase Agreement, dated as of
January 24, 1997 (the "Stock Purchase Agreement"), and all obligations of the
parties under this Agreement are subject to (a) the completion of the
"Closing" under the Stock Purchase Agreement and (b) the approval of this
Agreement and the transactions contemplated hereby by the stockholders of the
Corporation who own more than seventy-five percent (75%) of the voting power
of all outstanding stock of the Corporation immediately before the Closing (as
defined in the Stock Purchase Agreement).
In consideration of the foregoing and of the mutual representations,
warranties, covenants and agreements contained herein and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Exercise of the Options. Subject to Section 4 hereof, each of the
Option Holders hereby exercises his option (each an "Option") under the Option
Agreement to which he is a party to acquire the shares of Common Stock set
forth opposite his name on Exhibit A attached hereto and designated as "Option
Shares" (collectively, the "Option Shares") immediately following the
"Closing" under the Stock Purchase Agreement. Subject to Section 4 hereof,
the Corporation hereby approves such exercises of such Options.
2. Repurchase of the Option Shares. Immediately following the
exercises of the Options provided for in Section 1 hereof, the Option Holders
severally agree to sell to the Corporation, and the Corporation agrees to
repurchase from the Option Holders, all of the Option Shares at the purchase
price of $10.15 per share in cash.
3. Net Payment; No Issuance of Shares. The parties hereto agree that
it is in the best interests of the parties to effect the transactions
contemplated by Section 1 and Section 2 hereof as a unified exercise and
repurchase and as a consequence (a) no consideration shall be tendered by the
Option Holders for exercise of their Options to the extent provided in Section
1 hereof, (b) subject to Section 8, the Corporation shall pay in cash to each
of the Option Holders the "Net Amount" set opposite his name on Exhibit A
attached hereto within two (2) business days after the "Closing" under the
Stock Purchase Agreement (the "Option Share Termination Payment"), and (c) no
actual issuance of the Option Shares shall be made and the amount paid to the
Option Holders shall be deemed a payment to fully terminate and extinguish the
rights of the Option Holders to acquire the Option Shares pursuant to the
Option Agreements (and in the case of all Option Holders other than Michael D.
Austin it shall fully extinguish and terminate the applicable Option
Agreement).
4. Conditions Precedent. All obligations of the parties under this
Agreement shall be subject to the completion of the "Closing" under the Stock
Purchase Agreement. The obligations of the Corporation under this Agreement,
and the rights of the Option Holders under this Agreement, also shall be
subject to the approval of this Agreement and the transactions contemplated
hereby by the stockholders of the Corporation who own more than seventy-five
percent (75%) of the voting power of all outstanding stock of the Corporation
immediately before the Closing (as defined in the Stock Purchase Agreement).
5. Termination. This Agreement shall terminate if (a) the conditions
precedent specified in Section 4 hereof shall not have been satisfied or
waived in writing by all parties hereto prior to February 28, 1997, or (b) the
Stock Purchase Agreement shall terminate for any reason prior to the
completion of the "Closing" thereunder. In the event of termination of this
Agreement, no party hereto shall have any obligations or liabilities to any
other party hereto.
6. Representations and Warranties. Each of the Option Holders
severally represents and warrants to the Corporation as follows as of the date
hereof and as of the consummation of the transactions contemplated hereby:
a. The Option Holder has the legal right and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
This Agreement constitutes a valid and legally binding obligation of the
Option Holder, enforceable against the Option Holder in accordance with its
terms.
b. The execution, delivery and performance of this Agreement by the
Option Holder do not and shall not violate or result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
agreement or instrument to which the Option Holder is a party or is bound.
c. The Option Holder has not assigned, pledged, conveyed, transferred
(or attempted to assign, pledge, convey or transfer) to any individual,
corporation, partnership or other entity any of his rights under the Option
Agreement to which he is a party. No lien, claim or encumbrance exists with
respect to the Option Agreement to which the Option Holder is a party or any
Option Shares.
d. The Option Holder has such knowledge and experience in financial
and business matters that he is capable of evaluating the risks and merits of
the exercise and repurchase of the Option Shares contemplated hereby. As a
result of the positions that the Option Holder has with the Corporation and/or
its wholly-owned subsidiary, Haynes International, Inc. ("International"), he
has had access to all material facts concerning the Corporation and
International and their business, financial condition and prospects.
e. The Option Holder is an "accredited investor" as that term is
defined by Rule 501 of Regulation D promulgated by the United States
Securities and Exchange Commission.
f. Exhibit A attached hereto is accurate with respect to the Option
Holder.
In connection with the completion of the transactions contemplated
hereby, each of the Option Holders severally agrees to deliver to the
Corporation a certificate stating that the foregoing representations and
warranties of the Option Holder are true and correct on the date of the
closing of the transactions contemplated hereby.
7. No Exercise. Except as expressly provided for in this Agreement
or as expressly agreed to in writing between the Option Holders and the
Corporation after the date hereof, each of the Option Holders severally agrees
not to exercise the options, in whole or in part, granted pursuant to the
Option Agreement to which he is a party or any other stock option agreement
with the Corporation to which he is a party prior to the completion of the
"Subsequent Closing" under the Redemption Agreement (as defined in the Stock
Purchase Agreement) and the Redemption Offer referred to therein. Each of the
Option Holders acknowledges that the Corporation intends to effect the
Redemption Offer (as defined in the Stock Purchase Agreement) and consents to
the exclusion of such Option Holder as an offeree under such Redemption Offer.
8. Withholding Requirements. The Corporation shall have the right to
withhold from the amount of the Option Share Termination Payment or require
the Option Holder to remit to the Corporation any and all amounts sufficient
to satisfy any applicable withholding requirements set forth in the Internal
Revenue Code of 1986, as amended, and any state or local law, as provided in
Section 14 of the Plan (as defined in the Option Agreements).
9. Successors Bound; No Assignment. This Agreement shall be binding
upon the estate, executor, personal representative, guardian, heirs, and any
other successor of the Option Holder. This Agreement and the rights of the
Option Holder hereunder may not be assigned by the Option Holder in whole or
in part.
10. Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana applicable to contracts
made and to be performed in such state.
11. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall together
constitute the same instrument.
(The remainder of this page intentionally left blank.)
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
"Corporation"
HAYNES HOLDINGS, INC.
By: /s/ J F Barker
Title: Vice President, Finance
"Option Holders"
/s/ Michael D. Austin
Michael D. Austin
/s/ J F Barker
Joseph F. Barker
/s/ F. Galen Hodge
F. Galen Hodge
/s/ Charles J. Sponaugle
Charles J. Sponaugle
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A TO
- --------------
EXERCISE AND REPURCHASE AGREEMENT
- ------------------------------------
<S> <C> <C> <C> <C>
DATE OF
THE OPTION
OPTION HOLDER AGREEMENT TOTAL SHARES(1) OPTION SHARES(2) NET AMOUNT(3)
- -------------------- ------------------ --------------- ---------------- --------------
Michael D. Austin September 1, 1993 200,000 40,000 $ 306,000
Joseph F. Barker August 31, 1989 23,644 23,644 $ 186,078
F. Galen Hodge August 31, 1989 35,470 35,470 $ 245,098
Charles J. Sponaugle September 25, 1989 7,000 7,000 $ 53,550
---------------- --------------
TOTALS 106,114 $ 790,726
================ ==============
<FN>
1 Represents the total number of shares of Common Stock which may be acquired upon
exercise of the options granted by the applicable Option Agreement.
2 Represents the total number of shares of Common Stock that the Option Holder is
electing to acquire by exercise of his options and to have repurchased by the Corporation
pursuant to this Agreement.
3 The amount, before the withholding required by Section 8 of this Agreement, to be
paid by the Corporation to the applicable Option Holder, which represents $10.15 multiplied
by the number of Option Shares specified less the aggregate exercise price for acquisition
of the Option Shares.
</TABLE>
Consent Solicitation and Offer to Redeem for Cash
Certain Outstanding Shares of Common Stock
of
HAYNES HOLDINGS, INC.
Held by Certain Stockholders of Haynes Holdings, Inc.
at $10.15 Per Share
THE REDEMPTION OFFER DESCRIBED HEREIN WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MONDAY, MARCH 3, 1997, UNLESS EXTENDED
CONSUMMATION OF THE OFFER IS SUBJECT TO CERTAIN CONDITIONS.
SEE "TERMS AND CONDITIONS OF THE REDEMPTION OFFER."
IMPORTANT
Any stockholder desiring to tender all or any portion of his or her
shares of Common Stock, $.01 par value ("Holdings Common Stock"), of Haynes
Holdings, Inc., a Delaware corporation (the "Company"), for redemption in
accordance with the terms and conditions hereof must cause the Letter of
Transmittal included herewith (or a facsimile copy thereof) to be completed,
signed in accordance with the instructions contained therein, and mailed or
delivered (together with all other required documents) to the Company, and
must deliver the certificates for such shares of Holdings Common Stock to the
Company along with the Letter of Transmittal. A person owning shares of
Holdings Common Stock registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact such broker, dealer,
commercial bank, trust company or other nominee if the owner desires to tender
such shares.
The Company is also seeking the consent of each stockholder of the
Company to the amendment of the Company's existing Stockholders Agreement.
Any stockholder receiving this Consent Solicitation and Offer to Redeem and
thereafter executing the signature page to the Amended Stockholders Agreement
(as defined) included with the Letter of Transmittal will have the rights of
an "Investor" as such term is defined in the Amended Stockholders Agreement.
See "Acceptance for Redemption and Redemption of Shares."
Questions and requests for assistance may be directed to the Company at
its address and telephone number set forth in the Letter of Transmittal
included herewith. Additional copies of this Offer to Redeem and the Letter
of Transmittal may be obtained from the Company.
OFFEREE STOCKHOLDERS ARE URGED TO READ THIS CONSENT SOLICITATION AND
OFFER TO REDEEM AND THE ACCOMPANYING LETTER OF TRANSMITTAL CAREFULLY PRIOR TO
TAKING ANY ACTION WITH RESPECT THERETO.
January 30, 1997
TABLE OF CONTENTS
Page
INTRODUCTION 1
TERMS AND CONDITIONS OF THE REDEMPTION OFFER 3
PROCEDURE FOR TENDERING SHARES 4
ACCEPTANCE FOR REDEMPTION AND REDEMPTION OF SHARES 6
WITHDRAWAL RIGHTS 7
CERTAIN TAX CONSEQUENCES 8
PRICE RANGE OF HOLDINGS COMMON STOCK; DIVIDENDS 9
THE PURCHASE TRANSACTION 10
Terms of the Purchase Agreement 10
Terms of the Amended Stockholders Agreement 11
Amendment to the Loan and Security Agreement 13
The Change of Control Offer 14
REDEMPTION OF HOLDINGS COMMON STOCK HELD BY THE OTHER STOCKHOLDERS 14
Terms of the Fund Redemption Agreement 14
Terms of the Management Redemption Agreement 15
CERTAIN INFORMATION WITH RESPECT TO THE COMPANY 16
CERTAIN INFORMATION WITH RESPECT TO BLACKSTONE 16
Exhibit A - Stock Purchase Agreement dated as of January 24, 1997 by and
among Blackstone Capital Partners II Merchant Banking Fund L.P., Blackstone
Offshore Capital Partners II Merchant Banking Fund L.P., Blackstone Family
Investment Partnership L.P., Haynes Holdings, Inc. and Haynes International,
Inc.
Exhibit B - Stock Redemption Agreement dated as of January 24, 1997 by and
among MLGA Fund II, L.P., MLGAL Partners, L.P. and Haynes Holdings, Inc.
Exhibit C - Form of Amended Stockholders Agreement
Exhibit D - Escrow Agreement dated as of January 29, 1997 by and among
MLGA Fund II, L.P., MLGAL Partners, L.P., Haynes Holdings, Inc. and National
City Bank, N.A.
Exhibit E - Exercise and Repurchase Agreement by and among the Company and
certain members of management
Exhibit F - Annual Report on Form 10-K of Haynes International, Inc. for
the fiscal year ended September 30, 1996
Exhibit G - Current Report on Form 8-K of Haynes International, Inc. dated
January 22, 1996.
Exhibit H - Press Release Dated January 30, 1997.
Exhibit I - Prospectus dated August 20, 1996 of Haynes International, Inc.
Related to Sale of Senior Notes
<PAGE>
To: The Holders of Common Stock of Haynes Holdings, Inc. specified herein
("Offeree Stockholders")
INTRODUCTION
The Company hereby offers to redeem a number of outstanding shares of
Holdings Common Stock (determined in the manner set forth in the following
paragraph) held by Offeree Stockholders at $10.15 per share, net to the seller
in cash, without interest, upon the terms and subject to the conditions set
forth in this Consent Solicitation and Offer to Redeem and in the related
Letter of Transmittal (which together constitute the "Redemption Offer"). The
Redemption Offer is being made to all stockholders of the Company other than
MLGA Fund II, L.P. (the "Fund"); MLGAL Partners, L.P., the general partner of
the Fund ("MLGAL"); and certain members of management of the Company who
currently own options to acquire Holdings Common Stock ("the "Management
Holders," and together with the Fund and MLGAL, the "Other Stockholders").
Tendering Offeree Stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in the Letter of Transmittal, transfer
taxes with respect to the redemption of Holdings Common Stock by the Company
pursuant to the Redemption Offer.
The Company intends to redeem from the Fund, MLGAL and the Offeree
Stockholders an aggregate of 5,217,685 shares of Holdings Common Stock.
Subject to the terms and conditions of this Redemption Offer, the Company will
redeem from each Offeree Stockholder (a) first, up to 79.575% of the
outstanding shares of Holdings Common Stock held by such Offeree Stockholder,
and (b) second, to the extent that less than all Offeree Stockholders tender
for redemption 79.575% of their shares of Holdings Common Stock, such
additional shares of Holdings Common Stock desired to be redeemed by such
Offeree Stockholder as represents such Offeree Stockholder's pro rata portion
(based on the total number of shares of Holdings Common Stock owned by such
Offeree Stockholder prior to any redemption in relation to the total number of
shares of Holdings Common Stock owned prior to any redemption by all Offeree
Stockholders desiring to sell additional shares of Holdings Common Stock plus
the total number of shares of Holdings Common Stock owned by the Fund and
MLGAL prior to the transactions described below) of the additional shares of
Holdings Common Stock needed for the Company to redeem from the Fund, MLGAL
and the Offeree Stockholders an aggregate of 5,217,685 shares of Holdings
Common Stock. The effect of the formula described in the foregoing sentence
is to give all Offeree Stockholders the opportunity to have redeemed the same
percentage of their shares of Holdings Common Stock as the percentage of the
shares of Holdings Common Stock owned by the Fund and MLGAL to be redeemed.
Because the exact number of shares of Holdings Common Stock which may be
redeemed by each Offeree Stockholder cannot be determined at this time,
Offeree Stockholders are encouraged to tender for redemption the maximum
number of shares of Holdings Common Stock which such Offeree Stockholder
desires to redeem without regard to the number which may actually be redeemed.
The Redemption Offer is being made in connection with the following
transactions:
(1) The purchase by Blackstone Capital Partners II Merchant Banking Fund
L.P., a Delaware limited partnership ("Blackstone"), and two of its affiliates
(the "Blackstone Affiliates," and together with Blackstone, the "Purchasers")
of 5,323,799 shares of Holdings Common Stock, which will constitute 79.9% of
the Holdings Common Stock outstanding after giving effect to all of the
redemptions of Holdings Common Stock described herein (the "Purchase
Transaction"). See "The Purchase Transaction-Terms of the Purchase
Agreement."
(2) The redemption by the Company of a number of shares of Holdings
Common Stock held by the Fund and MLGAL equal to (i) 5,217,685 minus (ii) the
number of shares of Holdings Common Stock redeemed by the Offeree Stockholders
pursuant to this Redemption Offer. See "Redemption of Holdings Common Stock
Held by Other Stockholders-Terms of the Fund Redemption Agreement."
(3) The exercise of certain options held by certain of the Management
Holders, and the simultaneous redemption by the Company of the 106,114 shares
of Holding Common Stock acquired by certain of the Management Holders pursuant
to the exercise of such options. See "Redemption of Holdings Common Stock by
Other Stockholders-Terms of the Management Redemption Agreement."
(4) The amendment of the existing Stockholders Agreement among the
Company and certain stockholders of the Company (the "Existing Stockholders
Agreement") including the Purchasers as parties to that agreement and to
substantially revise the terms and conditions of that agreement (as amended,
the "Amended Stockholders Agreement"). See "The Purchase Transaction-Terms of
the Amended Stockholders Agreement."
(5) The amendment of the Amended and Restated Loan and Security
Agreement with respect to the revolving credit facility (the "Loan and
Security Agreement") of Haynes International, Inc., the Company's wholly-owned
subsidiary ("International"). See "The Purchase Transaction-Amendment to the
Loan and Security Agreement."
As a result of the transactions described above, which constitute a
change of control of the Company as defined in the Indenture (the "Indenture")
with respect to International's 11 5/8% Senior Notes due 2004 (the "Senior
Notes"), the Company will be required to offer to redeem for cash any and all
outstanding Senior Notes at a redemption price equal to 101% of the principal
amount of the Senior Notes plus accrued and unpaid interest thereon to the
date of redemption. See "The Purchase Transaction - The Change of Control
Offer."
The effect of the transactions referred to above is to transfer control
of the Company and International from the Fund to the Purchasers, which will
permit the existing stockholders to sell a majority of their shares of
Holdings Common Stock for cash at a price of $10.15 per share, enable
International to increase the maximum amount available for borrowing under
International's revolving credit facility from $50 million to $60 million and
give International greater access to additional sources of financing by reason
of its affiliation with the Purchasers, and to amend the Existing Stockholders
Agreement and effect the other transactions described herein.
If none of the Offeree Stockholders determine to accept the Redemption
Offer, then a total of 5,217,685 shares of Holdings Common Stock will be
purchased from the Fund and MLGAL, and the Fund and MLGAL will continue to
beneficially own approximately 4.5% of the shares of Holdings Common Stock
outstanding after giving effect to all of the redemptions of Holdings Common
Stock described herein. If Offeree Stockholders tender for redemption the
maximum number of shares of Holdings Common Stock which will be redeemed
pursuant to the Redemption Offer, then the Fund and MLGAL will continue to
beneficially own approximately 16.7% of the shares of Holdings Common Stock
outstanding after giving effect to all of the redemptions of Holdings Common
Stock described herein.
The Board of Directors of the Company has not obtained any appraisal or
fairness opinion to the effect that the price at which shares of Holdings
Common Stock will be sold to the Purchasers and redeemed from the Fund, MLGAL,
the Management Holders and the Offeree Stockholders (the "Transaction Price")
is fair to the Company or any person from a financial point of view. See
"Price Range of Holdings Common Stock; Dividends."
TERMS AND CONDITIONS OF THE REDEMPTION OFFER
Upon the terms and subject to the conditions of this Redemption Offer,
the Company will redeem from each Offeree Stockholder the number of shares of
Holdings Common Stock determined in the manner set forth in the following
paragraph, assuming such shares are validly tendered on or prior to the
Expiration Date (as hereinafter defined). The term "Expiration Date" shall
mean 5:00 p.m., New York City time, on March 3, 1997, unless extended by the
Company, in which case the Company will notify each Offeree Stockholder in
writing as to the new Expiration Date.
The Company intends to redeem from the Fund, MLGAL and the Offeree
Stockholders an aggregate of 5,217,685 shares of Holdings Common Stock.
Subject to the terms and conditions of this Redemption Offer, the Company will
redeem from each Offeree Stockholder (a) first, up to 79.575% of the
outstanding shares of Holdings Common Stock held by such Offeree Stockholder,
and (b) second, to the extent that less than all Offeree Stockholders tender
for redemption 79.575% of their shares of Holdings Common Stock, such
additional shares of Holdings Common Stock desired to be redeemed by such
Offeree Stockholder as represent such Offeree Stockholder's pro rata portion
(based on the total number of shares of Holdings Common Stock owned by such
Offeree Stockholder prior to any redemption in relation to the total number of
shares of Holdings Common Stock owned prior to any redemption by all Offeree
Stockholders desiring to sell additional shares of Holdings Common Stock plus
the total number of shares of Holdings Common Stock owned by the Fund and
MLGAL prior to the transactions described below) of the additional shares of
Holdings Common Stock needed for the Company to redeem from the Fund, MLGAL
and the Offeree Stockholders an aggregate of 5,217,685 shares of Holdings
Common Stock. The effect of the formula described in the foregoing sentence
is to give all Offeree Stockholders the opportunity to have redeemed the same
percentage of their shares of Holdings Common Stock as the percentage of the
shares of Holdings Common Stock owned by the Fund and MLGAL to be redeemed.
Because the exact number of shares of Holdings Common Stock which may be
redeemed by each Offeree Stockholder cannot be determined at this time,
Offeree Stockholders are encouraged to tender for redemption the maximum
number of shares of Holdings Common Stock which such Offeree Stockholder
desires to redeem without regard to the number which may actually be redeemed.
The Company expressly reserves the right, in its sole discretion (i) to
waive any condition to its obligation to redeem shares of Holdings Common
Stock pursuant to the Redemption Offer, (ii) to terminate this Redemption
Offer at any time, (iii) to extend the Expiration Date, and (iv) at any time,
or from time to time, to amend the Redemption Offer in any respect. Any
waiver, termination, extension or amendment will be followed as promptly as
practicable by written notice thereof to the Offeree Stockholders.
This Offer to Redeem and the related Letter of Transmittal will be mailed
to the Offeree Stockholders and will be furnished to brokers, dealers, banks
and similar persons whose names, or the names of whose nominees, appear on the
stockholder lists for subsequent transmittal to Offeree Stockholders who are
beneficial owners of Holdings Common Stock.
The redemption of the shares of Holdings Common Stock tendered for
redemption in accordance with this Offer to Redeem and the Letter of
Transmittal is subject to each redeeming Offeree Stockholder consenting to the
amendment of the Existing Stockholders Agreement. See "The Purchase
Transaction - Terms of the Amended Stockholders Agreement" and "- Terms of the
Purchase Transaction." Consents to the Amended Stockholders Agreement will
become effective upon the acceptance for payment pursuant to this Redemption
Offer of all shares of Holdings Common Stock validly tendered pursuant hereto
prior to the Expiration Date.
Whether or not an Offeree Stockholder determines to redeem Holdings
Common Stock pursuant to this Redemption Offer, Offeree Stockholders may
consent to the Amended Stockholders Agreement by following the procedures
outlined below and the Offeree Stockholders are encouraged to carefully
consider the benefits of becoming a party to the Amended Stockholder
Agreement.
PROCEDURE FOR TENDERING SHARES
For shares of Holdings Common Stock to be validly tendered pursuant to
the Redemption Offer, a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile copy thereof) with any required
signature guarantees and any other documents required by the Letter of
Transmittal must be received by the Company at its address set forth in the
Letter of Transmittal included with this Offer to Redeem. In addition,
certificates for such shares of Holdings Common Stock must be received by the
Company along with the Letter of Transmittal at such address. Also, as a
condition to the redemption of any shares of Holdings Common Stock held by an
Offeree Stockholder, the Offeree Stockholder must consent to the amendment of
the Existing Stockholders Agreement by executing a signature page for, and
becoming a party to, the Amended Stockholders Agreement.
Except as otherwise provided below, all signatures on a Letter of
Transmittal must be guaranteed by a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., or by a commercial bank or trust company having an office,
branch, agency or correspondent in the United States (an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed
(i) if the Letter of Transmittal is signed by the registered holder of the
shares of Holdings Common Stock tendered therewith and such holder has not
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii)
if such shares of Holdings Common Stock are tendered for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal. If the
certificates are registered in the name of a person or person other than the
signer of the Letter of Transmittal, or if payment is to be made or
unpurchased shares of Holdings Common Stock are to be returned to a person
other than the registered owner or owners, then the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates, with the signatures on the certificates or stock powers
guaranteed as provided in the instructions to the Letter of Transmittal. See
Instruction 2 of the Letter of Transmittal.
The method of delivery of shares of Holdings Common Stock, the Letter of
Transmittal and all other required documents is at the option and risk of the
tendering stockholder and, except as otherwise provided in the Letter of
Transmittal, the delivery will be deemed made only when actually received by
the Company. If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended.
In all cases, payment for shares of Holdings Common Stock tendered and
accepted for redemption pursuant to the Redemption Offer will be made only
after timely receipt by the Company of (i) certificates for such shares, (ii)
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile copy thereof) with any required signature guarantees; (iii) a
signature page for the Amended Stockholders Agreement; and (iv) any other
documents required by the Letter of Transmittal.
To prevent backup federal income tax withholding with respect to payment
of the purchase price for shares of Holdings Common Stock purchased pursuant
to the Redemption Offer, stockholders must provide the Company with their
taxpayer identification number and certify that they are not subject to backup
federal income tax withholding by completing the Substitute Form W-9 included
in the Letter of Transmittal.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any tender of shares
of Holdings Common Stock pursuant to the procedures described above will be
determined by the Company, in its sole discretion, which determination shall
be final and binding on all parties. The Company reserves the absolute right
to reject any or all tenders of shares of Holdings Common Stock determined by
it not to be in proper form or the acceptance for redemption of or redemption
of which may, in the opinion of the Company's counsel, be unlawful. The
Company also reserves the absolute right to waive any of the conditions of the
Redemption Offer or any defect or irregularity in any tender of shares of
Holdings Common Stock for redemption. The Company's interpretation of the
terms and conditions of the Redemption Offer (including the Letter of
Transmittal and its instructions) will be final and binding on all parties.
No tender of shares of Holdings Common Stock will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
Neither the Company nor any other person will be under any duty to give
notification of any defect or irregularity in the tender of any shares of
Holdings Common Stock or will incur any liability for failure to give any such
notification.
It is a violation of Section 10(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and Rule 10b-4 promulgated thereunder,
for a person to tender shares of Holdings Common Stock for his own account
unless the person so tendering (i) owns such shares or (ii) owns other
securities convertible into or exchangeable for such shares or owns an option,
warrant or right to purchase such shares and intends to acquire such shares
for tender by conversion, exchange or exercise of such option, warrant or
right. Section 10(b) and Rule 10b-4 provide a similar restriction applicable
to the tender or guarantee of a tender on behalf of another person. The
tender of shares to the Company pursuant to any one of the procedures
described above will constitute a binding agreement between the tendering
stockholder and the Company upon the terms and subject to the conditions of
the Redemption Offer, including the tendering stockholder's representations
that (i) such stockholder owns the shares of Holdings Common Stock being
tendered within the meaning of Rule 10b-4 under the Exchange Act and (ii) the
tender of such shares complies with Rule 10b-4.
ACCEPTANCE FOR REDEMPTION AND REDEMPTION OF SHARES
Upon the terms and subject to the conditions of the Redemption Offer
(including, if the Redemption Offer is amended, the terms and conditions of
any such amendment), the Company will accept for redemption and will redeem
promptly after the Expiration Date validly tendered shares of Holdings Common
Stock. Payment of the redemption price for shares of Holdings Common Stock
accepted for redemption will be made with a portion of the proceeds received
by the Company as a result of the Purchase Transaction. In all cases, payment
for shares of Holdings Common Stock to be redeemed pursuant to the Redemption
Offer will be made only after timely receipt by the Company of certificates
for such shares, a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile copy thereof), a signature page for the Amended
Stockholders Agreement, and any other documents required by the Letter of
Transmittal.
If any tendered shares of Holdings Common Stock are not redeemed for any
reason, or if certificates submitted represent more shares of Holdings Common
Stock than are tendered for redemption, certificates for such shares not
redeemed or tendered will be returned, without expense to the tendering
stockholder as soon as practicable following the expiration, termination or
withdrawal of the Redemption Offer. Under no circumstances will interest be
paid on the redemption price by the Company by reason of any delay in
accepting for payment or paying for any shares or otherwise.
Because the other requirements to amend the Existing Stockholders
Agreement have been met, if a majority of the Institutional Holders (as
defined in the Existing Stockholders Agreement) consent to the Amended
Stockholders Agreement, all parties to the Existing Stockholders Agreement
will be bound by the Amended Stockholders Agreement. Unless and until the
foregoing condition is satisfied, such Institutional Holders will retain
whatever rights and will be subject to the obligations and restrictions of the
Existing Stockholder Agreement. Any Offeree Stockholder executing the
signature page to the Amended Stockholders Agreement included with the Letter
of Transmittal will have the rights of an "Investor" as such term is defined
in the Amended Stockholders Agreement.
WITHDRAWAL RIGHTS
Except as otherwise provided in this Consent Solicitation and Offer to
Redeem, tenders of shares of Holdings Common Stock made pursuant to the
Redemption Offer are irrevocable. Shares of Holdings Common Stock tendered
pursuant to the Redemption Offer may be withdrawn at any time prior to 5:00
p.m., New York City time, on Monday, March 3, 1997, or, if the Company shall
have extended the time for which the Redemption Offer is open, at any time
prior to the latest time and date on which the Redemption Offer, as so
extended by the Company, shall expire (i.e., the Expiration Date).
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission of a notice of withdrawal must be timely received by
the Company at its address set forth in the Letter of Transmittal included
with this Consent Solicitation and Offer to Redeem. Any such notice must
specify the name of the person who tendered the shares of Holdings Common
Stock to be withdrawn, the number of shares of Holdings Common Stock to be
withdrawn and the name of the registered holder of the shares of Holdings
Common Stock to be withdrawn, if different from that of the person tendering
such shares.
If, for any reason whatsoever, the Company extends the Redemption Offer,
is delayed in its redemption of or payment for shares of Holdings Common Stock
or is unable to redeem or pay for shares of Holdings Common Stock for any
reason, tendered shares of Holdings Common Stock may be retained by the
Company and may not be withdrawn except to the extent that tendering Offeree
Stockholders are entitled to withdrawal rights as set forth herein.
Withdrawals may not be revoked, and any shares of Holdings Common Stock
properly withdrawn will be deemed not to be validly tendered for purposes of
the Redemption Offer. However, withdrawn shares of Holdings Common Stock may
be retendered at any subsequent time prior to the Expiration Date by following
the procedures described herein.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding on all parties.
Neither the Company nor any other person will be under any duty to give
notification of any defect or irregularity in any notice of withdrawal or
incur any liability for failure to give any such notification.
CERTAIN TAX CONSEQUENCES
Offeree Stockholders whose shares of Holdings Common Stock are accepted
for redemption pursuant to the Redemption Offer will realize income or incur a
loss which will be recognized for federal income tax purposes. If the Company
redeems the shares of any stockholder for cash, receipt of the cash will be
taxed to the stockholder as a dividend (resulting in the possible recognition
of ordinary income) and will not be taxed as a capital gain unless it meets
one of the following three tests set forth in Section 302(b) of the Internal
Revenue Code of 1986, as amended (the "Code"):
(1) The redemption is "not essentially equivalent to a dividend"
within the meaning of Code Section 302(b)(1);
(2) The distribution to the stockholder is "substantially
disproportionate" with respect to the stockholder within the meaning of Code
Section 302(b)(2). This test is met if:
(a) After the redemption, the stockholder owns less than 50% of
the total combined voting power of all classes of shares entitled to vote, and
(b) The redemption has the effect of reducing the stockholder's
proportionate interest in Holdings Common Stock following the redemption to an
amount less than 80% of the proportionate interest of such stockholder prior
to the redemption; or
(3) The redemption is in complete redemption of all of the shares of
Holdings Common Stock which are owned by the stockholder as described in Code
Section 302(b)(3).
In light of the foregoing, a stockholder who redeems a sufficient amount
of such stockholder's shares (including shares which such stockholder owns or
is deemed to own under the constructive ownership rules discussed below) will
be treated for federal income tax purposes as realizing capital gain or loss,
provided the shares of Holdings Common Stock were held as a capital asset in
the hands of such stockholder. As provided in Code Section 1001, gain or loss
will be realized and recognized by such stockholder in an amount equal to the
difference between the cash received and the adjusted tax basis of the shares
of Holdings Common Stock surrendered.
In determining whether the foregoing tests set forth in Code Section
302(b) are satisfied, the constructive ownership rules of Code Section 318
apply when making computations of share ownership both before and after the
redemption. Under the rules of Code Section 318, stockholders will be treated
as also holding shares owned by certain related persons and entities.
THE FOREGOING IS INTENDED TO BE MERELY AN OVERVIEW OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES AND SHOULD NOT BE CONSIDERED TO BE TAX ADVICE.
OFFEREE STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES WITH RESPECT TO THE
FOREGOING MATTERS AND ANY OTHER CONSIDERATIONS WHICH MAY BE APPLICABLE TO
THEM.
PRICE RANGE OF HOLDINGS COMMON STOCK; DIVIDENDS
There is no established trading market for the Holdings Common Stock.
However, the Board of Directors of the Company is aware that several recent
transactions involving Holdings Common Stock have occurred, at net prices to
stockholders ranging from $8.00 to $10.00 per share. In addition, in
November, 1996, the Board of Directors of the Company issued to certain
members of management of International options to acquire shares of Holdings
Common Stock at a price of $8.00 per share, which price was determined by the
Board of Directors of the Company to represent the fair market value of
Holdings Common Stock at that date.
The Company has not previously declared or paid dividends on the Holdings
Common Stock. The payment of dividends on the Holdings Common Stock would
require that International declare and pay a dividend to the Company. The
payment of dividends by International is limited by the terms of certain debt
agreements to which International is a party. As a result, the Company does
not anticipate paying dividends in the foreseeable future.
THE PURCHASE TRANSACTION
Terms of the Purchase Agreement
The following summary does not purport to be complete and is qualified in
its entirety by the actual terms and provisions of the Purchase Agreement,
which is attached hereto as Exhibit A.
The Company and International entered into the Purchase Agreement with
the Purchasers pursuant to which the Purchasers purchased (the "Closing") from
the Company on January 29, 1997 (the "Closing Date") Holdings Common Stock
representing approximately 79.9% of the shares of Holdings Common Stock
outstanding after giving effect to the redemptions described herein at a
purchase price of $10.15 per share. At the Closing, in addition to the other
deliveries required, International paid fees to an affiliate of the Purchasers
in the amount of $2,300,000, to PaineWebber Incorporated, the investment
banker for the Purchasers, in the amount of $1,250,000, and to MLGAL in the
amount of $1,750,000.
Representations and Warranties
The Company and International made certain representations and warranties
in the Purchase Agreement regarding: their organization, power and
qualifications; authorization of the Purchase Agreement and the other
agreements contemplated thereby; that, with certain exceptions, the Purchase
Agreement and the other agreements contemplated thereby do not violate or
conflict with the organizational documents of the Company or its subsidiaries,
any governmental order to which the Company or its subsidiaries is subject, or
any material agreement to which the Company or International is a party; that
no governmental or third party consent was necessary to consummate the
transactions contemplated by, and to comply with the terms of, the Purchase
Agreement, other than pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and from Congress Financial
Corporation (Central) and Core States Bank N.A., lenders pursuant to the Loan
and Security Agreement; the capitalization of the Company, International, and
certain subsidiaries of International (the "Subsidiaries"); the financial
condition of the Company and International; the absence of certain changes and
events since September 30, 1996; certain tax matters; the Company's and
International's employee benefit plans, collective bargaining agreements,
employee agreements, intellectual property, environmental matters, compliance
with applicable laws, whether brokers or finders fees were due in connection
with the Purchase Transaction and certain other matters.
The Purchasers made representations and warranties to the Company
regarding: their organization; authorization of the Purchase Agreement; that
the Purchase Agreement does not violate or conflict with the organizational
documents of the Purchasers, any governmental order to which any of the
Purchasers is subject or any material agreement to which any of the Purchasers
is a party; that no governmental or third party consent was necessary to
consummate the transactions contemplated by, and to comply with the terms of,
the Purchase Agreement, other than pursuant to the HSR Act; their solvency;
their investment intent; access to information about the Company and
International; their sophistication; the source of the funds used to purchase
the shares; that each is an accredited investor as defined under federal
securities laws; and whether brokers or finders fees were due in connection
with the Purchase Transaction.
Certain Covenants
Pursuant to the Purchase Agreement, the Company agreed that from the date
of the Purchase Agreement until Closing of the Purchase Transaction it would,
and would cause International and the Subsidiaries to, take or not take
certain actions, as described in the Purchase Agreement.
The Purchasers also made certain covenants with respect to their actions
prior to the Closing. All covenants of the Company and the Purchasers were
either satisfied or waived prior to the Closing.
Terms of the Amended Stockholders Agreement
The following summary does not purport to be complete and is qualified in
its entirety by the actual terms and provisions of the Amended Stockholders
Agreement, which is attached hereto as Exhibit C.
In connection with the Closing of the Purchase Transaction, the Existing
Stockholders Agreement will be substantially amended. The parties to the
Amended Stockholders Agreement will include the Purchasers, the Fund, MLGAL,
the Management Holders and Offeree Stockholders who determine to become
parties thereto (collectively, the "Investors"). Offeree Stockholders who
desire to redeem shares of Holdings Common Stock pursuant to the Redemption
Offer must consent and become parties to the Amended Stockholders Agreement,
but other Offeree Stockholders may become parties thereto. The Offeree
Stockholders are encouraged to carefully consider the benefits of becoming a
party to the Amended Stockholders Agreement.
Pursuant to the Amended Stockholders Agreement, the Purchasers, the Fund
and MLGAL agree to vote all shares of Holdings Common Stock owned by such
parties in favor of the election as members of the Board of Directors of (i)
those individuals nominated by the Purchasers and (ii) one individual
nominated by the Fund and MLGAL, so long as the Fund and MLGAL continue to own
25% of the Holdings Common Stock held by such parties immediately following
the second closing under the Fund Redemption Agreement. See Redemption of
Holdings Common Stock Held by the Other Stockholders-Terms of the Fund
Redemption Agreement. The Amended Stockholders Agreement imposes certain
restrictions on, and provides Investors with certain rights in connection
with, transfers of shares of Holdings Common Stock, including provisions that
(i) with certain exceptions, the parties may not grant any proxy or enter into
or agree to be bound by any voting trust with respect to the Holdings Common
Stock; (ii) if the Purchasers or certain of their transferees propose to sell
any of their shares of Holdings Common Stock, the other Investors shall,
subject to certain exceptions, have the right to participate ratably in the
proposed sale; (iii) if the Purchasers propose to sell all of their Holdings
Common Stock to a third party, the Purchasers, so long as they collectively
own a majority of the shares of Holdings Common Stock, can compel the
Investors and certain transferees of the Investors (other than transferees of
the Fund, MLGAL and their current and former partners and employees) to sell
their shares of Holdings Common Stock, (iv) give the Purchasers rights of
first refusal with respect to transfers by management holders, and (v) subject
to certain exceptions, require the Fund and MLGAL to obtain the consent of the
Purchasers before selling or otherwise disposing of, in one transaction or
series of transactions, 25% or more of the shares of Holdings Common Stock
owned by the Fund and MLGAL immediately following the second closing under the
Fund Redemption Agreement. Pursuant to the Amended Stockholders Agreement,
the Investors are able to transfer shares of Holdings Common Stock in a
private transaction to any person, other than certain affiliates of the
Investors, and those transferees will have (A) the right to participate in the
sale of shares of Holdings Common Stock by the Purchasers (as described in
(iii) in the preceding sentence), (B) the right to participate in the
registration of shares of Holdings Common Stock (as described below) and (C)
no other material restrictions of the further transfer of such shares of
Holdings Common Stock other than those imposed by applicable securities laws.
The Amended Stockholders Agreement also contains a commitment on the
part of the Company to, under certain circumstances, register shares of
Holdings Common Stock held by the Investors under the Securities Act of 1933,
as amended (the "Securities Act"), upon request by the Fund, MLGAL or the
Purchasers, or if the Company otherwise proposes to register shares of
Holdings Common Stock, subject to certain conditions and limitations. Each
time the Company proceeds to register shares of Holdings Common Stock, each
Investor will have the right, subject to certain conditions and limitations,
to include a certain number of its shares of Holdings Common Stock in such
registration.
In addition, the Amended Stockholders Agreement provides for the
payment of a monitoring fee of $500,000 per annum to Blackstone Management
Partners, L.P. ("Blackstone Partners"), provided that Blackstone Partners
shall not, without additional approval of the Board of Directors of
International and a majority of the disinterested directors of the Board of
Directors of International, receive total fees pursuant to the Amended
Stockholders Agreement in excess of $2,500,000. The Amended Stockholders
Agreement requires the Company, in certain instances, to disclose information
and to file reports necessary to permit the Investors to sell shares of
Holdings Common Stock pursuant to Rule 144 promulgated under the Securities
Act. Furthermore, the Amended Stockholders Agreement prohibits the Company
and its subsidiaries from entering into any transaction or conducting any
business with the Purchasers and their affiliates (other than payment of the
monitoring fees and reasonable and customary investment banking fees for
services rendered by the Purchasers or their affiliates) unless such
transaction or business: (i) has been either (A) approved by a majority of the
disinterested directors of the Company, or (B) the Company has received a
written opinion from an independent investment banking firm that such
transaction is fair to the Company and its subsidiaries from a financial point
of view, and (ii) in the case of any transaction or series of related
transactions involving an aggregate payment in excess of $5 million by or to
the Purchasers and their affiliates, the Company has received a written
opinion from a nationally recognized independent investment banking firm that
the transaction or the series of related transactions is fair to the Company
and its subsidiaries from a financial point of view. The Amended Stockholders
Agreement terminates upon the tenth anniversary of the initial effective date
of the Amended Stockholders Agreement.
Because the other requirements to amend the Existing Stockholders
Agreement have been met, if a majority of the Institutional Holders (as
defined in the Existing Stockholders Agreement) consent to the Amended
Stockholders Agreement, all parties to the Existing Stockholders Agreement
will be bound by the Amended Stockholders Agreement. Unless and until the
foregoing condition is satisfied, such Institutional Holders will retain
whatever rights and will be subject to the obligations and restrictions of the
Existing Stockholder Agreement. Any Offeree Stockholder executing the
signature page to the Amended Stockholders Agreement included with the Letter
of Transmittal will have the rights of an "Investor" as such term is defined
in the Amended Stockholders Agreement.
Amendment to the Loan and Security Agreement
The following summary does not purport to be complete and is qualified in
its entirety by the actual terms and provisions of the Loan Agreement
Amendment being described, a copy of which will be provided upon request to
the Company.
On January 24, 1997, the Company entered into Amendment No. 2 (the "Loan
Agreement Amendment") to the Amended and Restated Loan and Security Agreement
with CoreStates Bank, N.A. and Congress Financial Corporation (Central), as
lenders (the "Lenders"), and Congress Financial Corporation (Central), as
agent for the lenders (the "Loan Agreement"). The Loan Agreement Amendment
provides that: (i) the maximum amount available for borrowing under the Loan
and Security Agreement is increased from $50 million to $60 million, and a fee
of $100,000 was paid to the Lenders in consideration for such increase; (ii)
the Lenders and the Agent consent to the Purchase Transaction and the Fund
Redemption; (iii) the commissions, fees, costs, expenses and other charges
incurred by International in connection with the Purchase Transaction and the
redemptions of shares of Holdings Common Stock contemplated herein will not be
considered in determining International's compliance with covenants related to
the adjusted net worth or consolidated net income of International; (iv) the
amount used to calculate the unused line fee will be the amount by which
$48,000,000 (instead of $40,000,000) exceeds the average daily principal
balance of the outstanding loans; and (v) International will be permitted to
incur such indebtedness as is necessary to finance any redemptions pursuant to
the change of control offer described below in respect to the Senior Notes.
The proceeds received by the Company from the Purchase Transaction were
and will be applied by the Company to finance the redemptions of Holdings
Common Stock from the Fund, MLGAL and the Offeree Stockholders as described
herein. The transaction fees in connection with the purchase and redemption
transactions described herein were funded through additional borrowings under
the Loan and Security Agreement.
The Change of Control Offer
The Purchase Transaction constitutes a Change of Control as defined in
the Indenture. As a result, International is required to offer to redeem the
Senior Notes (the "Change of Control Offer") at a price of 101% of the
principal balance of the Senior Notes (the "Note Redemption Price"). The
Company currently anticipates making the Change of Control Offer soon after
the date of this Offer to Redeem, and the Change of Control Offer will expire
approximately thirty (30) days after the Change of Control Offer is made.
Because the Board of Directors of the Company is aware that the Senior Notes
have recently been trading at prices significantly above the Note Redemption
Price, the Company currently does not anticipate that any of the Senior Notes
will be tendered for redemption pursuant to the Change of Control Offer. If
any of the Senior Notes are tendered pursuant to the Change of Control Offer,
the Company currently anticipates that replacement financing will be obtained
through additional borrowings under the Loan and Security Agreement or through
the issuance of additional Senior Indebtedness as defined therein.
REDEMPTION OF HOLDINGS COMMON STOCK HELD
BY THE OTHER STOCKHOLDERS
In connection with the Purchase Agreement, the Company entered into (a) a
Stock Redemption Agreement with the Fund and MLGAL (the "Fund Redemption
Agreement") and (b) an Exercise and Repurchase Agreement with the Management
Holders (the "Management Redemption Agreement").
Terms of the Fund Redemption Agreement
The following summary does not purport to be complete and is qualified in
its entirety by the actual terms and provisions of the Fund Redemption
Agreement, which is attached hereto as Exhibit B.
Pursuant to the Fund Redemption Agreement, the Company has agreed to
redeem that number of shares of Holdings Common Stock held by the Fund and
MLGAL which, when combined with the number of shares of Holdings Common Stock
held by the Management Holders and the Offeree Stockholders and redeemed by
the Company, equals 79.9% of the issued and outstanding shares of Holdings
Common Stock.
In the Fund Redemption Agreement, the Fund and MLGAL make several
representations to the Company, including representations regarding: their
organization, power and qualifications; title to the shares of Holdings Common
Stock to be redeemed; their authority to execute and deliver the Fund
Redemption Agreement; that the Fund Redemption Agreement does not violate or
conflict with the organizational documents of the Fund or MLGAL or any
governmental order or material agreement to which the Fund or MLGAL is subject
or is a party; and that no consents are necessary. The Company also makes
similar representations to the Fund and MLGAL.
The redemption of the shares of Holdings Common Stock pursuant to the
Fund Redemption Agreement occurs on two separate dates, the first of which has
already occurred. At the first closing, which occurred on the same date as
the Closing of the Purchase Transaction, the Company redeemed from the Fund
and MLGAL 4,393,915 shares of Holdings Common Stock, which is the number of
shares of Holdings Common Stock which, when combined with the shares of
Holdings Common Stock to be redeemed by the Management Holders and the maximum
number of shares to be redeemed by the Offeree Stockholders if this Redemption
Offer is fully subscribed, will equal the number of shares of Holdings Common
Stock purchased by the Purchasers. The Company will redeem the shares of
Holdings Common Stock tendered for redemption by the Offeree Stockholders in
accordance with the Redemption Offer and such additional shares of Holdings
Common Stock held by the Fund and MLGAL so that the total shares of Holdings
Common Stock held by the Fund, MLGAL, the Management Holders and the Offeree
Stockholders and redeemed by the Company equals the number of shares of
Holdings Common Stock purchased by the Purchasers. At the time of the first
closing, the funds necessary to redeem the shares of Holdings Common Stock
from the Fund, MLGAL and the Offeree Stockholders were placed in escrow
pursuant to the Escrow Agreement, a copy of which is attached hereto as
Exhibit D.
Terms of the Management Redemption Agreement
The following summary does not purport to be complete and is qualified in
its entirety by the actual terms and provisions of the Management Redemption
Agreement, which is attached hereto as Exhibit E.
Pursuant to the Management Redemption Agreement, the Management Holders
exercised options to acquire 106,114 shares of Holdings Common Stock which
were already fully vested, and the Company redeemed the shares of Holdings
Common Stock acquired pursuant to such exercises for $10.15 per share. The
members of management of the Company redeeming shares of Holdings Common Stock
and the numbers of shares each such person redeemed are as follows: Michael
D. Austin, 40,000 shares; Joseph F. Barker, 23,644 shares; F. Galen Hodge,
35,470 shares; and Charles J. Sponaugle, 7,000 shares. Because of the
simultaneous exercise of options and redemption by the Company pursuant to the
Management Redemption Agreement, no shares of Holdings Common Stock were
issued to the Management Holders and the aggregate exercise price with respect
to the options held by each Management Holder was deducted, together with
required tax withholdings, from the proceeds to be received by the Management
Holders pursuant to the redemption of their respective shares.
Each of the Management Holders made certain representations and
warranties with respect to the shares of Holdings Common stock redeemed
pursuant to the Management Redemption Agreement, including that: the
Management Redemption Agreement constitutes valid and legally binding
obligations of the Management Holder; the Management Redemption Agreement did
not and will not cause a default or breach with respect to any agreement to
which the Management Holder is a party; no other party has any rights with
respect to the applicable option agreements or the shares of Holdings Common
Stock acquired upon exercise of the options; the Management Holder has
adequate knowledge and experience, and had access to all material information,
in order to evaluate the redemption; and the Management Holder is an
accredited investor under the securities laws.
CERTAIN INFORMATION WITH RESPECT TO THE COMPANY
The Company is a Delaware corporation which owns all of the outstanding
Common Stock of International. Included herewith as Exhibit F is a copy of
the Annual Report on Form 10-K filed by International with the Securities and
Exchange Commission relating to International's fiscal year ending September
30, 1996. Included herewith as Exhibit G is a copy of the Current Report on
Form 8-K filed by International with the Securities and Exchange Commission
for the purpose of filing the press release announcing the pending purchase of
shares of Holdings Common Stock by the Purchasers. Included herewith as
Exhibit H is a copy of the press release dated January 30, 1997 issued by
International announcing results for the first quarter of fiscal 1997.
International completed the sale of $140,000,000 of its Senior Notes in
August, 1996 (the "Notes Offering"), and included as Exhibit I is a copy of
the final Prospectus used in connection with the Notes Offering. The
information set forth in Exhibits F, G, H and I is hereby incorporated by
reference as if fully set forth herein.
In connection with the consummation of the Purchase Transaction and the
other transactions contemplated thereby, all of the members of the Board of
Directors of the Company and International resigned except for Michael D.
Austin and Ira Starr. Pursuant to the terms of the Amended Stockholders
Agreement, the following representatives of the Purchasers were elected to the
Board of Directors of the Company and International: David A. Stockman, Chin
Chu, David Blitzer, and Glenn Hutchins. Michael D. Austin remained on the
Board of Directors of the Company and International as a nominee of the
Purchasers. Ira Starr, a general partner of MLGAL, which is the general
partner of the Fund, remained on the Board of Directors of the Company and
International as a nominee of the Fund and MLGAL.
CERTAIN INFORMATION WITH RESPECT TO BLACKSTONE
The Purchasers are affiliates of The Blackstone Group, a private
investment bank based in New York and founded in 1985 by Peter G. Peterson,
its current Chairman, and Stephen A. Schwarzman, its current Chief Executive
Officer. The Blackstone Group's main businesses include strictly friendly
principal investments, real estate investing and asset management,
restructuring and merger and acquisition advisory services. Blackstone, the
group's principal investment vehicle, has approximately $1.3 billion of
committed equity capital.
10
LETTER OF TRANSMITTAL/CONSENT FORM
TO SURRENDER FOR REDEMPTION CERTIFICATES REPRESENTING
SHARES OF COMMON STOCK OF
AND/OR
TO GIVE CONSENTS IN RESPECT OF
THE EXISTING STOCKHOLDERS AGREEMENT OF
HAYNES HOLDINGS, INC.
THE CONSENT SOLICITATION AND OFFER TO REDEEM WILL EXPIRE AT 5:00 P.M., NEW
==============================================================================
YORK CITY TIME, ON MONDAY, MARCH 3, 1997, UNLESS EXTENDED.
===================================================================
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By Mail: By Hand/Overnight Delivery:
Haynes Holdings, Inc. Haynes Holdings, Inc.
Attention: Corporate Secretary Attention: Corporate Secretary
P.O. Box 9013 1020 West Park Avenue
Kokomo, IN 46904-9013 Kokomo, IN 46904-9013
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For Information Call: (317) 456-6000
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
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DESCRIPTION OF SHARES SURRENDERED
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Name(s) and Address(es) of Registered Holder Certificate(s) Being Surrendered
(Attach signed additional list if necessary)
Number of
Certificate Shares Represented by
Number(s) the Certificate(s)
Total Shares
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OF THE TOTAL SHARES REPRESENTED BY THE CERTIFICATES BEING SURRENDERED, PLEASE
INDICATE THE MAXIMUM NUMBER OF SHARES THAT THE HOLDER DESIRES TO REDEEM:
___________________________
The name(s) and address(es) of the registered holder(s) should be
printed, if they are not already set forth on a label above, as they appear on
the Certificate(s).
CHECK HERE AND RETURN THIS LETTER OF TRANSMITTAL TO THE COMPANY IF ANY OF
YOUR CERTIFICATES HAVE BEEN MUTILATED, LOST, STOLEN OR DESTROYED. THE COMPANY
WILL THEREAFTER ADVISE YOU OF THE REQUIREMENTS FOR RECEIVING PAYMENT FOR THE
SHARES FORMERLY REPRESENTED BY SUCH CERTIFICATES.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
To: Haynes Holdings, Inc. (the "Company")
The undersigned hereby surrenders the above-described certificate(s) (the
"Certificate(s)") representing shares of the Company's Common Stock, $.01 par
value ("Holdings Common Stock") to the Company for redemption pursuant to the
Consent Solicitation and Offer to Redeem ("Offer to Redeem"), and the
undersigned is also submitting the execution page of the Amended Stockholders
Agreement pursuant to which the undersigned consents to the amendment of the
Company's existing Stockholders Agreement. The undersigned has indicated on
the first page of this Letter of Transmittal the maximum number of shares of
Holdings Common Stock which the undersigned desires to redeem, which number
may not exceed the number of shares represented by the certificates
surrendered herewith. The Company will not redeem any shares of Holdings
Common Stock tendered for redemption by a stockholder unless such stockholder
has executed and delivered herewith the signature page to the Amended
Stockholders Agreement. Subject to the terms and conditions set forth in the
Offer to Redeem and this Letter of Transmittal (which together constitute the
"Redemption Offer"), upon the surrender of the Certificate(s), the undersigned
will be entitled to receive $10.15 in cash for each share of Holdings Common
Stock to be redeemed (the "Redemption").
The undersigned acknowledges that no scrip or fractional shares of
Holdings Common Stock will be issued in connection with the Redemption Offer.
Rather, each holder will receive $10.15 in cash times the fraction of the
share of Holdings Common Stock to which such holder would otherwise be
entitled, in lieu of any such fractional share.
The undersigned will, upon request, execute any additional documents
deemed by the Company to be necessary or desirable to complete the transmittal
and redemption of shares of Holdings Common Stock surrendered hereby and the
undersigned consenting to the amendment of the Existing Stockholders Agreement
and becoming a party to the Amended Stockholders Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to surrender the Certificate(s) pursuant to this
Letter of Transmittal and that, when delivery of the Redemption Consideration
on the terms set fort herein and in the Offer to Redeem has been made by the
Company, the Company will not be subject to any adverse claim in respect of
such certificate(s) of the shares of Holdings Common Stock represented
thereby.
Unless otherwise indicated below under "Special Payment and Issuance
Instructions", please issue any certificate for shares of Holdings Common
Stock to be owned following the Redemption and/or check for the cash to which
the undersigned is entitled in the name appearing under "Description of Shares
Surrendered" above. Similarly, unless otherwise indicated below under
"Special Delivery Instructions", please mail any certificate for shares of
Holdings Common Stock to be owned following the Redemption and/or check to the
address of the registered holder(s) appearing under "Description of Shares
Surrendered" above. In the event that both the Special Payment and Issuance
Instructions and the Special Delivery Instructions are completed, please issue
any certificate for shares of Holdings Common Stock to be owned following the
Redemption and/or check in the name of, and deliver such certificate and/or
check to, the person so indicated.
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SPECIAL PAYMENT AND SPECIAL DELIVERY
ISSUANCE INSTRUCTIONS INSTRUCTIONS
(Signature Guarantee Required -- (Signature Guarantee Required --
See Instruction 4) See Instruction 4)
To be completed ONLY if any certificate for To be completed ONLY if the certificate for
shares of Holdings Common Stock to be shares of Holdings Common Stock and/or
issued is to be registered in the name of, check is (are) to be issued in the name of the
and/or the check is (are) to be made payable to registered holder(s) of the shares of Holdings
someone other than the registered holder(s) of Common Stock surrendered herewith, but are
the shares of Holdings Common Stock to be sent to another person or to an address
surrendered herewith. other than that shown under "Description of
Shares Surrendered" above.
The certificate for shares of Holdings The certificate for shares of Holdings
Common Stock is to be issued and/or the Common Stock and/or check is (are) to be
check is (are) to be made payable to: delivered to:
Name ___________________________ Name ___________________________
(Please Print) (Please Print)
Address Address
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
__________________ ____________________________________
(Include Zip Code) (Include Zip Code)
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ACKNOWLEDGMENTS, REPRESENTATIONS, WARRANTIES AND
AUTHORIZATIONS OF THE UNDERSIGNED
1. The undersigned hereby acknowledges receipt of the Offer to
Redeem (including all of the exhibits thereto) and agrees that all elections,
instructions and orders in this Letter of Transmittal are subject to the terms
and conditions of the Offer to Redeem and the instructions applicable to this
Letter of Transmittal. The undersigned also represents and warrants that the
undersigned has full authority to give the representations, certifications and
instructions contained in this Letter of Transmittal and to surrender the
shares of Holdings Common Stock surrendered herewith and will, upon receipt,
execute any additional documents necessary or desirable to complete the
redemption of Holdings Common Stock contemplated in the Redemption Offer. The
signature of the undersigned below authorizes the Company to follow and to
rely upon all representations, certifications and instructions contained in
this Letter of Transmittal. This Letter of Transmittal shall survive the
death or incapacity of the undersigned and shall be binding upon heirs,
personal representatives and assigns of the undersigned.
2. Unless otherwise indicated above, please issue the
certificate for shares of Holdings Common Stock and/or check for the cash to
which the undersigned is entitled in the name, and mail to the address
appearing under "Description of Shares Surrendered" above. The undersigned
agrees to pay transfer taxes, if any, due where shares of Holdings Common
Stock are issued to a name different from that in which the shares of Holdings
Common Stock surrendered are registered. The undersigned certifies that any
tax identification or social security number provided herein is true, correct
and complete.
3. The undersigned understands that the definitive terms
pursuant to which the redemption will be effected, including the amount and
form of consideration to be received by holders of shares of Holdings Common
Stock, and the effect of this Letter of Transmittal are summarized in the
Offer to Redeem.
4. With respect to all shares of Holdings Common Stock to be
redeemed by the Company, the undersigned represents and warrants to the
Company that the undersigned has legal, valid and marketable title to such
shares, and upon redemption of such shares the Company shall acquire good and
unencumbered title to such shares. The undersigned also represents and
warrants to the Company that the undersigned has full power and authority to
consent to the amendment of the Existing Stockholders Agreement and enter into
the Amended Stockholders Agreement.
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SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
_____________________________________________
_____________________________________________
(Signature(s) of Stockholder(s))
Date: _____________________________________________
Please sign exactly as your name(s) appear(s) on the Certificate(s). If the
shares of Holdings Common Stock with respect to which this Letter of
Transmittal applies are registered in the name of two or more owners, all such
owners must sign personally. Executors, administrators, trustees and persons
signing for corporations or partnerships should so indicate. By signing this
form, persons signing as executors, administrators or trustees and persons
signing for corporations or partnerships represent and warrant that they have
requisite legal authority to sign in the capacity indicated. If any of your
Certificate(s) are not registered in your name or if you are signing in a
representative capacity, see Instructions 3, 5, and 6.
Name(s): _____________________________________________
_____________________________________________
(Please Print)
Capacity (full title): _____________________________________________
Address: _____________________________________________
_____________________________________________
(Include Zip Code)
Area Code and Telephone Number:
__________________________________________________
Employer Identification or Social Security Number:
___________________________________________________________
(Also Complete Substitute Form W-9 below)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED - SEE INSTRUCTION 4)
Authorized Signature: _____________________________________________
Name: _____________________________________________
(Please Print)
Name of Firm: _____________________________________________
Address: _____________________________________________
(Include Zip Code)
Area Code and Telephone Number: _____________________________________________
Dated: _____________________________________________
<PAGE>
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PAYER'S NAME: HAYNES HOLDINGS, INC.
NAME:___________________________________________________________________
ADDRESS:(Include Zip Code) ____________________________________________________
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SUBSTITUTE Form W-9 Part 1 - PLEASE PROVIDE YOUR TIN Social Security Number
IN THE BOX AT RIGHT AND CERTIFY OR Employer Identification
BY SIGNING AND DATING BELOW Number
_____________________
Department of the Treasury Part 2-Check the box if you are NOT subject to backup
Internal Revenue Service withholding under the provisions of Section 3406(a)(1)(C) of the
Internal Revenue Code because (1) you have not been notified
that you are subject to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal Revenue Service
has notified you that you are no longer subject to backup
withholding.
Payer's Request For CERTIFICATION - UNDER THE Part 3 -
Taxpayer Identification PENALTIES OF PERJURY, I CERTIFY Awaiting TIN
Number (TIN) THAT THE INFORMATION PROVIDED
ON THIS FORM IS TRUE, CORRECT,
AND COMPLETE.
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SIGNATURE: _____________________ DATE: ______________________
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I
understand that, notwithstanding that I have checked the box in Part 3 (and
have completed this Certificate of Awaiting Taxpayer Identification Number),
all reportable payments made to me prior to the time I provide the Company
with a properly certified taxpayer identification number will be subject to a
31% backup withholding tax.
Signature Date
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENT MADE TO YOU. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
INSTRUCTIONS
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATE(S). Certificate(s)
representing shares of holdings Common Stock, as well as a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) and any other
documents required by this Letter of Transmittal, including a duly executed
counterpart signature page of the Amended Stockholders Agreement, must be
received by Holdings at one of its addresses set forth in this Letter of
Transmittal.
2. SIGNATURES. The Letter of Transmittal must be signed by or on behalf
of the registered holder(s) of the Certificate(s) transmitted. If shares of
Holdings Common Stock covered by the Letter of Transmittal are registered in
the names of two or more owners, all such owners must sign. The signature(s)
on the Letter of Transmittal should correspond exactly to the name(s) written
on the face of the Certificate(s) transmitted.
If the Letter of Transmittal is signed by an agent, attorney,
administrator, executor, guardian, trustee, or any person in any other
fiduciary or representative capacity, or by an officer of a corporation on
behalf of the corporation, the person signing must give such person's full
title in such capacity. In addition, see Instruction 5.
If the Certificate(s) delivered herewith are registered in the name
of a person other than the signer of this Letter of Transmittal, the
Certificate(s) must be endorsed or accompanied by stock powers signed by the
registered owner(s) with the signature or the endorsement on stock powers
guaranteed as described below.
If Special Payment and Issuance Instructions are given by this
Letter of Transmittal, each signature appearing on the Letter of Transmittal
must be guaranteed by a commercial bank and trust company located in the
United States or by a firm which is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc.
("Eligible Institution").
3. ISSUANCE OF NEW CERTIFICATES IN SAME NAME. IF ANY
CERTIFICATE REPRESENTING SHARES OF HOLDINGS COMMON STOCK AND/OR CHECK IS TO BE
ISSUED IN THE NAME OF THE REGISTERED HOLDER AS INSCRIBED ON THE SURRENDERED
CERTIFICATE(S), THE SURRENDERED CERTIFICATE(S) NEED NOT BE ENDORSED. For
corrections in name or changes not involving changes in ownership, see
Instruction 4(c).
4. ISSUANCE OF NEW CERTIFICATE IN DIFFERENT NAMES. If any certificate
representing shares of Holdings Common Stock and/or check is to be issued in
the name of someone other than the registered holder of the surrendered
certificate(s), you must follow the guidelines listed below:
a) ENDORSEMENT AND GUARANTEE. The Certificate(s) surrendered must be
properly endorsed (or accompanied by appropriate stock power properly executed
by the registered holder of such Certificate(s)) to the person who is to
receive the shares of Holdings Common Stock and/or check. The signature of
the registered holder on the endorsement or stock powers must correspond with
the name as written upon the face of the certificate(s) in every particular
and must be guaranteed by an Eligible Institution.
b) TRANSFER TAXES. In the event that any transfer or other taxes become
payable by reason of the issuance of any shares of Holdings Common Stock or
any check in any name other than that of the registered holder, the Letter of
Transmittal must be accompanied by a check in payment of any transfer or other
taxes required by reason of such issuance in such different name, or proper
evidence that such tax has been paid or is not payable.
c) CORRECTION OF OR CHANGE IN NAME. For a correction of name or for a
change in name which does not involve a change in ownership, proceed as
follows: for a change in name by marriage, etc., the surrendered
Certificate(s) should be endorsed, e.g., "Mary Doe, now by marriage Mrs. Mary
Jones," with the signature guaranteed by an Eligible Institution. For a
correction in name, the surrendered Certificate(s) should be endorsed, e.g.,
"James E. Brown, incorrectly inscribed as J. E. Brown," with the signature
guaranteed by an Eligible Institution.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO ANY POSSIBLE
CONSEQUENCES RESULTING FROM THE ISSUANCE OF ANY CERTIFICATE REPRESENTING
SHARES OF HOLDINGS COMMON STOCK OR ANY CHECK IN A NAME DIFFERENT FROM THAT OF
THE REGISTERED HOLDER OF THE SURRENDERED CERTIFICATE(S).
5. SUPPORTING EVIDENCE. In case the Letter of Transmittal,
certificate endorsement or stock power is executed by an agent, attorney,
administrator, executor, guardian, trustee, or any other person acting in a
fiduciary or representative capacity, or by an officer of a corporation on
behalf of the corporation, there must be submitted with the Letter of
Transmittal, surrendered Certificate(s), and/or stock powers documentary
evidence of appointment and authority to act in such capacity (including court
orders and corporate resolutions where necessary), as well as evidence of the
authority of the person making such execution to assign, sell or transfer
shares. Such documentary evidence of authority must be in form satisfactory
to the Company.
6. SPECIAL INSTRUCTIONS FOR DELIVERIES BY THE COMPANY. Unless
instructions to the contrary are given in the Special Payment and Issuance
Instructions above or Special Delivery Instructions above, any certificate
representing shares of Holdings Common Stock and/or any check to be
distributed to a stockholder upon the surrender of shares of Holdings Common
Stock will be mailed to the address set forth above the owner's signature.
7. INADEQUATE SPACE. If there is insufficient space to complete
any box or sign the Letter of Transmittal, please attach additional sheets.
8. INDICATION OF CERTIFICATE NUMBERS. The Letter of Transmittal
must indicate the certificate number(s) of the Certificate(s) representing
shares of Holdings Common Stock covered thereby. If the space provided on the
Letter of Transmittal is inadequate, such information should be listed
separately on additional sheets and attached to the Letter of Transmittal.
9. METHOD OF DELIVERY. The method of delivery of all documents
is at the option and risk of the holder of shares of Holdings Common Stock,
but if delivery is by mail, registered mail, with return receipt requested,
properly insured is recommended. It is suggested that you mail as early as
possible.
10. DENOMINATIONS. If you wish to have stock certificates
issued in particular denominations, explicit written instructions to the
Company should be provided.
11. LOST CERTIFICATES. In the event that the stockholder is
unable to deliver to the Company any of the Certificate(s) due to the
mutilation, loss, theft or destruction of such Certificate(s), this Letter of
Transmittal may nevertheless be submitted, together with any documents which
may be required, subject to acceptance at the discretion of the Company,
provided, among other requirements, that the stockholder agrees to indemnify
the Company by signing the form of indemnity agreement which may be obtained
from the Company. In certain instances, the Company may require a corporate
bond or indemnity.
12. CONSTRUCTION. All questions with respect to the Letter of
Transmittal will be determined by the Company. The Company may (but is not
required to) waive any immaterial defects or variances in the manner in which
the Letter of Transmittal has been completed and submitted so long as the
intent of the holder of shares of Holdings Common Stock submitting the Letter
of Transmittal is reasonably clear.
13. SUBSTITUTE FORM W-9. If you have not previously provided
the Company with your social security number or other taxpayer identification
number on Form W-9 or certified therein that you are not subject to backup
withholding, you should complete the Substitute Form W-9 included herein.
Failure to do so may subject you to 31% Federal income tax withholding on
amounts to be paid to you as a holder of shares of Holdings Common Stock.
14. MISCELLANEOUS. The Company shall not be under any duty to
give notification of defects in the Letter of Transmittal and shall not incur
any liability for failure to give such notice. All Letters of Transmittal
shall be construed in accordance with the terms and conditions of the Offer to
Redeem.
15. QUESTIONS. Any questions concerning this Letter of
Transmittal can be made by writing to the Company at the appropriate address
set forth on the first page of this Letter of Transmittal or by calling the
Company at (317) 456-6000.
AMENDED STOCKHOLDERS' AGREEMENT, dated as of January 29, 1997 (this
"Agreement"), by and among Haynes Holdings, Inc., a Delaware corporation
(including its successors, the "Issuer"), the investors listed on the
signature pages hereof and all other persons that become parties to this
Agreement pursuant to the terms and provisions contained herein.
W I T N E S S E T H
WHEREAS, the Issuer owns all of the outstanding capital stock of
Haynes International, Inc., a Delaware corporation ("Haynes");
WHEREAS, the Issuer and certain of the Investors are parties to
a Stockholders' Agreement, dated as of August 31, 1989 (as heretofore amended,
the "Original Stockholders Agreement") and to a certain Stock Subscription
Agreement, dated as August 31, 1989 (as heretofore amended, the "Subscription
Agreement");
WHEREAS, the Blackstone Investors (as defined below) and the Issuer
have entered into a Stock Purchase Agreement, dated as of January 24, 1997
(the "Stock Purchase Agreement"), and the MLGA Investors (as defined below)
and the Issuer have entered into a Stock Redemption Agreement, dated as of
January 24, 1997 (the "Stock Redemption Agreement"), which agreements,
collectively with certain other agreements referred to therein, provide for
the recapitalization of the Issuer (the "Recapitalization") through the
repurchase by the Issuer of 79.9% of the outstanding shares of common stock,
par value $.01 per share, of the Issuer (the "Common Stock") and the purchase
by the Blackstone Investors of a like amount of newly-issued shares of Common
Stock;
WHEREAS, it is in the best interests of the Issuer and the Investors
(as defined below) that in connection with the Recapitalization, the Original
Stockholders' Agreement be amended and restated and superseded in its entirety
with this Agreement and that, through the execution and delivery of this
Agreement certain aspects of the relationship between the Issuer and the
Investors be regulated and that certain rights be granted to the Holders (as
defined below) with respect to the Common Stock; and
WHEREAS, this Agreement shall become applicable in accordance with
its terms to any Holder (as defined below), (i) with respect to any Holder
that owns Common Stock or options as of the date of effectiveness of this
Agreement, as of such date, and (ii) with respect to any Holder that acquires
Common Stock or options after such date, as of the first date as of which such
Holder acquires any of the Common Stock or options;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Affiliate" shall have the meaning given to such term in Rule 12b-2
promulgated under the Exchange Act.
"Affiliated Transferee" with respect to any Investor, means any
Person (including any Permitted Transferee) that (1) is (a) an Affiliate of
such Investor, (b) an employee, limited partner, general partner or director
of such Investor, any spouse, sibling or lineal ancestor or descendant of any
such employee, limited partner, general partner or director or (c) any trust
for the benefit of, or any estate of, any such spouse, sibling, ancestor or
descendant and (2) has (a) agreed in writing to be bound and (b) has become
bound by the terms and conditions of this Agreement to the same extent and in
the same manner as the Investor transferring Common Stock to such Person;
provided, however, if such Person is a direct or indirect transferee of one of
the MLGA Investors or the MLGA Partners, the Person need not satisfy the
requirements of this clause (2) to be deemed an "Affiliated Transferee".
"Agreement" means this Amended Stockholders Agreement, as the same
shall be amended, supplemented or otherwise modified from time to time.
"Blackstone Investors" means Blackstone Capital Partners II Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners II Merchant Banking
Fund L.P. and Blackstone Family Investment Partnership, L.P.
"Blackstone Nominees" has the meaning set forth in Section 2.1.
"Blackstone Price" means $10.15 per share of Common Stock.
"Board of Directors" means the Board of Directors of the Issuer.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in the City of New York are authorized by law to
close.
"Commission" means the Securities and Exchange Commission and any
successor commission or agency having similar powers.
"Common Stock" has the meaning set forth in the recitals and shall
include shares of Common Stock (i) issuable upon exercise of options held by
any Holder on the date hereof or (ii) to the extent this Agreement is made
applicable to such shares in accordance with the provisions of Section 6.10
hereof, issuable upon exercise of any options granted by the Issuer after the
date hereof.
"Disinterested Director" shall mean any director of the Issuer that
(i) is not an employee or Affiliate of any Blackstone Investor or any
Affiliate thereof, (ii) is not an employee of the Issuer or any subsidiary of
the Issuer and (iii) does not have any material direct or indirect pecuniary
interest in the applicable transaction or series of related transactions.
"Duly Endorsed" means duly endorsed in blank by the Person or
Persons in whose name a stock certificate is registered or accompanied by a
duly executed stock assignment separate from the certificate with the
signature(s) thereon guaranteed by a commercial bank or trust company or a
member of a national securities exchange or of the NASD.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Haynes" has the meaning set forth in the recitals to this
Agreement.
"Holders" means the Investors and their respective Private
Transferees who own shares of Common Stock or options to acquire Common Stock.
"Initial Closing" shall mean the consummation of the purchase of
shares of Common Stock by the Blackstone Investors pursuant to the Stock
Purchase Agreement.
"Initial Public Offering" means the first Public Offering of shares
of Common Stock after the date hereof pursuant to a registration statement
filed under the Securities Act.
"Investors" means the collective reference to the Blackstone
Investors, the MLGA Investors, the Management Investors and the Other
Investors and each Person who becomes a Management Investor or Other Investor
pursuant to the provisions of this Agreement (including Section 6.10 hereof),
but the term shall not include any Private Transferees (other than Affiliated
Transferees who are required to become parties to this Agreement and Permitted
Transferees).
"Management Investors" means the Management Investors listed as such
on the signature pages hereof, each Person that becomes a Management Investor
pursuant to Section 6.10, each Permitted Transferee of any Management Investor
and each Affiliated Transferee of any Management Investor.
"Minimum Price" shall mean, as of any date of determination
commencing with the first Business Day following the 24th full calendar month
after the Subsequent Closing Date, a premium over the Blackstone Price,
compounded annually during the period from the Subsequent Closing Date to such
date of determination, equal to the percentage premium indicated with respect
to such date of determination under the column designated "Applicable Premium"
below:
<TABLE>
<CAPTION>
<S> <C>
Date of Determination: Applicable Premium:
During the 25th calendar month
following the Initial Closing Date 28.5%
During the 26th calendar month
following the Initial Closing Date 27.1%
During the 27th calendar month
following the Initial Closing Date 25.9%
During the 28th calendar month
following the Initial Closing Date 24.7%
During the 29th calendar month
following the Initial Closing Date 23.7%
During the 30th calendar month
following the Initial Closing Date 22.8%
During or after the 31st calendar month
following the Initial Closing Date 22.0%
</TABLE>
"MLGA Investors" means MLGA Fund II, L.P. and MLGAL Partners, L.P.
"MLGA Nominee" has the meaning set forth in Section 2.1(a)(i).
"MLGA Partners" means any partner (current or former) of either of
the MLGA Investors and the following individuals: David J. Githens, John P.
Githens, Paul M. Githens, Suzanne M. Githens, Thomas F. Githens, Jr., William
E. Githens, Hedy Matteson, Anne H. Milton, Nancy S. Milton, Robert C. Milton,
III, and Diane Sexton.
"NASD" means the National Association of Securities Dealers, Inc.
"Original Stockholders' Agreement" has the meaning set forth in the
recitals to this Agreement.
"Other Investors" means the persons designated as "Other Investors"
on the signature pages hereof.
"Permitted Transferee" means any Person who, in connection with any
sale, assignment, transfer, participation in, pledge, transfer or other
disposition of Common Stock to such Person by a Management Investor, (i) has
agreed in writing to be bound and (ii) has become bound by the terms and
conditions of this Agreement to the same extent and in the same manner as the
Management Investor transferring Common Stock to such Person.
"Person" means an individual, partnership, corporation, trust, joint
stock company, association, joint venture, or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
"Private Transferee" means any Person (including any Affiliated
Transferee or Permitted Transferee) who acquires any Common Stock upon any
sale, assignment, transfer, distribution, participation in, pledge, transfer
or other disposition from a Holder or a direct or indirect Private Transferee
thereof, other than (i) pursuant to a Public Offering or (ii) pursuant to Rule
144 under the Securities Act after the Initial Public Offering. The term
"Private Transferees" shall mean any combination of such Private Transferees
and, with respect to any Holder, "Private Transferees" shall mean the
specified combination of such Private Transferees.
"Public Offering" means any firm commitment underwritten public
offering of equity securities (or securities convertible into equity
securities) of the Issuer pursuant to an effective registration statement
under the Securities Act other than pursuant to a registration statement on
Form S-4 or Form S-8 or any successor or similar form.
"Registrable Shares" means the shares of Common Stock of the Issuer
(a) held by the Investors immediately after the Subsequent Closing on the
Subsequent Closing Date or (b) acquired by any Private Transferee upon
transfer of any of the shares referred to in clause (a); provided that such
shares shall cease to be Registrable Shares if and when (i) a registration
statement with respect to the disposition of such shares shall have become
effective under the Securities Act and such shares shall have been disposed of
pursuant to such effective registration statement, (ii) such shares shall have
been sold under circumstances in which all of the applicable conditions of
Rule 144 (or any similar provisions then in force) under the Securities Act
are met, (iii) such shares shall have been otherwise transferred, new
certificates not bearing restrictive legends shall have been delivered by the
Issuer in lieu thereof and further disposition thereof shall not require
registration or qualification of them under the Securities Act or any state
securities or Blue Sky laws, (iv) such shares may be sold pursuant to Rule
144(k) under the Securities Act or (v) such shares shall have ceased to be
outstanding.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsequent Closing" means the Subsequent Closing (as defined in the
Stock Redemption Agreement).
"Subsequent Closing Date" means the Subsequent Closing Date (as
defined in the Stock Redemption Agreement).
"Stock Purchase Agreement" has the meaning set forth in the recitals
to this Agreement.
"Stock Redemption Agreement" has the meaning set forth in the
recitals to this Agreement.
"Tag-along Transfer Notice Date" means the effective date of the
Tag-along Transfer Notice.
ARTICLE II
CORPORATE GOVERNANCE AND
CERTAIN VOTING AGREEMENTS
SECTION 2.1. Board of Directors of the Issuer. (a) The Blackstone
Investors and MLGA Investors agree as follows:
(i) Commencing after the Initial Closing and for so long thereafter
as the MLGA Investors own (or either of them owns) at least 25% of the number
of shares of Common Stock owned by the MLGA Investors immediately following
the Subsequent Closing (as such number shall be adjusted to account for stock
splits, dividends, subdivisions, combinations, reclassifications or similar
transactions effected by the Issuer after the Subsequent Closing Date), the
MLGA Investors (or either of them) shall be entitled, but not required, to
designate one nominee for election to the Board of Directors (such nominee,
together with any replacement pursuant to subparagraph (d) below, being
referred to herein as the "MLGA Nominee"); and
(ii) Commencing after the Initial Closing, the Blackstone Investors
shall be entitled to designate such number of nominees for election to the
Board of Directors as the Blackstone Investors shall specify from time to time
(such nominees, together with any replacements pursuant to subparagraph (d)
below and any additional directors appointed pursuant to subparagraph (f)
below, being referred to herein as the "Blackstone Nominees").
As soon as practicable after the Initial Closing, the Blackstone Investors and
the MLGA Investors shall vote at a meeting or by written consent all of the
shares of Common Stock owned by them so that the Blackstone Nominees and the
MLGA Nominee shall be elected to the Board of Directors. The Blackstone
Investors and the MLGA Investors shall vote all of the shares of Common Stock
owned by them, at any subsequent regular or special meeting of the
shareholders of the Issuer at which action is to be taken with respect to the
election of directors, or in any written consent in lieu of such a meeting of
shareholders, in favor of the election of the Blackstone Nominees and the MLGA
Nominee and shall take all other actions necessary to ensure the continued
election to the Board of Directors of such nominees and shall not take any
actions which are inconsistent with the intent and purpose of the foregoing.
(b) The Blackstone Investors and the MLGA Investors shall take all
actions necessary to cause each of the members of the Board of Directors so
elected, acting as the sole shareholder of Haynes, to take all action
necessary such that the board of directors of Haynes shall at all times be
constituted of the same individuals as the Board of Directors.
(c) Neither this Agreement nor any provisions hereof nor any action
taken or omitted to be taken hereunder shall be deemed to create or confer on
any particular member of the Board of Directors any right to be retained in
such capacity with the Issuer or Haynes, or any of their respective
Affiliates.
(d) Each Blackstone Investor and MLGA Investor hereby agrees to use
its best efforts to call, or cause the appropriate officers and directors of
the Issuer to call, a special meeting of shareholders of the Issuer and vote
all of the shares of Common Stock owned or held of record by it for, or to
take all actions by written consent in lieu of any such meeting necessary to
cause, the removal (with or without cause) of any Blackstone Nominee or MLGA
Nominee if the Blackstone Investors or the MLGA Investors, as the case may be,
request his or her removal for any reason. The Blackstone Investors and the
MLGA Investors shall have the right to designate a new nominee if a Blackstone
Nominee or a MLGA Nominee shall vacate his or her directorship for any reason
(including any removal from such directorship as provided above) and each
Blackstone Investor and each MLGA Investor hereby agrees to take such actions
as may be necessary to cause such vacancy to be filled by such new Blackstone
Nominee or MLGA Nominee.
ARTICLE III
RIGHTS AND OBLIGATIONS WITH
RESPECT TO TRANSFER
SECTION 3.1. General Restrictions. (a) Each Holder agrees that it
will not, except as required by law, directly or indirectly, offer, sell,
assign, transfer, grant a participation in, pledge or otherwise dispose of any
shares of Common Stock, except those dispositions that are made in compliance
with the Securities Act, all applicable state and foreign securities laws and
this Agreement (and, in the case of a transfer not pursuant to a Public
Offering, upon delivery to the Issuer of such opinions or certificates as the
Issuer shall reasonably request to establish that such disposition is not
subject to the registration requirements of the Securities Act or any other
applicable securities laws).
(b) No Investor or Affiliated Transferee of any Investor (other
than Affiliated Transferees of the MLGA Investors or the MLGA Partners) shall
grant any proxy or enter into or agree to be bound by any voting trust with
respect to the Common Stock, nor shall any Investor or Affiliated Transferee
of any Investor (other than Affiliated Transferees of the MLGA Investors or
the MLGA Partners) enter into any agreement or arrangement of any kind with
any Person with respect to the Common Stock, in either case, inconsistent with
the provisions of this Agreement, including, but not limited to, agreements or
arrangements with respect to the acquisition, disposition or voting of shares
of Common Stock, or act, for any reason, as a member of a group or in concert
with any other Persons in connection with the acquisition, disposition or
voting of shares of Common Stock in any manner which is inconsistent with the
provisions of this Agreement.
(c) No Investor (other than the MLGA Investors or the MLGA Partners)
shall transfer any shares of Common Stock during the period from the date of
the initial effectiveness of this Agreement until the Subsequent Closing Date,
except as expressly contemplated by the Stock Purchase Agreement, the Stock
Redemption Agreement and the other agreements and transactions referred to in
such agreements.
No Investor (other than a MLGA Investor or MLGA Partner) shall,
directly or indirectly, sell, assign, transfer, grant a participation in,
pledge or otherwise dispose of shares of Common Stock to any Person who would
constitute an Affiliated Transferee if such Person agreed in writing to be
bound by the terms and conditions of this Agreement to the same extent and in
the same manner as the Investor transferring Common Stock to such Person,
unless such Person does agree in writing to be bound by the terms and
conditions of this Agreement to the same extent and in the same manner as the
Investor transferring Common Stock to such Person.
SECTION 3.2. Legends. (a) Each certificate evidencing outstanding
shares of Common Stock issued to any Holder shall bear a legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE OR FOREIGN
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, OR TRANSFERRED EXCEPT IN
COMPLIANCE THEREWITH. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO A STOCKHOLDERS' AGREEMENT DATED AS OF JANUARY 29, 1997, COPIES OF
WHICH WILL BE FURNISHED BY HAYNES HOLDINGS, INC. OR ANY SUCCESSOR THERETO UPON
REQUEST AND WITHOUT CHARGE.
(b) If any shares of Common Stock shall cease to be Registrable
Shares, the Issuer shall, upon the written request of the Holder thereof,
issue to such Holder a new certificate evidencing such shares without the
legend required by Section 3.2(a) hereof endorsed thereon. If any shares of
Common Stock are transferred to any Private Transferee (other than an
Affiliated Transferee who is required to agree in writing to be bound by this
Agreement or a Permitted Transferee), then upon the request of the Private
Transferee the second sentence of the legend required by Section 3.2(a) shall
be removed from the certificate evidencing the applicable Common Stock.
SECTION 3.3. Tag-along Rights. (a) If one or more of the
Blackstone Investors or any Affiliated Transferee of a Blackstone Investor
(other than a Person who is an Affiliated Transferee of a Blackstone Investor
solely as a result of being a limited partner of a Blackstone Investor or a
limited partner of an Affiliated Transferee of a Blackstone Investor)
(collectively, the "Tag-along Offering Investors") proposes to sell any of its
shares of Common Stock to any Person (a "Prospective Tag-along Purchaser")
pursuant to a bona fide offer or offers to purchase or otherwise acquire, in
one transaction or any series of related transactions (a "Tag-along Transfer
Offer"), such Tag-along Offering Investors shall then cause the Tag-along
Transfer Offer to be reduced to writing and shall provide written notice (the
"Tag-along Transfer Notice") of such Tag-along Transfer Offer to each of the
other Holders (the "Tag-along Transfer Offerees"), in the manner set forth in
this Section 3.3. The Tag-along Transfer Notice shall identify the
Prospective Tag-along Purchaser, the Tag-along Ratio (as defined below), the
price contained in the Tag-along Transfer Offer and all the other material
terms and conditions of the Tag-along Transfer Offer. The Tag-along Transfer
Offerees shall have the right and option, exercisable as set forth below, to
accept the Tag-along Transfer Offer for up to such number of shares of Common
Stock as is determined in accordance with the provisions of Section 3.3(b).
Each Tag-along Transfer Offeree that desires to exercise such option to accept
the Tag-along Transfer Offer shall provide the Tag-along Offering Investors
with written revocable notice (each a "Tag-along Notice" and collectively, the
"Tag-along Notices") (specifying the number of shares of Common Stock as to
which such Tag-along Transfer Offeree is accepting the Tag-along Transfer
Offer) within 15 Business Days after the Tag-along Transfer Notice Date, and
shall simultaneously provide a copy of such Tag-along Transfer Notice to the
Issuer, and the Issuer shall forward a copy of each such Tag-along Notice to
the other Tag-along Transfer Offerees. Such Tag-along Notice may be withdrawn
or modified at any time until the expiration of 20 Business Days after the
Tag-along Transfer Notice Date (the "Tag-along Notice Period"). At the
expiration of the Tag-along Notice Period, the most recent notice given by a
Tag-along Transfer Offeree shall become irrevocable and binding, and shall
constitute an irrevocable acceptance of the Tag-along Transfer Offer by the
Tag-along Transfer Offeree for the Common Stock specified therein. As soon as
practicable after the expiration of the Tag- along Notice Period, the
Tag-along Offering Investors shall notify the Issuer and each accepting
Tag-along Transfer Offeree of the number of shares of Tag-along Transfer Stock
such Tag- along Transfer Offeree is obligated to sell or otherwise dispose of
pursuant to the Tag-along Transfer Offer and Section 3.3(b). The Tag-along
Offering Investors shall notify the Issuer and each accepting Tag-along
Transfer Offeree of the proposed date of any sale (the "Sale Date") pursuant
to this Section 3.3 no less than ten (10) days prior to the Sale Date and each
accepting Tag-along Transfer Offeree shall, not less than five (5) days prior
to the Sale Date, deliver to the Tag-along Offering Investors the Duly
Endorsed certificate or certificates representing the shares of Common Stock
to be sold or otherwise disposed of pursuant to such offer by such Tag-along
Transfer Offeree (or, if delivery of such certificates is not permitted by
applicable law, regulation or previously adopted non-discretionary policy,
copies of such certificates together with an unconditional agreement to
deliver such certificates on the Sale Date against delivery to the Tag- Along
Transfer Offeree of the consideration therefor), together with a limited
power-of-attorney authorizing the Tag-along Offering Investors to sell or
otherwise dispose of such shares of Common Stock pursuant to the terms of the
Tag-along Transfer Offer and all other documents required to be executed in
connection with the Tag-along Transfer Offer and shall simultaneously provide
a copy of such share certificates (or such agreement to deliver such shares
certificates) and such other required documents to the Issuer. In the event
that an accepting Tag-along Transfer Offeree shall fail to deliver such
certificates (or such agreement) and all other such required documents to the
Tag-along Offering Investors and the Issuer by such fifth day prior to the
Sale Date, after one day's notice of such failure (or in the event that such
Tag-Along Transfer Offeree shall fail to comply with its agreement to deliver
certificates on the Sale Date), the Tag-along Offering Investors shall be
entitled on the Sale Date to sell pursuant to such Tag- along Transfer Offer,
in addition to any other shares of Common Stock they are entitled to sell
pursuant to this Section 3.3, the number of shares of Common Stock such
failing Tag-along Transfer Offeree was otherwise entitled to sell hereunder.
The sale by the Tag-along Offering Investors to the Prospective Tag-along
Purchaser must be consummated by the Tag-along Offering Investors within 60
Business Days from the termination of the Tag-along Notice Period at a price
not higher than, and on terms not more favorable in any material respect than,
the terms contained in the Tag-along Transfer Notice. If the consideration
payable for the shares of Common Stock consists in part or in whole of
consideration other than cash, any increase in the cash component of such
Tag-along Transfer Offer shall constitute terms that are ipso facto "more
favorable" and thus require the provisions of this Section 3.3 to again apply
to such increased offer. If, at the end of such 60 Business Day period, the
Tag-along Offering Investors have not consummated the sale or other
disposition of the shares of Common Stock to the Prospective Tag-along
Purchasers all the restrictions on sale or other disposition contained in this
Agreement with respect to the shares of Common Stock owned by the Tag-along
Offering Investor shall again be in effect.
(b) (i) Each Tag-along Transfer Offeree shall have the right to
sell, pursuant to the Tag-along Transfer Offer, a number of shares of Common
Stock less than or equal to the product of the total number of shares offered
to be sold by the Tag-along Offering Investors or offered to be purchased by
the Prospective Tag-along Purchaser as set forth in such Tag-along Transfer
Offer multiplied by a fraction (the "Tag-along Ratio"), the numerator of which
shall be the total number of shares of Common Stock owned by such Tag-along
Transfer Offeree (or immediately acquirable upon exercise of outstanding
options issued to the Tag-along Transfer Offeree) and the denominator of which
shall be the sum of the total number of shares of Common Stock owned by all
Holders (or immediately acquirable upon exercise of outstanding options issued
to all Holders).
(ii) If at the termination of the Tag-along Notice Period
any Tag-along Transfer Offeree shall not have accepted the Tag-along Transfer
Offer, such Tag-along Transfer Offeree will be deemed to have waived any and
all of its rights under this Section 3.3 with respect to the sale or other
disposition or any of its Common Stock pursuant to such (but no other)
Tag-along Transfer Offer.
(iii) The Issuer shall fully cooperate with any Holder
who desires to exercise options held by such Holder in order to sell shares of
Common Stock pursuant to the Tag-along Transfer Notice, including, but not
limited to, promptly delivering certificates for the shares of Common Stock so
purchased to the Holder.
(c) Promptly after the consummation of the sale or other
disposition of the shares of Common Stock pursuant to the Tag-along Transfer
Notice the Tag-along Offering Investors shall remit to each of the Tag-along
Transfer Offerees the relevant consideration for the shares of Common Stock of
such Tag-along Transfer Offeree sold or otherwise disposed of pursuant
thereto, and shall furnish such other evidence of the completion and time of
completion of such sale or other disposition and the terms thereof as may be
reasonably requested by the Tag-along Transfer Offerees.
(d) Each Tag-along Transfer Offeree shall be entitled to sell its
shares of Common Stock pursuant to the Tag-along Transfer Offer at the same
price per share of Common Stock and upon the same financial terms and
conditions (including without limitation time of payment and form of
consideration) as to be paid and given to the Tag-along Offering Investors,
provided that no Tag-along Transfer Offeree shall be required to make to the
Prospective Tag-along Purchaser any representations or warranties in
connection with the proposed transfer of their shares of Common Stock (except
for several (and not joint) representations with respect to the Tag-along
Transfer Offeree's ownership and authority to sell, free of liens, claims and
encumbrances, the Common Stock to be sold by it), and provided further that no
Tag- along Transfer Offeree shall have any indemnification obligation, except
with respect to a breach of its representations and warranties.
(e) No obligation to make a Tag-along Transfer Offer shall result
from, and no Tag-along Transfer Offeree shall have any right or option to
demand any Tag-along Transfer Offer pursuant to this Section 3.3 arising out
of, any proposed sale of Common Stock in connection with any sale by a
Blackstone Investor or an Affiliated Transferee of a Blackstone Investor (i)
to an Affiliated Transferee of such Persons, (ii) pursuant to a Public
Offering or (iii) in compliance with Rule 144 under the Securities Act
subsequent to the Initial Public Offering.
(f) Notwithstanding anything contained in this Section 3.3, there
shall be no liability on the part of the Tag-along Offering Investors to any
Tag-along Transfer Offeree if the sale of Common Stock is not consummated for
whatever reason; providednone of such Tag-along Offering Investors sells any
Common Stock to any other Prospective Tag-along Purchaser without complying
again with this Section 3.3. Whether to effect a sale of Common Stock
pursuant to this Section 3.3 is in the sole and absolute discretion of the
Tag-along Offering Investors; provided, however, if any sale is effected by
such Tag-along Offering Investor, such sale shall be effected pursuant to this
Section 3.3.
SECTION 3.4. Drag-Along Rights. (a) Except as provided in Section
3.4(e), for so long as the Blackstone Investors collectively own at least a
majority of the shares of Common Stock of the Issuer on a fully-diluted basis,
if the Blackstone Investors propose to sell to any Person (the "Compelled Sale
Purchaser") all Common Stock held by all Blackstone Investors (the "Compelled
Sale Transfer Offer"), then the Blackstone Investors shall have the right,
exercisable as set forth below, to require each and every one (but not less
than every one) of the Investors, and all Affiliated Transferees of all of the
Investors (other than Affiliated Transferees of the MLGA Investors and the
MLGA Partners) (the "Drag-along Persons"), to sell all, but not less than all,
of the Common Stock then held by them to the Compelled Sale Purchaser, for the
same consideration per share and otherwise on the same terms and conditions
upon which the Blackstone Investors sell their Common Stock.
(b) The Blackstone Investors shall cause the Compelled Sale
Transfer Offer to be reduced to writing and shall provide a written notice
(the "Compelled Sale Transfer Notice") of such Compelled Sale Transfer Offer
to the Issuer and the Drag-along Persons. The Compelled Sale Transfer Notice
shall contain written notice of the exercise of the Blackstone Investors'
rights pursuant to Section 3.4(a) hereof setting forth the consideration per
share to be paid by the Compelled Sale Purchaser and the other terms and
conditions of the Compelled Sale Transfer Offer.
(c) Within ten (10) Business Days of the Compelled Sale Transfer
Notice, each of the Drag-Along Persons shall deliver to a representative of
the Blackstone Investors designated in the Compelled Sale Transfer Notice,
Duly Endorsed certificates representing the shares of Common Stock held by
such Drag-along Person (or, if delivery of such certificates is not permitted
by applicable law, regulation or previously adopted non-discretionary policy,
copies of such certificates and an unconditional agreement to deliver such
certificates at the closing for such Compelled Sale Transfer Offer against
delivery to such Drag-along Person of the consideration therefor), together
with all other documents, required to be executed in connection with such
Compelled Sale Transfer Offer. In the event that a Drag-along Person should
fail to deliver such certificates to the Blackstone Investors as required by
this Section 3.4, the Issuer shall cause the books and records of the Issuer
to show that such shares of Common Stock are bound by the provisions of this
Section 3.4 and that such shares shall be transferred only to the Compelled
Sale Purchaser upon surrender for transfer by such Drag-along Person.
(d) If, within 90 days after the Compelled Sale Transfer Notice, the
Blackstone Investors have not completed the sale of all the Common Stock to
the Compelled Sale Purchaser, the Blackstone Investors shall return to each of
the Drag-along Persons all certificates representing Common Stock and other
documents and instruments that such Drag-along Persons delivered in connection
with the sale pursuant hereto, and the provisions of this Section 3.4 with
respect to the shares of Common Stock owned by the Blackstone Investors prior
to giving such Compelled Sale Transfer Notice shall again be in effect.
(e) The provisions of this Section 3.4 shall not apply to any
proposed sale by the Blackstone Investors of all of their shares of Common
Stock (i) to the Issuer, (ii) to an Affiliated Transferee of any of the
Blackstone Investors or (iii) pursuant to a Public Offering.
(f) Promptly after the consummation of the sale of the shares of
Common Stock of the Blackstone Investors and the Drag- along Persons pursuant
to this Section 3.4, the Blackstone Investors shall give notice thereof to the
Drag-along Persons and shall remit to each of the Drag-along Persons the
relevant consideration for the shares of Common Stock of such Drag-along
Persons sold pursuant thereto, and shall furnish such other evidence of the
completion and time of completion of such sale and the terms thereof as may be
reasonably requested by such Drag-along Persons.
SECTION 3.5. Consent to Certain Transfers. Without the prior
written consent of the Blackstone Investors (which consent shall not be
unreasonably withheld), the MLGA Investors shall not sell, assign, transfer,
grant a participation in, pledge or otherwise dispose of, in one transaction
or any series of related transactions, to any single purchaser or to any
"group" (as defined under the Exchange Act and the rules and regulations
promulgated thereunder), 25% or more of the number of shares of Common Stock
owned by the MLGA Investors immediately following the Subsequent Closing (as
such number shall be adjusted to account for stock splits, dividends,
subdivisions, combinations, reclassifications or similar transactions effected
by the Issuer after the Subsequent Closing). If the Blackstone Investors do
not respond to a written notice from the MLGA Investors of their intention to
transfer such shares within five (5) Business Days after receiving such
written notice, the Blackstone Investors shall be deemed to have consented to
the transfer. The provisions of this Section 3.5 shall not apply to any sale
or transfer of Common Stock by the MLGA Investors to the Issuer or in
connection with any transfer to the partners of the MLGA Investors upon a
distribution to partners of Common Stock. The provisions of this Section 3.5
shall terminate upon the occurrence of an Initial Public Offering.
SECTION 3.6. Certain Provisions With Respect to Management
Investors. (a) Without limiting the provisions of Section 3.1, each Management
Investor agrees that it will not, except as required by law, directly or
indirectly, offer, sell, assign, transfer, grant a participation in, pledge or
otherwise dispose of any shares of Common Stock, except to a Permitted
Transferee.
(b) If any Management Investor receives or otherwise negotiates a
bona fide offer (a "Transfer Offer") to purchase any of its shares of Common
Stock (the "Transfer Stock"), which such Management Investor wishes to accept,
such Management Investor shall cause the Transfer Offer to be reduced to
writing and shall provide a written notice to the Blackstone Investors. The
Transfer Offer shall also contain an irrevocable offer (the "First Offer") to
sell all such Transfer Stock subject to the Transfer Offer to the Blackstone
Investors at a price equal to the price and upon substantially the same terms
as the terms contained in such Transfer Offer and shall be accompanied by a
true and correct copy of such Transfer Offer (which shall identify the third
party offeror, the Transfer Stock, the price contained in such Transfer Offer
and all the other terms and conditions of the Transfer Offer). The Blackstone
Investors shall have the irrevocable right and option, exercisable upon
written notice to the Issuer and the Management Investor within 15 days of
their receipt of the Transfer Offer, to accept the First Offer with respect to
all, but not less than all, of the shares of Transfer Stock. The Transfer
Stock to be purchased by the Blackstone Investors upon their exercise of the
First Offer shall be allocated among the Blackstone Investors pro rata or, if
any of the Blackstone Investors elect not to purchase shares of Transfer
Stock, according to any other method of allocation the Blackstone Investors
shall elect in their written notice of exercise to the Issuer and Management
Investor.
(c) The closing of the purchase of the Transfer Stock by the
Blackstone Investors shall take place at the principal office of the Issuer on
the tenth Business Day after receipt by the Issuer of the written election by
the Blackstone Investors to exercise the First Offer, or upon such earlier
date as may be agreed by the Management Investor and the Blackstone Investors.
At such closing, the Blackstone Investors purchasing Transfer Stock shall
deliver a certified check or wire transfer of immediately available funds
against delivery by the Management Investor of Duly Endorsed certificates
representing the Transfer Stock.
(d) The provisions of this Section 3.6 shall not apply (a) in
connection with any sale (i) by a Management Investor to the Issuer or an
Affiliated Transferee, (ii) by a Management Investor or Affiliated Transferee
pursuant to a Public Offering or (b) in connection with sales of Common Stock
pursuant to and in compliance with Rule 144 under the Securities Act
subsequent to the Initial Public Offering.
SECTION 3.7. Improper Transfer. Any attempt to sell, assign,
transfer, grant a participation in, pledge or otherwise dispose of any Common
Stock not in compliance with this Agreement shall be null and void and neither
the Issuer nor any transfer agent shall give any effect in the Issuer's stock
records to such attempted sale, assignment, transfer, grant of a participation
in, pledge or other disposition.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1. Registration Upon Request of the MLGA Investors
following an Initial Public Offering. (a) If, at any time after the 180th day
after the consummation of the Initial Public Offering (or such earlier date
after such consummation as the managing underwriter of the Initial Public
Offering shall permit), the Issuer shall receive a written request from either
of the MLGA Investors to register Registrable Shares owned by the MLGA
Investors totalling at least 25% of the number of shares of Common Stock owned
by the MLGA Investors immediately following the Subsequent Closing (as such
number shall be adjusted to account for stock splits, dividends, subdivisions,
combinations, reclassifications or similar transactions effected by the Issuer
after the Subsequent Closing Date), which request shall specify the intended
method of disposition thereof, the Issuer shall promptly give notice of such
request to the other Holders and thereupon shall (i) prepare and file a
registration statement under the Securities Act covering (A) the number of the
Registrable Shares which are the subject of such request, (B) all unissued
shares of Common Stock which the Issuer has elected to register for itself and
(C) all other Registrable Shares which the Holders shall have requested the
Issuer to register pursuant to Section 4.4 hereof and (ii) use its
commercially reasonable best efforts to cause such registration statement to
become effective. The managing underwriter of an offering pursuant to this
subparagraph (a) shall be selected by the MLGA Investors and shall be
reasonably acceptable to the Issuer.
(b) In the event that the MLGA Investors determine for any reason
not to proceed with a registration at any time before the registration
statement has been declared effective by the Commission, and such registration
statement, if theretofore filed with the Commission, is withdrawn with respect
to the Registrable Shares covered thereby, and the MLGA Investors bear their
own expenses and reimburse the Issuer for all out-of-pocket expenses incurred
by it attributable to the attempted registration of such Registrable Shares,
then the MLGA Investors shall not be deemed to have exercised a right to
require the Issuer to register Registrable Shares pursuant to this Section
4.1. If a registration statement filed by the Issuer at the request of the
MLGA Investors pursuant to this Section 4.1 is withdrawn at the initiative of
the Issuer, then the MLGA Investors shall not be deemed to have exercised a
right to require the Issuer to register Registrable Shares pursuant to this
Section 4.1.
(c) If a requested registration pursuant to this Section 4.1
involves an underwritten offering and the managing underwriter advises the
Issuer in writing that, in its opinion, the number of securities requested to
be included in such registration (including securities of the Issuer which are
not Registrable Shares) exceeds the largest number of securities which can be
sold in such offering, the Issuer will include in such registration shares of
Common Stock in the priority listed below, (i) first, the number of
Registrable Shares requested to be registered by the MLGA Investors, pro rata
in accordance with the number of shares so requested to be registered, (ii)
second, the number of Registrable Shares requested to be registered by Holders
other than the MLGA Investors, pro rata in accordance with the number of
shares so requested to be registered and (iii) third, the number of shares
proposed to be sold by the Issuer.
(d) Subject to subparagraph (b) of this Section 4.1, the obligation
of the Issuer under this Section 4.1 shall be limited to one registration
statement. Subject to the election of the MLGA Investors to pay certain
expenses pursuant to Section 4.1(b), the Issuer shall pay the expenses
described in Section 4.6 in connection with any registration statement filed
pursuant to this Section 4.1.
(e) Notwithstanding the foregoing provisions of this Section 4.1, if
the managing underwriter, the Commission, the Securities Act or the form on
which the registration statement is to be filed with respect to a requested
registration would require the conduct of an audit other than the regular
audit conducted by the Issuer at the end of its fiscal year, the filing of the
registration statement requested pursuant to this Section may be delayed until
the completion of such regular audit.
SECTION 4.2. Registration Upon Request of the MLGA Investors prior
to an Initial Public Offering. (a) In the event that the Issuer shall not have
consummated an Initial Public Offering prior to the first Business Day of the
calendar month occurring at least 24 full calendar months after the Subsequent
Closing Date, if, at any time on or after such first Business Day the Issuer
shall receive a written request from either of the MLGA Investors to register
Registrable Shares then owned by the MLGA Investors totalling at least 25% of
the number of shares of Common Stock owned by the MLGA Investors immediately
following the Subsequent Closing (as such number shall be adjusted to account
for stock splits, dividends, subdivisions, combinations, reclassifications or
similar transactions effected by the Issuer after the Subsequent Closing Date)
pursuant to a Public Offering, the Issuer shall (i) promptly select a managing
underwriter for such requested Public Offering (which managing underwriter
shall be reasonably acceptable to the MLGA Investors) and (ii) cause such
managing underwriter to deliver to the Issuer and the MLGA Investors a letter
(the "Underwriter's Letter") stating (A) the prices that the managing
underwriter believes represent, respectively, the highest initial public
offering price and the lowest initial public offering price likely to be
attained in a Public Offering of the Common Stock owned by such MLGA Investors
requested to be so registered pursuant to this Section 4.2(a) if a Public
Offering of such shares were to be consummated on the date of the
Underwriter's Letter pursuant to customary underwriting arrangements and an
effective registration statement (provided that such high price shall not
exceed such low price by more than 15%) or (B) that such managing underwriter
believes that a Public Offering of the shares of Common Stock owned by such
MLGA Investors requested to be so registered pursuant to this Section 4.2(a)
could not be successfully consummated on such date (assuming customary
underwriting arrangements and the availability of an effective registration
statement with respect to such shares).
(b) Notwithstanding the provisions of this Subsection 4.2, the
Issuer shall have no obligation to file a registration statement requested
pursuant to this Section 4.2 unless the following conditions have been
satisfied:
(i) the Underwriter's Letter shall state that the managing
underwriter is confident that the Public Offering referred to in the
Underwriter's Letter could be effected at an initial public offering price per
share within the range of the high and low initial public offering prices set
forth in the Underwriter's Letter; and
(ii) the median of the high and low prices set forth in the
Underwriter's Letter (the "Midpoint Price") shall represent a percentage
premium over the Blackstone Price, compounded annually during the period from
the Subsequent Closing Date to the date of the Underwriter's Letter, equal to
not less than the Minimum Price as of the date of the Underwriter's Letter.
(c) Subject to the provisions of subparagraph (d) below, if the
conditions of subparagraph (b) are satisfied, and if the MLGA Investors notify
the Issuer and the Blackstone Investors in writing within five (5) Business
Days of their receipt of the Underwriter's Letter of their election to proceed
with the registration requested by the MLGA Investors as set forth above, the
Issuer shall give notice of such request to the other Holders and thereupon
shall (i) prepare and file a registration statement under the Securities Act
covering (A) the number of the Registrable Shares which are the subject of
such request, (B) all unissued shares of Common Stock which the Issuer has
elected to register for itself and (C) all other Registrable Shares which the
Holders shall have requested the Issuer to register pursuant to Section 4.4
hereof and (ii) subject to the provisions of subparagraph (e) below, use its
commercially reasonable best efforts to cause such registration statement to
become effective.
(d) Upon satisfaction of the requirements set forth in subparagraph
(b) above, in lieu of proceeding with the registration provided for in
subparagraph (c), the Blackstone Investors may elect, or if the Blackstone
Investors decline to so elect, the Issuer may elect, by written notice
delivered to the MLGA Investors within five (5) Business Days following
receipt of the notice from the MLGA Investors to proceed with the registration
as provided in subparagraph (c) above, to purchase from the MLGA Investors all
shares of Common Stock which are the subject of their request for registration
at a price equal to the Midpoint Price. Upon the exercise of any such
election to purchase by the Blackstone Investors or the Issuer, as the case
may be, the MLGA Investors and the Blackstone Investors or the Issuer, as the
case may be, shall be obligated to consummate the sale of such shares of
Common Stock to the Blackstone Investors or the Issuer, as the case may be, on
the date designated by the Blackstone Investors or the Issuer, as the case may
be, in the written election to purchase, which date shall be not less than 5
Business Days nor more than 10 Business Days following the date of the
election by the Blackstone Investors. On the date so specified by the
Blackstone Investors or the Issuer, as the case may be, the MLGA Investors
shall deliver to the Blackstone Investors or the Issuer, as the case may be,
against receipt of the purchase price therefor in immediately available funds,
Duly Endorsed certificates representing the shares of Common Stock elected to
be purchased by the Blackstone Investors or the Issuer, as the case may be.
(e) Notwithstanding any provisions of this Section 4.2 to the
contrary, the Issuer shall be entitled to withdraw any registration statement
filed pursuant to this Section 4.2, and the MLGA Investors shall not be
entitled to consummate any Public Offering of Registrable Shares subject to
any registration statement filed pursuant to this Section 4.2, if the initial
public offering price with respect to such Public Offering would be less than
the Minimum Price. If a registration statement is withdrawn or a Public
Offering terminated by the Issuer pursuant to this subparagraph (e), then the
MLGA Investors shall not be deemed to have exercised their right to require
the Issuer to register Registrable Shares pursuant to this Section 4.2.
(f) In the event that the MLGA Investors determine for any reason
not to proceed with a Public Offering pursuant to this Section 4.2 after they
shall have requested the Issuer to proceed with such registration pursuant to
subparagraph (c), then the MLGA Investors shall be deemed to have fully
exercised their right to require the issuer to register Registrable Shares
pursuant to this Section 4.2 and, upon compliance by the Issuer with its
obligations under this Article IV with respect to such Public Offering, the
Issuer shall have no further obligation to the MLGA Investors pursuant to this
Section 4.2; provided, however, that if the MLGA Investors elect not to
proceed with such requested Public Offering pursuant to this Section 4.2
because the managing underwriter shall have notified the MLGA Investors of its
inability to consummate the Public Offering at an initial public offering
price equal to at least the lowest initial public offering price set forth in
the Underwriter's Letter, upon payment by the MLGA Investors of all their
expenses, and upon reimbursement by the MLGA Investors of all out-of-pocket
expenses of the Issuer, incurred in connection with the registration of such
Registrable Shares, then the MLGA Investors shall not be deemed to have
exercised their right to require the Issuer to register Registrable Shares
pursuant to this Section 4.2.
(g) If the managing underwriter advises the Issuer in writing that,
in its opinion, the number of securities (including securities of the Issuer
which are not Registrable Shares) requested to be included in a Public
Offering pursuant to this Section 4.2 exceeds the largest number of securities
which can be sold in such offering, the Issuer will include in such
registration shares of Common Stock in the priority listed below, (i) first,
the number of Registrable Shares requested to be registered by the MLGA
Investors, pro rata in accordance with the number of shares so requested to be
registered, (ii) second, the number of Registrable Shares requested to be
registered by Holders other than the MLGA Investors, pro rata in accordance
with the number of shares so requested to be registered and (iii) third, the
number of shares proposed to be sold by the Issuer.
(h) Subject to subparagraph 4.2(f) above, the obligation of the
Issuer under this Section 4.2 shall be limited to one registration statement.
The MLGA Investors shall not be entitled to request the delivery of an
Underwriter's Letter with respect to a proposed registration of Registrable
Shares pursuant to this Section 4.2 more than one time in any period of twelve
calendar months. The Issuer shall pay the expenses in connection with such
registration statement described in Section 4.6.
(i) Notwithstanding the foregoing provisions of this Section 4.2, if
the managing underwriter, the Commission, the Securities Act or the form on
which the registration statement is to be filed with respect to a requested
registration would require the conduct of an audit other than the regular
audit conducted by the Issuer at the end of its fiscal year, the filing of the
registration statement requested pursuant to this Section may be delayed until
the completion of such regular audit.
SECTION 4.3. Registration Upon Request of Blackstone Investors.
(a) If, at any time after the Subsequent Closing Date, the Issuer shall
receive a written request from any of the Blackstone Investors to register
Registrable Shares, which request shall specify the intended method of
disposition thereof, the Issuer shall promptly give notice of such request to
the other Holders and thereupon shall (i) prepare and file a registration
statement under the Securities Act covering (A) the number of the Registrable
Shares which are the subject of such request and (B) all unissued shares of
Common Stock which the Issuer has elected to register for itself and all other
Registrable Shares which the Holders shall have requested the Issuer to
register pursuant to Section 4.4 and (ii) use its commercially reasonable best
efforts to cause such registration statement to become effective. The
managing underwriter of an offering pursuant to this subparagraph (a) shall be
selected by the Blackstone Investors and shall be reasonably acceptable to the
Issuer.
(b) In the event that the Blackstone Investors determine for any
reason not to proceed with a registration at any time before the registration
statement has been declared effective by the Commission, and such registration
statement, if theretofore filed with the Commission, is withdrawn with respect
to the Registrable Shares covered thereby, and the Blackstone Investors bear
their own expenses and reimburse the Issuer for all out-of-pocket expenses
incurred by it attributable to the registration of such Registrable Shares,
then the Blackstone Investors shall not be deemed to have exercised a right to
require the Issuer to register Registrable Shares pursuant to this Section
4.3. If a registration statement filed by the Issuer at the request of the
Blackstone Investors pursuant to this Section 4.3 is withdrawn at the
initiative of the Issuer, then the Blackstone Investors shall not be deemed to
have exercised a right to require the Issuer to register Registrable Shares
pursuant to this Section 4.3.
(c) If a requested registration pursuant to this Section 4.3
involves an underwritten offering and the managing underwriter advises the
Issuer in writing that, in its opinion, the number of securities requested to
be included in such registration (including securities of the Issuer which are
not Registrable Shares) exceeds the largest number of securities which can be
sold in such offering, the Issuer will include in such registration shares of
Common Stock in the priority listed below, (i) first, the number of
Registrable Shares requested to be registered by all Holders, pro rata in
accordance with the number of shares owned by such Holders and (ii) second,
the number of shares proposed to be sold by the Issuer.
(d) The obligation of the Issuer under this Section 4.3 shall be
limited to two registration statements in any twelve- month period, up to a
total of five registration statements. Subject to Section 4.3(b), the Issuer
shall pay the expenses in connection with such registration statement
described in Section 4.6.
(e) Notwithstanding the foregoing provisions of this Section 4.3, if
the managing underwriter, the Commission, the Securities Act or the form on
which the registration statement is to be filed with respect to a requested
registration would require the conduct of an audit other than the regular
audit conducted by the Issuer at the end of its fiscal year, the filing of the
registration statement requested pursuant to this Section may be delayed until
the completion of such regular audit.
SECTION 4.4. Incidental Registration Rights. Each time the Issuer
shall determine to proceed with the actual preparation and filing of a
registration statement under the Securities Act in connection with the
proposed offer and sale of its Common Stock (other than a registration
statement on Form S- 4, S-8, or other limited purpose form), whether or not
for sale for its own account, the Issuer will give written notice of its
determination to the Holders. Upon written request of any Holder given within
30 days after receipt of any such notice from the Issuer, the Issuer will,
except as herein provided, cause all Registrable Shares which have been
requested to be included in the registration to be included in such
registration statement; provided, however, that nothing herein shall prevent
the Issuer from, at any time, abandoning or delaying any registration. If any
registration statement pursuant to this Section 4.4 shall be underwritten, in
whole or in part, the Issuer may require that the Common Stock requested for
inclusion pursuant to this Section 4.4 be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through the
underwriters. If, upon the written advice of the managing underwriter of such
Public Offering, the inclusion of all of the Common Stock originally covered
by requests for registration would have an adverse effect on the offering of
securities (including the price at which such securities could be offered),
the number of shares of Common Stock to be included in the Public Offering may
be reduced in the following manner: (1) first, the shares of Common Stock
held by those record holders of Common Stock who are not Holders shall be
excluded from such underwritten public offering by the managing underwriter on
a pro rata basis according to the respective numbers of shares held by such
respective holders; and, subject to the next sentence, (2) second, after
reduction as provided in clause (1) to the full extent of such shares, the
shares of Common Stock held by all Holders shall be excluded on a pro rata
basis according to the respective numbers of shares held by such respective
holders; provided, however, that in the case of an Initial Public Offering of
the Common Stock of the Issuer, all Registrable Shares of the Blackstone
Investors shall be excluded pursuant to this clause (2) prior to the exclusion
of any Registrable Shares of any other Holders. Notwithstanding anything to
the contrary in the foregoing, to the extent that the preceding sentence
conflicts with Section 4.1(c), 4.2(g) or 4.3(c), Section 4.1(c), 4.2(g) or
4.3(c), as the case may be, shall control.
SECTION 4.5. Registration Procedures. If and whenever the Issuer
is required by the provisions of Sections 4.1, 4.2, 4.3 or 4.4 to effect the
registration of shares of Common Stock under the Securities Act, the Issuer
will:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its commercially reasonable best
efforts to cause such registration statement to become and remain effective
for such period as may be reasonably necessary to effect the sale of such
securities, not to exceed 180 days; provided, however, that the Issuer may
discontinue any registration of its securities that is being effected pursuant
to Section 4.4 at any time;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for such period
as may be reasonably necessary to effect the sale of such securities, not to
exceed 180 days; provided, however, that the Issuer may discontinue any
registration of its securities that is being effected pursuant to Section 4.4
at any time;
(c) furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order
to facilitate the public offering of such securities;
(d) use its commercially reasonable best efforts to register or
qualify the securities covered by such registration statement under such state
securities or Blue Sky Laws of such jurisdictions as such participating
Holders may reasonably request within 20 days following the original filing of
such registration statement, except that the Issuer shall not for any purpose
be required to execute a general consent to service of process or to qualify
to do business as a foreign corporation in any jurisdiction wherein it is not
so qualified;
(e) notify such holders participating in such registration, promptly
after it shall receive notice thereof, of the time when such registration
statement has become effective or a supplement to any prospectus forming a
part of such registration statement has been filed;
(f) notify the participating Holders in the event that the Issuer
becomes aware that any prospectus required to be delivered by Holders pursuant
to the Securities Act contains an untrue statement of a material fact or fails
to state a material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading and, at the
request of any such Holder prepare, promptly file with the Commission and
deliver to such Holder such amendments or supplements to the prospectus as may
be necessary so that the prospectus, as so amended or supplemented, shall not
contain an untrue statement of a material fact or fail to state a material
fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
(g) advise such Holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation
or threatening of any proceeding for that purpose and promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal,
if such stop order should be issued; and
(h) if such registration statement includes an underwritten public
offering, enter into a customary underwriting agreement and, at the closing
provided for in such underwriting agreement provide such of the following
documents as are required thereunder: (i) an opinion or opinions of counsel to
the Issuer; and (ii) a cold comfort letter or letters from the independent
certified public accountants of the Issuer covering such matters as are
customarily covered by such letters.
The Issuer may require each Holder of Registrable Shares as to which
any registration is being effected to furnish the Issuer with such information
regarding such Holder and pertinent to the disclosure requirements relating to
the registration and the distribution of such Registrable Shares as the Issuer
may from time to time reasonably request in writing.
Each Holder of Registrable Shares agrees that, upon receipt of any
notice from the Issuer of the happening of any event of the kind described in
subparagraph (f) above, such Holder will forthwith discontinue disposition of
Registrable Shares pursuant to the registration statement covering such
Registrable Shares until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by such subparagraph, and, if
so directed by the Issuer, such Holder will deliver to the Issuer (at the
Issuer's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Shares
current at the time of receipt of such notice.
SECTION 4.6. Expenses. With respect to a registration requested
pursuant to Sections 4.1, 4.2 and 4.3 (except as otherwise provided in such
Section with respect to registrations voluntarily terminated at the request of
the Holders that elect to pay certain expenses) and with respect to each
inclusion of Registrable Shares in a registration statement pursuant to
Section 4.4, the Issuer shall bear the following fees, costs and expenses:
all registration, filing and listing fees, printing expenses, fees and
disbursements of counsel and accountants for the Issuer and all legal fees and
disbursements and other expenses of complying with state securities or Blue
Sky Laws of any jurisdictions in which the securities to be offered are to be
registered or qualified. Fees and disbursements of counsel and accountants
for the Holders, underwriting discounts and commissions, transfer taxes and
any other expenses incurred by the Holders not expressly included above shall
be borne by the applicable Holders.
SECTION 4.7. Indemnification.
(a) The Issuer will indemnify and hold harmless each Holder whose
shares which are included in a registration statement pursuant to the
provisions of Section 4.1, 4.2, 4.3 or 4.4 each officer, director and
affiliate of each such Holder, any underwriter (as defined in the Securities
Act) for such holder and each person, if any, who controls such holder or such
underwriter within the meaning of the Securities Act, from and against any and
all loss, damage, liability, cost and expense to which such Holder, director,
officer, affiliate, underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, damages, liabilities,
costs or expenses are caused by any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, any
final prospectus relating thereto or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Issuer will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information
furnished by such Holder, such underwriter or such controlling person in
writing specifically for use in the preparation thereof.
(b) Each Holder whose shares are included in a registration pursuant
Section 4.1, 4.2, 4.3 or 4.4 will indemnify and hold harmless the Issuer, an
director or officer thereof, any underwriter and any controlling person
(within the meaning of the Securities Act) of the Issuer or any such
underwriter from and against any and all loss, damage, liability, cost or
expense to which the Issuer or such director, officer, underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue or alleged untrue statement of any material fact contained in such
registration statement, any final prospectus relating thereto or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by such Holder
specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of subparagraph (a) or (b) of this Section 4.7 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
subparagraphs (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party under this Section 4.7, except to the extent the indemnifying party was
prejudiced by such omission. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in, and,
to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants
in any action include both the indemnified party and the indemnifying party
and there is a conflict of interest which would prevent counsel for the
indemnifying party from also representing the indemnified party the
indemnified party or parties shall have the right to select one firm of
separate counsel satisfactory to the indemnifying party to participate in the
defense of such action on behalf of all indemnified parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of said subparagraphs (a) or (b)
for any legal or other expense subsequently incurred by such indemnified party
in connection with the defense thereof, other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the proviso of the preceding sentence, in which case only the
reasonable fees and expenses of such single firm shall be indemnifiable; (ii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after the notice of the commencement of the action; or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
SECTION 4.8. Holdback Agreement. If any registration of
Registrable Shares shall be in connection with an underwritten public
offering, each Investor and Affiliated Transferee of any Investor (other than
an Affiliated Transferee of a MLGA Investor or MLGA Partner) agrees not to
effect any public sale or distribution (except in connection with such
underwritten public offering), including any sale pursuant to Rule 144 under
the Securities Act, of any equity securities of the Issuer, or of any security
convertible into or exchangeable or exercisable for any equity security of the
Issuer (in each case, other than as part of such underwritten public
offering), during the seven days prior to, and during the 180-day period (or
such shorter period as the managing underwriters may require or permit)
beginning on, the effective date of such registration, and the Issuer hereby
also so agrees and agrees to use reasonable efforts to cause each other Holder
of any equity security, or of any security convertible into or exchangeable or
exercisable for any equity security, of the Issuer purchased from the Issuer
(at any time other than in a public offering) to so agree.
ARTICLE V
PAYMENT OF CERTAIN FEES; REPORTING;
AFFILIATE TRANSACTIONS
SECTION 5.1. Blackstone Monitoring Fee. From and after the
Subsequent Closing Date, the Issuer or Haynes shall pay to Blackstone
Management Partners L.P. or any of its Affiliates a monitoring fee in the
amount of $500,000 per annum, payable annually in arrears on each anniversary
of the Subsequent Closing Date.
(b) Notwithstanding any provision of subparagraph (a), without the
prior approval of the Board of Directors and a majority of the Disinterested
Directors of the Board of Directors, the aggregate amount payable to
Blackstone Management Partners L.P. or its Affiliates pursuant to this Section
5.1 shall in no event exceed $2,500,000.
SECTION 5.2. Periodic Reporting. (a) For so long as the MLGA
Investors hold at least 10% or more of the number of shares of Common Stock
held by the MLGA Investors immediately following the Subsequent Closing Date
(as such number shall be adjusted to account for stock splits, dividends,
subdivisions, combinations, reclassifications or similar transactions effected
by the Issuer after the Subsequent Closing Date), the Issuer shall deliver to
the MLGA Investors, (i) (A) as soon as such documents are filed with the
Commission, each Annual Report on Form 10-K, Quarterly Report on Form 10-Q and
Current Report on Form 8-K filed by Haynes with the Commission or (B) if
Haynes ceases to be a reporting company under the Exchange Act for any reason,
annual audited financial statements and quarterly unaudited financial
statements of Haynes and (ii) within 30 days after the end of each calendar
month, the unaudited consolidated financial statements of Haynes.
(b) For so long as any Holder holds shares of Common Stock, the
Issuer shall deliver to such Holder (i) as soon as such documents are filed
with the Commission, each Annual Report on Form 10-K and Quarterly Report on
Form 10-Q filed by the Issuer with the Commission or (ii) if the Issuer is not
a reporting company under the Exchange Act, reasonably promptly after such
financial statements become available in the ordinary course of business,
annual audited financial statements and quarterly unaudited financial
statements of the Issuer.
SECTION 5.3. Rule 144. The Issuer covenants that, after the Initial
Public Offering, it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by
the Commission thereunder (or, if the Issuer is not required to file such
reports, it will, upon the request of any Holder of Registrable Shares, make
publicly available such information as is necessary to permit sales pursuant
to Rule 144 under the Securities Act), all to the extent required from time to
time to enable Holders to sell Registrable Shares without registration under
the Securities Act within the limitation of the exemptions provided by (a)
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Holder of Registrable Shares, the Issuer
will deliver to such Holder a written statement as to whether it has complied
with the requirements hereof.
SECTION 5.4. Limitations on Affiliate Transactions. The Issuer
will not, and will not permit any direct or indirect subsidiary to, directly
or indirectly enter into any transaction or conduct any business with any
Blackstone Investor or any Affiliate thereof (an "Affiliate Transaction"),
unless (i) either (A) such transaction has been approved by a majority of the
Disinterested Directors of the Issuer or (B) the Issuer has received a written
opinion from an independent investment banking firm that such Affiliate
Transaction is fair to the Issuer and its subsidiaries from a financial point
of view and (ii) in the case of an Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration payable by or to the
Blackstone Investors and their Affiliates in excess of $5 million, the Issuer
has received a written opinion from an independent nationally recognized
investment banking firm that such Affiliate Transaction and all related
Affiliate Transactions are fair to the Issuer and its subsidiaries from a
financial point of view. Notwithstanding the foregoing, the payment by the
Issuer or any of its subsidiaries of (x) reasonable and customary investment
banking fees for services rendered by any Blackstone Investor or any Affiliate
thereof, or (y) the monitoring fee payable pursuant to Section 5.1 of this
Agreement shall not be considered an "Affiliate Transaction" for purposes
hereof and shall not be subject to the requirements of this Section.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Headings. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.
SECTION 6.2. No Inconsistent Agreements. The Issuer will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with or grant rights superior to the rights granted to the
Holders in this Agreement. The Issuer has not previously entered into any
agreement with respect to any of its debt or equity securities granting any
registration rights to any Person other than the Original Stockholders'
Agreement and the Subscription Agreement.
SECTION 6.3. Frustration of Purpose; Administration of Agreement.
Holders may not do directly or indirectly that which is prohibited by this
Agreement. The Board of Directors shall have general authority to administer
the terms of this Agreement, including, without limitation, the power to
enforce the prohibition set forth in the preceding sentence and the power to
make allocations pursuant to Articles III and IV. All such actions and
allocations shall be binding, absent manifest error, and the Issuer shall not
be liable therefor absent gross negligence or willful misconduct.
SECTION 6.4. Entire Agreement. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
of this Agreement.
SECTION 6.5. Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto to another party hereto
shall be in writing (including telex, telecopier or similar writing) and shall
be given to such party at its address, telex or telecopier number set forth on
the signature pages hereof or, in the case of a Private Transferee, to the
address, telex or telecopier number set forth in the written agreement
pursuant to which such Private Transferee becomes bound hereunder or to such
other address as the party to whom notice is to be given may provide in a
written notice to the party giving such notice, a copy of which written notice
shall be on file with the Secretary of the Issuer. Each such notice, request
or other communication shall be effective (i) if given by telex or telecopy,
when such telex or telecopy is transmitted to the telex or telecopy number
specified in this Section and the appropriate answer back is received or (ii)
if given by mail, 72 hours after such communication is deposited in the mails
with first class postage prepaid addressed as aforesaid or (iii) if given by
any other means, when delivered at the address specified in this Section 6.5.
SECTION 6.6. Applicable Law. This Agreement shall be governed by
and construed in accordance with, the laws of the State of New York applicable
to contracts made and to be performed in that State.
SECTION 6.7. Severability. The invalidity or unenforceability of
any provisions of this Agreement in any jurisdiction shall not affect the
validity, legality or enforceability of the remainder of this Agreement in
such jurisdiction or the validity, legality or enforceability of this
Agreement, including any such provision, in any other jurisdiction, it being
intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
SECTION 6.8. Effectiveness. (a) This Agreement shall become
effective with respect to all Investors on the later to occur of (i) the first
date on which any shares are repurchased by the Issuer or subscribed for by
the Blackstone Investors pursuant to the Recapitalization and (ii) the date on
which this Agreement is executed and delivered by each of (A) the Majority
Holders (as defined in the Original Stockholders' Agreement, (B) a majority of
the "Management Investors" (as defined in the Original Stockholders' Agreement
and (C) a majority of the Institutional Holders (as defined in the Original
Stockholders' Agreement); provided that this Agreement shall become effective
with respect to each Investor party hereto on the later to occur of (x) the
execution and delivery by such Investor of this Agreement and (y) the first
date on which any shares are repurchased by the Issuer or subscribed for any
the Blackstone Investors pursuant to the Recapitalization, regardless of
whether this Agreement has become effective with respect to all Investors who
have not signed this Agreement.
(b) By its execution and delivery hereof, each Investor party to
the Original Stockholders' Agreement agrees that such Agreement is hereby
amended in its entirety and superseded by this Agreement effective as of the
effectiveness of this Agreement and the rights and obligations of the
Investors thereunder are superseded in their entirety by the provisions of
this Agreement. Further, by its execution and delivery hereof, each Investor
party to the Original Stockholders' Agreement hereby agrees that any and all
claims and rights that such Investor may have under the Original Stockholders'
Agreement, including any and all claims for a breach of the Original
Stockholders' Agreement which occurred prior to the execution of this
Agreement, are hereby unconditionally waived and released in all respects and
that such Investor will not make any claim or assert any right under the
Original Stockholders' Agreement after the execution and delivery of this
Agreement by such Investor.
(c) Unless and until this Agreement is executed by a majority of
the Institutional Holders (as defined in the Original Stockholders'
Agreement): (i) the Issuer agrees to continue to provide to the Institutional
Holders (as defined in the Original Stockholders' Agreement) who do not
execute this Agreement the rights, if any, to which they are entitled under
Section 3.2 of the Original Stockholders' Agreement and (ii) the Founding
Investors (as defined in the Original Stockholders' Agreement) and the
Management Holders (as defined in the Original Stockholders' Agreement) who
are parties to this Agreement agree to continue to provide the Institutional
Holders who do not execute this Agreement with the rights, if any, to which
they are entitled under Section 2.3 of the Original Stockholders' Agreement
(collectively, the "Prior Rights"). The Holders agree to the extension and
honoring of the Prior Rights and agree that the Prior Rights shall have
priority over and shall control in the event of any conflict with the
provisions of this Agreement.
SECTION 6.9. Termination. This Agreement shall terminate and be of
no further force or effect upon the tenth anniversary of its initial effective
date.
SECTION 6.10. Additional Holders. Each employee of the Issuer or
of any direct or indirect subsidiary of the Issuer (including Haynes) who
becomes a holder of Common Stock after the date hereof shall, at the option of
the Issuer, become a "Management Investor" party to this Agreement and be
bound by its terms and be able to enforce any rights as a Management Investor
hereunder. In addition, the Issuer shall have the right, at the time of the
grant by the Issuer to any employee of any option to purchase Common Stock, to
cause the Common Stock issuable upon exercise of such option to be covered by
this Agreement and the holder of such option to become a "Management Investor"
hereunder at the time of exercise of such option. Each Person to whom the
Issuer issues shares of Common Stock after the date hereof which were not
outstanding or subject to issuance upon the exercise of options outstanding on
the date hereof shall, at the option of the Issuer, become an "Other Investor"
party to this Agreement and be bound by its terms and be able to enforce any
rights as an Other Investor hereunder. If the Issuer so determines, such
employee or such Person shall enter into a supplementary agreement with the
Issuer to such effect.
SECTION 6.11. Other Agreements. Except to the extent set forth in
Section 6.8, nothing contained in this Agreement shall be deemed to be a
waiver of, or release from, any obligations any party hereto may have under,
or any restrictions on the transfer of Common Stock or other securities of the
Issuer or any direct or indirect subsidiary of the Issuer imposed by, any
other agreement, including, but not limited to, the Subscription Agreement.
SECTION 6.12. Successors, Assigns, Transferees. To the extent set
forth herein, the provisions of this Agreement shall be binding upon and
accrue to the benefit of the parties hereto and their respective successors
and permitted assigns; provided, however, (i) if any party ceases to own any
shares of Common Stock or securities convertible into Common Stock, then
notwithstanding anything to the contrary stated herein, such party shall no
longer have any rights or obligations hereunder, and (ii) no Private
Transferee (other than Affiliated Transferees who are required to be bound by
written agreement to the terms and conditions hereof and Permitted
Transferees) shall be bound by any obligations under this Agreement, but shall
have the rights of a Holder specified in this Agreement.
SECTION 6.13. Amendments; Waivers. (a) No failure or delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall ny single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
(b) This Agreement may not be amended, modified or supplemented and
no waivers of or consents to departures from the provisions hereof may be
given unless consented to in writing by each of the Blackstone Investors,
provided that (i) any amendment, modification, supplement or waiver that
adversely affects any Holders other than the Blackstone Investors shall not
become effective without the written consent of a majority of the Holders
other than the Blackstone Investors adversely affected by such amendment,
modification, supplement or waiver, and (ii) any amendment, modification,
supplement or waiver which adversely affects rights or obligations of the MLGA
Investors in a manner differently from all other Holders shall not become
effective without the written consent of the MLGA Investors.
SECTION 6.14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 6.15. Attorneys' Fees. In any action or proceeding brought
to enforce any provisions of this Agreement, or where any provisions hereof if
validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to any other available remedy.
SECTION 6.16. Remedies. The parties hereby acknowledge that it is
impossible to measure in money the damages which will accrue to a party hereto
by reason of a failure to perform any of the obligations under this Agreement.
Therefore, if any party hereto shall institute any action or proceeding to
enforce the provisions hereof, any Person against whom such action or
proceeding is brought hereby waives the claim or defense therein that such
party has an adequate remedy at law, and such Person shall not urge in any
such action or proceeding the claim or defense that such remedy at law exists.
SECTION 6.17. Recapitalization, etc. In the event that any capital
stock or other securities are issued in respect of, in exchange for, or in
substitution of, any shares of Common Stock by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial
or complete liquidation, stock dividend, split-up, sale of assets,
distribution to stockholders or combination of the shares of Common Stock or
any other change in capital structure of the Issuer, appropriate adjustments
shall be made with respect to the relevant provisions of this Agreement so as
to fairly and equitably preserve, as far as practicable, the original rights
and obligations of the Holders under this Agreement and the term "Common
Stock", as used herein, shall be deemed to include shares of such capital
stock or other securities, as appropriate. This provision shall not require
the Issuer to effect any adjustments in connection with granting of any
employee stock options pursuant to such employee benefit plans of the Issuer
which may be from time to time in effect.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first above written.
MLGA FUND II, L.P.
By: MLGAL Partners,
general partner
By:_________________________
Name:
Title:
MLGAL PARTNERS, L.P.
By:_________________________
Name:
Title:
BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P.
By: BLACKSTONE MANAGEMENT ASSOCIATES II L.L.C.,
general partner
By: /s/ David A. Stockman
Name: David A. Stockman
Title: Member
BLACKSTONE OFFSHORE CAPITAL
PARTNERS II MERCHANT BANKING
FUND L.P.
By: BLACKSTONE MANAGEMENT ASSOCIATES II L.L.C.,
general partner
By: /s/ David A. Stockman
Name: David A. Stockman
Title: Member
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP, L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.,
general partner
By: /s/ David A. Stockman
Name: David A. Stockman
Title: Member
<PAGE>
OTHER INVESTORS:
/s/ Michael D. Austin
Michael D. Austin
/s/ Joseph F. Barker
Joseph F. Barker
/s/ F. Galen Hodge
F. Galen Hodge
/s/ Charles J. Sponaugle
Charles J. Sponaugle
FIFTH AMENDMENT TO STOCK SUBSCRIPTION AGREEMENT
FIFTH AMENDMENT (this "Amendment"), dated as of January 29, 1997, by
and among Haynes Holdings, Inc., a Delaware corporation (the "Issuer"), Haynes
International, Inc., a Delaware corporation ("Haynes"), and the persons listed
on the signature pages hereof as "Investors", to the Stock Subscription
Agreement referred to below.
PRELIMINARY STATEMENTS
----------------------
The Issuer, Haynes and the investors named on the signature pages
thereof executed a Stock Subscription Agreement dated as of August 1, 1989, as
amended by the Amendment to the Stock Subscription Agreement to Add a Party,
dated August 14, 1992, and by the Second Amendment to Stock Subscription
Agreement, dated as of March 16, 1993, and by the Third Amendment to Stock
Subscription Agreement, dated May 6, 1996, and by the Fourth Amendment to
Stock Subscription Agreement, dated as of May 31, 1996 (as so amended, the
"Stock Subscription Agreement").
The parties hereto wish to further amend the Stock Subscription
Agreement as set forth herein.
AGREEMENT
---------
In consideration of the mutual covenants contained in this Amendment
and other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, pursuant to Section 12.6(b) of the Stock Subscription
Agreement, the parties hereto hereby agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
-----------
herein are used as defined in the Stock Subscription Agreement.
2. Amendments.
----------
(a) Section 1.1 of the Stock Subscription Agreement shall be amended
to modify the definition of "Management Investors" to read as follows:
"'Management Investors' means each of Michael D. Austin, Joseph F. Barker, F.
Galen Hodge and Charles J. Sponaugle."
(b) Section 1.1 of the Stock Subscription Agreement shall be amended
to insert the following new definition immediately following the definition of
NASD:
"'New Stockholders' Agreement' means the Stockholders' Agreement dated as of
January 29, 1997 by and among the Company and the investors listed therein
which amends and supersedes in all respects the Stockholders' Agreement."
(c) Section 9.3(a)(iii) of the Stock Subscription Agreement shall be
amended in its entirety to read as follows:
"(iii) at any time by any Holder to any Person; provided that (A) the
--------
transfer is made pursuant to, and subject to any applicable limitations of
Article III of the New Stockholders' Agreement, and (B) such Person becomes a
Holder pursuant to Section 12.10 hereof;"
(d) Section 9.4 of the Stock Subscription Agreement shall be deleted
in its entirety.
(e) Article XI of the Stock Subscription Agreement shall be deleted
in its entirety.
(f) All references to the Stockholders' Agreement in the Stock
Subscription Agreement shall mean the New Stockholders' Agreement.
(g) Section 12.11 of the Stock Subscription Agreement shall be amended
in its entirety to read as follows:
"SECTION 12.11. Termination. All rights, restrictions and
-----------
provisions set forth in this Agreement shall lapse upon the earlier to occur
of (A) the Initial Public Offering, (B) the vote in favor of terminating this
Agreement by the Majority Holders and the majority of Management Holders at
the time of termination or (C) the fifth anniversary of the Initial Closing
Date (as defined in the New Stockholders' Agreement)."
3. Release of Rights and Restrictions. On and after the date of this
----------------------------------
Amendment: (a) the only parties to the Stock Subscription Agreement shall be
the Issuer, Haynes, the Management Holders and those Persons that thereafter
are made a party to the Stock Subscription Agreement pursuant to Section 12.12
thereof, and (b) no Common Shares or options of any Person other than a
Management Holder shall be bound by the restrictions and limitations of the
Stock Subscription Agreement.
4. Continuing Effect; Amendment Limited. This Amendment is limited as
------------------------------------
specified and shall not constitute a modification, acceptance or waiver of any
other provision of the Stock Subscription Agreement. From and after the date
of the effectiveness of this Amendment, all references in the Stock
Subscription Agreement to the "Agreement" shall be deemed to be references to
the Stock Subscription Agreement after giving effect to this Amendment.
5. Counterparts. This Amendment may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts,
each of which counterparts when executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
6. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
7. Effectiveness. This Amendment shall become effective on the date on
-------------
which each of the Issuer, the Majority Holders and a majority of the
Management Holders shall have signed a copy hereof (whether the same or
different copies) and shall have delivered the same to the Issuer.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Amendment to
be executed by a duly authorized officer as of the date set forth above.
HAYNES HOLDINGS, INC.
By: ____________________________
Its: ____________________________
MLGA FUND II, L.P.
By: MLGAL Partners
By: _______________________________
Its: General Partner
MLGAL PARTNERS LIMITED PARTNERSHIP
By: _______________________________
Its: General Partner
/s/ John A. Morgan
John A. Morgan
/s/ Perry J. Lewis
Perry J. Lewis
/s/ Sangwoo Ahn
Sangwoo Ahn
/s/ Thomas F. Githens
Thomas F. Githens
/s/ William F. Ludwig
William F. Ludwig
/s/ Nancy S. Milton
Nancy S. Milton
/s/ Ira Starr
Ira Starr
/s/ Michael D. Austin
Michael D. Austin
/s/ Joseph F. Barker
Joseph F. Barker
/s/ F. Galen Hodge
F. Galen Hodge
/s/ Charles J. Sponaugle
Charles J. Sponaugle
AMENDMENT NO. 2 TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AMENDMENT ("Amendment"), dated January __, 1997, by and among CORESTATES
BANK, N.A., a national banking association ("CoreStates"), CONGRESS FINANCIAL
CORPORATION (CENTRAL), an Illinois corporation ("Congress", and together with
CoreStates, each individually, a "Lender", and collectively, "Lenders"),
CONGRESS FINANCIAL CORPORATION (CENTRAL), an Illinois corporation, in its
capacity as agent for Lenders (in such capacity, "Agent") and HAYNES
INTERNATIONAL, INC., a Delaware corporation ("Borrower").
W I T N E S S E T H :
WHEREAS, Borrower has entered into financing arrangements with Agent and
Lenders pursuant to which Agent may make secured revolving loans and advances
and provide other financial accom modations to Borrower on behalf of Lenders
as set forth in the Amended and Restated Loan and Security Agreement, dated as
of August 23, 1996, by and among Agent, Lenders and Borrower, as amended
pursuant to Amendment No. 1 to Amended and Restated Loan and Security
Agreement, dated September 23, 1996 (as amended and supplemented hereby and as
the same may hereafter be further amended, modified, supplemented, extended,
renewed, restated or replaced, the "Loan Agreement") and the other Financing
Agreements (as defined therein); and
WHEREAS, Borrower has requested that Agent and Lenders increase the
maximum amount of the financing arrangements, consent to the change of control
of Borrower arising pursuant to the issuance and sale by Haynes Holdings, Inc.
of certain new shares of its common stock and the redemption of certain
existing shares of its common stock with the proceeds received by Haynes
Holdings, Inc. from the issuance and sale of new shares and Borrower has
requested that Agent and Lenders agree to certain amendments to the Financing
Agreements in connection therewith; and
WHEREAS, by this Amendment, Agent, Lenders and Borrower desire and intend
to evidence such increase in the maximum amount and such change of control and
related amendments; and
NOW, THEREFORE, in consideration of the foregoing, the mutual agreements
and covenants contained herein, and other good and valuable consideration,
Agent, Lenders and Borrower agree as follows:
1. Definitions.
(a) Amendments to Definitions.
(i) All references to the term "Adjusted Net Worth" in the
Loan Agreement shall be deemed and each such reference is hereby amended by
adding the following clause at the end of Section 1.4 of the Loan Agreement:
"plus (c) the aggregate amount of all indebtedness and other liabilities of
Borrower consisting of the commissions, fees, costs, expenses or other charges
in connection with the issuance and sale by Parent of certain new shares of
Parent Common Stock and the redemption of certain existing shares of Parent
Common Stock pursuant to the Recapitalization Agreements as in effect on the
date of the execution thereof and the other transactions contemplated
thereby."
(ii) All references to the term "Consolidated Net Income" in
the Loan Agreement shall be deemed and each such reference is hereby amended
(A) by adding the following clause at the end of Section 1.24 of the Loan
Agreement: "and (k) the aggregate amount of all indebtedness and other
liabilities of Borrower consisting of the commissions, fees, costs, expenses
or other charges in connection with the issuance and sale by Parent of certain
new shares of Parent Common Stock and the redemption of certain existing
shares of Parent Common Stock pursuant to the Recapitalization Agreements as
in effect on the date of the execution thereof and the other transactions
contemplated thereby" and (B) by deleting the word "or" immediately before
clause (j) of Section 1.24 of the Loan Agreement.
(iii) All references to the term "Maximum Credit" in the Loan
Agreement shall be deemed and each such reference is hereby amended to mean
the amount of $60,000,000.
(iv) All references to the term "Permitted Holders" in the
Loan Agreement shall be deemed and each such reference is hereby amended to
include, in addition and not in limitation, the Blackstone Funds.
(b) Additional Definitions. As used herein, the following terms
shall have the respective meanings given to them below and the Loan Agreement
shall be deemed and is hereby amended to include, in addition and not in
limitation, each of the following definitions:
(i) "Blackstone Funds" shall mean, collectively, Blackstone
Capital Partners II Merchant Banking Fund L.P., Blackstone Offshore Capital
Partners II Merchant Banking Fund L.P. and Blackstone Family Investment
Partnership L.P. and their respective successors and assigns.
(ii) "Change of Control Offer" shall mean the offer by
Borrower to each holder of the Senior Notes to repurchase such Senior Notes in
cash in an amount equal to one hundred one (101%) percent of the principal
amount of the Senior Notes, plus accrued and unpaid interest as required as a
result of the Change of Control from the transactions described herein
pursuant to Section 10.13 of the Senior Note Indenture.
(iii) "Exercise and Repurchase Agreement" shall mean the
Exercise and Repurchase Agreement, dated of even date herewith, by and among
Parent, Michael D. Austin, Joseph F. Barker, F. Galen Hodge and Charles J.
Sponaugle, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(iv) "Recapitalization Agreements" shall mean, collectively,
the following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (A) the Stock
Purchase Agreement, (B) the Redemption Agreement, (C) the Exercise and
Repurchase Agreement, and (D) all agreements, documents and instruments
executed and/or delivered in connection with any of the foregoing.
(v) "Redemption Agreement" shall mean the Stock Redemption
Agreement, dated of even date herewith, by and among MLGA Fund II, L.P., MLGAL
Partners, LP and Parent, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
(vi) "Replacement Indebtedness" shall mean, collectively, all
indebtedness issued or incurred by Borrower after the date hereof, the
proceeds of which are used exclusively to pay the purchase price for the
Senior Notes tendered to Borrower pursuant to the Change of Control Offer in
the aggregate principal amount not to exceed one hundred one (101%) percent of
the amount of the Senior Notes tendered to, and repurchased by, Borrower under
the Change of Control Offer, as the same may hereafter exist and thereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(vii) "Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, dated of even date herewith, by and among the Blackstone Funds,
Borrower and Parent, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
(c) Interpretation. For purposes of this Amendment, unless
otherwise defined herein, all terms used herein, including, but not limited
to, those terms used and/or defined in the recitals hereto, shall have the
respective meanings assigned thereto in the Loan Agreement.
(d) Consent and Waiver. Subject to the terms and
conditions contained herein, Agent and Lenders hereby acknowledge and confirm
that each of them consents to and waives any and all Events of Default caused
by the following transactions:
(i) the issuance and sale by Parent of 5,329,392 shares of
new Parent Common Stock to the Blackstone Funds as set forth in the Stock
Purchase Agreement (as in effect on the date hereof) and the payment by
Borrower of the fees and expenses provided for therein;
(ii) the use of the proceeds from such issuance and sale
to redeem and repurchase 5,329,392 shares of existing Parent Common Stock as
set forth in the Redemption Agreement and the Exercise and Repurchase
Agreement (each as in effect on the date hereof); and
(iii) the Change of Control resulting from such
transactions.
2. Unused Line Fee. Section 4.4 of the Loan Agreement is hereby
deleted in its entirety and the following substituted therefor:
"4.4 Unused Line Fee. Borrower shall pay to Agent, for the benefit
of Lenders, monthly an unused line fee at a rate equal to three-eighths of one
(3/8%) percent per annum calculated on the amount by which $48,000,000 exceeds
the average daily principal balance of the outstanding Loans and Letter of
Credit Accom modations during the immediately preceding month (or part
thereof), in each case while this Agreement is in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be
payable on the first day of each month in arrears."
3. Encumbrances. Section 10.8(e) of the Loan Agreement is hereby
deleted in its entirety and the following substituted therefor:
"(e) purchase money security interests in Equip ment (including
Capital Leases) and purchase money mortgages on real estate to secure
indebtedness permitted under Section 10.9(c) below, provided, that, such
security interests and mortgages do not apply to any property of Borrower
other than the Equipment or real estate so acquired, and the indebtedness
secured thereby does not exceed the cost of the Equipment or real estate so
acquired, as the case may be."
4. Indebtedness.
(a) Section 10.9(c) of the Loan Agreement is hereby deleted in
its entirety and the following substituted therefor:
"(c) purchase money indebtedness (including Capital Leases) in a
principal amount in the aggregate not to exceed $10,000,000 in any fiscal year
of Borrower to the extent such indebtedness is secured by purchase money
security interests in Equipment or purchase money mortgages on real estate
permitted under Section 10.8(c) above."
(b) Section 10.9 of the Loan Agreement is hereby amended by adding
a new Section 10.9(j) thereto as follows:
"(j) the Replacement Indebtedness; provided, that,
(i) the sum of the principal amount of the Replacement
Indebtedness plus the principal amount of the indebtedness evidenced by the
Senior Notes shall not exceed the amount equal to: (A) $140,000,000 plus (B)
one (1%) percent multiplied by the principal amount of the Senior Notes
repurchased by Borrower pursuant to the Change of Control Offer (less the
aggregate amount of all repayments or purchases of principal in respect
thereof), together with interest on the principal amount of the Replacement
Indebtedness and prepayment and redemption premiums with respect thereto,
(ii) the proceeds of the Replacement Indebt edness shall only
be used to pay the purchase price for the Senior Notes to the extent required
upon the proper tender of Senior Notes to Borrower in response to the Change
of Control Offer,
(iii) Lender shall have received true, correct and complete
copies of the agreements evidenc ing or governing the Replacement Indebtedness
and all related agreements, documents and instruments,
(iv) such indebtedness (A) shall be incurred by Borrower at
commercially reasonable rates and terms in a bona fide arm's length
transaction, (B) shall not include any terms or conditions which in any manner
(1) adversely affect Agent, Lenders or any rights of Agent or Lenders as
determined in good faith by Agent or (2) which taken as a whole are more
restrictive or burdensome than the terms and conditions of any other
indebtedness of Borrower as in effect on the date hereof, (C) shall be
unsecured and (D) shall not have any scheduled maturity or amortization prior
to September 1, 2004,
(v) Borrower shall only make regularly scheduled payments of
principal and interest, or to the extent permitted under Section 10.9(j)(vii)
below, other payments, in respect of such indebtedness,
(vi) Borrower shall not, directly or indirectly, amend,
modify, alter or change the terms of the Replacement Indebtedness or any
related agreements, documents or instruments, except that Borrower may, after
not less than ten (10) Business Days prior written notice to Agent, amend or
modify the terms thereof so long as: (A) either (1) such amendment or
modification does not in any manner adversely affect Agent, Lenders or any
rights of Agent or Lenders as determined in good faith by Agent and confirmed
by Agent to Borrower in writing or (2) Agent has consented in writing to such
amendment or modification, and (B) such amendment or modification does not
relate to the terms of payment of the indebtedness evidenced thereby, the
amount of such indebtedness, the interest rate or any fees or charges or any
collateral with respect thereto or make any terms thereof more restrictive or
burdensome than as in effect on the date of the incurrence of the Replacement
Indebtedness, as determined in good faith by Agent and confirmed by Agent to
Borrower in writing,
(vii) Borrower shall not, directly or indirectly, redeem,
retire, defease, purchase or otherwise acquire such indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, or make any other
payments in respect thereof, except:
(A) purchases or redemptions of Replacement Indebtedness
required to be made under the terms of the Replacement Indebtedness: (1) to
the extent of net cash proceeds received by Borrower from an Asset Sale and
including any Sale and Leaseback Transaction, provided, that, any such net
cash proceeds shall first be applied to the Obligations to the extent such
assets sold or otherwise disposed of pursuant to the Asset Sale constitute
Collateral and thereafter to the repayment of the Senior Notes as required
under the terms of the Senior Note Indenture, (2) as a result of a Change in
Control or (3) to the extent of net cash proceeds received by Borrower from a
Public Equity Offering up to the maximum of thirty-five (35%) percent of the
initial aggregate principal amount of the Replacement Indebtedness at a
redemption price not to exceed one hundred eleven and six hundred twenty-five
thousandths (111.625%) percent of the principal amount thereof plus accrued
and unpaid interest to the redemption date, provided, that, after giving
effect thereto, at least two-thirds (2/3rds) of the initial principal amount
of Replacement Indebtedness remains outstanding,
(B) purchases or redemptions of Replacement Indebtedness
at the option of Borrower in open market transactions, provided, that, each of
the following conditions is satisfied as determined by Agent as of the date of
each such purchase and after giving effect thereto: (1) no Event of Default,
or act, conditions or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred, (2) either:
(aa) the amounts used to pay for the purchase of the Replacement Indebtedness
consist only of the net cash proceeds received by Borrower from a Public
Equity Offering or (bb) there are no Loans outstanding, (3) as of the date of
such purchase or redemption and after giving effect thereto, Excess
Availability shall be not less than $5,000,000 and (4) Agent shall have
received not less than two (2) Business Days prior written notice of the
intent of Borrower to make any such purchases or redemptions;
(viii) Borrower shall furnish to Agent all notices, demands or
other materials concerning such indebtedness either received by Borrower or on
its behalf, promptly after receipt thereof, or sent by Borrower or on its
behalf, concurrently with the sending thereof, as the case may be;"
(c) Section 10.9 of the Loan Agreement is hereby amended by
adding a new Section 10.9(k) as follows:
"(k) indebtedness of Borrower owing to any person in an arm's
length transaction (other than Replacement Indebtedness); provided, that, as
to each and all of such indebtedness: (i) Agent shall have received not less
than ten (10) Business Days prior written notice of the intention to incur
such indebt edness, which notice shall set forth in reasonable detail
satisfactory to Agent, the amount of such indebtedness, the person to whom
such indebtedness will be owed, the interest rate, the schedule of repayments
and maturity date with respect thereto and such other information with respect
thereto as Agent may request, (ii) Agent shall have received true, correct and
complete copies of all agreements, documents and instruments evidencing or
otherwise related to such indebtedness, as duly authorized, executed and
delivered by the parties thereto, (iii) such indebtedness shall be unsecured,
(iv) the aggregate amount of all such indebtedness shall not exceed
$10,000,000 at any time outstanding less the then outstanding amount of any
indebtedness of a subsidiary of Borrower described in the definition of
"Permitted Subsidiary Indebtedness" in the Senior Note Indenture as in effect
on the date hereof, (v) such indebtedness shall be incurred by Borrower at
commercially reasonable rates and terms in a bona fide arm's length
transaction, (vi) such indebtedness shall not at any time include terms and
conditions which in any manner adversely affect Agent, Lenders or any rights
of Agent or Lenders as determined in good faith by Agent and confirmed by
Agent to Borrower in writing or which taken as a whole are more restrictive or
burdensome than the terms or conditions of any other indebtedness of Borrower
as in effect on the date hereof, (vii) as of the date of incurring such
indebtedness and after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred and be continuing,
and (viii) Borrower shall furnish to Agent all notices or demands in
connection with such indebtedness either received by Borrower or on its behalf
promptly after the receipt thereof, or sent by Borrower, or on its behalf,
concurrently with the sending thereof, as the case may be;"
5. Line Increase Fee. Borrower shall pay to Agent, for the benefit
of Lenders, a line increase fee in the amount of $100,000, which amount shall
be payable simultaneously with the execution hereof and shall be deemed fully
earned as of the date hereof. Such fee, may, at Agent's option, be charged
directly to any account of Borrower maintained with Agent or Lenders.
6. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrower to Agent and Lenders pursuant to the other Financing
Agreements, Borrower hereby represents, warrants and covenants with and to
Agent and Lenders as follows (which representations, warranties and covenants
are continuing and shall survive the execution and delivery hereof and shall
be incorporated into and made a part of the Financing Agreements):
(a) After giving effect to this Amendment, no Event of Default
or act, condition or event which with notice or passage of time or both would
constitute an Event of Default exists or has occurred as of the date of this
Amendment.
(b) This Amendment has been duly executed and delivered by
Borrower and is in full force and effect as of the date hereof, and the
agreements and obligations of Borrower contained herein constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms.
(c) The Recapitalization Agreements have been, and the agreements
evidencing the Replacement Indebtedness will be, duly authorized, executed and
delivered.
(d) All actions and proceedings required by the Recapitalization
Agreements and all applicable law or regulations in connection therewith have
been taken, and the transactions required thereunder have been duly and
validly taken and consummated.
(e) Neither the execution and delivery of any of the
Recapitalization Agreements or the agreements evidencing the Replacement
Indebtedness will be (or any related agreements, documents or instruments) nor
the consummation of the transactions therein contemplated, nor compliance with
the provisions thereof, has violated or shall violate any law or regulation or
any order or decree of any court or governmental instrumentality in any
substantial respect or does or shall conflict with or result in the breach of,
or constitute a default in any substantial respect under, any indenture,
mortgage, deed of trust, security agreement, agreement or instrument to which
Parent or Borrower is a party or may be bound, or violate any provision of the
Certificate of Incorporation or By-Laws of Parent or Borrower.
(f) Borrower has delivered to Lender, true, correct and complete
copies of the Recapitalization Agreements.
7. Conditions Precedent. The amendments herein shall be effective
upon the satisfaction of each of the following conditions precedent in a
manner satisfactory to Lenders:
(a) the receipt by Agent of an original of this Amendment, duly
authorized, executed and delivered by Borrower;
(b) Parent and Borrower have obtained all required consents and
approvals of all persons other than Agent and Lenders to the issuance and sale
of the shares of Parent Common Stock pursuant to the Stock Purchase Agreement
and the use of the proceeds to redeem the existing shares of Parent Common
Stock as provided for in the Redemption Agreement and the Exercise and
Repurchase Agreement;
(c) no Event of Default shall have occurred and be continuing
and no event shall have occurred or conditions be existing and continuing
which, with notice or passage or time or both, would constitute an Event of
Default.
8. Effect of this Amendment. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreements are intended or
implied, and in all other respects, the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the other Financing Agreements, the terms of this Amendment
shall control.
9. Further Assurances. Borrower shall execute and deliver, or shall
cause the execution and delivery of, such additional documents and take such
additional actions as may be requested by Agent or Lenders to effectuate the
provisions and purposes of this Amendment.
10. Governing Law. The validity, interpretation and enforcement of
this Amendment and any dispute arising out of the relationship between the
parties hereto, whether in contract, tort, equity or otherwise shall be
governed by the internal laws of the State of Illinois (without giving effect
to principles of conflicts of laws).
11. Binding Effect. This Amendment shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors
and assigns. The Loan Agreement and this Amendment shall be read and
construed as one agreement.
12. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one
and the same agreement. In making
proof of this Amendment, it shall not be necessary to produce or account for
more than one counterpart thereof signed by each of the parties thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their authorized officers as of the day and
year first above written.
HAYNES INTERNATIONAL, INC.
By: /s/ J F Barker
Title: VP Finance
CONGRESS FINANCIAL CORPORATION
(CENTRAL), in its individual
capacity and as agent
By: /s/ William H. Bloom
Title: Senior Vice President
CORESTATES BANK, N.A.
By: /s/ Myron Landau
Title: VP
HAYNES INTERNATIONAL, INC.
1020 W. PARK AVENUE
P. O. BOX 9013
KOKOMO, IN 46904-9013
FOR IMMEDIATE RELEASE
CONTACT: JOSEPH F. BARKER
TELEPHONE: (317) 456-6004
HAYNES INTERNATIONAL, INC.
ANNOUNCES EXECUTION OF DEFINITIVE ACQUISITION AGREEMENTS
Kokomo, Indiana, January 24, 1997 - Haynes International, Inc. announced
today that Haynes Holdings, Inc., its parent corporation, has entered into a
Stock Purchase Agreement with Blackstone Partners II Merchant Banking Fund
L.P. and certain of its affiliates ("Blackstone") and a Stock Redemption
Agreement with MLGA Fund II, L.P. and MLGAL Partners, L.P., the principal
investors in Haynes Holdings, which together provide for a recapitalization of
Haynes Holdings through a repurchase by Haynes Holdings of approximately 79.9%
of its outstanding shares of common stock at a price of $10.15 per share in
cash and the purchase by Blackstone of a like number of shares at the same
price.
The United States Department of Justice has granted early termination of
the statutory waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended; however, several additional conditions
must be satisfied prior to the closing of the transactions. Although there
can be no assurance that such conditions will be satisfied, the transactions
provided for in the Stock Purchase Agreement are expected to close prior to
the end of the month.
Haynes International, Inc., based in Kokomo, Indiana, develops,
manufactures and markets technologically advanced, high performance alloys
primarily for use in the aerospace and chemical processing industries.
The Blackstone Group is a private investment bank based in New York and
founded in 1985 by Peter G. Peterson, its current Chairman, and Stephen A.
Schwarzman, its current Chief Executive Officer. The Blackstone Group's main
businesses include strictly friendly principal investments, real estate
investing and asset management, restructuring and merger and acquisition
advisory services. Blackstone Capital Partners II Merchant Banking Fund L.P.,
the firm's principal investment vehicle, has approximately $1.3 billion of
committed equity capital.
HAYNES INTERNATIONAL, INC.
1020 W. PARK AVENUE
P. O. BOX 9013
KOKOMO, IN 46904-9013
FOR IMMEDIATE RELEASE
CONTACT: JOSEPH F. BARKER
TELEPHONE: (317) 456-6004
HAYNES INTERNATIONAL, INC.
ANNOUNCES COMPLETION OF STOCK PURCHASE
AND STOCK REDEMPTION TRANSACTIONS
Kokomo, Indiana, January 29, 1997 - Haynes International, Inc. announced
today that Haynes Holdings, Inc., its parent corporation, has completed a
stock purchase transaction with Blackstone Capital Partners II Merchant
Banking Fund L.P. and certain of its affiliates ("Blackstone") and a stock
redemption transaction with MLGA Fund II, L.P. and MLGAL Partners, L.P., the
principal investors in Haynes Holdings, which together with certain other
agreements will result in a recapitalization of Haynes Holdings through a
repurchase by Haynes Holdings of approximately 79.9% of its outstanding shares
of common stock at a price of $10.15 per share in cash and the purchase by
Blackstone of a like number of shares at the same price.
Haynes International, Inc., based in Kokomo, Indiana, develops,
manufactures and markets technologically advanced, high performance alloys
primarily for use in the aerospace and chemical processing industries.
The Blackstone Group is a private investment bank based in New York and
founded in 1985 by Peter G. Peterson, its current Chairman, and Stephen A.
Schwarzman, its current Chief Executive Officer. The Blackstone Group's main
businesses include strictly friendly principal investments, real estate
investing and asset management, restructuring and merger and acquisition
advisory services. Blackstone Capital Partners II Merchant Banking Fund L.P.,
the firm's principal investment vehicle, has approximately $1.3 billion of
committed equity capital.
