Stockholders' Agreement

Exhibit 10.27


STOCKHOLDERS AGREEMENT


THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made as of June __, 1994, by and among Steel Dynamics Holdings, Inc., an Indiana corporation (the "Company"), each of the Persons listed on Schedule I attached hereto (the "Bain Group"), General Electric Capital Corporation, a New York corporation ("GECC"), each of the Persons listed on Schedule II attached hereto (the "Whitney Group"), Heavy Metal, L.C., a Virginia limited liability company ("Heavy Metal"), each of the persons listed on Schedule IV attached hereto (the "Keylock Group"), Low Cost Limited Partnership, an Ohio limited partnership ("Low Cost"), each of the persons listed on Schedule IV attached hereto (the "Subdebt Group"), and each of the persons set forth on Schedule V attached hereto (the "Management Group"). The entities and individuals which compose the Bain Group, GECC, Heavy Metal, the Keylock Group, Low Cost and the Management Group are collectively referred to herein as the "Stockholders," and each as a "Stockholder." Unless otherwise indicated herein, capitalized terms used herein are defined in Section 7 hereof.


WHEREAS, the Company, as of the date hereof, is authorized by its Articles of Incorporation to issue capital stock consisting of 10,000,000 shares of its Class A Common Stock, par value $.01 per share (the "Class A Common"), and 500,000 shares of its Class B Common Stock, par value $.01 per share (the "Class B Common");


WHEREAS, pursuant to a Stock Purchase Agreement dated the date hereof among the Bain Group, GECC, Heavy Metal, the Keylock Group, the Whitney Group, Low Cost, the Company and certain other parties (the "Purchase Agreement"), the Bain Group, GECC, Heavy Metal, the Keylock Group, Low Cost and the Whitney Group will purchase from the Company shares of Class A Common, and the execution and delivery of this Agreement is a condition to consummation of the transactions contemplated by the Purchase Agreement;


WHEREAS, pursuant to a Subordinated Note and Warrant Purchase Agreement dated the date hereof (the "Subordinated Loan Agreement"), each Stockholder of the Subdebt Group will purchase from the Company from time to time warrants to purchase Class A Common (each such warrant, a "Class A Warrant"), and the execution and delivery of this Agreement is a condition to the consummation of the transactions contemplated by the Subordinated Loan Agreement;


WHEREAS, pursuant to a warrant purchase agreement, Mellon Bank, N.A., or an affiliate thereof, will purchase from the Company warrants to purchase Class B Common (each such warrant, a "Class B Warrant") (the Class A Warrants and the Class B Warrants, each a


2 "Warrant" and collectively the "Warrants");


WHEREAS, each Stockholder of the Management Group owns shares of Class A Common; and


WHEREAS, the parties hereto desire to restrict the sale, assignment, transfer, encumbrance or other disposition of the Stockholder Shares and the Warrants and to provide for certain rights and obligations with respect thereto as hereinafter provided;


NOW, THEREFORE, the parties to this Agreement hereby agree as follows:


i. Voting Agreement.


(a) From and after the Closing (as defined in the Purchase Agreement) and until the provisions of this Section 1 cease to be effective, each holder of Stockholder Shares shall vote all of his Stockholder Shares and shall take all other necessary or desirable actions within his control (whether in his capacity as a shareholder or officer of the Company or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Company shall take all necessary and desirable actions within its control (including, without limitation, calling special Board and shareholder meetings), so that:


(i) subject to Section 1(d) below, the authorized number of
directors on the Board shall be established at nine directors;


(ii) the following persons shall be elected to the Board:


(A) one representative designated by the holders of a
majority of the Bain Shares;


(B) one representative designated by the holders of a
majority of the GECC Shares;


(C) one representative designated by the holders of a
majority of the Heavy Metal Shares;


(D) one representative designated by the holders of a
majority of the Keylock Shares;


(E) one representative, who shall be a Senior Manager,
designated by the holders of a majority of the Busse Shares;


(F) one representative, who shall be a Senior Manager,
designated by


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the holders of a majority of the Millet Shares;


(G) one representative, who shall be a Senior Manager,
designated by the holders of a majority of the Teets Shares;


(H) one representative, who shall be a Senior Manager,
designated by the holders of a majority of the Busse Shares,
Millett Shares and Teets Shares (the representatives designated
pursuant to clauses (E) through (H) hereof, collectively the
"Management Directors"); and


(I) one representative designated by the holders of a
majority of the Whitney Shares;


(iii) the removal from the Board (with or without cause) of (a) any
representative designated hereunder by the holders of a majority of the
Bain Shares, the GECC Shares, the Heavy Metal Shares, the Keylock Shares,
the Busse Shares, the Millett Shares, the Teets Shares or the Whitney
Shares shall be at the written request of such holders, but only upon
such written request and under no other circumstances (determined on the
basis of a vote of the holders of a majority of such shares held by such
holders); provided, that if any director elected pursuant to clause (ii)
(E) through (H) above ceases to be a Senior Manager of the Company, such
director shall be removed as a director;


(iv) in the event that any representative designated hereunder by
the holders of a majority of the Bain Shares, the GECC Shares, the Heavy
Metal Shares, the Keylock Shares, the Busse Shares, the Millett Shares,
the Teets Shares or the Whitney Shares for any reason ceases to serve as
a member of the Board during his term of office, the resulting vacancy on
the Board shall be filled by a representative designated by such holders,
respectively, as provided hereunder;


(v) the Company complies with all covenants, agreements and
obligations of the Company set forth herein;


(vi) the Company elects to, and removes from, the board of
directors of the Sales Subsidiary those individuals elected to, and
removed from, the board of directors of the Company; and


(vii) the Company causes the Sales Subsidiary to elect to, and
remove from, the board of directors of the Operating Company those
individuals elected to, and removed from, the board of directors of the
Sales Subsidiary.


(b) The Company shall pay, and cause the Sales Subsidiary and the Operating Company to pay, the reasonable out-of-pocket expenses incurred by each director of the Company, the Sales Subsidiary and the Operating Company in connection with attending the


-3- 4 meetings of the respective boards of directors and any committees thereof.


(c) The provisions of this Section 1 shall terminate automatically and be of no further force and effect upon the earlier of (i) the tenth anniversary of the date hereof unless extended by the parties hereto in accordance with Section 23-1-31-2 of the Indiana Business Corporation Law (or any similar provision then in force) and (ii) the realization of a Public Float.


(d) If any group of holders of Stockholder Shares fails to designate a representative to fill a directorship or committee membership pursuant to the terms of this Section 1 within 30 days after such vacancy occurs, the election of a person to such directorship shall be accomplished in accordance with the Company's By-Laws and applicable law; provided, that in the event that such group of holders then designates a representative to fill such membership, such designee will replace the person elected.


(e) The Management Directors shall have sole discretion (A) to cause the Company to exercise or refrain from exercising the Company's rights under Section 2 of the Purchase Agreement and to determine the timing thereof and (B) to cause the Company to consent to, or refrain from consenting to, any modification, amendment or waiver of any provision of the Purchase Agreement or the Escrow Agreement (as defined in the Purchase Agreement).


ii. Restrictions on Transfer of Stockholder Shares
and Warrants.


(a) Transfer of Stockholder Shares and Warrants. No holder of Stockholder Shares or Warrants shall sell, transfer, assign, pledge or otherwise dispose of (a "Transfer") any interest in any Stockholder Shares or Warrants except pursuant to an Exempt Transfer or in accordance with the provisions of this Section 2.


(b) Notice of Proposed Transfer. At least 20 days prior to making any Transfer of any Stockholder Shares or Warrants (other than an Exempt Transfer), the transferring holder of Stockholder Shares which are not Warrant Shares (the "Transferring Stockholder"), or the transferring holder of Warrants or Warrant Shares (the "Transferring Warrant Holder"), as the case may be, shall deliver a written notice (the "Offer Notice") to all other holders of Stockholder Shares or Warrants. The Offer Notice shall disclose in reasonable detail the proposed number of Stockholder Shares which are not Warrant Shares (the "Offered Stockholder Shares"), Warrants (the "Offered Warrants") or Warrant Shares (the "Offered Warrant Shares") to be transferred, the price at which such securities are proposed to be sold (the "Offer Price") and other proposed terms and conditions of the Transfer. Notwithstanding the previous sentence, a holder of Class B Warrants or Class B Warrant Shares which proposes to transfer such Class B Warrants or Class B Warrant Shares shall be deemed to be a "Transferring Stockholder" (and not a "Transferring Warrantholder"), and such Class B Warrants or Class B Warrant Shares shall be deemed to be Offered Stockholder Shares (and not Offered Warrants or Offered Warrant Shares), for purposes of Sections 2(b), 2(c) and 2(d) hereof.


-4- 5
(c) Stockholder Shares First Offer Right.


(i) Any one or more of the holders of Stockholder Shares or
Warrants (other than the Transferring Stockholder) may individually or
collectively elect to purchase all (but not less than all) of the Offered
Stockholder Shares for the Offer Price and on the other terms and
conditions set forth in the Offer Notice by delivering written notice
(the "Stockholder Acceptance Notice") of such election to the
Transferring Stockholder within 20 days after the delivery of the Offer
Notice. In the event more than one holder of Stockholder Shares or
Warrants elects to participate in the purchase set forth in the
Stockholder Acceptance Notice, each participating holder shall be
entitled to purchase his Pro Rata Share of the Offered Stockholder
Shares, or such other portion as all of such participating holders agree.
Each holder's "Pro Rata Share" shall be that number of Offered
Stockholder Shares equal to the total number of Offered Stockholder
Shares multiplied by a fraction, the numerator of which is the number of
shares of Stockholder Shares (treating for this purpose the holders of
Warrants as holding the maximum number of Warrant Shares then issuable
upon the exercise of such Warrants) then held by the participating
holder, and the denominator of which is the total number of Stockholder
Shares (including the Warrant Shares deemed to be held by holders of
Warrants) held by all participating holders;


(ii) If Stockholder Acceptance Notices with respect to all Offered
Stockholder Shares are not given within the time period set forth in
Section 2(c)(i), the Transferring Stockholder may, within 90 days after
the end of the 20-day period following delivery of the Offer Notice,
Transfer all (but not less than all) of the Offered Stockholder Shares to
one or more third parties at a price no less than the Offer Price and on
other terms no more favorable to the transferees than the terms contained
in the Offer Notice;


(iii) All holders of Stockholder Shares and Warrants to which an
Offer Notice is given shall maintain in confidence and shall not disclose
or permit to be disclosed to any third party (other than such holder's
legal counsel, accountants or other agents) the Offer Price and the other
terms and conditions contained in the Offer Notice and, if any holder of
Stockholder Shares or Warrants fails to comply with the foregoing
sentence, then such holder shall not be entitled to exercise such rights
with respect to the transaction contemplated by the Offer Notice and in
the next succeeding Offer Notice which may be given by a holder of
Stockholder Shares or Warrants hereunder;


(iv) All Transfers of Offered Stockholder Shares pursuant to
Section 2(c)(i) shall be consummated as soon as practicable after the
delivery of the applicable Stockholder Acceptance Notice, but in any
event within 90 days after delivery of the Offer Notice; and


(v) The Transferring Stockholder's ability to effect any Transfer
pursuant to this Section 2(c) to the other holders of Stockholder Shares
or Warrants or any third party


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shall in all cases be subject to the participation rights of other
Stockholders and Warrant Holders pursuant to Section 2(e) below.


(d) Warrant and Warrant Shares First Offer Right.


(i) Any one or more of the holders of Stockholder Shares or
Warrants may, individually or collectively, elect to purchase all (but
not less than all) of the Offered Warrants or Offered Warrant Shares for
the Offer Price and on the other terms and conditions set forth in the
Offer Notice by delivering written notice (the "Warrant Acceptance
Notice") of such election to the Transferring Warrant Holder as soon as
practicable but in any event within 20 days after the delivery of the
Offer Notice; provided, however, that holders of Heavy Metal/Keylock
Shares shall have the right (subject to the following sentence) to
purchase Offered Shares and Offered Warrant Shares prior to the right of
any other holder of Stockholder Shares or Warrants to purchase Offered
Shares or Warrant Shares. In the event more than one holder of Heavy
Metal/Keylock Shares elects to participate in the purchase set forth in
the Warrant Acceptance Notice, each participating holder shall be
entitled to purchase his Pro Rata Share of the Offered Warrants or the
Offered Warrant Shares, or such other portion as all of such
participating holders agree. In the event and to the extent that (A)
holders of Heavy Metal/Keylock Shares give Warrant Acceptance Notices
with respect to less than all of the Offered Warrants or Offered Warrant
Shares and (B) more than one other holder of Warrants or Stockholder
Shares ("Remaining Holders") gives Warrant Acceptance Notices with
respect to all Warrants or Warrant Shares for which Warrant Acceptance
Notices were not given by holders of Heavy Metal/Keylock Shares (the
"Remaining Securities"), each participating Remaining Holder shall be
entitled to purchase his Pro Rata Share of the Remaining Securities, or
such other portion as all of such participating Remaining Holders agree.
For the purposes of this Section 1(d), the "Pro Rata Share" of each
holder of Heavy Metal/Keylock Shares or Remaining Holders shall be (i)
with respect to Offered Warrants, that portion of the Offered Warrants
attributable to that number of Warrant Shares obtainable upon exercise of
such Offered Warrants multiplied by a fraction, the numerator of which is
the number of Stockholder Shares (treating for this purpose the holders
of Warrants as holding the maximum number of Warrant Shares issuable upon
the exercise of such Warrants) then held by the participating holders of
Heavy Metal/Keylock Shares or Remaining Holders, as the case may be, and
the denominator of which is the total number of Stockholder Shares
(including the Warrant Shares deemed to be held by holders of Warrants)
held by all participating holders of Heavy Metal/Keylock Shares or
Remaining Holders, as the case may be, and (ii) with respect to Offered
Warrant Shares, that number of Offered Warrant Shares equal to the total
number of Offered Warrant Shares multiplied by a fraction, the numerator
of which is the number of Stockholder Shares (treating for this purpose
the holders of Warrants as holding the maximum number of Warrant Shares
issuable upon the exercise of such Warrants) then held by the
participating holders of Heavy Metal/Keylock Shares or Remaining Holders,
as the case may be, and the denominator of which is the total number


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of Stockholder Shares (including Warrant Shares deemed to be held by
holders of Warrants) held by all participating holders of Heavy
Metal/Keylock Shares or Remaining Holders, as the case may be;


(ii) If Warrant Acceptance Notices with respect to all Offered
Warrants or Offered Warrant Shares are not given within the time period
set forth in this Section 2(d), the Transferring Warrant Holder may,
within 90 days after the end of the 20-day period following delivery of
the Offer Notice, Transfer all (but not less than all) of the Offered
Warrants or Offered Warrant Shares to one or more third parties at a
price no less than the Offer Price and on other terms and conditions no
more favorable to the transferees than the terms and conditions contained
in the Offer Notice;


(iii) All holders of Heavy Metal/Keylock Shares, other Stockholder
Shares or Warrants to which an Offer Notice is given shall maintain in
confidence and shall not disclose or permit to be disclosed to any third
party (other than such holders' legal counsel, accountants or other
agents) the Offer Price and other terms and conditions contained in the
Offer Notice and, if any holder of Heavy Metal/Keylock Shares,
Stockholder Shares or Warrants fails to comply with the foregoing
sentence, then such holder shall not be entitled to exercise such rights
with respect to the transaction contemplated by the Offer Notice and in
the next succeeding Offer Notice which may be given by a holder of
Stockholder Shares or Warrants hereunder;


(iv) All Transfers of Offered Warrants and Offered Warrant Shares
shall be consummated as soon as practicable after the delivery of the
applicable Warrant Acceptance Notice, but in any event within 90 days
after delivery of the Offer Notice; and


(v) The Transferring Warrant Holder's ability to effect any
Transfer pursuant to this Section 2(d) shall in all cases be subject to
the participation rights of other Stockholders and Warrant Holders
pursuant to Section 2(e) below.


(e) Participation Rights. Each holder of Stockholder Shares and Warrants (collectively, "Qualifying Shares") (other than the Transferring Stockholder or Transferring Warrant Holder and any holders who have elected to purchase Offered Stockholder Shares, Offered Warrants or Offered Warrant Shares pursuant to Sections 2(c) or 2(d)) may elect to participate as a selling holder in the contemplated Transfer by delivering written notice to the Transferring Stockholder or Transferring Warrant Holder within 20 days after delivery of the Offer Notice. If any holders of Qualifying Shares have elected to participate in such Transfer, the Transferring Stockholder or Transferring Warrant Holder and such other holders shall be required to include in the contemplated Transfer, at the same price and on the same terms, a number or portion of such Stockholder Shares or Warrants (the "Included Shares") equal to the product of (i) the quotient determined by dividing the percentage of the total number of outstanding Qualifying Shares (treating, for this purpose, the holders of Warrants which are


-7- 8 Qualifying Shares as holding the maximum number of Warrant Shares obtainable upon exercise of such Warrants) owned by such person by the aggregate percentage of the total number of outstanding Qualifying Shares owned by the Transferring Stockholder or Transferring Warrant Holder and all holders electing to participate in such transfer and (ii) the aggregate number of Offered Stockholder Shares and Offered Warrant Shares (treating as Offered Warrant Shares the Warrant Shares obtainable upon the exercise of all Offered Warrants); provided, however, that (A) if Warrants are proposed to be transferred by the Transferring Warrant Holder, then Qualifying Shares which are not Warrants shall be sold in the contemplated Transfer for a per share price equal to the price at which the Warrants are proposed to be sold, plus the per share amount payable to the Company upon the exercise of such Warrants, and (B) if Stockholder Shares are being Transferred by the Transferring Stockholder, then Qualifying Shares which are Warrants shall be sold in the contemplated Transfer for a per share price equal to the price at which the Stockholder Shares are proposed to be sold, less the amount per share payable to the Company upon the exercise of such Warrants.


For example, if the contemplated Transfer involves 100 Offered Stockholder
Shares and if the Transferring Stockholder at such time owns 30% of all
Qualifying Shares and if one other holder elects to participate and owns
20% of all such Qualifying Shares, the Transferring Stockholder would be
entitled to sell 60 shares ((30% divided by 50%) x 100 shares) and the
other holder would be entitled to sell 40 shares ((20% divided by 50%) x
100 shares).


Each holder of Qualifying Shares participating as a selling Stockholder or Warrant Holder in any proposed transfer pursuant to this Section 2(e) (including, without limitation, the Transferring Stockholder or Transferring Warrant Holder) shall use his or its reasonable efforts to obtain the agreement of the prospective transferee(s) to the participation of the other holders in any contemplated Transfer. No such Transferring Stockholder or Transferring Warrant Holder shall transfer any of his or its Qualifying Shares to the prospective transferee(s) unless the prospective transferee signs a counterpart of this Agreement, in form and substance reasonably satisfactory to the Company, and agrees to be bound thereby and (A) the prospective transferee(s) agrees to allow the participation of the other holders or (B) the Transferring Stockholder or Transferring Warrant Holder agrees to purchase the number of Qualifying Shares from the other holders which such other holders would have been entitled to sell pursuant to this Section 2(e). In the event of a Transfer in which Qualifying Shares are included, all Stockholders (including the Transferring Stockholder or Transferring Warrant Holder) participating in such Transfer shall share the out-of- pocket expenses of the Transferring Shareholder or Transferring Warrant Holder (including, without limitation, legal, accounting, consulting and brokerage expenses), pro rata based on the number of Qualifying shares, Warrants and Stockholder Shares included in the Transfer.


(f) Permitted Transfers. The restrictions contained in this Section 2 shall not apply to (i) any Transfer of Stockholder Shares or Warrants by any holder thereof to one or more of its Affiliates, (ii) a Public Sale, (iii) a Sale of the Company, (iv) a Transfer of Stockholder Shares or Warrants between or among members of the Bain Group, (v) a Transfer of Stockholder


-8- 9 Shares or Warrants between or among members of the Keylock Group, (vi) a Transfer of Stockholder Shares or Warrants between or among members of the Whitney Group (including for this purpose the Whitney Subordinated Debt Fund, L.P.), (vii) a Transfer of Stockholder Shares or Warrants between or among members of the Management Group, (viii) a Transfer of Stockholder Shares or Warrants by any holder thereof by will or pursuant to the laws of descent and distribution to, between or among such Stockholder's Family Group, (ix) a Transfer pursuant to Sections 1 or 2 of the Purchase Agreement, (x) a Transfer by a Stockholder to a member of such Stockholder's Family Group, (xi) any transfer of Stockholder Shares or Warrants pursuant to any employment agreement executed by the Company or its Subsidiaries, (xii) a Transfer of Warrants between or among Warrant Holders, or (xiii) a Transfer of Warrants or Stockholder Shares in conjunction with a sale of the Company's subordinated indebtedness or senior indebtedness. Any Transfer permitted by this Section 2(f) is referred to herein as an "Exempt Transfer."


(g) Termination of Restrictions. The restrictions set forth in Sections 2(a) through 2(f) shall continue with respect to each Stockholder Share and Warrant until the earlier of (i) the date on which such Stockholder Share or Warrant has been transferred in a Public Sale, (ii) the consummation of a Sale of the Company and (iii) the realization of a Public Float.


(h) Confidential Information. Prior to the provision of confidential non-public information regarding the Company and/or its Subsidiaries to a proposed transferee of any Stockholder Share or Warrant by any holder thereof, such holder shall cause such proposed transferee to agree in writing to be bound by an appropriate confidentiality and nondisclosure agreement pursuant to which such proposed transferee will agree not to disclose or allow the disclosure of any nonpublic information obtained by such proposed transferee; provided, that each such proposed transferee may disclose such information if required by law or court order.


(i) Additional Transfer Restrictions. Notwithstanding any provision in this Agreement to the contrary, no holder of Stockholder Shares or any Warrant shall Transfer any such Stockholder Shares or Warrant (i) to any third party, if such third party (or any member of such third party's Family Group or any Affiliate of such third party) is engaged, directly or indirectly, whether as an owner of 10% or more of its voting stock or an employee, in the production of raw steel, (ii) unless the transferor provides, if required by the Company, an opinion of counsel satisfactory to the Company that such Transfer is made in compliance ...