SPECIAL METALS CORPORATION
2,500,000 Shares
6.625% Series A Senior Convertible Preferred Stock
(Liquidation Amount $50.00 per Share)
INVESTMENT AGREEMENT
July 8, 1998
Titanium Metals Corporation
TIMET Finance Management Company
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Special Metals Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to TIMET Finance Management Company, a Delaware
corporation (the "Investor"), and a wholly-owned subsidiary of Titanium Metals
Corporation, a Delaware corporation ("TMC"), 2,500,000 shares of its 6.625%
Series A Senior Convertible Preferred Stock, liquidation amount $50.00 per share
(the "Convertible Preferred Securities"). The Convertible Preferred Securities
will be convertible into shares of the common stock, par value $.01 per share
(the "Common Stock"), of the Company initially at the conversion price set forth
herein and will rank, with respect to dividend rights and rights upon
liquidation, winding up and dissolution, senior to the Common Stock, and each
other class of capital stock or series of preferred stock of the Company
established after the original issuance of the Convertible Preferred Securities.
The proceeds of the sale by the Company of the Convertible Preferred
Securities are to be used to finance a portion of the acquisition (the
"Acquisition") by the Company of the Inco Alloys International division ("IAI")
of INCO Limited pursuant to the terms of the stock purchase agreement, dated as
of July 8, 1998 (the "Acquisition Agreement"), among INCO Limited, Inco United
States, Inc., Inco Europe Limited and Inco S.A. (collectively, "Inco") and the
Company.
The sale of the Convertible Preferred Securities to the Investor will
be made without registration of the Convertible Preferred Securities under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon
exemptions from the registration requirements of the Securities Act. However,
the Investor (and subsequent permitted transferees) of the Convertible Preferred
Securities (and the Common Stock issued upon conversion thereof) will have the
registration rights set forth in the Registration Rights Agreement (the
"Registration Rights Agreement") to be entered into between the Company and the
Investor.
1. Purchase and Sale. On the terms and subject to the conditions and in
reliance upon the representations and warranties set forth in this Agreement,
the Company agrees to issue, sell and deliver to the Investor, and the Investor
agrees to purchase from the Company, 2,500,000 Convertible Preferred Securities,
at a purchase price of $50.00 per Convertible Preferred Security, for an
aggregate purchase price of $125,000,000 (the "Purchase Price"). Each
Convertible Preferred Security shall be convertible at the option of the holder
into shares of Common Stock of the Company following the Initial Conversion Date
(as defined herein) at a conversion price equal to the lesser of (i) 125% of the
average of the closing prices of shares of Common Stock for the 40 consecutive
trading day period ending on the 20th trading day immediately following the date
on which the Acquisition is first publicly announced by the parties or otherwise
made known to the public and (ii) $26.00. Such conversion price will be subject
to adjustment from time to time as set forth in the Certificate of Designation
of Rights and Preferences establishing the terms and relative rights and
preferences of the Convertible Preferred Securities substantially in the form
set forth in Exhibit C hereto (the "Certificate of Designation"). The term
"Initial Conversion Date" shall mean the later of (i) 90 days following the date
of original issuance of the Convertible Preferred Securities, (ii) the date on
which approval is obtained in accordance with Regulation 14A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), by the stockholders of
the Company entitled to vote thereon (the "Stockholders Conversion Vote") of the
issuance of Common Stock upon the conversion of the Convertible Preferred
Securities upon the terms and conditions set forth in the Certificate of
Designation and (iii) the date upon which all waiting periods under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act"), have expired or been terminated.
2. Delivery and Payment Delivery of and payment for the Convertible
Preferred Securities shall be made at the offices of ▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ at 10:00 a.m., New York City time, on the same date as the
closing date under the Acquisition Agreement (as such date shall be notified in
writing by the Company to the Investor not less than 2 business days prior
thereto) or such other time (not later than the 120th day following the date of
this Agreement) and place as the Investor and the Company shall agree upon in
writing (the "Closing Time"). Delivery of the Convertible Preferred Securities
shall be made to the Investor against payment by the Investor of the Purchase
Price to or upon the order of the Company by wire transfer drawn and payable in
same day funds or such other manner of payment as may be agreed by the Company
and the Investor.
3. Representations and Warranties of the Company. The Company
represents and warrants to the Investor as follows:
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(a) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority under such laws to own
its property and to conduct its business as presently conducted and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its Subsidiaries (as defined below), taken as a whole.
(b) Each subsidiary of the Company that is listed on Schedule
3(b) attached hereto (collectively, the "Subsidiaries") has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority under such laws to own its property and to conduct its business as
presently conducted and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its Subsidiaries, taken as a whole;
except as described in the SEC Reports (as defined herein), all of the issued
shares of capital stock of each Subsidiary of the Company, other than one share
of Udimet Special Metals Ltd., which is owned by a director thereof, have been
duly and validly authorized and issued, are fully paid and non-assessable and
are owned directly by the Company, free and clear of all liens, encumbrances,
equities or claims, except to the extent that such liens, encumbrances, equities
or claims would not, singly or in the aggregate, have a material adverse effect
on the Company and its Subsidiaries, taken as a whole; the Subsidiaries are the
only subsidiaries of the Company required to be listed on Exhibit 21 to the SEC
Reports.
(c) As of the Closing Time, the Convertible Preferred
Securities will have been duly authorized by the Company and, when issued and
delivered by the Company to the Investor against payment of the Purchase Price
therefor, will be validly issued and fully paid and non-assessable and the
issuance of the Convertible Preferred Securities will not be subject to any
preemptive or other similar rights.
(d) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement by the Investor and TMC, constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws affecting creditors' rights generally and general principles of
equity, regardless of whether enforceability is considered in a proceeding in
equity or at law.
(e) The Company has taken the corporate action necessary to
approve the transactions contemplated by this Agreement for purposes of Section
203 of the General Corporation Law of the State of Delaware.
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(f) As of the Closing Time, the Registration Rights Agreement
will have been duly authorized, executed and delivered by the Company and,
assuming the due authorization, execution and delivery of the Registration
Rights Agreement by the Investor, will be a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that (i) enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar laws
affecting creditors' rights generally and general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law and (ii) the enforceability of indemnification and contribution
provisions may be limited by federal and state securities laws and the policies
underlying such laws; and
(g) Except as set forth on Schedule 3(g) hereto, (i) the
execution and delivery by the Company of, and the performance by the Company of
its obligations under, this Agreement and the Registration Rights Agreement, and
the consummation of the transactions contemplated hereby and thereby, will not
contravene any provision of applicable law material to the Company, the
Certificate of Designation, the articles of incorporation or the by-laws of the
Company, or any agreement or other instrument binding upon the Company or any of
its Subsidiaries, except where such contravention of any such agreement or
instrument would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body or agency or court having jurisdiction over the Company or any
of its Subsidiaries and material to it, and (ii) no consent, approval,
authorization, waiver or order of, or qualification with, any court or
governmental body or agency or any other person is required for the performance
by the Company of its obligations under this Agreement and the Registration
Rights Agreement, except such as may be required by federal, state or foreign
securities laws in connection with the offer and sale of the Convertible
Preferred Securities and the Conversion Shares (as defined below) and the
registration of such securities pursuant to the terms of the Registration Rights
Agreement, and except for any such consent, approval, authorization, waiver,
order or qualification the failure of which to obtain would not result in a
material adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of Company and its Subsidiaries, taken as a
whole, and would not materially impair the ability of the Company to effect the
transactions contemplated hereby and pursuant to the Registration Rights
Agreement.
(h) The financing contemplated by the new credit facility to
be entered into by the Company, Credit Lyonnais New York Branch as agent and
various lenders with respect to the Acquisition (the "New Credit Agreement") and
the Investor's investment in the Convertible Preferred Securities as
contemplated by this Agreement constitute the only financing arrangements to be
entered into by the Company or any of its Subsidiaries in connection with the
financing of the Acquisition other than indebtedness of Inco and/or its
subsidiaries to be assumed in connection with the Acquisition.
(i) The authorized capital stock of the Company consists of
(i) 35,000,000 shares of Common Stock, par value $0.01 per share, of which, as
of the date hereof, 15,479,000 shares are issued and outstanding and, as of the
Closing Time, 7,600,000 shares will be reserved for issuance upon conversion of
the Convertible Preferred Securities and (ii) 10,000,000 shares of
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preferred stock, par value $0.01 per share, of which, as of the date hereof, no
shares are outstanding. All of the outstanding shares of Common Stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable.
(j) As of the Closing Time, the shares of Common Stock
initially issuable upon conversion of the Convertible Preferred Securities (the
"Conversion Shares") will have been duly authorized and, when issued upon such
conversion in accordance with the provisions of the Certificate of Designation,
will be validly issued, fully paid and non-assessable; the issuance of the
Conversion Shares will not be subject to any preemptive or similar rights.
(k) The Company has delivered or made available to the
Investor a true and complete copy of (i) the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997 (the "Form 10-K"); (ii) the
Company's Quarterly Report on Form 10-Q for the period ended March 31, 1998 (the
"Form 10-Q"), and (iii) each registration statement, report on Form 8-K and Form
8-A, proxy statement, information statement or other form, schedule, document,
report or statement filed by the Company or any of its Subsidiaries with the
Securities and Exchange Commission (the "Commission") since March 3, 1997, in
each case in the form (including financial statements, schedules, exhibits and
any amendments thereto) filed with the Commission (collectively, the "SEC
Reports"). As of their respective dates, the SEC Reports (i) were timely filed
with the Commission; (ii) complied, in all material respects, with the
applicable requirements of the Exchange Act and the Securities Act of 1933, as
amended (the Securities Act"); and (iii) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Other than the SEC
Reports, the Company and its Subsidiaries have not filed or been required to
file any other reports or statements with the Commission since March 3, 1997.
(l) Each of (i) the consolidated balance sheets (including the
related notes and schedules) included in the SEC Reports fairly presents the
consolidated financial position of the Company and its Subsidiaries as of the
date thereof, subject, in the case of unaudited statements, to normal year-end
adjustments, and (ii) the consolidated statements of income (or statements of
results of operations), shareholders' equity and cash flows (including the
related notes and schedules) included in or incorporated by reference into the
SEC Reports fairly presents the results of operations, retained earnings and
cash flows, as the case may be, of the Company and its Subsidiaries (on a
consolidated basis) for the periods set forth therein, in each case in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods (except as stated therein or in the notes thereto)
and in compliance with the rules and regulations of the Commission.
(m) Except, in each case, as disclosed in the SEC Reports,
there are no legal or governmental proceedings, claims, suits, actions,
arbitrations or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries that, singly or in the
aggregate, would reasonably be expected to have a material adverse effect on the
Company and its Subsidiaries, taken as a whole; nor are there any judgments,
orders, decrees, awards or rulings of any governmental body or agency
outstanding against or applicable to the
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Company or any of its Subsidiaries or against or applicable to any of their
respective assets, properties or businesses that, singly or in the aggregate,
would reasonably be expected to have a material adverse effect on the Company
and its Subsidiaries, taken as a whole.
(n) Each of the Company and its Subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of and
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory organizations and all
courts and other tribunals, to own, lease, license and use its properties and
assets and to conduct its business as presently conducted, except as set forth
in the SEC Reports or to the extent that the failure to obtain such consents,
authorizations, approvals, orders, certificates and permits or make such
declarations and filings would not have a material adverse effect on the Company
and its Subsidiaries, taken as a whole. Except as set forth in the SEC Reports,
neither the Company nor any of its Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such consent,
authorization, approval, order, certificate or permit which, singly or in the
aggregate, would result in a material adverse change in the condition, financial
or otherwise, or in the earnings, business or operations of the Company and its
Subsidiaries, taken as a whole.
(o) The Company and its Subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except as set forth in the
SEC Reports or where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company and
its Subsidiaries, taken as a whole.
(p) In the ordinary course of its business, the Company
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its Subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a material adverse effect on the Company and
its Subsidiaries, taken as a whole, except as set forth in the SEC Reports.
(q) Subsequent to December 31, 1997, except as contemplated by
this Agreement, the Registration Rights Agreement, the Acquisition Agreement and
the New Credit Agreement, (1) as of the date hereof, the Company and its
Subsidiaries have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction, in each case, not in the
ordinary course of business; (2) the Company has not purchased any of its
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outstanding capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock; and (3) there has not been any
material change in the capital stock, short-term debt or long-term debt of the
Company and its consolidated Subsidiaries, except (i) for borrowings and
repayments under the Company's existing Credit Agreement, dated October 18,
1996, as amended, among the Company, the lenders from time to time party thereto
and Credit Lyonnais New York Branch (the "Credit Agreement") or (ii) as
described in the SEC Reports.
(r) Except as set forth in the SEC Reports, the Company and
its Subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property in each case
owned by them which is material to the business of the Company and its
Subsidiaries, taken as a whole, in each case free and clear of all liens,
encumbrances and defects, except for any liens or encumbrances created in
connection with the Credit Agreement or under the financing agreements entered
into by the Company in connection with the Acquisition, or except such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
its Subsidiaries; and any material real property and buildings held under lease
by the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.
(s) Except as set forth in the SEC Reports, the Company and
its Subsidiaries own or otherwise have the right to use, or can acquire on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with the business now operated by them, except where the failure
thereof would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole, and neither the Company nor any of its
Subsidiaries has received any written notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which, singly or
in the aggregate, could reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its Subsidiaries, taken as a whole.
(t) Except as set forth in the SEC Reports, the Company and
its Subsidiaries have complied in all material respects with all material laws
applicable to the Company's and its Subsidiaries' business and operations
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and the payment of social
security and other taxes applicable to the Company's and its Subsidiaries'
business and operations, and no material labor dispute with the employees of the
Company or any of its Subsidiaries exists or, to the knowledge of the Company,
is threatened.
(u) Except as set forth in the SEC Reports, the Company and
its Subsidiaries are in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the regulations and published interpretations thereunder.
No "reportable event" (as defined in ERISA and the
7
regulations and published interpretations thereunder) has occurred with respect
to any "pension plan" (as defined in ERISA and the regulations and published
interpretations thereunder) established or maintained by the Company or its
subsidiaries, except with respect to which the 30-day notice requirement has
been waived . The Company and its Subsidiaries have not incurred and do not
expect to incur liability under (i) Title IV of ERISA with respect to the
termination of, or withdrawal from, any "pension plan" or (ii) Sections 4971,
4975 or 4980B of the Internal Revenue Code of 1986, as amended (the "Code"),
except where such liability would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. Each "pension plan" established
or maintained by the Company or its subsidiaries that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(v) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the businesses in which they are engaged
to the Company's knowledge, neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for; and neither the Company
nor any such Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or operations of
the Company and its Subsidiaries, taken as a whole, except as set forth in the
SEC Reports.
(w) Neither the Company nor any of its Subsidiaries is (i) in
violation of its respective charter, by-laws or other organizational documents
or (ii) in default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any other agreement or instrument binding upon the Company or any of its
Subsidiaries that is material to the Company and its Subsidiaries, taken as a
whole, except in each case, as set forth in the SEC Reports, or except in the
case of clause (ii) where such failure to perform would not have a material
adverse effect on the Company and its Subsidiaries, taken as a whole.
(x) The Company and its Subsidiaries have filed all tax
returns which they are required to file under applicable laws and regulations,
except where such failure to file would not have a material adverse effect on
the Company and its Subsidiaries, taken as a whole; all such returns are
complete and correct in all material respects; except with respect to amounts
which are being contested in good faith and by appropriate proceedings, the
Company and each Subsidiary in all material respects have paid all taxes due and
owing by them and have withheld and paid over all taxes which they are obligated
to withhold from amounts paid or owing to any employee, stockholder, creditor or
other third party. Neither the Company nor any Subsidiary has waived any statute
of limitations with respect to taxes or agreed to any extension of time with
respect to a material tax assessment or deficiency. No foreign, federal, state
or local tax audits are pending or being conducted with respect to the Company
or any Subsidiary. Except as set forth on Schedule 3(x), no information related
to tax matters has been requested in writing by
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any foreign, federal, state or local taxing authority and no written notice
indicating an intent to open an audit or other review has been received by the
Company from any foreign, federal, state or local taxing authority with respect
to any material tax liability.
(y) Except for ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation, whose fees will be paid by the Company, there is no investment
banker, broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of the Company who might be entitled to any fee or
commission from the Company in connection with the transactions contemplated by
this Agreement.
(z) Neither the Company nor any of its Subsidiaries is an
"investment company" required to be registered under the Investment Company Act
of 1940, as amended.
(aa) Assuming the accuracy of the representations and
warranties of the Investor set forth in Section 4(e) hereof, no registration of
the Convertible Preferred Securities under the Securities Act is required for
the issuance and sale by the Company of the Convertible Preferred Securities in
the manner contemplated by this Agreement.
(bb) The representations and warranties made by the Company in
Article IV and elsewhere in the Acquisition Agreement that are qualified by
reference to materiality or a material adverse effect are true and correct and
all other representations and warranties made by the Company in Article IV and
elsewhere in the Acquisition Agreement are true and correct in all material
respects. To the Company's knowledge, the representations and warranties made by
Inco in Article III and elsewhere in the Acquisition Agreement that are
qualified by reference to a material adverse effect are true and correct and all
other representations and warranties made by Inco in Article III and elsewhere
in the Acquisition Agreement are true and correct except for such inaccuracies
as in the aggregate are not reasonably likely to have a material adverse effect
and all information contained in any exhibit, schedule or attachment thereto is
true and correct in all material respects.
4. Representations and Warranties of the Investor and TMC. TMC and the
Investor, jointly and severally, represent and warrant to the Company as
follows:
(a) Each of TMC and the Investor has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation.
(b) This Agreement has been duly authorized, executed and
delivered by each of TMC and the Investor and, assuming due authorization,
execution and delivery of this Agreement by the Company constitutes a valid and
binding agreement of each of TMC and the Investor, enforceable against each of
TMC and the Investor in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws affecting creditors' rights
generally and general principles of equity, regardless of whether enforceability
is considered in a proceeding in equity or at law.
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(c) As of the Closing Time, the Registration Rights Agreement
will have been duly authorized, executed and delivered by the Investor and,
assuming the due authorization, execution and delivery of the Registration
Rights Agreement by the Company, will be a valid and binding agreement of the
Investor, enforceable against the Investor in accordance with its terms, except
to the extent that (i) enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar laws
affecting creditors' rights generally and general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law and (ii) the enforceability of indemnification and contribution
provisions may be limited by federal and state securities laws and the policies
underlying such laws.
(d) Except as set forth on Schedule 4(d), (i) the execution
and delivery by each of TMC and the Investor of, and the performance by each of
TMC and the Investor of its respective obligations under, this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby will not contravene any provision of applicable
law material to TMC or the Investor or the articles of incorporation or by-laws
of either of TMC or the Investor or any agreement or other instrument binding
upon TMC or the Investor, except where such contravention of any such agreement
or instrument would not have any material adverse effect on TMC and its
subsidiaries, taken as a whole, or any judgement, order or decree of any
governmental body, agency or court having jurisdiction over TMC or the Investor
that is material to either of them, and (ii) no consent, approval,
authorization, waiver or order of, or qualification with, any court or
governmental body or agency or any other person is required for the performance
by each of TMC or the Investor of its respective obligations under this
Agreement, except such as may be required by federal, state or foreign
securities laws in connection with the offer and sale of the Convertible
Preferred Securities, the Conversion Shares and the registration of such
securities pursuant to the terms of the Registration Rights Agreement, and
except for any such consent, approval, authorization, waiver, order or
qualification the failure of which to obtain would not result in a material
adverse change in the condition, financial or otherwise, or in the earnings,
business or operations of TMC and its subsidiaries, taken as a whole, or
materially impair the ability of TMC or the Investor to perform its obligations
hereunder.
(e) The Investor is acquiring the Convertible Preferred
Securities under this Agreement for its own account solely for the purpose of
investment and not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act. The Investor has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Convertible Preferred
Securities and the Conversion Shares and is able to bear the economic risk of
such investment. The Investor acknowledges that none of the Convertible
Preferred Securities or the Conversion Shares have been registered under the
Securities Act and such securities may be sold or disposed of in the absence of
such registration only pursuant to an exemption from such registration and in
accordance with the terms of the Investment Agreement.
(f) As of the Closing Time, the Investor (or any wholly-owned
subsidiary of TMC to which the Investor has assigned its rights pursuant to
Section 25 of this Agreement) will
10
have sufficient funds to purchase the Convertible Preferred Securities on the
terms and subject to the conditions contemplated by this Agreement and to
consummate the transactions contemplated hereby.
(g) No part of the source of funds to be used by the Investor
to acquire the Convertible Preferred Securities constitutes the assets of any
"employee benefit plan" as defined in section 3(3) of ERISA, or its related
trust, or any "plan" as defined in Section 4975(e)(1) of the Code, or its
related trust.
(h) Except for ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ & Co., whose fees will be
paid by TMC, there is no investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of the Investor or
TMC who might be entitled to any fee or commission from the Investor or TMC in
connection with the transactions contemplated by this Agreement.
5. Governance. The Company agrees with the Investor and TMC that:
(a) Immediately following the Closing Time, the Board of
Directors of the Company (the "Board") shall increase the authorized number of
Directors of the Board by a number sufficient to include as additional directors
of the Company the two Investor Nominees (as defined in Section 5(b) hereof) who
have been designated by the Investor in the Investor Nominee Notice (as defined
in Section 5(b) hereof) and shall appoint such Investor Nominees to the Board as
Class II Director and Class III Director, respectively, in accordance with the
Company's procedures for the appointment of directors. Such Investor Nominees
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of the class to which they have been elected expires or, in each
case, until their respective successors are duly elected and qualified. So long
as the Investor (together with TMC and any wholly-owned subsidiary of TMC)
beneficially owns voting securities of the Company representing at least 20% of
the outstanding voting securities of the Company (assuming for purposes of this
Section 5, that any Convertible Preferred Securities owned by the Investor, TMC
or such subsidiary have been converted into Common Stock), the Investor shall be
entitled to designate two Investor Nominees to the Board. In addition, for so
long as the Investor beneficially owns voting securities of the Company
representing at least 10% (but less than 20% of the outstanding voting
securities of the Company), the Investor shall be entitled to designate one
Investor Nominee to the Board. If at any time the number of members constituting
the entire Board shall equal or exceed 15, including the Investor Nominees
appointed pursuant to this Section 5 but excluding all directors elected by
holders of the Convertible Preferred Securities pursuant to Section 9 of the
Certificate of Designation, the Investor shall be entitled to designate pursuant
to an Investor Nominee Notice, and the Board shall appoint to the Board, one
additional Investor Nominee in accordance with the provisions of this Section 5.
In the event of a vacancy caused by the disqualification, removal, resignation
or other cessation of service of any Investor Nominee from the Board, the Board
shall elect as a director (to serve until the Company's immediately succeeding
annual meeting of shareholders at which the term of the class to which such
Investor Nominee has been elected expires) a new Investor Nominee who has been
designated by the Investor in an additional Investor Nominee Notice that has
been provided to the Company at
11
least five days prior to the date of a regular meeting of the Board. The
Investor shall nominate each Investor Nominee pursuant to an additional Investor
Nominee Notice in advance of each meeting of shareholders at which such Investor
Nominee is to be elected. If the beneficial ownership by the Investor (together
with TMC and any wholly-owned subsidiary of TMC) of voting securities of the
Company decreases below 20% but exceeds 10% of the outstanding voting securities
of the Company (assuming for purposes of this Section 5, that any Convertible
Preferred Securities owned by the Investor, TMC or such subsidiary have been
converted into Common Stock), the Investor shall cause a number of its Investor
Nominees to resign from the Board so that there shall only remain one Investor
Nominee on the Board (or two if the Board is then comprised of 15 or more
members as provided above), in accordance with the Company's procedures for the
resignation of directors and applicable laws and regulations. If the beneficial
ownership by the Investor, TMC or such subsidiary of the outstanding voting
securities of the Company decreases below 10% of the outstanding voting
securities of the Company, the Investor shall, at the request of the Company,
cause all its Investor Nominees to resign from the Board, in accordance with the
Company's procedures for the resignation of directors and applicable laws and
regulations.
(b) The Investor shall provide a designation notice to the
Company (the "Investor Nominee Notice") as required by Section 5(a) above for
each Investor Nominee, which notice shall contain the following information: (i)
the name of the person(s) it has designated to become director(s) of the Company
(the "Investor Nominees"), and (ii) all information required by Regulation 14A
and Schedule 14A under the Exchange Act with respect to each such Investor
Nominee. Such Investor Nominees may be any person designated by the Investor,
including, but not limited to, persons who are officers, directors or employees
of the Investor.
Notwithstanding the above, the Company shall not be obligated
to perform the obligations under this Section 5 with respect to any Investor
Nominee designated by the Investor if such Investor Nominee is (i) a director,
officer, employee, shareholder, controlling person or otherwise affiliated with
a Significant Competitor (as hereinafter defined), other than TMC or its
affiliates, (ii) a person that is or theretofore has been engaged in material
litigation adverse to the Company or any of its affiliates, (iii) a person
(other than TMC and/or its wholly owned subsidiaries) who beneficially owns
voting securities of the Company representing more than 10% of the outstanding
voting securities of the Company, or (iv) a person (x) other than the person
then serving as chief executive officer, chief financial officer or chief
operating officer of TMC and/or as a director of TMC or (y) who the Board, after
customary investigation of such person's qualifications, reasonably determines
in good faith is not qualified or acceptable under standards applied fairly and
equally to all nominees (it being understood that any person listed on Schedule
5(b) hereto or falling within subclause (x) of this clause (iii) shall be deemed
qualified and acceptable hereunder).
(c) The Company agrees to cause to include the Investor
Nominees which the Investor is entitled to designate pursuant to this Agreement
in the slate of nominees recommended by the Board to the Company's shareholders
for election as directors and shall use its reasonable best efforts to cause the
election or reelection of each such Investor Nominee to the Board at each
meeting of shareholders at which such Investor Nominee is up for election,
12
including soliciting proxies in favor of the election of such persons. At the
direction of the Investor, the Company shall use reasonable efforts to cause the
removal from the Board of any Investor Nominee.
(d) Investor Nominees shall be reimbursed for their
out-of-pocket expenses incurred in attending regular and special Board meetings
and any meeting of any Board committee by the Company to the extent of, and in
accordance with, the policies of the Company generally applicable to the
reimbursement of expenses of directors of the Company.
(e) The Board will not establish an executive committee
authorized to exercise the power of the Board generally unless the Investor is
granted representation on such committee proportional to its representation on
the Board, nor will the Board establish or employ committees (unless the
Investor is granted proportional representation thereon) as a means designed to
circumvent or having the effect of circumventing the rights of the Investor
under this Agreement to representation on the Board.
6. Standstill.
(a) Except as provided in this Section 6(a), commencing on
April 13, 1998 (the "Standstill Commencement Date"), the date of the letter
agreement among the Company, the Investor and TMC (the "Letter Agreement"), and
ending on the date (the "Standstill Termination Date") that is the earliest of
(x) the first anniversary of the date (following the closing under this
Agreement) when the Investor no longer owns shares of Common Stock and/or
Convertible Preferred Securities convertible into the Common Stock or other
voting securities of the Company, which represents more than 5% of the
outstanding voting securities of the Company, (y) such time as the Company
enters into, or publicly announces an intention to enter into, directly or
indirectly, a definitive agreement (a "Change of Control Agreement") that would
result in a "change of control" of the Company (as defined in Section 7(b)) or a
sale of all or substantially all of the assets of the Company, with respect to
which transactions contemplated by this clause (y), the Investor's
representatives on the Company's Board voted against such transaction (or, in
the event they were interested parties to such transaction, abstained from
voting on such transaction) and (z) the occurrence of a "change of control" of
the Company (as defined in Section 7(b)), neither TMC, the Investor nor any of
their respective affiliates will, directly or indirectly, acting alone or in
concert with others, except with the prior approval of the Board of Directors of
the Company, (a) acquire, or offer, propose or agree to acquire, or otherwise
possess, ownership (including, but not limited to, beneficial ownership as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, by
purchase or otherwise, of any equity securities issued by the Company other than
(i) the securities it may acquire pursuant to any provision of this Agreement,
(ii) rights, options or warrants distributed on a pro rata basis to all holders
of the class or classes or securities of the Company held by the Investor, (iii)
securities acquired from the Company pursuant to a rights offer, exchange offer
or similar transaction made by the Company, (iv) securities acquired by employee
benefits plans sponsored or maintained by the Investor or TMC, or any of their
respective subsidiaries, provided that the investment decisions of such plans
are made by persons or entities which are independent of the management of the
Investor, TMC, or such subsidiary, as the case may be, (v) purchases in
13
accordance with Section 9 below or (vi) securities acquired pursuant to a
merger, business combination, purchase of assets or similar transaction between
two or more entities, none of which is an affiliate of the Investor, (b) propose
to enter into, directly or indirectly, any merger, consolidation, tender
exchange offer or other business combination or extraordinary transaction
involving the Company or any of its subsidiaries, (c) solicit proxies from
stockholders of the Company, become a " participant" in any "election contest"
(as such terms are used in Rule 14a-11 of the Securities Exchange Act of 1934
(the "Exchange Act") with respect to the Company, make a communication referred
to in Rule 14a-1(1)(2)(iv) of the Exchange Act or otherwise seek to influence or
control the management or policies of the Company or any of its affiliates
(provided that the foregoing shall not prohibit the Investor from voting its
shares of stock or having its board designees vote or participate in any board
matter), (d) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting
securities of the Company or its subsidiaries, (e) otherwise act alone or in
concert with others to seek to control or influence the management, board of
directors of policies of the Company provided that the foregoing shall not
prohibit the Investor from voting its shares of stock or having its board
designees vote or participate in any board matter, (f) disclose any intention,
plan or arrangement inconsistent with the foregoing, or (g) assist, advise,
participate with or encourage any person to do any of the foregoing. Prior to
the Standstill Termination Date, without the prior approval of the Board of
Directors of the Company, neither TMC nor the Investor will (and each shall
cause its respective affiliates not to) take any action that is reasonably
likely to require the Company to make a public announcement regarding the
possibility of any extraordinary transaction. Notwithstanding the foregoing, if
the Standstill Termination Date shall have occurred as a result of the Company
having entered into a Change of Control Agreement and such agreement terminates
without a change of control having occurred thereunder, the obligations
contained in this Section 6(a), shall be automatically reinstated; provided that
any actions taken by the Investor, TMC or their affiliates prior to such
reinstatement or taken pursuant to (x) definitive agreements entered into with
the Company, or (y) a tender or exchange offer commenced, or (z) a proxy
statement filed with the Commission, in each case prior to such reinstatement,
may be pursued, consummated or completed without regard to such reinstatement.
(b) Except as provided in this Section 6(b), commencing on the
Standstill Commencement Date and ending on the Standstill Termination Date,
neither the Company nor any of its affiliates will, directly or indirectly,
acting alone or in concert with others, except with the prior approval of the
Board of Directors of TMC, (a) acquire, or offer, propose or agree to acquire,
or otherwise possess, ownership (including, but not limited to, beneficial
ownership as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, by purchase or otherwise, of more than 5% of the outstanding equity
securities issued by TMC other than (i) rights, options or warrants distributed
on a pro rata basis to all holders of the class or classes of securities of TMC
held by the Company, (ii) securities acquired pursuant to a rights offer,
exchange offer or similar transaction made by TMC, (iii) securities acquired by
employee benefit plans sponsored or maintained by the Company or any of its
subsidiaries, provided that the investment decisions of such plans are made by
persons or entities which are independent of the management of the Company or
such subsidiary, as the case may be, or (iv) securities acquired pursuant to a
merger, business combination, purchase of assets or similar transaction between
two or more entities,
14
none of which is an affiliate of the Company, (b) propose to enter into,
directly or indirectly, any merger, consolidation, tender exchange offer or
other business combination or extraordinary transaction involving TMC or any of
its subsidiaries, (c) solicit proxies from stockholders of TMC, become a
"participant" in any "election contest" (as such terms are used in Rule 14a-11
of the Exchange Act with respect to TMC, make a communication referred to in
Rule 14a-1(1)(2)(iv) of the Exchange Act or otherwise seek to influence or
control the management or policies of TMC or any of its affiliates (provided
that the foregoing shall not prohibit the Company from voting its shares of
stock or having its designee vote or participate in any board matter), (d) form,
join or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any voting securities of TMC or
its subsidiaries, (e) otherwise act alone or in concert with others to seek to
control or influence the management, board of directors of policies of TMC
provided that the foregoing shall not prohibit the Company from voting its
shares of stock or having its board designees vote or participate in any board
matter, (f) disclose any intention, plan or arrangement inconsistent with the
foregoing, or (g) assist, advise, participate with or encourage any person to do
any of the foregoing. Prior to the Standstill Termination Date, without the
prior approval of the Board of Directors of TMC, the Company will not (and the
Company will cause its affiliates not to) take any action that is reasonably
likely to require TMC to make a public announcement regarding the possibility of
any extraordinary transaction. Notwithstanding the foregoing, if the Standstill
Termination Date shall have occurred as a result of the Company having entered
into a Change of Control Agreement and such agreement terminates without a
change of control having occurred thereunder, the obligations contained in this
Section 6(b) shall be automatically reinstated; provided that any actions taken
by the Company or its affiliates prior to such reinstatement or taken pursuant
to (x) definitive agreements entered into with TMC, or (y) a tender or exchange
offer commenced, or (z) a proxy statement filed with the Commission, in each
case prior to such reinstatement, may be pursued, consummated or completed
without regard to such reinstatement.
7. Dispositions. (i) The Investor shall not, directly or indirectly,
sell, assign, transfer, pledge, hypothecate or otherwise dispose of any interest
in any Convertible Preferred Securities or any Conversion Shares (a
"Disposition"), except as set forth in this Section 7 and (ii) TMC shall not,
directly or indirectly dispose of any securities of any direct or indirect
subsidiary that is a holder of record of any Convertible Preferred Securities or
Conversion Shares (except for Dispositions to one or more of its wholly-owned
subsidiaries or Dispositions to any Lender (as hereinafter defined) made
pursuant to a bona fide pledge under Section 7(c)) and shall take all action as
is necessary so that, unless disposed of in accordance with Section 7(b) below,
all Convertible Preferred Securities and Conversion Shares will directly or
indirectly be wholly-owned by TMC or any of its wholly-owned subsidiaries.
(a) Dispositions may be made at any time and from time to time
following the Closing Time, to one or more wholly-owned subsidiaries of the
Investor, provided that each such subsidiary agrees in writing to be bound by
this Agreement to the same extent as the Investor
(b) Dispositions may be made (i) following the second
anniversary of the Closing Time, in a bona fide public offering effected in
accordance with the provisions of the Registration Rights Agreement; and (ii)
following the earlier of the third anniversary of the
15
Closing Time and the occurrence of a "change of control" (as hereinafter
defined), provided, however, that Dispositions shall not be made pursuant to
clauses (i) and (ii) of this Section 7(b) to any person who, to the actual
knowledge of the Investor or TMC (without any duty of inquiry) in the case of
Dispositions to be made pursuant to bona fide open market "brokers transactions"
as permitted pursuant to the provisions of Rule 144 promulgated under the
Securities Act and to the knowledge of the Investor or TMC (after reasonable
inquiry) in all other cases, is (x) a Significant Competitor of the Company (as
hereinafter defined), (y) a person that is or theretofore had been engaged in
any material litigation adverse to the Company or any of its affiliates or (z) a
person (other than any underwriter who is in the business of underwriting
securities and who, in the ordinary course of its business as an underwriter,
acquired Convertible Preferred Securities or Conversion Shares in connection
with a public offering with the bona fide intention of reselling all of the
securities so acquired pursuant to such public offering) who, after acquiring
such interest in Convertible Preferred Securities or Common Stock, would
beneficially own voting securities of the Company representing more than 10% of
the outstanding shares of voting securities of the Company (assuming any
Convertible Preferred Securities owned by such person were converted into Common
Stock); provided that any Disposition proposed to be made by the Investor
pursuant to this Section 7(b) shall be subject to the Company's prior right of
first refusal as set forth in Section 8 of this Agreement and, in the case of
Dispositions to be made pursuant to Section 7(b)(i) hereof, shall be subject to
the additional purchase rights of the Company set forth in Section 2.8(b) of the
Registration Rights Agreement.
As used in this Section 7(b), "change of control" means the
occurrence of any of the following events.
(A) in any three-year period, a majority of the members of the
Board elected during such three-year period shall have been so elected against
the recommendation of the management of the Company or the Board in office
immediately prior to such election;
(B) any Designated Person (as defined herein) or Persons
acting in concert shall, except as provided in clause (C) below, acquire
(whether by merger, consolidation, sale, assignment, lease, transfer or
otherwise, in one transaction or any related series of transactions) or
otherwise beneficially own a majority of the voting power of the outstanding
securities of the Company generally entitled to vote for the election of
directors ("Voting Securities"); or
(C) upon consummation of a consolidation or merger of the
party with another Designated Person in which the holders of the Voting
Securities of the Company immediately prior to such consolidation or merger
would not own Voting Securities representing at least a majority of the
outstanding voting power of such Designated Person or its ultimate parent upon
consummation of such consolidation or merger; or
(D) upon the sale, transfer or assignment (it being understood
that the pledge of, or the granting of a security interest in, assets of the
Company or its subsidiaries shall not be deemed a sale, transfer or assignment)
of all or substantially all of the assets of the Company to any person in a
single transaction or a series of related transactions; provided, however, that
a sale, transfer or assignment of all or substantially all of the assets of the
Company, to (x) the
16
Principal Stockholders (as defined herein), or to (y) any entity the holders of
at least a majority of the Voting Securities of which (or of such entity's
ultimate parent) were holders of Voting Securities of the Company immediately
prior to such sale, transfer or assignment shall not constitute a "change of
control" hereunder; or
(E) At such time as the Principal Stockholders fail to
beneficially own, in the aggregate, at least 30% of the voting power of the
outstanding Voting Securities of the Company. For purposes hereunder,
"Designated Person" shall mean any person, corporation, partnership or other
entity other than Societe Industrielle de Materiaux Avances ("SIMA") and its
affiliates and "Principal Stockholders" shall mean SIMA, LWH Holdings S.A. and
their respective affiliates. Reference to a "Significant Competitor" of the
Company means any person identified in writing to the Investor (as provided
below) that manufactures or sells high performance nickel base alloys, cobalt
base alloys, stainless steels or other similar based alloys where annual sales
of such alloys for such person's most recently completed fiscal year exceeded
$75 million (which term shall exclude TMC and its subsidiaries). The Company
shall provide to the Investor prior to the date of this Agreement a written list
of such Significant Competitors (which list the Company may, by notice to the
Investor, amend or supplement at any time or from time to time), which
Significant Competitors shall conform to the provisions of the definition of
Significant Competitor contained herein. The Significant Competitors so
designated on such list shall constitute the Significant Competitors hereunder.
(c) Dispositions may be made pursuant to a bona fide pledge
not intended to circumvent the provisions of this Section 7 to one or more banks
or other lending institutions (or any agent on their behalf) (each a "Lender"),
provided that prior to any foreclosure upon or other acquisition by such Lender
of any Convertible Preferred Securities or Conversion Shares pledged to it such
Lender agrees in writing to be bound by the provisions of Sections 7(d) (to the
extent set forth therein) and 8 of this Agreement to the same extent as the
Investor. Upon any such foreclosure or other acquisition by a Lender of any
Convertible Preferred Securities or Conversion Shares pledged to it, such Lender
(except for the rights set forth under Sections 5, 6 and 9) shall succeed to the
rights and (to the extent set forth under Section 8 and Section 7(d)) the
obligations of the Investor hereunder and, following a Disposition of such
Convertible Preferred Securities or Conversion Shares by such Lender, the
subsequent transferee shall succeed to the same rights and obligations hereunder
as such ▇▇▇▇▇▇; provided, however, that if such Lender makes a Disposition of
such Convertible Preferred Securities or Conversion Shares to the Investor, TMC
or any of their affiliates, such transferees shall agree in writing to be bound
by the terms of this Agreement and the Registration Rights Agreement to the same
extent as the Investor hereunder.
(d) Notwithstanding any other provision of this Agreement, no
Disposition may be made pursuant to this Section 7 unless (i) the transfer
complies in all respects with the applicable provisions of this Agreement and
applicable federal and state securities laws, including, without limitation, the
Securities Act, (ii) except for Dispositions made pursuant to Section 7(b)(i) of
this Agreement, pursuant to foreclosures or other acquisitions by a Lender
pursuant to Section 7(c) of this Agreement or by a ▇▇▇▇▇▇'s transferee (unless
such transferee is
17
the Investor, TMC or any of their affiliates), or pursuant to a brokers
transaction under Rule 144 (other than Rule 144(k)) promulgated under the
Securities Act, the transferee agrees in writing to be bound by the terms and
conditions of this Agreement, to the extent applicable, and the Registration
Rights Agreement (whereupon such transferee shall be substituted for, and shall
enjoy the same rights and be subject to the same obligations, as its predecessor
hereunder except as contemplated below) and (iii) if requested by the Company in
its sole judgment, an opinion of counsel (reasonably acceptable to the Company)
to such transferring holder (or with respect to any Disposition under Section
7(c) of this Agreement, an opinion of counsel (reasonably acceptable to the
Company) to such transferring holder or any Lender) shall be supplied to the
Company, at such transferring holder's expense, to the effect that such transfer
complies with applicable federal and state securities laws. Notwithstanding the
above, no transferee of Convertible Preferred Securities or Conversion Shares
hereunder (other than TMC or its affiliates) shall be entitled to any of the
rights or subject to any of the obligations set forth in Sections 5, 6 and 9 of
this Agreement. Any attempt to transfer any Convertible Preferred Securities or
any Conversion Shares hereunder in violation of this Agreement shall be null and
void ab initio and the Company shall not register such transfer.
8. Right of First Refusal. Prior to any Disposition by the Investor
pursuant to Section 7(b), the Company shall have the right, exercisable in
accordance with this Section 8, to purchase all, but not less than all, of the
Convertible Preferred Securities or Conversion Shares intended to be subject to
such Disposition by the Investor.
(a) The Investor shall give notice (a "Transfer Notice") to
the Company of such intended Disposition, specifying the Convertible Preferred
Securities or Conversion Shares, as the case may be (the "Offered Securities"),
to be subject to Disposition and the intended method of Disposition. The
Transfer Notice shall specify the cash price (the "First Offer Price") at or
above which the Investor intends to effect such Disposition and, in the case of
a privately negotiated Disposition, the terms of the bona fide third party offer
(a "Third Party Offer") to purchase such Offered Securities theretofore received
by the Investor and then remaining open (including the identity and address of
the offeror and the price offered).
(b) If the Company wishes to purchase the Offered Securities
specified in the Transfer Notice, then within thirty days following receipt of
the Transfer Notice, the Company shall deliver a written notice (an "Acceptance
Notice") to the Investor indicating that the Company wishes to purchase such
Offered Securities, a date for the closing of such purchase, which shall not be
more than ten business days after delivery of such Acceptance Notice (subject to
extension as provided in Section 8(f) hereof), and a place for the closing of
such purchase. Upon delivery of an Acceptance Notice, a binding agreement shall
be deemed to exist providing for the purchase by the Company of the Offered
Securities to which such Acceptance Notice relates, upon the terms and subject
to the conditions set forth in this Section 8 and the Company shall use its
reasonable best efforts to secure all approvals required in connection
therewith.
(c) The cash purchase price to be paid by the Company
hereunder for any Offered Securities (the "Designated Price") shall be
determined as set forth below.
18
(i) With respect to any Offered Securities for which
a First Offer Price or a Third Party Offer consisting solely of cash
and/or readily marketable securities is disclosed in the applicable
Transfer Notice, the Designated Price per share of such Offered
Securities shall equal the per share price specified in such First
Offer Price or Third Party Offer; provided, however, that, in the event
the Market Price (as defined in Section 8(c)(iii)) per share on the
last business day prior to the date the Acceptance Notice is delivered
is more than 10% greater than or is less than 10% lower than the per
share price specified by such First Offer Price or Third Party Offer,
then the price per share shall equal the Market Price per share on the
last business day prior to the date the Acceptance Notice is delivered.
The value of any readily marketable securities identified in such Third
Party Offer shall equal the average Market Price per share of such
securities during the ten consecutive trading days immediately
preceding the Company's receipt of the Transfer Notice. In the case of
any securities not theretofore traded, such securities must be issued
or proposed to be issued by an entity which has been subject to the
reporting requirements of the Exchange Act for at least one year, and
the value of such securities shall be determined by two nationally
recognized investment banking firms, one firm to be selected by each of
the Investor and the Company, or in the event such firms are unable to
agree, by a third nationally recognized investment banking firm
selected by such firms. The Investor and the Company shall use their
reasonable best efforts to cause any such determination of value to be
made within five business days following the Company's receipt of the
applicable Transfer Notice. In connection with any determination of
value pursuant to this Section 8(c)(i), each party will bear the fees
and expenses of the investment banking firm selected by it and the
parties will bear equally the fees and expenses of any third investment
banking firm.
(ii) With respect to any Offered Securities for which
a Third Party Offer consisting of other than solely cash and/or readily
marketable securities is disclosed in the applicable Transfer Notice,
the Designated Price per share of such Offered Securities (which shall
refer, in the case of shares of Convertible Preferred Securities that
are Offered Securities, to the applicable number of Conversion Shares
issuable upon conversion of such Convertible Preferred Securities)
shall equal the average Market Price per share during the twenty
consecutive trading days immediately preceding the Company's receipt of
the Transfer Notice.
(iii) "Market Price" of any security on any trading
day shall mean (i) the closing price of such security on the principal
national securities exchange on which such security is listed at the
time (or if there have been no sales on such exchange on such day, the
average of the highest bid and lowest asked prices on such exchange on
such day), or (ii) if the security is not listed on a national
securities exchange at the time, the sales price of such security as
reported on the NASDAQ National Market as of 4:00 p.m., New York time,
on such day (or, if there is no reported sales price of such security
on the NASDAQ National Market on such day, the average of the
representative bid and asked prices quoted on the NASDAQ National
Market as of 4:00 p.m., New York time, on such day, or (iii) if such
security is not reported on the NASDAQ National Market at the time, the
average of the representative bid and asked prices quoted in the NASDAQ
System as of
19
4:00 p.m., New York time, on such day, or (iv) if the security is not
quoted on the NASDAQ System at the time, the average of the highest bid
and lowest asked prices on such day in the over-the-counter market as
reported by the National Quotation Bureau Incorporated or any similar
successor organization.
(d) At any closing pursuant to this Section 8, the Company
shall pay to the Investor (or its designees) the aggregate Designated Price for
the Offered Securities by wire transfer of immediately available funds, and the
Investor shall deliver or cause to be delivered to the Company such Offered
Securities, with documentation satisfactory to the Company evidencing the
transfer of such Offered Securities, in form acceptable for transfer on the
Company's books. The Company may assign its right to purchase the Offered
Securities pursuant to this Section 8 to an affiliate of the Company or an
unrelated third party, provided that such affiliate or other third party agrees
in writing to be bound by the provisions of this Section 8 to the same extent as
the Company, and provided further that the Company shall remain liable for the
obligations of such affiliate or other third party under this Section 8.
(e) If the Company does not exercise its right to purchase
Offered Securities specified in a Transfer Notice, then the party giving such
Transfer Notice shall be free to effect the Disposition of such Offered
Securities on terms no less favorable than those set forth in such Transfer
Notice, subject to any other requirements applicable to such Disposition
pursuant to Section 7(b) and (c) hereof and, in the case of a Disposition
pursuant to Section 7(b)(i), the additional purchase rights of the Company set
forth in Section 2.8(b) of the Registration Rights Agreement; provided, that any
such Disposition is completed within 180 days, in the case of a Disposition
pursuant to Section 7(b)(i), and 75 days, in the case of a Disposition pursuant
to Section 7(b)(ii), in each case following the expiration of the period in
which the Company had the right to elect to purchase such Offered Securities on
terms no less favorable than those set forth in such Transfer Notice. In the
event that such sale is not consummated within such 180 or 75-day period for any
reason, then the restrictions on transfers provided for herein shall again
become effective, and no transfer of such Offered Securities may be made
thereafter by the Investor without again offering the same to the Company in
accordance with this Section 8.
(f) The obligations of the parties to effect any closing
pursuant to this Section 8 shall be subject to the satisfaction of the following
conditions: (i) all requisite regulatory or third party approvals and consents
necessary to effect the purchase and sale of the Offered Securities shall have
been received and (ii) no statute, rule, regulation, executive order, decree,
ruling, injunction or other order shall have been enacted, entered, promulgated
or enforced by any court or governmental authority of competent jurisdiction
which prohibits such transaction or makes such transaction illegal. If, as of
any date on which a closing under this Section 8 is scheduled to occur, the
foregoing conditions relating thereto have not been satisfied, then such closing
shall occur as promptly as practicable following such satisfaction, and the
parties shall use their reasonable best efforts to cause the satisfaction of
such conditions; provided that if the foregoing conditions relating to any
closing hereunder are not satisfied within 60 days following delivery of the
applicable Acceptance Notice (or in the case of an order or injunction arising
out of any proceeding initiated by the Investor, such later date on which such
order or injunction becomes final and nonappealable), then the Investor or the
Company may terminate the agreement deemed
20
to exist upon delivery of the applicable Acceptance Notice; provided that no
such termination shall excuse any party for a breach of its obligations
thereunder.
(g) Pursuant to Section 2.8(a) of the Registration Rights
Agreement, the sale of Registrable Securities by Selling Holders (as such terms
are defined in the Registration Rights Agreement), in addition to the Investor,
shall be subject to the Company's prior right of first refusal set forth in this
Section 8, and the additional purchase rights of the Company set forth in
Section 2.8(b) of the Registration Rights Agreement.
9. Top-Up Rights. If, prior to any Disposition by the Investor (other
than any Disposition pursuant to Section 7(a) hereof), the Company issues
additional shares of Common Stock, Convertible Preferred Securities or other
voting securities that results in the voting securities beneficially owned by
the Investor (together with TMC and any wholly-owned subsidiary of TMC)
representing less than 20% of the outstanding voting securities of the Company
(assuming, for purposes of this Section 9, that any Convertible Preferred
Securities owned by the Investor or such subsidiary have been converted into
Common Stock), the Investor at its option may at any time purchase in open
market purchases or privately negotiated transactions such minimum number of
additional shares of equity securities (as reasonably and in good faith
determined by the Investor) that would enable the Investor (together with TMC
and any wholly-owned subsidiary of TMC) to restore its beneficial ownership to
20% of the outstanding voting securities of the Company; provided that a block
purchase of equity securities of the Company in accordance with the foregoing
effected as a single transaction which results in the beneficial ownership of
the Company's voting securities by the Investor (together with TMC and any
wholly-owned subsidiary of TMC) exceeding 20% shall not be deemed to violate
this Section 9, Section 6 or any other provision hereof or paragraph 6 of the
Letter Agreement solely as a result of the acquisition of such excess securities
so long as (i) the aggregate voting securities so held by the Investor (together
with TMC and any wholly-owned subsidiary of TMC) at any time in excess of 20%
represents less than 1/2 of 1% of the Company's outstanding voting securities
and (ii) the Investor transfers, or causes to be transferred, such excess voting
securities to an unaffiliated entity within 120 days of the acquisition thereof
by the Investor.
10. Pre-Closing Covenants
(a) Each of the parties hereto agrees to use its reasonable
best efforts promptly to take or cause to be taken all action and promptly to do
or cause to be done all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the closing of the
transactions contemplated by this Agreement. Without limiting the foregoing, the
Investor and TMC, on the one hand, and the Company on the other hand, (i) will
use their reasonable best efforts to obtain all consents, approvals,
authorizations, waivers and orders of any court or governmental agency or body
or any other person necessary or, in the opinion of the Investor or the Company,
advisable in order to permit the consummation of the transactions contemplated
by this Agreement and the other Transaction Documents and (ii) will not take any
actions that could reasonably be expected to have the effect of delaying or
hindering the closing of the transactions contemplated by this Agreement.
Without limiting the generality of the
21
foregoing, the Investor will use its best efforts to satisfy the conditions of
the Lenders described on Schedule 4(d).
(b) At all times prior to the Closing Time, the Investor shall
promptly notify the Company, and the Company shall promptly notify the Investor,
in writing of any fact, change, condition, circumstance or occurrence or
nonoccurrence of any event actually known to it which will or is reasonably
likely to (i) constitute a breach of any representation or warranty of such
party contained in this Agreement or (ii) result in the failure to satisfy the
conditions to be complied with or satisfied by it hereunder; provided, that the
delivery of any notice pursuant to this Section 10(b) shall not limit or
otherwise affect the remedies available hereunder to any party receiving such
notice.
(c) As soon as practicable, but in any event prior to the
Initial Conversion Date, the Company shall take such action as is required to
cause the Conversion Shares into which the Convertible Preferred Securities are
convertible to be listed for trading on the NASDAQ National Market or such other
exchange on which the Company's securities are listed, as applicable.
(d) As of the Closing Time, the Company and the Investor shall
enter into the Registration Rights Agreement.
(e) The Company shall (and shall cause each of its
subsidiaries and their respective officers, directors, employees, attorneys,
accountants, financial advisors and other agents to), from and after the date
hereof and until the Closing Time, afford to the Investor, TMC and their
representatives, including without limitation their officers, directors,
employees, agents, attorneys, accountants, consultants, financing sources or
financial or other advisors or other person associated with or acting on their
behalf (collectively, the "Representatives"), access, upon reasonable notice and
in such manner as will not unreasonably interfere with the conduct of the
Company's business, to material financial and other information regarding the
Company and its Subsidiaries and afford to the Investor, TMC and their
Representatives reasonable access to such material information concerning IAI,
which has been made available to the Company by Inco. In addition, the Company
will promptly inform the Investor of the principal terms of any additional
financing proposal with respect to which the Company has entered into
substantive discussions or negotiations and the Company shall provide the
Investor with such information in respect of such financing as the Investor
shall reasonably request. All information provided hereunder to the Investor or
TMC, on the one hand, or to the Company, on the other hand, shall be provided in
confidence in accordance with the provisions of the confidentiality agreement,
dated March 6, 1998 (the "Confidentiality Agreement"), between the Company and
TMC and, in the case of information concerning IAI, the provisions of the
confidentiality agreement, dated March 31, 1998, between the Company and Inco,
as agreed to by TMC pursuant to an acknowledgement, dated April 15, 1998 (the
"Acknowledgement"), between TMC and the Company.
11. Conditions to the Obligations of the Investor. The obligation of
the Investor to purchase and pay for the Convertible Preferred Securities at the
Closing Time shall be subject (i)
22
to the accuracy of the representations and warranties on the part of the Company
contained herein that are qualified by reference to materiality or a material
adverse effect and to the accuracy in all material respects of all other
representations and warranties on the part of the Company contained herein that
are not so qualified, in each case as of the date and time that this Agreement
is executed and delivered by the parties hereto (the "Execution Time"), and as
of the Closing Time, except for such representations and warranties that are
expressly made as of an earlier date in which case such representations and
warranties shall only be true and correct on and as of such earlier date, (ii)
to the accuracy of the statements of the Company made in any certificates
pursuant to the provisions hereof, (iii) to the performance by the Company of
their respective obligations hereunder in all material respects, and (iv) to the
following additional conditions:
(a) The Company shall have furnished to the Investor the
opinion of ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Company,
dated as of the Closing Time, in the form set forth in Exhibit A hereto. Such
counsel may state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of officers of
the Company and its Subsidiaries and certificates of public officials.
(b) The Company shall have furnished to the Investor a
certificate of the Company, signed by the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, dated the
Closing Time, to the effect that the signers of such certificate have carefully
read this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement that are qualified by reference to materiality or a material
adverse effect are true and correct on and as of the Closing Time with
the same effect as if made as of the Closing Time and all other
representations and warranties of the Company in this Agreement that
are not so qualified are true and correct on and as of the Closing Time
with the same effect as if made as of the Closing Time, except for such
representations and warranties that are expressly made as of an earlier
date in which case such representations and warranties shall only be
true and correct on and as of such earlier date, and the Company has
complied in all material respects with all the agreements and satisfied
all the conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Time; and
(ii) since December 31, 1997, there has not occurred any
material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise,
earnings, business or operations of the Company and its Subsidiaries,
taken as a whole, excluding any change or development resulting from
(i) events adversely affecting any of the principal markets served by
the business of the Company generally or shortages or price increases
with respect to scrap or raw materials, (ii) general economic
conditions, including changes in the economies of any of the
jurisdictions in which the Company or any of its Subsidiaries conduct
business or (iii) the Acquisition Agreement and any financing
arrangements entered into in connection therewith.
23
(c) All consents, approvals, authorizations, waivers and
orders of any court or governmental body or agency or any other person required
in connection with the execution and delivery of this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby shall have been obtained or made on terms
reasonably satisfactory to the Investor, except such as may be required by
federal, state or foreign securities laws in connection with the registration of
the Convertible Preferred Securities and the Conversion Shares pursuant to the
terms of the Registration Rights Agreement and except where the failure to
obtain such consents, approvals, authorizations, waivers and orders would not
result in a material adverse change in the condition, financial or otherwise, or
in the earnings, business or operations of Company and its Subsidiaries, taken
as a whole, and would not materially impair the ability of the Company to effect
the transactions contemplated hereby and pursuant to the Registration Rights
Agreement.
(d) No governmental body or agency or court of competent
jurisdiction shall have (i) enacted, issued, promulgated, enforced or entered
any statute, rule, regulation or nonappealable judgment, decree, injunction or
other order restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement and the Registration Rights
Agreement or (ii) commenced any action, suit or proceeding seeking to restrain,
enjoin, prohibit or otherwise make illegal the performance of this Agreement or
the Registration Rights Agreement or the consummation of the transactions
contemplated hereby and thereby.
(e) since December 31, 1997, there has not occurred any
material adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, earnings, business or
operations of the Company and its Subsidiaries, taken as a whole, excluding any
change or development resulting from (i) events adversely affecting any of the
principal markets served by the business of the Company generally or shortages
or price increases with respect to scrap or raw materials (ii) general economic
conditions, including changes in the economies of any of the jurisdictions in
which the Company or any of its Subsidiaries conduct business or (iii) the
Acquisition Agreement and any financing arrangements entered into in connection
therewith.
(f) The Registration Rights Agreement shall have been duly
executed and delivered by the Company.
(g) On or prior to the Closing Time, the Acquisition, and all
transactions to be consummated in connection therewith pursuant to the
Acquisition Agreement, shall have been consummated and the Company shall have
provided to the Investor and its counsel copies of all material closing
documents delivered to the parties in respect of the Acquisition.
(h) Prior to the Closing Time, the Company shall have
furnished to the Investor such further information, certificates and documents
as the Investor may reasonably request.
(i) An agreement, substantially in the form set forth in
Exhibit D hereto, pursuant to which the Principal Stockholders shall have agreed
to vote their shares of Common Stock in
24
favor of the Stockholder's Conversion Vote and in favor of the Investor's
Nominees to the Board selected in accordance with Section 5 shall have been
executed and delivered to the Investor by the Principal Stockholders.
(j) The terms of the New Credit Agreement shall be
substantially as contemplated in the related Commitment Letter, dated July 2,
1998 (a copy of which was provided to TMC and the Investor prior to the date of
this Agreement).
(k) The Company shall have duly adopted, executed and filed
with the Secretary of State of the State of Delaware the Certificate of
Designation establishing the terms and the relative rights and preferences of
the Convertible Preferred Securities, and the Company shall not have adopted or
filed any other document designating terms, relative rights or preferences of
its preferred stock. The Certificate of Designation shall be in full force and
effect as of the Closing Time under the laws of the State of Delaware and shall
not have been amended or modified.
If any of the conditions specified in this Section 11 shall not have
been fulfilled when and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Investor and its counsel,
this Agreement and all obligations of the Investor hereunder may be canceled at,
or at any time prior to, the Closing Time by the Investor or TMC. Notice of such
cancellation shall be given to the Company in writing or by telephone confirmed
in writing.
12. Conditions to the Obligations of the Company. The obligations of
the Company to issue and sell the Convertible Preferred Securities at the
Closing Time shall be subject to the accuracy of the representations and
warranties on the part of the Investor contained herein at the Execution Time
and the Closing Time, to the performance by the Investor of its obligations
hereunder in all material respects, and to the following additional conditions:
(a) On or prior to the Closing Time, the Acquisition, and all
transactions to be consummated in connection therewith pursuant to the
Acquisition Agreement, shall have been consummated.
(b) The average of the closing prices of shares of Common
Stock of the Company for the 20 consecutive trading days immediately preceding
the Closing Time shall not have been less than $16.50 per share.
(c) All consents, approvals, authorizations, waivers and
orders of any court or governmental body or agency or any other person required
in connection with the execution and delivery of this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby shall have been obtained or made on terms
reasonably satisfactory to the Company, except such as may be required by
federal, state or foreign securities laws in connection with the registration of
the Convertible Preferred Securities and the Conversion Shares pursuant to the
terms of the Registration Rights Agreement and except where the failure to
obtain such consents, waivers and approvals would not result in a material
adverse change in the condition, financial or otherwise, or in the earnings,
business or
25
operations of TMC and its subsidiaries, taken as a whole, and would
not materially impair the ability of the Investor or TMC to effect the
transactions contemplated hereby and pursuant to the Registration Rights
Agreement.
(d) No governmental body or agency or court of competent
jurisdiction shall have (i) enacted, issued, promulgated, enforced or entered
any statute, rule, regulation or nonappealable judgment, decree, injunction or
other order restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement and the Registration Rights
Agreement or (ii) commenced any action, suit or proceeding seeking to restrain,
enjoin, prohibit or otherwise make illegal the performance of this Agreement or
the Registration Rights Agreement or the consummation of the transactions
contemplated hereby and thereby.
(e) TMC and the Investor shall have furnished to the Company,
the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to TMC and the
Investor, dated as of the Closing Time, in the form set forth in Exhibit B
hereto. Such counsel may state that, insofar as such opinion involves factual
matters, they have relied to the extent they deem proper upon certificates of
officers of TMC and the Investor and certificates of public officials.
(f) Each of TMC and the Investor shall have furnished a
certificate of TMC, signed by the Chairman of the Board of Directors or the
President and the principal financial or accounting officer of TMC, dated the
Closing Time, to the effect that the signers of such certificate have carefully
read this Agreement and that the representations and warranties of each of TMC
and the Investor in this Agreement that are qualified by reference to
materiality or a material adverse effect are true and correct on and as of the
Closing Time with the same effect as if made as of the Closing Time and all
other representations and warranties of each of TMC and the Investor in this
Agreement that are not so qualified are true and correct on and as of the
Closing Time with the same effect as if made as of the Closing Time, except for
such representations and warranties that are expressly made as of an earlier
date in which case such representations and warranties shall only be true and
correct as of such earlier date, and each of TMC and the Investor has complied
in all material respects with the agreements and satisfied all the conditions on
its part to be performed or satisfied hereunder at or prior to the Closing Time.
(g) The Registration Rights Agreement shall have been duly
executed and delivered by the Investor.
If any of the conditions specified in this Section 12 shall not have
been fulfilled when and as provided in this Agreement, this Agreement and all
obligations of the Company hereunder may be canceled at, or at any time prior
to, the Closing Time by the Company. Notice of such cancellation shall be given
to the Investor in writing or by telephone confirmed in writing.
13. Publicity. Except as may be required by applicable law or by the
rules and regulations of any securities exchange or inter-dealer quotation
system upon which the securities of one of the parties are listed or admitted
for trading, neither the Company or any of its affiliates nor TMC or any of its
affiliates shall, without the prior written consent of the other, which
26
consent shall not be unreasonably withheld or delayed, make any public
announcement or issue any press release with respect to the transactions
contemplated by this Agreement. Prior to making any public disclosure required
by applicable law or the rules and regulations of any relevant securities
exchange or inter-dealer quotation system, the disclosing party shall consult
with the other party, to the extent feasible, as to the content of such public
announcement or press release and provide the other party an opportunity to
review and comment upon such public announcement.
14. Legend. The Investor agrees to the placement on certificates
representing Convertible Preferred Securities purchased by the Investor pursuant
hereto, of a legend substantially as set forth below (except that (i) the first
sentence of such legend shall not be placed on any Convertible Preferred
Securities or Conversion Shares that have been registered under the Securities
Act or if, in the opinion of counsel, such sentence is not required under the
Securities Act and (ii) the second sentence of such legend relating to
restrictions on transfer provided in this Agreement shall not be placed on any
Convertible Preferred Securities or Conversion Shares acquired by a transferee
pursuant to Section 7(b)(i) of this Agreement, 7(c) or pursuant to brokers
transactions under Rule 144 of the Securities Act), unless the Company
determines otherwise, in accordance with the opinion of counsel:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR NON-U.S. JURISDICTION AND MAY NOT BE OFFERED, SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF SUCH OTHER STATE
OR NON-U.S. JURISDICTIONS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PROVISIONS (INCLUDING PROVISIONS THAT
RESTRICT THE TRANSFER OF SUCH SECURITIES) OF AN INVESTMENT AGREEMENT
DATED AS OF JULY 8, 1998 AMONG SPECIAL METALS CORPORATION (THE
"COMPANY"), TIMET FINANCE MANAGEMENT COMPANY AND TITANIUM METALS
CORPORATION, COPIES OF WHICH ARE ON FILE AT THE OFFICES OF THE
SECRETARY OF THE COMPANY. THE HOLDER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS."
15. Termination. This Agreement may be terminated by notice in writing
at any time prior to the Closing Time by either the Investor or the Company if
(a) the closing of the transactions contemplated by this Agreement shall not
have occurred on or before the 120th day
27
following the date of this Agreement; (b) the Acquisition Agreement shall have
been terminated in accordance with its terms; or (c) the Company and the
Investor so mutually agree in writing.
16. Fees and Expenses. Each party shall bear its own expenses,
including the fees and expenses of counsel, accountants, financial or other
advisors or representatives engaged by it, incurred in connection with this
Agreement and the transactions contemplated hereby.
17. Survival. The representations, warranties, covenants and agreements
contained in or made pursuant to this Agreement shall expire as of the
consummation of the transactions to be completed as of the Closing Time, except
(i) for the representations and warranties contained in Section 3(a) through (j)
and Section 4(a) through (e) and Section 4(g) which shall survive without
limitation, and (ii) the covenants and agreements contained in or made pursuant
to this Agreement which by their terms are to survive after the Closing Time,
which shall survive for the period specified therein, provided, that if a claim
or notice is given with respect to any representation, warranty, covenant or
agreement prior to any such expiration date, the claim with respect to such
representation, warranty, covenant or agreement shall continue in definitely
until such claim is finally resolved.
18. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given, if delivered personally, by
telecopier or sent by first class mail, postage prepaid, as follows:
(a) If to the Company, to:
Special Metals Corporation
Middle Settlement Road
New Hartford, New York 13413
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇, ▇▇▇▇▇, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Investor, to:
TIMET Finance Management Company
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
28
With a copy to:
Bartlit ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to any other holder of Convertible Preferred Securities
of the Company, addressed to such holder at the address of such holder in the
record books of the Company; or to such other address or addresses as shall be
designated in writing. All notices shall be effective when received.
19. Entire Agreement; Amendment. This Agreement and the documents
described herein or delivered pursuant hereto (including, without limitation,
the Registration Rights Agreement), the Letter Agreement, the Confidentiality
Agreement and the Acknowledgement set forth the entire agreement between the
parties hereto with respect to the matters provided herein and therein. Any
provision of this Agreement may be amended or modified in whole or in part at
any time by an agreement in writing among the parties hereto executed in the
same manner as this Agreement; provided, however that the provisions set forth
in Sections 7(c), 7(d), 8 and 25 hereof may not, directly or indirectly, be
amended or modified without the prior written consent of each Lender affected
thereby.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
21. Governing 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.
22. Successors. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
parties hereto and their respective successors.
23. Obligations of the Investor. TMC shall cause the Investor to
perform the obligations required to be performed by it hereunder when and as the
same shall be required to be performed and hereby guarantees the payment of all
amounts required to be paid and the performance of all covenants, agreements and
obligations required to be performed or complied with by the Investor hereunder.
The guarantee by TMC of the Investor's obligations hereunder shall be construed
as a continuing, absolute , unconditional and irrevocable guarantee of payment
and performance (and not merely of collection).
29
24. Stockholder Vote. The Company shall, in accordance with applicable
law and the Company's Certificate of Incorporation and By-laws, (a) duly call,
give notice of and convene and hold a special meeting of its stockholders as
promptly as practicable following the Closing Time for the purpose of
considering and taking action on the Stockholder Conversion Vote and (b) subject
to the fiduciary obligations of the Board of the Company, include in the Proxy
Statement for such stockholders' meeting the recommendation of the Board that
the stockholders of the Company approve the Stockholder Conversion Vote and,
subject to such fiduciary duty, use all reasonable efforts to obtain such
approval. If a favorable vote of the Company's stockholders is not obtained (i)
within 120 days following the Closing Time, then the dividend rate on the
Convertible Preferred Securities shall increase automatically from and including
the 121st day following such Closing Time to, but not including, the date a
favorable vote of the Company's stockholders is obtained on the Stockholder
Conversion Vote by an additional increment of one-quarter of one percent (.25%)
per annum of the liquidation amount thereof and (ii) prior to the 270th day
following the Closing Time, the dividend rate on the Convertible Preferred
Securities shall increase automatically from and including such 270th day to,
but not including, the date a favorable vote of the Company's stockholders on
the Stockholder Conversion Vote is obtained by an additional increment (which
shall be in addition to the incremental increase provided in clause (i) of this
Section 24) of one-quarter of one percent (.25%) per annum (or one-half of one
percent (.50%) per annum when combined with the incremental increase set forth
in clause (i) of this Section 24) of the liquidation amount thereof, upon the
terms and conditions set forth in the Certificate of Designation.
25. Assignment. Except as otherwise expressly provided in Section 7 or
8 hereof, neither this Agreement nor any rights or obligations of the parties
hereunder shall be assignable; provided, however, the rights of the Investor
under this Agreement may be assigned to a wholly-owned subsidiary of TMC,
without the consent of the Company, provided that TMC shall remain liable for
the obligations of the Investor hereunder to the same extent as the Investor;
and provided, further, that the Investor and TMC may assign their rights and
obligations under this Agreement (as well as the Registration Rights Agreement)
to one or more Lenders or their transferees in connection with a bona fide
pledge or Disposition permitted by Section 7(c).
26. Remedies; Waiver. To the extent permitted by law, all rights and
remedies existing under this Agreement and any related agreements or documents
are cumulative to, and are exclusive of, any rights or remedies otherwise
available under applicable law. No failure on the part of any party to exercise,
or delay in exercising, any right hereunder shall be deemed a waiver thereof,
nor shall any single or partial exercise preclude any further or other exercise
of such or any other right.
27. Specific Performance. Each party hereto acknowledges that, in view
of the uniqueness of the transactions contemplated by this Agreement, the other
party would not have an adequate remedy at law for money damages in the event
that this Agreement has not been performed in accordance with its terms. Each
party therefore agrees that the other party shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
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28. Severability. If any provision of this Agreement is determined to
be invalid, illegal, or unenforceable, the remaining provisions of this
Agreement shall remain in full force and effect provided that the economic and
legal substance of the transactions contemplated is not affected in any manner
materially adverse to any party. In the event of any such determination, the
parties agree to negotiate in good faith to modify this Agreement to fulfill as
closely as possible the original intent and purpose hereof. To the extent
permitted by law, the parties hereby to the same extent waive any provision of
law that renders any provision hereof prohibited or unenforceable in any
respect.
29. Business Day. For purposes of this Agreement, "business day" means
each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in The City of New York, New York are authorized or
obligated by law, executive order or regulation to close.
30. Acknowledgement. The parties hereto hereby acknowledge that, at the
Closing Time, the Investor shall pledge to Bankers Trust Company or its agent
("BTC") the Convertible Preferred Securities purchased by the Investor under
this Agreement (as well as the Common Stock issued upon conversion thereof and
any securities issued in exchange therefor) and the Investor and TMC shall
assign their rights and obligations under this Agreement to BTC to the extent
provided in Section 7(c) with respect to Dispositions pursuant to a bona fide
pledge to any Lender, and that BTC, in its individual capacity and as agent for
other Lenders, shall constitute a Lender under Section 7(c).
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement between
the Company, on the one hand, and the Investor and TMC, on the other hand.
Very truly yours,
SPECIAL METALS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & CEO
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written:
TIMET FINANCE MANAGEMENT COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
TITANIUM METALS CORPORATION
By: /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------
Name: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: