10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter ended November 30, 2003
Commission File Number 1-4304

COMMERCIAL METALS COMPANY

(Exact Name of registrant as specified in its charter)

Delaware	75-0725338
(State or other Jurisdiction of	(I.R.S. Employer
incorporation of organization)	Identification Number)

6565 N. MacArthur Blvd.
Irving, Texas 75039

(Address of principal executive offices)
(Zip Code)

(214) 689-4300

(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year,
If changed since last report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes	No
[X]	[   ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes	No
[X]	[   ]

As of January 9, 2004 there were 28,495,888 shares of the Company’s common stock issued and outstanding excluding 3,769,278 shares held in the Company’s treasury.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

TABLE OF CONTENTS

		PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
	Condensed Consolidated Balance Sheets - November 30, 2003 and August 31, 2003		2-3
	Condensed Consolidated Statements of Earnings - Three months ended November 30, 2003 and 2002		4
	Condensed Consolidated Statements of Cash Flows - Three months ended November 30, 2003 and 2002		5
	Condensed Consolidated Statement of Stockholders’ Equity - Three months ended November 30, 2003		6
	Notes to Condensed Consolidated Financial Statements		7-13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			14-22
Item 3. Quantitative and Qualitative Disclosures about Market Risk			22
Item 4. Controls and Procedures			22
PART II - OTHER INFORMATION
Items 1. - 6.			23-24
SIGNATURES			25
INDEX TO EXHIBITS			26

1

ITEM 1 –FINANCIAL STATEMENTS

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
ASSETS

(In thousands except share data)

			November 30,			August 31,
			2003			2003
CURRENT ASSETS:
	Cash and cash equivalents		$	133,544		$	75,058
	Accounts receivable (less allowance for collection losses of $10,036 and $9,275)			445,808			397,490
	Inventories			362,192			310,816
	Other			55,927			61,053
		TOTAL CURRENT ASSETS		997,471			844,417
PROPERTY, PLANT AND EQUIPMENT:
	Land			34,592			34,617
	Buildings			128,851			127,780
	Equipment			749,391			747,207
	Leasehold improvements			38,266			38,117
	Construction in process			20,015			15,503
				971,115			963,224
	Less accumulated depreciation and amortization			(602,693	)		(588,842	)
				368,422			374,382
OTHER ASSETS				53,446			56,607
			$	1,419,339		$	1,275,406

See notes to condensed consolidated financial statements.

2

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
LIABILITIES AND STOCKHOLDERS’ EQUITY

(In thousands except share data)

					November 30,			August 31,
					2003			2003
CURRENT LIABILITIES:
	Accounts payable - trade				$	230,293		$	225,880
	Accounts payable–documentary letters of credit					93,963			74,782
	Accrued expenses and other payables					118,673			126,971
	Income taxes payable					2,208			1,718
	Short-term trade financing arrangement					12,000			15,000
	Current maturities of long-term debt					618			640
				TOTAL CURRENT LIABILITIES		457,755			444,991
DEFERRED INCOME TAXES						43,669			44,419
OTHER LONG-TERM LIABILITIES						27,069			24,066
LONG-TERM DEBT						362,365			254,997
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
	Capital stock:
		Preferred stock				—			—
		Common stock, par value $5.00 per share:
			Authorized 40,000,000 shares; issued 32,265,166 shares; outstanding 28,325,301 and 27,994,690 shares			161,326			161,326
	Additional paid-in capital					1,966			863
	Accumulated other comprehensive income					7,841			2,368
	Retained earnings					412,254			401,869
						583,387			566,426
			Less treasury stock, 3,939,865 and 4,270,476 shares at cost			(54,906	)		(59,493	)
						528,481			506,933
					$	1,419,339		$	1,275,406

See notes to condensed consolidated financial statements.

3

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

(In thousands except share data)

		Three months ended
		November 30,
		2003		2002
NET SALES		$	830,007	$	636,179
COSTS AND EXPENSES:
	Cost of goods sold		737,488		575,119
	Selling, general and administrative expenses		64,620		53,567
	Interest expense		5,094		3,994
	Loss on reacquisition of debt		2,792		—
			809,994		632,680
EARNINGS BEFORE INCOME TAXES			20,013		3,499
INCOME TAXES			7,385		1,294
NET EARNINGS		$	12,628	$	2,205
Basic earnings per share		$	0.45	$	0.08
Diluted earnings per share		$	0.44	$	0.08
Cash dividends per share		$	0.08	$	0.08
Average basic shares outstanding			28,145,679		28,486,578
Average diluted shares outstanding			28,999,960		28,963,733

See notes to condensed consolidated financial statements.

4

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

			Three months ended
			November 30,
			2003			2002
CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES:
	Net earnings		$	12,628		$	2,205
	Adjustments to reconcile net earnings to cash used by operating activities:
		Depreciation and amortization		15,123			15,226
		Loss on reacquisition of debt		2,792			—
		Provision for losses on receivables		941			369
		Net loss (gain) on sale of property		(101	)		211
		Deferred income taxes		(750	)		101
		Tax benefits from stock plans		1,042			5
	Changes in operating assets and liabilities:
		Decrease (increase) in accounts receivable		(51,916	)		(12,291	)
		Funding from accounts receivable sold		2,657			12,961
		Decrease (increase) in inventories		(51,376	)		(25,537	)
		Decrease (increase) in other assets		10,038			(1,905	)
		Increase (decrease) in accounts payable, accrued expenses, other payables and income taxes		(3,395	)		(46,624	)
		Increase (decrease) in other long-term liabilities		3,003			2,228
Net Cash Flows Used By Operating Activities				(59,314	)		(53,051	)
CASH FLOWS FROM (USED BY) INVESTING ACTIVITIES:
		Purchases of property, plant and equipment		(7,143	)		(9,658	)
		Sale of property, plant and equipment		101			—
Net Cash Used By Investing Activities				(7,042	)		(9,658	)
CASH FLOWS FROM (USED BY) FINANCING ACTIVITIES:
		Additional (payments on) documentary letters of credit		19,181			1,976
		Payments on short-term trade financing arrangement		(3,000	)		—
		Proceeds from issuance of long-term debt		200,000			—
		Payments on long-term debt		(89,035	)		(16	)
		Stock issued under incentive and purchase plans		4,648			26
		Treasury stock acquired		—			(1,613	)
		Dividends paid		(2,243	)		(2,281	)
		Debt reacquisition and issuance costs		(4,709	)		—
Net Cash From (used by) Financing Activities				124,842			(1,908	)
Increase (Decrease) in Cash and Cash Equivalents				58,486			(64,617	)
Cash and Cash Equivalents at Beginning of Year				75,058			124,397
Cash and Cash Equivalents at End of Period			$	133,544		$	59,780

See notes to condensed consolidated financial statements.

5

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In thousands except share data)

			Common Stock						Accumulated					Treasury Stock
							Add’l		Other
			Number of				Paid-in		Comprehensive		Retained			Number of
			Shares		Amount		Capital		Income		Earnings			Shares			Amount			Total
Balance September 1, 2003:				32,265,166	$	161,326	$	863	$	2,368	$	401,869			(4,270,476	)	$	(59,493	)	$	506,933
Comprehensive income:
	Net earnings for three months ended November 30, 2003											12,628									12,628
	Other comprehensive income:
		Foreign currency translation adjustment								5,434											5,434
		Unrealized loss on derivatives, net of taxes of $21								39											39
Comprehensive income																					18,101
Cash dividends												(2,243	)								(2,243	)
Stock issued under incentive and purchase plans								61							330,611			4,587			4,648
Tax benefits from stock plans								1,042													1,042
Balance November 30, 2003				32,265,166	$	161,326	$	1,966	$	7,841	$	412,254			(3,939,865	)	$	(54,906	)	$	528,481

See notes to condensed consolidated financial statements.

6

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A – QUARTERLY FINANCIAL DATA

     In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of November 30 and August 31, 2003 and the results of operations and cash flows for the three months ended November 30, 2003 and 2002. The results of operations for the three month periods are not necessarily indicative of the results to be expected for a full year. These interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended August 31, 2003 included in its Form 10-K filed with the Securities and Exchange Commission (SEC).

NOTE B – ACCOUNTING POLICIES

Stock-Based Compensation

     The Company accounts for stock options granted to employees and directors using the intrinsic value based method of accounting. Under this method, the Company does not recognize compensation expense for the stock options because the exercise price is equal to the market price of the underlying stock on the date of the grant. If the Company had used the fair value based method of accounting, net earnings and earnings per share would have been reduced to the pro-forma amounts listed in the table below. The Black-Scholes option pricing model was used to calculate the pro forma stock-based compensation costs. For purposes of the pro forma disclosures, the assumed compensation expense is amortized over the options’ vesting periods. The pro forma information is consistent with assumptions used in the year end information.

(in thousands, except per share amounts)

		Three months ended
		November 30,
		2003		2002
Net earnings-as reported		$	12,628	$	2,205
Pro forma stock-based compensation cost			335		334
Net earnings-pro forma		$	12,293	$	1,871
Net earnings per share-as reported:
	Basic	$	0.45	$	0.08
	Diluted	$	0.44	$	0.08
Net earnings per share-pro forma:
	Basic	$	0.44	$	0.07
	Diluted	$	0.43	$	0.07

Reclassifications

     Certain reclassifications have been made to the prior period financial statements to conform to the classifications used in the current period.

     In order to facilitate certain trade transactions, especially international, we utilize documentary letters of credit to provide assurance of payment to our suppliers. These letters of credit may be for prompt payment or for payment at a future date conditional upon the bank finding the documentation presented to be in strict compliance with all terms and conditions of the letter of credit. Our banks issue these letters of credit under informal, uncommitted lines of credit which are in addition to the committed revolving credit agreement. In some cases, if our suppliers choose to discount the future dated obligation, we may absorb the discount cost. The amounts currently payable under letters of credit in connection with such discount arrangements are

7

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

classified as Accounts Payable – Documentary Letters of Credit and the related discount charges are included as a component of interest expense in the condensed consolidated financial statements.

NOTE C – SALES OF ACCOUNTS RECEIVABLE

     The Company has an accounts receivable securitization program (Securitization Program) which it utilizes as a cost-effective, short-term financing alternative. Under the Securitization Program, the Company and several of its subsidiaries (the Originators) periodically sell accounts receivable to the Company’s wholly-owned consolidated special purpose subsidiary (CMCR). CMCR is structured to be a bankruptcy-remote entity. CMCR, in turn, sells an undivided percentage ownership interest (Participation Interest) in the pool of receivables to an affiliate of a third party financial institution (Buyer). CMCR may sell undivided interests of up to $130 million, depending on the Company’s level of financing needs.

     At November 30 and August 31, 2003, uncollected accounts receivable of $159 million and $152 million, respectively, had been sold to CMCR, and the Company’s undivided interest in these receivables (representing the Company’s retained interest) was 100%. At November 30 and August 31, 2003, no Participation Interests in CMCR’s accounts receivable pool were owned by the Buyer and, therefore, none were reflected as a reduction in accounts receivable on the Company’s consolidated balance sheets.

     Discounts (losses) on the sales of accounts receivable to the Buyer under this Program were $116 thousand, and $123 thousand for the three months ended November 30, 2003 and 2002, respectively. These losses primarily represented the costs of funds and were included in selling, general and administrative expenses.

     In addition to the Securitization Program described above, the Company’s international subsidiaries periodically sell accounts receivable. Uncollected accounts receivable that had been sold under these arrangements and removed from the consolidated balance sheets were $23.5 million and $20.8 million at November 30 and August 31, 2003, respectively.

NOTE D – INVENTORIES

     Before deduction of last-in, first-out (LIFO) inventory valuation reserves of $18.7 million and $17.4 million at November 30 and August 31, 2003, respectively, inventories valued under the first-in, first-out method approximated replacement cost. The majority of the Company’s inventories are in finished goods, with minimal work in process. Approximately $28.6 million and $20.5 million were in raw materials at November 30 and August 31, 2003, respectively.

NOTE E – LONG TERM DEBT

     Long-term debt (in thousands) was as follows:

	November 30,		August 31,
	2003		2003
7.20% notes due 2005	$	11,566	$	104,185
6.80% notes due 2007		50,000		50,000
6.75% notes due 2009		100,000		100,000
5.625% notes due 2013		200,000		—
Other		1,417		1,452
		362,983		255,637
Less current maturities		618		640
	$	362,365	$	254,997

8

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In November 2003, the Company purchased $89 million of its 7.20% notes due in 2005. The Company recorded a pre-tax charge of $2.8 million resulting from the cash payment made to retire the notes, which was in excess of the $4.2 million of cash proceeds received by the Company upon settlement of a related interest rate swap. Also, in November 2003, the Company issued $200 million of its 5.625% notes due in November 2013. Interest is payable semiannually. The Company had entered into an interest rate lock on $100 million of the new debt resulting in an effective rate of 5.54%.

On April 9, 2002 the Company entered into two interest rate swaps to convert a portion of the Company’s long term debt from a fixed interest rate to a floating interest rate. The impact of these swaps adjusted the amount of fixed rate and floating rate debt and reduced overall financing costs. These hedges remained in effect and were highly effective for the $11 million remaining debt at November 30, 2003. The swaps effectively converted the interest rate on the $100 million notes ($11 million remaining at November 30, 2003) due July 2005 from the fixed rate of 7.20% to the six month LIBOR (determined in arrears) plus a spread of 2.02%. The interest rate is set on January 15th and July 15th, and for the quarter ended November 30, 2003, was estimated to be an annualized rate of 3.38%. The total fair value of both swaps, including accrued interest, was $566 thousand and $4.6 million at November 30 and August 31, 2003, respectively. The swaps are recorded in other long-term assets, with a corresponding increase in the 7.20% long-term notes, representing the change in fair value of the hedged debt.

NOTE F – EARNINGS PER SHARE

     In calculating earnings per share, there were no adjustments to net earnings to arrive at income for the three months ended November 30, 2003 or 2002. The reconciliation of the denominators of earnings per share calculations are as follows:

	Three months ended
	November 30,
	2003		2002
Shares outstanding for basic earnings per share		28,145,679		28,486,578
Effect of dilutive securities-stock options/purchase plans		854,281		477,155
Shares outstanding for diluted earnings per share		28,999,960		28,963,733

All stock options with total share commitments of 3,507,843 at November 30, 2003 were dilutive based on the average share price for the quarter of $22.14. Stock options with total share commitments of 70,690 were anti-dilutive at November 30, 2002 based on the average share price of $17.48 for the quarter. All stock options expire by 2010.

At November 30, 2003, the Company had authorization to purchase 1,116,152 of its common shares.

NOTE G– DERIVATIVES AND RISK MANAGEMENT

     The Company’s worldwide operations and product lines expose it to risks from fluctuations in foreign currency exchange rates and metals commodity prices. The objective of the Company’s risk management program is to mitigate these risks using futures or forward contracts (derivative instruments). The Company enters into metal commodity forward contracts to mitigate the risk of unanticipated declines in gross margin due to the volatility of the commodities’ prices, and enters into foreign currency forward contracts which match the expected settlements for purchases and sales denominated in foreign currencies. The Company designates only those contracts as hedges for accounting purposes which closely match the terms of the underlying transaction. These hedges resulted in substantially no ineffectiveness in the statements of earnings for the three months ended November 30, 2003 and 2002. Certain of the foreign currency and all of the commodity contracts were not designated as hedges for accounting purposes, although management believes

9

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

they are essential economic hedges. The changes in fair value of the commodity hedging instruments resulted in a $889 thousand increase and a $339 thousand decrease in cost of goods sold for the three months ended November 30, 2003 and 2002, respectively. The Company also recognized a $715 thousand and a $1.1 million reduction in net sales relating primarily to foreign currency instruments for the three months ended November 30, 2003 and 2002, respectively. At November 30 and August 31, 2003, derivative assets recorded in other current assets were $4.8 million and $1.8 million, respectively. Derivative liabilities of $6.3 million and $1.7 million, respectively, were included in other current liabilities.

The Company recognized a gain of $1.5 million during the three months ended November 30, 2003 relating to the forward purchase of Polish Zlotys in connection with the acquisition of Huta Zawiercie S.A. This was recorded in net sales for the three months ended November 30, 2003.

All of the instruments are highly liquid, and none are entered into for trading purposes.

See Note E, Long-Term Debt, regarding the Company’s interest rate risk management strategies.

NOTE H – CONTINGENCIES

     There were no material developments relating to the Company’s contingencies during the three months ended November 30, 2003. See Note 9, Commitments and Contingencies, to the consolidated financial statements for the year ended August 31, 2003.

     In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. Management believes that adequate provision has been made in the consolidated financial statements for the potential impact of these issues, and that the outcomes will not significantly impact the results of operations or the financial position of the Company, although they may have a material impact on earnings for a particular quarter.

     The Company has not entered into or modified any significant guarantees since December 31, 2002, and therefore no liability was recorded at November 30, 2003. The Company’s existing guarantees have been given at the request of a customer and its surety bond issuer. The Company has agreed to indemnify the surety against all costs that the surety may incur should the customer fail to perform its obligations under construction contracts covered by payment and performance bonds issued by the surety. As of November 30, 2003, the surety had issued bonds in the total amount (without reduction for the work performed to date) of $11.9 million, which are subject to the Company’s guarantee obligation under the indemnity agreement. The fair value of these guarantees is not significant.

NOTE I – SUBSEQUENT ACQUISITIONS

     On December 3, 2003, the Company’s international Swiss subsidiary acquired 71.1% of the outstanding shares of Huta Zawiercie, S.A., of Zawiercie, Poland for 200 million Polish Zlotys ($51.9 million). In connection with the acquisition, the Company also assumed debt of 180 million Polish Zlotys ($46.7 million), acquired $4.8 million in cash and incurred $1.7 million of directly related costs. Huta Zawiercie operates a steel minimill similar to those operated by the Company’s steel group with annual capacity of about 1 million metric tons consisting mainly of rebar and wire rod products. With this acquisition, the Company has become a significant manufacturer of rebar and wire rod in a key Central European market.

10

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

On December 23, 2003, the Company acquired 100% of the stock of Lofland Acquisition, Inc. (Lofland) for $48.8 million cash. The Company also incurred approximately $1.0 million of external costs directly related to this acquisition. Lofland is the sole stockholder of the Lofland Company and subsidiaries which operate steel reinforcing bar fabrication and construction-related product sales facilities from 11 locations in Texas, Arkansas, Louisiana, Oklahoma, New Mexico and Mississippi. This acquisition complements the Company’s existing Texas rebar fabrication and construction-related product sales operations and expands the Company’s service areas in each of the neighboring states.

The following is a summary of the preliminary allocation of purchase price as of the date of the acquisitions (in thousands) presented in conformity with U.S. GAAP. The purchase price allocations have been prepared on a preliminary basis, and changes may be made following the completion of the valuation of the net assets by independent appraisers.

	Huta
	Zawiercie			Lofland			Total
Accounts receivable	$	42,907		$	19,125		$	62,032
Inventories		32,958			5,138			38,096
Property, plant and equipment		84,650			10,316			94,966
Intangible assets		3,044			27,616			30,660
Other assets		6,164			133			6,297
Accounts payable and accrued expenses		(46,126	)		(12,550	)		(58,676	)
Debt		(46,674	)		—			(46,674	)
Minority interest		(28,110	)		—			(28,110	)
	$	48,813		$	49,778		$	98,591

The intangible assets acquired include customer base, favorable land leases and production backlog, all of which have finite lives and will be amortized over lives from one year (for the backlog) to 96 years (for the favorable land leases). Also, the acquisition of Lofland will result in goodwill of approximately $15 million and a trade name with an indefinite life. The Company expects to be able to deduct approximately $4 million goodwill for tax purposes. The estimated aggregate amortization expense for each of the five succeeding fiscal years is as follows: 2004 - $2.4 million; 2005 - $1.7 million; 2006 through 2008 - $1.3 million per year. The fair value estimates are being determined either on a market-based or income-based approach.

11

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE J – BUSINESS SEGMENTS

The following is a summary of certain financial information by reportable segment (in thousands):

	Three months ended November 30, 2003
					Marketing &		Corp. &
	Manufacturing		Recycling		Distribution		Elim.			Consolidated
Net sales – unaffiliated customers	$	377,806	$	120,484	$	331,689	$	28		$	830,007
Inter-segments sales		820		11,408		8,692		(20,920	)		—
		378,626		131,892		340,381		(20,892	)		830,007
Adjusted operating profit (loss)		20,325		5,734		6,267		(7,103	)		25,223
Total assets – November 30, 2003		764,927		117,383		399,388		137,641			1,419,339

	Three months ended November 30, 2002
					Marketing &		Corp. &
	Manufacturing		Recycling		Distribution		Elim.			Consolidated
Net sales – unaffiliated customers	$	295,530	$	89,707	$	250,736	$	206		$	636,179
Inter-segments sales		800		6,649		5,627		(13,076	)		—
		296,330		96,356		256,363		(12,870	)		636,179
Adjusted operating profit (loss)		3,744		1,404		4,431		(1,963	)		7,616
Total assets – November 30, 2002		707,307		95,342		293,264		90,736			1,186,649

12

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table provides a reconciliation of the non-GAAP measure, adjusted operating profit (loss), to net earnings (loss), (in thousands):

	Three months ended November 30, 2003
					Marketing &		Corp. &
	Manufacturing		Recycling		Distribution		Elim.			Consolidated
Net earnings (loss)	$	12,509	$	3,868	$	4,919	$	(8,668	)	$	12,628
Income taxes		7,745		1,846		1,271		(3,477	)		7,385
Interest expense		30		1		47		5,016			5,094
Discounts on sales of accounts receivable		41		19		30		26			116
Adjusted operating profit (loss)	$	20,325	$	5,734	$	6,267	$	(7,103	)	$	25,223

	Three months ended November 30, 2002
					Marketing &		Corp. &
	Manufacturing		Recycling		Distribution		Elim.			Consolidated
Net earnings (loss)	$	2,283	$	900	$	2,827	$	(3,805	)	$	2,205
Income taxes		1,387		485		1,543		(2,121	)		1,294
Interest expense		33		1		22		3,938			3,994
Discounts on sales of accounts receivable		41		18		39		25			123
Adjusted operating profit (loss)	$	3,744	$	1,404	$	4,431	$	(1,963	)	$	7,616

13

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis should be read in conjunction with our Form 10-K filed with the SEC for the year ended August 31, 2003.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are not different from the information set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Form 10-K filed with the SEC for the year ended August 31, 2003 and are therefore not presented herein.

CONSOLIDATED RESULTS OF OPERATIONS

(in millions)

	Three Months Ended
	November 30,
	2003		2002
Net sales	$	830.0	$	636.2
Net earnings		12.6		2.2
EBITDA		40.2		22.7

We have included a financial statement measure in the table above that was not derived in accordance with generally accepted accounting principles (GAAP). Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) is a non-GAAP liquidity measure. In calculating EBITDA, we exclude our largest recurring non-cash charge, depreciation and amortization. We use EBITDA as one guideline to assess our ability to pay our current debt obligations as they mature and a tool to calculate possible future levels of leverage capacity. Reconciliations to net earnings are provided below (in millions):

	Three Months Ended
	November 30,
	2003		2002
Net earnings	$	12.6	$	2.2
Income taxes		7.4		1.3
Interest expense		5.1		4.0
Depreciation and amortization		15.1		15.2
EBITDA	$	40.2	$	22.7

Our management uses a non-GAAP measure, adjusted operating profit, to compare and evaluate the financial performance of our segments. See Note J, Business Segments, to the condensed consolidated financial statements. Adjusted operating profit is the sum of our earnings before income taxes, and financing costs. Adjusted operating profit provides a core operational earnings measurement that compares segments without the need to adjust for federal, but more specifically state and local taxes which have considerable variation between domestic jurisdictions. Tax regulations in international operations add additional complexity. Also, we exclude interest cost in our calculation of adjusted operating profit. The results are therefore without consideration of financing alternatives of capital employed. See Note J, Business Segments, to the condensed consolidated financial statements for a reconciliation of the non-GAAP measure, adjusted operating profit (loss) to net earnings (loss).

The following financial events were significant during the first quarter ended November 30, 2003:

- The improved market conditions that we experienced during the fourth quarter of fiscal 2003 continued during our first quarter of fiscal 2004 for most of our businesses.

- Steel group earnings increased primarily due to higher shipments, as realized product prices only kept up with the increases in input costs.

14

- The copper tube division reported increased gross margins due to higher volumes and improved metal spreads.

- The recycling segment continued to be very profitable primarily due to improvements in the ferrous scrap market over last year.

- Marketing and distribution’s adjusted operating profit was higher than last year’s first quarter, with improvements in a number of products’ prices.

- On November 12, 2003, we issued $200 million aggregate principal amount of 5.625% notes due 2013 following the purchase of $89 million of notes otherwise due in 2005. We incurred a $2.8 million pre-tax charge on this purchase.

- During the three months ended November 30, 2003, we realized a pre-tax gain of $1.5 million in marketing and distribution related to the forward purchase of Polish Zlotys in connection with our December 3, 2003 acquisition of Huta Zawiercie, S.A.

CONSOLIDATED DATA -

The LIFO method of inventory valuation decreased net earnings by $818 thousand and increased net earnings by $143 thousand (3 cents and 1 cent per diluted share) for the three months ended November 30, 2003 and 2002, respectively.

SEGMENT OPERATING DATA - (in thousands)

Unless otherwise indicated, all dollars below are before income taxes.

The following table shows net sales and adjusted operating profit (loss) by business segment.

	Three months ended
	November 30,
	2003			2002
NET SALES:
Manufacturing	$	378,626		$	296,330
Recycling		131,892			96,356
Marketing and Distribution		340,381			256,363
Corporate and Eliminations		(20,892	)		(12,870	)
	$	830,007		$	636,179
ADJUSTED OPERATING PROFIT (LOSS):
Manufacturing	$	20,325		$	3,744
Recycling		5,734			1,404
Marketing and Distribution		6,267			4,431
Corporate and Eliminations		(7,103	)		(1,963	)
	$	25,223		$	7,616

MANUFACTURING -

We include our steel group and our copper tube division in our manufacturing segment. Adjusted operating profit is equal to earnings before income taxes for our four steel minimills, our copper tube mill and the steel group’s fabrication operations. Our manufacturing segment’s adjusted operating profit for the three months ended November 30, 2003 increased $16.6 million (443%) as compared to 2002 on $82.3 million (28%) more net sales. Our steel group’s minimills and our copper tube mill reported higher adjusted operating profits due to higher selling prices and increased shipments, although higher scrap purchase and utility costs resulted in continued compressed gross margins. Our steel group’s downstream fabrication operations were more profitable due to higher shipments with stable selling prices. Slower demand for commercial construction was more than offset by demand in other construction markets. Our downstream rebar fabrication, construction related products, steel post plants, steel joist manufacturing and structural steel fabrication businesses, were profitable for the three months ended November 30, 2003.

15

The table below reflects steel and scrap prices per ton:

	Three months ended
	November 30,
	2003		2002
Average mill selling price (total sales)	$	309	$	272
Average mill selling price (finished goods)		313		281
Average fabrication selling price		555		558
Average ferrous scrap purchase price		118		89

Adjusted operating profit for our four steel minimills increased 408% for the three months ended November 30, 2003 compared to 2002, due to higher selling prices and shipments. Adjusted operating profits at all four mills were significantly higher. The largest increases in profitability were at SMI Texas and SMI South Carolina. Adjusted operating profits at SMI Texas increased $2.7 million (91%) for the three months ended November 30, 2003 as compared to 2002. SMI South Carolina reported $1.7 million adjusted operating profit for the three months ended November 30, 2003 as compared to a $2.3 million adjusted operating loss in 2002. The mills shipped 566,000 tons in the current quarter compared to 505,000 last year, an increase of 12%. Mill production increased as well, with tons rolled up 13% to 541,000. Tons melted increased 9% to 561,000. The average total mill selling price at $309 per ton was $37 (14%) above last year. Our mill selling price for finished goods increased $32 per ton (11%). Average scrap purchase costs were $29 per ton (33%) higher than last year. Utility expenses increased by $1.8 million as compared to last year; both natural gas and electricity costs were higher. Consequently, the increases in our steel product prices were only enough to offset the increase in these input costs, resulting in continuing restricted mill product margins. However, our metal spread (the difference between our average total mill selling price and our average scrap purchase price) was $8 per ton higher during the three months ended November 30, 2003 as compared to 2002.

Adjusted operating profit in the steel group’s fabrication and other businesses increased by $6.6 million (472%) for the three months ended November 30, 2003 as compared to 2002. Fabrication plant shipments totaled 280,000 tons, 29% more than last year’s first quarter shipments of 217,000 tons. The average fabrication selling price for the three months ended November 30, 2003 was approximately the same as compared to 2002. All of these lines of business were profitable for the three months ended November 30, 2003 including rebar and structural fabrication, construction-related products, steel post plants, and steel joist manufacturing. During the three months ended November 30, 2002, our structural steel fabrication and joist plants had reported adjusted operating losses. We are continuing to evaluate certain facilities which are performing under expectations or for which we are considering alternative uses. Our current estimates of cash flows do not indicate that the assets are impaired. However, these estimates and expected uses could change resulting in asset impairments.

On December 23, 2003, we acquired Lofland Acquisition, Inc. (Lofland) for $48.8 million. Lofland is the sole stockholder of the Lofland Company and subsidiaries which operate steel reinforcing bar fabrication and construction-related products sales facilities from 11 locations in Texas, Arkansas, Louisiana, Oklahoma, New Mexico and Mississippi. The acquisition of Lofland complements our existing Texas rebar fabrication and construction-related product sales operations and expands our service areas in each of the neighboring states. See Note I, Acquisitions, to the condensed consolidated financial statements.

Our copper tube division’s adjusted operating profit increased $1.9 million (695%) to $2.2 million on 32% higher net sales. Copper tube shipments increased 7% to 16.6 million pounds. Production increased 5% to 16.1 million pounds. The average selling price increased 26 cents per pound (24%) to $1.36 for the three months ended November 30, 2003 as compared to $1.10 for the three months ended November 30, 2002. The average copper scrap price increased 15 cents per pound (22%) during the three months ended November 30, 2003 as compared to 2002. Demand in our end use markets remained relatively strong, but selling prices remained constrained by over-supply of water and refrigeration tubing. Our metal spreads improved because the average copper scrap price increased less than the average product sales price.

16

RECYCLING -

Our recycling segment reported an adjusted operating profit of $5.7 million for the three months ended November 30, 2003 as compared with an adjusted operating profit of $1.4 million in 2002. Net sales for the three months ended November 30, 2003 were 37% higher at $132 million. Gross margins were 42% higher than the same period last year. The segment processed and shipped 430,000 tons of ferrous scrap during the three months ended November 30, 2003, 10% more than 2002. Ferrous sales prices were on average $124 per ton, or $35 (39%) higher than 2002. Nonferrous shipments were 2.5% lower at 54,000 tons. The average nonferrous scrap sales price of $1,139 per ton for the three months ended November 30, 2003 was 18% higher than in 2002. The total volume of scrap processed, including the steel group’s processing plants, was 734,000 tons, an increase of 10% from the 669,000 tons processed in 2002.

MARKETING AND DISTRIBUTION -

Net sales in the three months ended November 30, 2003 for our marketing and distribution segment increased 33% to $340 million as compared to net sales of $256 million in 2002. Adjusted operating profit for the three months ended November 30, 2003 was $6.3 million, as compared to $4.4 million in 2002, an increase of 42%. Markets were solid in several geographic regions and product lines. Sales to and within Asia, especially China, were up significantly. Also, the economy in Australia was still strong. Sales were level in Europe and imports into the United States were mixed. A number of product prices (as expressed in U.S. dollars) improved during the three months ended November 30, 2003. Gross margins were better for steel products and industrial raw materials, but were lower for nonferrous metal products. The increased profitability in marketing and distribution was largely due to our strategy in recent years to build up our regional business around the world and to increase our downstream presence.

On December 3, 2003, we purchased a 71.1% interest in Huta Zawiercie, S.A. in Zawiercie, Poland. Huta Zawiercie is a steel minimill, with annual capacity of about 1 million metric tons of primarily rebar and wire rod products. See Note I, Acquisitions, to the condensed consolidated financial statements. During the three months ended November 30, 2003, we recognized a $1.5 million gain on our forward purchases of Polish Zlotys related to this acquisition.

OTHER -

During the three months ended November 30, 2003, we incurred a $2.8 million charge from the purchase of $89 million of our notes otherwise due in 2005.

CONTINGENCIES -

See Note H, Contingencies, to the condensed consolidated financial statements.

In the ordinary course of conducting our business, we become involved in litigation, administrative proceedings, governmental investigations including environmental matters, and contract disputes. We may incur settlements, fines, penalties or judgments and otherwise become subject to liability because of some of these matters. While we are unable to estimate precisely the ultimate dollar amount of exposure to loss in connection with these matters, we make accruals as amounts become probable and estimable. The amounts we accrue could vary substantially from amounts we pay due to several factors including the following: evolving remediation technology, changing regulations, possible third-party contributions, the inherent shortcomings of the estimation process and the uncertainties involved in litigation. Accordingly, we cannot always estimate a meaningful range of possible exposure. We believe that we have adequately provided in our financial statements for the estimable potential impact of these contingencies. We also believe that the outcomes will not significantly affect the long-term results of operations or our financial position. However, they may have a material impact on earnings for a particular period.

We are subject to federal, state and local pollution control laws and regulations in all locations where we have operating facilities. We anticipate that compliance with these laws and regulations will involve continuing capital expenditures and operating costs.

17

NEAR-TERM OUTLOOK -

We expect our fiscal year ending August 31, 2004 to be significantly more profitable than 2003, primarily due to market improvements, the weakened U.S. dollar, acquisitions, internal cost reductions and productivity improvements. We expect that our second quarter, which is typically our weakest, will be relatively strong. We estimate that our net earnings (excluding any impact of adjusting our inventory valuation to the LIFO method which we are unable to estimate) will be between $7 million and $10 million for the three months ending February 28, 2004. We have noted signs of increasing demand in the U.S. manufacturing sector, and some improvement in construction. However, office, lodging and industrial construction will be slower to recover. Also, orders for capital goods are higher. Asian markets are relatively strong and European markets are partially recovering. We anticipate that our overall results will be better in the second half of 2004 as compared to the first half.

We anticipate our profits will be higher in 2004 in our manufacturing segment as compared to 2003 because of higher metal spreads and increased production, shipments and prices. We have implemented several price increases on most of our steel minimill products. Manufacturing margins are likely to be squeezed in the short run because the benefits of higher volumes and improved pricing will be offset by continued increased raw material costs as well as higher energy and freight costs. We are expecting these price increases to become fully effective during the second half of fiscal 2004. As a result, gross margins at our steel minimills should increase. We expect the gross margins in our fabrication and other related businesses to continue at current levels during the second quarter of fiscal 2004. However, these margins should improve later this year. The weak U.S. dollar, high freight costs, and strong Asian demand will minimize the impact of the Section 201 tariff repeal.

We anticipate that our recycling segment will continue to report significant profits, due to strong demand for steel scrap and nonferrous metal scrap and the relatively weak U.S. dollar.

Our marketing and distribution segment should remain consistently profitable during our fiscal 2004. We expect that our U.S. operations will be more profitable, but that our international operations will have lower profits in 2004 as compared to 2003. Overall prices and volumes should remain constant.

We anticipate that our capital spending for 2004 will be $61 million, excluding acquisition costs for Huta Zawiercie and Lofland. Most of these expenditures will be in our manufacturing segment including a major improvement project at our SMI-Texas melt shop. We believe that our purchase of Huta Zawiercie, S.A. and Lofland will be accretive to our 2004 earnings.

LONG-TERM OUTLOOK -

We believe we are well-positioned to exploit long-term opportunities. We expect stronger demand for our products due to the increased possibility of a recovery in demand throughout the major global economies as well as continued growth in developing countries. Emerging countries often have a higher growth rate for steel and nonferrous metals consumption. We believe that the demand will increase in Asia, particularly in China, as well as in Central and Eastern Europe.

We believe that there will be further consolidation in the industries in which we participate, and we plan to continue

to participate in a prudent way. The reasons for further consolidation include an inadequate return on capital for most companies, numerous bankruptcies, a high degree of fragmentation, the need to eliminate non-competitive capacity and more effective marketing.

This outlook section contains forward-looking statements regarding the outlook for our financial results including net earnings, product pricing and demand, production rates, energy expense, freight expense, interest rates, inventory levels, acquisitions and general market conditions. These forward-looking statements generally can be identified by phrases such as we “will”, “expect”, “anticipate”, “believe”, “presume”, “think”, “plan to”, “should”, “likely”, “appear”, “project”, or other similar words or phrases of similar impact. There is inherent risk and uncertainty in any forward-looking statements. Variances will occur and some could be materially different from our current opinion. Developments that could impact our expectations include the following:

18

• interest rate changes

• construction activity

• litigation claims and settlements

• difficulties or delays in the execution of construction contracts resulting in cost overruns or contract disputes

• metals pricing over which we exert little influence

• increased capacity and product availability from competing steel minimills and other steel suppliers including import quantities and pricing

• industry consolidation or changes in production capacity or utilization

• global factors including credit availability

• currency fluctuations

• scrap, energy and freight prices

• decisions by governments impacting the level of steel imports

• pace of overall economic activity.

LIQUIDITY AND CAPITAL RESOURCES -

We discuss liquidity and capital resources on a consolidated basis. Our discussion includes the sources and uses of our three operating segments and centralized corporate functions. We have a centralized treasury function and use inter-company loans to efficiently manage the short-term cash needs of our operating divisions. We invest any excess funds centrally.

We rely upon cash flows from operating activities, and to the extent necessary, external short-term financing sources for liquidity. Our short-term financing sources include the issuance of commercial paper, sales of accounts receivable, short-term trade financing arrangements and borrowing under our bank credit facilities. From time to time, we have issued long-term public debt and private debt placements. Our investment grade credit ratings and general business conditions affect our access to external financing on a cost-effective basis. Depending on the price of our common stock, we may realize significant cash flows from the exercise of stock options.

Moody’s Investors Service (P-2) and Standard & Poor’s Corporation (A-2) rate our $275 million commercial paper program in the second highest category. To support our commercial paper program, we have an unsecured contractually committed revolving credit agreement with a group of sixteen banks. Our $275 million facility expires in August 2006. We plan to continue our commercial paper program and the revolving credit agreements in comparable amounts to support the commercial paper program.

For added flexibility, we may secure financing through sales of certain accounts receivable in an amount not to exceed $130 million and direct sales of accounts receivable. We may continually sell accounts receivable on an ongoing basis to replace those receivables that have been collected from our customers. Our long-term public debt was $362 million at November 30, 2003 and is investment grade rated by Standard & Poors’ Corporation (BBB) and by Moody’s Investors Services (Baa2). We believe we will have access to the public markets for potential refinancing or the issuance of additional long-term debt. In November 2003, we purchased $89 million of our 7.20% notes otherwise due in 2005, and issued $200 million of 5.625% rate notes due November 2013. See Note E, Long-term Debt to the condensed consolidated financial statements. Also, we have numerous informal, uncommitted, nonbinding, short-term credit facilities available from domestic and international banks. These credit facilities are priced at bankers’ acceptance rates on a cost of funds basis.

19

In order to facilitate certain trade transactions, especially international, we utilize bank letters of credit to provide assurance of payment to our suppliers. These letters of credit may be for prompt payment or for payment at a future date conditional upon the bank finding the documentation presented to be in strict compliance with all terms and conditions of the letter of credit. Our banks issue these letters of credit under informal, uncommitted lines of credit which are in addition to the committed revolving credit agreement. In some cases, if our suppliers choose to discount the future dated obligation we may absorb the discount cost.

Credit ratings affect our ability to obtain short and long-term financing and the cost of such financing. If the rating agencies were to reduce our credit ratings, we would pay higher financing costs and probably would have less availability of the informal, uncommitted facilities. In determining our credit ratings, the rating agencies consider a number of both quantitative and qualitative factors. These factors include earnings, fixed charges such as interest, cash flows, total debt outstanding, off balance sheet obligations and other commitments, total capitalization and various ratios calculated from these factors. The rating agencies also consider predictability of cash flows, business strategy, industry condition and contingencies. Maintaining our investment grade ratings is a high priority for us.

Certain of our financing agreement include various covenants. The most restrictive of these covenants requires us to maintain an interest coverage ratio of greater than three times and a debt to capitalization ratio of 55%, as defined in the financing agreement. A few of the agreements provide that if we default on the terms of another financing agreement, it is considered a default under these agreements. We have complied with the requirements, including the covenants of our financing agreements as of and for the three months ended November 30, 2003.

Our revolving credit and accounts receivable securitization agreements include ratings triggers. The trigger in the revolving credit agreement is solely a means to reset pricing for facility fees and, if a borrowing occurs, on loans. Within the accounts receivable securitization agreement, the ratings trigger is contained in a “termination event”, but the trigger requires a combination of ratings actions on behalf of two independent rating agencies and is set at levels six ratings categories below our current rating.

Our manufacturing and recycling businesses are capital intensive. Our capital requirements include construction, purchases of equipment and maintenance capital at existing facilities. We plan to invest in new operations, working capital to support the growth of our businesses, and pay dividends to our stockholders.

We continue to assess alternative means of raising capital, including potential dispositions of under-performing or non-strategic assets. Any potential future major acquisitions could require additional financing from external sources such as the issuance of common or preferred stock.

Cash Flows

Our cash flows from operating activities primarily result from sales of steel and related products, and to a lesser extent, sales of nonferrous metal products. We also sell and rent construction-related products and accessories. We have a diverse and generally stable customer base. We use futures or forward contracts as needed to mitigate the risks from fluctuations in foreign currency exchange rates and metals commodity prices. See Note G, Derivatives and Risk Management, to the condensed consolidated financial statements.

The volume and pricing of orders from our U.S. customers in the construction sector affects our cash flows from operating activities. The pace of economic expansion and retraction of major industrialized markets outside of the United States also significantly affects our cash flows from operating activities. The weather can influence the volume of products we ship in any given period. Also, the general economy, the strength of the U.S. dollar, governmental action, and various other factors beyond our control influence our volume and prices. Periodic fluctuations in our prices and volumes can result in variations in cash flows from operations. Despite these fluctuations, we have historically relied on operating activities as a steady source of cash.

We used $59.3 million of net cash flows in our operating activities for the three months ended November 30, 2003 as compared to the $53.1 million of net cash flows used by our operating activities for the three months ended November 30, 2002. Net earnings were $10.4 million higher for the three months ended November 30, 2003 as compared to 2002. Net working capital increased to $540 million at

20

November 30, 2003 from $399 million at August 31, 2003 primarily because of increased accounts receivable (primarily in marketing and distribution) and inventories (primarily in manufacturing and marketing and distribution).

We invested $7.1 million in property, plant and equipment during the three months ended November 30, 2003, which was less than during 2002. We expect our capital spending for fiscal 2004 to be $61 million, excluding our acquisitions of Huta Zawiercie and Lofland. We assess our capital spending each quarter and reevaluate our requirements based upon current and expected results.

In November 2003, we issued $200 million of long-term notes due in 2013. The proceeds from this offering were used in November 2003 to purchase $89 million of our notes otherwise due in 2005, and finance our purchases of Huta Zawiercie and Lofland in December 2003.

At November 30, 2003, 28,325,301 common shares were issued and outstanding, with 3,939,865 held in our treasury. We paid dividends of $2.2 million during the three months ended November 30, 2003, approximately the same amount paid during 2002. During the three months ended November 30, 2002, we purchased 100,000 shares of our common stock at an average price of $16.13 per share. These shares were held in our treasury. We purchased no shares during the three months ended November 30, 2003.

We believe that we have sufficient liquidity for fiscal 2004.

CONTRACTUAL OBLIGATIONS -

The following table represents our contractual obligations as of November 30, 2003 below (dollars in thousands):

				Payments Due Within *
						2-3		4-5		After
		Total		1 Year		Years		Years		5 Years
Contractual Obligations:
	Long-term Debt (1)	$	362,983	$	618	$	12,256	$	50,037	$	300,072
	Operating Leases (2)		32,852		8,151		10,771		5,811		8,119
	Unconditional Purchase Obligations (3)		176,858		98,040		51,913		12,834		14,071
Total Contractual Cash Obligations		$	572,693	$	106,809	$	74,940	$	68,682	$	322,262

* Cash obligations herein are not discounted.

(1)	Total amounts are included in the November 30, 2003 condensed consolidated balance sheet. See Note E, Long-Term Debt, to the condensed consolidated financial statements.
(2)	Includes minimum lease payment obligations for noncancelable equipment and real-estate leases in effect as of November 30, 2003.
(3)	About 73% of these purchase obligations are for inventory items to be sold in the ordinary course of business; most of the remainder are for supplies associated with normal revenue-producing activities.

Other Commercial Commitments

We maintain stand-by letters of credit to provide support for certain transactions that our customers and suppliers request. At November 30, 2003, we had committed $20.7 million under these arrangements. All of the commitments expire within one year.

At the request of a customer and its surety bond issuer, we have agreed to indemnify the surety against all costs the surety may incur should our customer fail to perform its obligations under construction contracts covered by payment and performance bonds issued by the surety. We are the customer’s primary supplier of steel, and steel is a substantial portion of our customer’s cost to perform the contracts. We believe we have

21

adequate controls to monitor the customer’s performance under the contracts including payment for the steel we supply. As of November 30, 2003, the surety had issued bonds in the total amount (without reduction for the work performed to date) of $11.9 million which are subject to our guaranty obligation under the indemnity agreement.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required hereunder for the Company is not materially different from the information set forth in Item 7a. Quantitative and Qualitative Disclosures About Market Risk included in the Company’s Annual Report of Form 10-K for the year ended August 31, 2003, filed with the Securities Exchange Commission, and is therefore not presented herein.

Also, see Note G, Derivatives and Risk Management, to the condensed consolidated financial statements.

ITEM 4. CONTROLS AND PROCEDURES

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange Act. This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods. Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report, and they have concluded that as of that date, our disclosure controls and procedures were effective at ensuring that required information will be disclosed on a timely basis in our reports filed under the Exchange Act.

No change to our internal control over financial reporting occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

22

PART II                     OTHER INFORMATION

     ITEM 1. LEGAL PROCEEDINGS

Reference is made to the information incorporated by reference from Item 3. Legal Proceedings in the Company’s Annual Report on Form 10-K for the year ending August 31, 2003, filed November 24, 2003, with the Securities and Exchange Commission.

     ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

          Not Applicable

     ITEM 3. DEFAULTS UPON SENIOR SECURITIES

          Not Applicable

     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          Not Applicable

     ITEM 5. OTHER INFORMATION

          Not Applicable

     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

A.	Exhibits required by Item 601 of Regulation S-K.
2.1	Share Purchase Agreement dated July 22, 2003 between Impexmetal, S.A. and Commercial Metals (International) AG (filed herewith).
31.1	Certification of Stanley A. Rabin, Chairman of the Board, President and Chief Executive Officer of Commercial Metals Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of William B. Larson, Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of Stanley A. Rabin, Chairman of the Board, President and Chief Executive Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2	Certification of William B. Larson, Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
B.	Commercial Metals Company filed and/or furnished the following Form 8-K’s during the quarter ended November 30, 2003:
	Form 8-K on October 14, 2003 under Items 9 and 12 for the purpose of furnishing the press release announcing Commercial Metals Company’s financial results for the fiscal year ended August 31, 2003.

23

Form 8-K on October 31, 2003 under Items 5 and 7 for the purpose of announcing the commencement of a tender offer for Commercial Metals Company’s 7.20% notes due 2005.

Form 8-K dated November 5, 2003 under Items 5 and 7 for the purpose of announcing the fixed price per $1,000 principal amount of notes tendered in Commercial Metals Company’s tender offer for its 7.20% notes due 2005.

Form 8-K dated November 6, 2003 under Items 5, 7 and 9 for the purpose of (1) announcing that Commercial Metals Company was proposing to make, subject to market and other conditions, an offering of up to $200 million aggregate principal amount of senior notes due 2013 in a private offering and (2) furnishing information pursuant to Regulation FD.

Form 8-K dated November 6, 2003 under Items 5 and 7 for the purpose of announcing that Commercial Metals Company had agreed to sell $200 million aggregate principal amount of senior notes due 2013 in a private offering.

Form 8-K dated November 7, 2003 under Items 5, 7 and 9 for the purpose of (1) announcing the expiration of Commercial Metals Company’s tender offer for its 7.20% notes due 2005 and (2) furnishing information pursuant to Regulation FD.

The Form 8-K information in this Item 6 identified as being “furnished” shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of Commercial Metals Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COMMERCIAL METALS COMPANY
	/s/ William B. Larson
January 14, 2004	William B. Larson
	Vice President & Chief Financial Officer
	/s/ Malinda G. Passmore
January 14, 2004	Malinda G. Passmore
	Controller

25

INDEX TO EXHIBITS

2.1	Share Purchase Agreement dated July 22, 2003 between Impexmetal, S.A. and Commercial Metals (International) AG (filed herewith).
31.1	Certification of Stanley A. Rabin, Chairman of the Board, President and Chief Executive Officer of Commercial Metals Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of William B. Larson, Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of Stanley A. Rabin, Chairman of the Board, President and Chief Executive Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2	Certification of William B. Larson, Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

26 EX-2.1 3 d11831exv2w1.txt EX-2.1 SHARE PURCHASE AGREEMENT EXHIBIT 2.1 HUTA "ZAWIERCIE" S.A. WITH ITS REGISTERED SEAT IN ZAWIERCIE SHARE PURCHASE AGREEMENT MADE ON THIS JULY 22, 2003 BY AND BETWEEN IMPEXMETAL S.A. AND COMMERCIAL METALS (INTERNATIONAL) AG SHARE PURCHASE AGREEMENT RELATING TO HUTA "ZAWIERCIE" SPOLKA AKCYJNA WITH ITS REGISTERED SEAT IN ZAWIERCIE This agreement, hereinafter referred to as the "AGREEMENT" is made on this July 22, 2003 in Warsaw, by and between: IMPEXMETAL S.A. with its registered seat in Warsaw, 00-842 Warsaw, ul. (pound)ucka 7/9, a joint stock company entered in the Register of Entrepreneurs by the District Court for the Capital City of Warsaw, XIX Commercial Division of the National Court Register, under number 0000003679, hereinafter referred to as the "SELLER", represented by: Jerzy Kaminski, President of the Management Board, and Krzysztof Adamski, Member of the Management Board. and COMMERCIAL METALS (INTERNATIONAL) AG with its registered seat in Baar, Switzerland, a company entered in the Principal Register kept by the Commercial Registers Office of the Zug Canton, under number CH-170.3.010.397-2, hereinafter referred to as the "BUYER", represented by: Hanns Zollner, President, Ruedi Auf der Maur, Managing Director. The Seller and the Buyer shall hereinafter be jointly referred to as the "PARTIES", and individually as a "PARTY". PREAMBLE WHEREAS: (A) The Seller owns 9,954,359 (nine, nine hundred and fifty-four thousand, three hundred and fifty-nine) ordinary registered series A shares of PLN 10 (ten) par value per share, of Huta "Zawiercie" S.A. with its registered seat in Zawiercie. (B) The Seller intends to sell and the Buyer intends to buy the shares referred to in section (A) of the Preamble on the terms and conditions set forth herein; (C) As it is required to obtain relevant consents and permits to transfer the ownership title to the shares referred to in section (A) of the Preamble, to the Buyer, and it is required further for the Parties to cooperate with third parties in performance of the specific obligations referred to in the Agreement, the Parties express their determination to obtain all the relevant consents and permits and to perform all the obligations referred to in the Agreement on as soon as possible basis; (D) In anticipation of execution of this Agreement on July 22, 2003, the Seller procured that the supervisory board of Huta Zawiercie S.A. dismissed certain members of the management board of that company and appointed a person designated by the Buyer in their stead; furthermore, the Seller caused the supervisory board of Huta Zawiercie S.A. to limit the number of members of the management board to two only; 2 NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS: ARTICLE 1 DEFINITIONS 1.1 Unless the content or context of this Agreement require otherwise, all the capitalized terms used throughout this Agreement shall have the meanings assigned thereto below: SHARES means 9,954,359 (nine million, nine hundred fifty-four thousand, three hundred fifty-nine) ordinary registered series A shares of PLN 10 (ten) par value per share, of the Company with numbers as evidenced in the list attached hereto as Schedule No. 1, jointly constituting 71.1% of the Company's share capital and representing 71.1% of the voting power at Company's general meeting of shareholders; ESCROW BANK means Bank Polska Kasa Opieki S.A. with its registered seat in Warsaw, a joint stock company entered in the Register of Entrepreneurs by the District Court for the Capital City of Warsaw, XIX Commercial Division of the National Court Register, under number 0000153588; BRE BANK means BRE Bank S.A. with its registered seat in Warsaw, a joint stock company entered into the Register of Entrepreneurs by the District Court for the Capital City of Warsaw, XIX Commercial Division of the National Court Register under number 0000025237; DEPOSIT means the deposit kept by the Escrow Bank pursuant to the Deposit Agreement; SETTLEMENT DATE means the date occurring two (2) business days prior to the Closing Date, on which the Seller, on the terms and conditions set forth in Article 2.5 settles or procures settlement of all due and payable receivables of (i) the entities of the Company Group; and (ii) the Seller and the entities of the Seller's Group; COOPERATION means the date occurring two (2) business AGREEMENTS' days prior to the Closing Date on which the SETTLEMENT DATE Seller, on the terms and conditions defined in Article 2.6, settles the Cooperation Agreements with the Company; CLOSING DATE means the date on which the ownership title to the Shares will be transferred to the Buyer; EXECUTION DATE the date of signing the Agreement by the Buyer and the Seller; COMPANY GROUP means all or any, as the context requires, of the following companies: (i) Hutsprzet Sp. z o.o.; (ii) Elserw Sp. z o.o.; 3 (iii) Energomedia Sp. z o.o., (iv) Kolhut Sp. z o.o., (v) Centroz(3)om Katowice Sp. z o.o., (vi) Putex Sp. z o.o., (vii) HZ Format Sp. z o.o., (viii) HZ Service Sp. z o.o., (ix) Centrum Zawiercie Sp. z o.o., (x) Scrapena S.A., (xi) Scrap-Service Sp. z o.o.; and (xii) the Company; SELLER'S GROUP means all or, if the context so requires, any of the Seller's subsidiaries or affiliates, as defined in the Commercial Companies Code, excluding the entities of the Company Group; CONFIDENTIAL means (i) any and all information and INFORMATION documents in possession of any Party, its employees, representatives and advisors and relating to the entities from the Company Group; and (ii) information concerning this Agreement; MATERIAL ADVERSE means: CHANGE (a) any change, except for any changes resulting from market conditions, particularly any changes resulting from the seasonal character of operations of the entities of the Company Group, whether or not foreseeable or known as of the Execution Date, excluding however, any changes known by the Buyer on the Execution Date, that, individually or in the aggregate with any such other changes, events or effects, is or could reasonably be expected to (whether or not such change, event or effect has, at the time in question, manifested itself in the financial statements of the entities of the Company Group) result in (i) a reduction of fixed assets by PLN 75,000,000 (seventy five million), (ii) an increase in liabilities by PLN 100,000,000 (one hundred million), or (iii) a reduction in company equity by PLN 40,000,000 (forty million), in each case, of the Company Group taken as a whole as compared to the standing of the Company Group as of May 31, 2003, or (b) any material casualty, or damage (whether or not covered by insurance) to any facility, property, or equipment in possession of the entities of the Company Group which results or is reasonably expected to result in non-planned stoppage of production with respect to melting and rolling of steel products by the Company for more than forty five (45) days. COMMERCIAL means the act of September 15, 2000 - the COMPANIES CODE Commercial Companies Code (Dz.U. No. 94, item 1037, as amended); BUYER means COMMERCIAL METALS (INTERNATIONAL) AG, with its registered seat in Baar, Switzerland, a company entered in the Principal Register kept by the 4 Commercial Registers Office of the Zug Canton, under number CH-170.3.010.397-2; a copy of an extract from the register of the Commercial Registers Office of the Zug Canton relating to the Buyer is attached as Schedule No. 2 to the Agreement; IMPEX DEBT VALUE means the amount of outstanding debts of the Seller and the entities of the Seller's Group after a proper Settlement had been made, such amount not exceeding PLN 1,000,000 (one million); HZ DEBT VALUE means the amount of outstanding debts of the entities of the Company Group after a proper Settlement has been made, such amount not exceeding PLN 1,000,000 (one million); ESCROW AMOUNT means PLN 20,000,000 (twenty million); MAXIMUM AMOUNT means PLN 250,000 (two hundred and fifty thousand) increased by the goods and services tax (VAT) due thereon; DEDUCTIBLE means the amount provided in the Cooperation Agreements' Settlement Notice and in the representation of the Company (approved by the Buyer's Representative), attached to the Cooperation Agreements' Settlement Notice; IMPEX DEBT means the amount provided in the Settlement DEDUCTIBLE Notice and in the representation of the Company (approved by the Buyer's Representative), such amount constituting the outstanding debts of the Seller and the entities of the Seller's Group, established after a proper Settlement had been made, and exceeding PLN 1,000,000 (one million); HZ DEBT INCREASE means the amount provided in the Settlement Notice and in the representation of the Company (approved by the Buyer's Representative), such amount constituting the outstanding debts of the entities of the Company Group, established after a proper Settlement had been made, and exceeding PLN 1,000,000 (one million); SETTLEMENT AMOUNT means the value of receivables which have not been settled, provided in the Settlement Notice and in the representation of the Company (approved by the Buyer's Representative) attached to the Settlement Notice; COOPERATION means the value of receivables which have AGREEMENTS' not been settled, provided in the SETTLEMENT AMOUNT Cooperation Agreements' Settlement Notice and in the representation of the Company (approved by the Buyer's Representative), attached to the Notice of Cooperation Agreements' 5 Settlement; TOTAL PURCHASE PRICE means the total price of purchase of the Shares, as defined in Article 2.2 of the Agreement, which may be increased or decreased in accordance with Article 2.5 or Article 2.6 hereof; INFORMATION means the information memorandum relating MEMORANDUM to the Company and prepared by BRE Corporate Finance S.A. with its registered seat in Warsaw; BREACH OF AGREEMENT means any action or omission by a relevant Party, as referred to in Article 9.2 hereof; NOTARY means a notary designated by the Buyer, acting as a person of public trust and performing actions referred to in the Notary's Office Law of February 14, 1991 (unified text Dz.U. 2002, No. 42, item 369, as amended); TERM FOR MAXIMUM means the term between May 31, 2003 and the AMOUNT Cooperation Agreements' Settlement Date; REPRESENTATION WITH means the Seller's representation delivered INSTRUCTIONS RELATING to the Buyer not later than one day prior TO THE FIRST PART OF to the Closing Date, designating one or PURCHASE PRICE several bank accounts to which the Buyer will transfer the First Part of Purchase Price; the form of Representation with Instructions Relating to the First Part of Purchase Price is attached as Schedule No. 3 to the Agreement; NOTICE OF WAIVER OF means a BRE Bank's representation, BRE BANK'S SECURITY substantially in the form and content INTEREST attached hereto as Schedule No. 4, or any other document issued by BRE Bank to confirm expiry of BRE Bank's Security Interest; NOTICE OF WAIVER OF means a PKO BP's representation, PKO BP'S SECURITY substantially in the form and content INTEREST attached hereto as Schedule No. 5, or any other document issued by PKO BP to confirm expiry of PKO BP's Security Interest; NOTICE OF WAIVER OF means a WFOS's representation, WFOS'S SECURITY substantially in the form and content INTEREST attached hereto as Schedule No. 6, or any other document issued by WFOS to confirm expiry of WFOS's Security Interest; FIRST PART OF PURCHASE means the sum of: (i) PLN 40,000,000 (forty PRICE million) and (ii) total value of the Seller's liabilities as of the Closing Date established on the basis of the Impexmetal Credit Facility Agreements referred to in the BRE Bank Agreement, provided that the liability to repay the foreign exchange credit facility granted to the Seller in Euros shall be defined in PLN on the basis of the EUR buy rate used by BRE Bank on the date of defining the 6 First Part of Purchase Price, provided that such sum will not be greater than PLN 120,000,000 (one hundred and twenty million); PKO BP means Powszechna Kasa Oszczednooeci Bank Polski S.A. with its registered seat in Warsaw, a joint stock company entered into the Register of Entrepreneurs by the District Court for the Capital City of Warsaw, XX Commercial Division of the National Court Register, under number 0000026438; PLN means the Polish zloty - the legal tender in Poland; BRE BANK AGREEMENT means the agreement between the Seller, the Buyer and BRE Bank which was made on the Execution Date and which comes into force after execution hereof; a copy of the BRE Bank Agreement is attached herewith as Schedule No. 7; UOKIK PRESIDENT means the President of the Office for Protection of Competition and Consumers as referred to in the Protection of Competition and Consumers Act of December 15, 2000 (Dz.U. No. 122, item 1319, as amended); BUYER'S REPRESENTATIVE means Mr. Ludovit Gajdos, who was appointed on July 22, 2003, by the Company's supervisory board, to the Company's management board, or any other person who is appointed to the Company's management board in accordance with the Buyer's written request; SELLER'S means Mr. Marek Rozga, or any other person REPRESENTATIVE who, prior to the Execution Date or thereafter, is appointed to the Company's Management Board in result of Seller's direct or indirect actions, and who is not the Buyer's Representative; BANK'S means the representatives of BRE Bank and REPRESENTATIVES of PKO BP who may take part in the Closing; SETTLEMENT means an accurate settlement, on the terms and conditions defined in Article 2.5 hereof, of due and payable receivables under agreements, trade orders and performance of any other actions (excluding Cooperation Agreements) of: (i) entities of the Company Group and (ii) the Seller and the entities of the Seller's Group; COOPERATION means a settlement made on the terms and AGREEMENTS' conditions defined in Article 2.6 hereof of SETTLEMENT all due and payable Seller's receivables with respect to the Company, as provided in the Cooperation Agreements; 7 COMPANY means Huta "Zawiercie" S.A. with its registered seat in Zawiercie, 42-400 Zawiercie, at ul. Pi(3)sudskiego No. 82, a joint stock company entered into the Register of Entrepreneurs by the District Court in Katowice, Commercial Division of the National Court Register under number 0000017925; the share capital of the Company amounts to PLN 140,000,000 (one hundred forty million) and is divided into 14,000,000 (fourteen million) ordinary registered series A shares of PLN 10 (ten) par value each; an up-to-date copy of an extract from the Register of Entrepreneurs of the National Court Register, relating to the Company, is attached hereto as Schedule No. 8; SELLER means IMPEXMETAL S.A. with its registered seat in Warsaw, 00-842 Warsaw, ul.L ucka 7/9, a joint stock company entered in the Register of Entrepreneurs by the District Court for the Capital City of Warsaw, XIX Commercial Division of the National Court Register, under number 0000003679; an up-to-date copy of an extract from the Register of Entrepreneurs of the National Court Register, relating to the Seller, is attached hereto as Schedule No. 9; STATUTE means the Company statute as made on December 27, 1995, as later amended, an updated wording of which is attached as Schedule No. 10 hereto; PARTY means the Seller or the Buyer, depending on the context, and if used in plural shall mean both the Seller and the Buyer; AGREEMENT means this agreement, including all schedules which shall constitute an integral part thereof; DEPOSIT AGREEMENT means the deposit agreement made between the Parties and the Escrow Bank on the Execution Date; a form of Deposit Agreement is attached hereto as Schedule No. 11; ESCROW ACCOUNT means the escrow account agreement made AGREEMENT between the Parties and the Escrow Bank on the Execution Date; a form of Escrow Account Agreement is attached hereto as Schedule No. 12; KNOW-HOW means the agreement made between the AGREEMENT Company and the Seller on March 10, 1999 (No. BNDF/118/03/99), subsequently amended by the following annexes: No. 1 of January 10, 2002, No. 2 of November 29, 2002, No. 3 of December 20, 2002, such agreement having been effectively terminated, and all the Seller's receivables under that agreement having been paid; a complete copy 8 of the Know-How Agreement is attached hereto together with the Cooperation Agreements as Schedule 13; COOPERATION means all or, as the context may require, AGREEMENTS each of the following agreements made between the Company and the Seller: (i) license agreement on the use of trade mark of April 29, 1998, amended by annex No. 1/2003 of February 17, 2003 and annex No 2/2003 of April 8, 2003, pursuant to which the Seller granted the Company a license for the logo, trade mark and the mixed logo-trade mark sign of Impexmetal; (ii) consulting services agreement made on February 3, 2003 pursuant to which the Seller renders strategic advice, operational advice, financial advice and public relations advice services; (iii) an agreement made on November 28, 2002 pursuant to which the Company agreed to pay the Seller a fee for the security interests granted by the Seller for third party receivables against the Company; true and complete copies of the Cooperation Agreements (including the Know-How Agreement) are attached as Schedule No. 13 hereto; CONDITIONS TO mean all, or as the context requires any of PURCHASE the conditions precedent and events listed in Article 3.1 hereof; WFOS means Wojewodzki Fundusz Ochrony aerodowiska i Gospodarki Wodnej (Voivodship Fund for Protection of the Environment and Water Management) in Katowice, 40-035 Katowice, at ul. Plebiscytowa 19; BRE BANK'S SECURITY means the security interests granted by the INTERESTS Seller to BRE Bank in relation to the credit facility of PLN 10,000,000 (ten million) extended to the Company by the bank pursuant to the credit facility agreement No. 11/161/03/2/VV dated May 22, 2003; those security interests include: (i) Seller's suretiship (poreczenie) for up to PLN 10,000,000 (ten million) in accordance with the guarantor's (poreczyciel) representation of May 21, 2003; (ii) an ordinary and a registered pledge on 688,064 (six hundred and eighty-eight thousand, sixty-four) shares of Aluminium Konin - Impexmetal S.A. with its registered seat in Konin, pursuant to the pledge agreement of May 23, 2003 between the Seller and BRE Bank, provided that the ordinary pledge created on those shares shall expire once the registered pledge is entered into the register of pledges; PKO BP'S SECURITY means the security interests granted by the INTERESTS Seller to PKO BP, in relation to a credit facility of PLN 30,000,000 (thirty million) extended to the Company of by the bank pursuant to the agreement No. 202-127/2/I/28/202 dated 9 November 29, 2002; those security interests include: (i) five blank promissory notes issued by the Company, paid for up to PLN 6,000,000 (six million) each, with the Seller's guarantee (aval) on each such promissory note, (ii) registered pledge on 1,714,114 (one million, seven hundred and fourteen thousand, one hundred fourteen) shares of Aluminium Konin - Impexmetal S.A. with its registered seat in Konin, entered in the registered of pledges on May 14, 2003; WFOS'S SECURITY means the security interests granted by the INTERESTS Seller to WFOS in relation to a loan of PLN 8,100,000 (eight million, one hundred thousand) extended to the Company pursuant to a loan agreement No. 243/2002/89/OA/od/P dated December 19, 2002; the security interest consists of a suretship (poreczenie) of repayment of the loan, granted by the Seller for up to the principal of PLN 2,430,000 (two million, four hundred and thirty thousand) including all interest accrued on such principal, costs and contractual penalties, under the guarantee agreement (umowa poreczenia) made between the Seller and WFOS on December 19, 2002; CLOSING means Buyer's purchase of the Shares; SETTLEMENT NOTICE means any Seller's written notification on the Settlement to which the Company's representation is attached (approved by the Buyer's Representative) confirming that an accurate Settlement has been made; form of Settlement Notice is attached hereto as Schedule No. 14. COOPERATION means written notice to the Seller that the AGREEMENTS' Cooperation Agreements' Settlement has been SETTLEMENT NOTICE made, accompanied by Company's representation (approved by the Buyer's Representative) confirming the accuracy of the Cooperation Agreements' Settlement and defining, the Deductible, if any; form of Cooperation Agreements' Settlement Notice is attached hereto as Schedule No. 15. ARTICLE 2 SHARE PURCHASE, ADDITIONAL OBLIGATIONS OF THE PARTIES 2.1 Share Purchase. On the terms and subject to the conditions set forth in the Agreement, the Seller covenants to sell and to deliver the Shares to the Buyer and the Buyer covenants to buy the Shares and pay the Total Purchase Price to the Seller on the Closing Date. 2.2 Purchase Price. Subject to Article 2.5 and Article 2.6. The purchase price per one Share shall be PLN 20.0917 (twenty and 917/1000), and the Total Purchase Price for all the Shares shall be PLN 200,000,000 (two hundred million). 10 2.3 Escrow Account. On the Execution Date the Parties and the Escrow Bank will enter into the Escrow Account Agreement pursuant to which the Escrow Bank will open and maintain an Escrow Account for the benefit of the Buyer. For the purposes of securing performance of Buyer's obligations defined in Article 2.7.2 through the end of 2.7.8, within three (3) business days after the Execution Date, however not earlier than within three (3) days from the date of execution of the Escrow Agreement, the Buyer will pay the Escrow Amount to the Escrow Account. On the Closing Date the Escrow Amount shall be credited towards Buyer's payment of the Total Purchase Price. All interest on the Escrow Amount and other benefits earned on the Escrow Amount being deposited on the Escrow Account shall be enjoyed by the Buyer, regardless of which Party is actually paid the amount on such account in accordance with the Escrow Account Agreement. The costs of opening and keeping the Escrow Account shall be borne by the Buyer. The terms and conditions regulating withdrawal of the Escrow Amount from the Escrow Account as well as other terms and conditions of such agreement shall be set forth in detail in the Escrow Account Agreement. 2.4 Deposit Agreement. On the Execution Date the Parties and the Escrow Bank will enter into a Deposit Agreement pursuant to which the Escrow Bank will open and maintain the Deposit. For the purposes of securing payment to the Buyer of an amount equal to the Escrow Amount in case of Seller's failure to perform the obligations defined in Article 2.8.2 through the end of 2.8.9, except, however, for the Seller's obligations referred to in Article 4.14, 4.16, 4.17, 4.18 and 4.21 which are referred to in Article 2.8.6, on the Execution Date the Seller will place a blank promissory note in the Deposit. The Seller's promissory note shall include the following information: (i) designation of the Buyer as the entity in favor of which or at the instructions of which the payment should be made; (ii) the date of issuance of the promissory note; (iii) the location where the promissory note was issued; (iv) signature of the Seller as the issuer of the promissory note. Should the promissory note be released to the Buyer in accordance with the Deposit Agreement, the Buyer shall be authorized to: (i) fill in the promissory note with a sum of not more than PLN 20,000,000 (twenty million) as the promissory note sum, provided that such amount may be increased by the stamp duty payable with respect to the promissory note including the promissory note sum as evidenced on such promissory note; (ii) specify the date of payment of the promissory note (provided that such promissory note payment date shall be a business day occurring seven calendar days from the date of Buyer's dispatch of a registered letter to the Seller to notify the Seller that the promissory note was filled out in accordance with this Agreement), (iii) designate the location of payment of the promissory note; (iv) present the promissory note filled in with the elements designated in this clause to the Seller for payment. The costs of opening and maintaining the Deposit shall be borne by the Buyer. The terms and conditions on which the promissory note will be released from the Deposit as well as other regulations will be specified in detail in the Deposit Agreement. 2.5 Settlement between the Seller and the Entities of the Seller's Group and the Entities from the Company Group. Two (2) business days prior to Closing Date ("SETTLEMENT DATE"), the Seller covenants, in agreement with the Buyer and the Buyer's Representative, to make all endeavors to settle, and with respect to the entities from the Seller's Group it covenants to make all the endeavors to procure 11 settlement of all mutual due and payable receivables of (i) the entities of the Company Group, and (ii) the Seller and the entities of the Seller's Group, such receivables resulting from any agreements (except for the Cooperation Agreements), trade orders or other deeds between the entities from the Company Group and the Seller or the entities from the Seller's Group ("SETTLEMENT"). On the date following the Settlement Date the Seller covenants to notify the Buyer in writing that the Settlement has been made ("SETTLEMENT NOTICE"), by including with the Settlement Notice the Company's representation (approved by the Buyer's Representative) confirming accurate, full and complete Settlement, and if no full and complete settlement of all matured receivables has been made, a representation of the Company (approved by the Buyer's Representative) and defining the total amount of matured receivables remaining to be settled ("SETTLEMENT AMOUNT"). 2.5.1 In the event that the Settlement Amount is not greater than PLN 1,000,000 (one million), the Buyer or the Seller, respectively, covenant to procure: (i) in the event that the Settlement Amount constitutes the outstanding debts of the Seller and the entities from the Seller's Group ("IMPEX DEBT VALUE"), the Seller covenants to procure that the Impex Debt Value is repaid within 5 (five ) business days after the Closing Date; (ii) in the event that the Settlement Amount constitutes the outstanding debts of the entities from the Company Group ("HZ DEBT VALUE"), the Buyer covenants to procure repayment of the HZ Debt Value within five (5) business days after the Closing Date. For the purposes of securing performance of the Seller's obligation to procure repayment of the Impex Debt Value or the Buyer's obligation to procure repayment of the HZ Debt Value, respectively, the Seller or the Buyer, respectively, covenant that no later than on the date preceding the Closing Date but no earlier than on the date of accurate Settlement, they shall grant a surety (poreczenie) of repayment of such debts. The form of the surety referred to in the preceding sentence is attached hereto as Schedule No. 16. 2.5.2 In the event that the Settlement Amount is greater than PLN 1,000,000 (one million) and the Settlement Amount constitutes outstanding debts of the Seller and the entities from the Seller's Group ("IMPEX DEBT DEDUCTIBLE"), the Buyer shall decrease the Total Purchase Price by the Impex Debt Deductible. In the event that the Settlement Amount is greater than PLN 1,000,000 (one million) and the Settlement Amount constitutes outstanding debts of the entities from the Company Group ("HZ DEBT INCREASE"), the Buyer will pay the Total Purchase Price increased by the HZ Debt Increase. If, in result of application of the above procedure, the Total Purchase Price is decreased by the Impex Debt Deductible or increased by the HZ Debt Increase, the Buyer or the Seller, as the case may be, covenant to procure that the entities whose matured receivables have not been settled within the scope of the Settlement do not request repayment of debts thereunder from (i) the Seller or the entities from the Seller's Group in case of decrease of the Total Purchase Price by the Impex Debt Deductible, or (ii) the entities from the Company Group in case of increase of the Total Purchase Price by the HZ Debt Increase. 12 2.6 Cooperation Agreements' Settlement. Two (2) business days prior to the Closing Date ("COOPERATION AGREEMENTS' SETTLEMENT DATE") the Seller, in agreement with the Company, the Buyer's Representative and the Buyer, covenants to settle all the due and payable receivables of the Seller under the Cooperation Agreements ("COOPERATION AGREEMENTS' SETTLEMENT"). The Seller and the Company will make the Cooperation Agreements' Settlement on the basis of the terms and conditions defined in the Cooperation Agreements. On the date following the Cooperation Agreements' Settlement Date the Seller covenants to notify the Buyer in writing that the Cooperation Agreements' Settlement has been made ("COOPERATION AGREEMENTS' SETTLEMENT NOTICE"), by including with the Cooperation Agreements' Settlement Notice the Company's representation (approved by the Buyer's Representative) confirming accurate, full and complete Cooperation Agreements' Settlement and specifying the Deductible, as referred to below, or if no full and complete Cooperation Agreements' Settlement has been made, the Company's representation (approved by the Buyer's Representative) designating the total amount remaining to be settled ("COOPERATION AGREEMENTS' SETTLEMENT AMOUNT") and designating the Deductible, as referred to below. In the event that the Deductible is designated in the Cooperation Agreements' Settlement Notice and in the Seller's and the Company's representation attached to such notice, the Buyer shall decrease the Total Purchase Price by the Deductible. In the event that no full and complete Cooperation Agreements' Settlement has been made, the Buyer covenants to procure that the Company pays the Cooperation Agreements' Settlement Amount to the Seller within 5 (five) business days after the Closing Date. For the purposes of securing the obligation to procure the Buyer's repayment of the Cooperation Agreements' Settlement Amount no later than on the date preceding the Closing Date, but no earlier than after making the accurate Cooperation Agreements' Settlement, the Buyer covenants to grant a surety for repayment of such amount. The form of surety (poreczenie) referred to in the preceding sentence is attached as Schedule No. 17 hereto. 2.6.1 Calculation of the Deductible. In the event that in the period between May 31, 2003 and the Cooperation Agreements' Settlement Date ("TERM FOR MAXIMUM AMOUNT") the Seller's remuneration and receivables (including the costs incurred by the Seller) under the consulting services agreement of February 3, 2003, in any of the months within the Term of Maximum Amount, exceed PLN 250,000 (two hundred and fifty thousand) increased by the goods and services tax (VAT) due thereon ("MAXIMUM AMOUNT"), the Seller shall be obliged to provide in the Cooperation Agreements' Settlement Notice, which shall be confirmed by the Company's representation (approved by the Buyer's Representative), the total amount paid to the Seller or the amount of Company's outstanding debts in that respect, constituting the sum of the amounts which exceed the Maximum Amount established for each of the months in the Term for Maximum Amount ("DEDUCTIBLE"). In the event that a Deductible exists, the Buyer shall decrease the Total Purchase Price by the Deductible. 2.7 Additional Covenants of the Buyer. Subject to other terms and conditions of this Agreement which define the Buyer's covenants, the Buyer covenants, in particular: 13 2.7.1 to deposit the Escrow Amount in the Escrow Account within three (3) business days of Execution Date, however not earlier than within three (3) days from execution of the Escrow Agreement; 2.7.2 to duly perform Buyer's obligations as defined in the BRE Bank Agreement; 2.7.3 to procure approval by the Buyer's Representative of the accuracy of the Settlement and the Cooperation Agreements' Settlement; 2.7.4 to pay to the Buyer's account at BRE Bank, the First Part of Purchase Price no later than on the day preceding the Closing Date, however not earlier than within three (3) days from receipt of Seller's and BRE Bank's notice on the final definition of the First Part of Purchase Price; and refrain from, until the Closing Date inclusive, issuing any instructions with regards to such amounts, except for giving instructions of transfer of specific amounts (which, in aggregate, do not exceed the First Part of Purchase Price) to the bank accounts designated in the Representation with Instructions Relating to the First Part of Purchase Price; 2.7.5 to procure, no later than on the Closing Date, Seller's release from the PKO BP Security Interests and the BRE Bank Security Interests, which release cannot contain any other conditions other than the terminating condition constituting the Buyer's failure to buy the Shares; no later than three (3) business days prior to the Closing Date the Buyer shall deliver to the Seller either documents or draft documents relating to execution of this obligation; the contents of the documents and draft documents delivered to the Seller within such time should correspond to the contents of the documents which will be presented to the Seller on the Closing Date; 2.7.6 to procure, no later than on the Closing Date, Seller's release from the WFOae's Security Interests, which waiver cannot contain any conditions other than the terminating condition of Buyer's failure to buy the Shares, no later than three (3) business days prior to the Closing Date the Buyer shall deliver to the Seller either documents or draft documents relating to execution of this obligation; the contents of the documents and draft documents delivered to the Seller within such time should correspond to the contents of the documents which will be presented to the Seller on the Closing Date; 2.7.7 to collect the share certificates for the Shares; 2.7.8 to pay the Total Purchase Price for the Shares. 2.8 Additional Covenants of the Seller. Subject to other terms and conditions of this Agreement which define the Seller's covenants, the Seller covenants, in particular: 2.8.1 to deliver, on the Execution Date, however not earlier than on the date of execution of the Deposit Agreement, the Seller's blank promissory note to the Deposit maintained by the Escrow Bank; 14 2.8.2 to duly perform the Seller's obligations as defined in the BRE Bank Agreement and, in particular, to define, in agreement with BRE Bank, no later than within five (5) business days prior to the Closing Date, the amount of the First Part of Purchase Price and to advise the Buyer that the First Part of Purchase Price has been defined no later than four (4) business days prior to the Closing Date; 2.8.3 to procure that until the date on which it will be possible to hold a Company's general meeting at which the Buyer would be able to exercise voting rights attached to the Shares, neither the general meeting nor the supervisory board of the Company, unless the Buyer decides otherwise, shall dismiss or suspend the Buyer's representative in his/her duties as a Company's management board member; in the event that the Seller finds that the Buyer's Representative acts to the detriment of the Company or that, in relation to performing duties related to acting as member of the Company's management board, he/she performs other illegal actions, the Buyer shall not deny its consent for the Buyer's Representative's dismissal without justified reasons; in case of Buyer's Representative dismissal regardless of the Buyer's consent of once such consent has been given, the Seller shall procure that the dismissed Buyer's Representative is replaced by another person designated by the Buyer to serve on the Company's management board so that at the time of Buyer's Representative's dismissal another person designated by the Buyer would be effectively appointed in his/her stead; 2.8.4 to procure that the Company's management board, in the period between the Execution Date and the Closing Date, shall consist of two members, including the Buyer's Representative, unless the Buyer decides otherwise; 2.8.5 to procure, no later than on the Closing Date, expiry of all encumbrances on the Shares, subject to Buyer's proper performance of the BRE Bank Agreement; 2.8.6 to make an accurate Settlement and the Cooperation Agreements' Settlement as well as terminate the Cooperation Agreements and duly perform other obligations of the Seller as referred to in Article 4 of the Agreement; 2.8.7 to grant Seller's consent, in the form as required by law, for the Buyer to apply to the relevant tax office, acting on the basis of Article 306g of Tax Ordinance, for a certificate stating any outstanding tax liabilities of the Seller, such consent being granted on such date that will allow to receive the certificate within three (3) days prior to the Closing Date; such consent will be granted to the Buyer within five (5) days from the date of Seller's receipt of the Buyer's request, provided that the Buyer will make the request for the consent no later than on the second business day after satisfaction of the Conditions to Purchase as referred to in Article 3.1.3 and 3.1.4; form of Seller's consent referred to in this Article is attached hereto as Schedule No. 18; 15 2.8.8 to grant Seller's consent, in the form as required by law, for the Buyer to apply to the relevant social insurance office (ZUS) for a certificate evidencing the Seller's outstanding liabilities with respect to social or health insurance premiums or any other premiums, payables and public duties which are collected by social insurance offices, such consent being granted within the time allowing to receive the certificate within three (3) days prior to the Closing Date; the above consent will be granted to the Buyer within five (5) days from the date of Seller's receipt of the Buyer's request, provided that the Buyer will make the request for the consent no later than on the second business day after satisfaction of the Conditions to Purchase as referred to in Article 3.1.3 and 3.1.4; form of Seller's consent referred to in this Article is attached hereto as Schedule No. 19; 2.8.9 to deliver to the Buyer the share certificates for the Shares on the Closing Date. ARTICLE 3 CONDITIONS TO BUYER'S SHARE PURCHASE 3.1 Catalogue of Conditions to Purchase. Subject to Article 3.4 the obligations referred to in Article 2.1 shall be performed after the occurrence of all the events, performance of obligations and satisfaction of all the conditions precedent referred to in this Article (the events, performance of obligations and conditions precedent defined in this Article shall hereinafter be jointly referred to as the "CONDITIONS TO PURCHASE"). The transfer of the ownership title to the Shares to the Buyer shall occur after all the following Conditions to Purchase have been satisfied: 3.1.1 on the Execution Date, execution of the Escrow Account Agreement and the Buyer's payment of Escrow Amount to the Escrow Account; 3.1.2 on the Execution Date, execution of the Deposit Agreement and delivery of the Seller's blank promissory note to the Deposit kept by the Escrow Bank; 3.1.3 receipt of UOKiK President's decision with unconditional consent for concentration as defined in the Protection of Competition and Consumers Act of December 15, 2000 (Dz.U. 2000, No. 122, item 1319, as amended), consisting of the Buyer's acquisition of the Shares, or after the statutory period for such decision to be issued has lapsed; 3.1.4 receipt of a permit of the Minister of Internal Affairs and Administration for Buyer's purchase of the Shares which constitute a majority stake in the Company's share capital, as required by the Acquisition of Real Estate by Foreigners Act of March 24, 1920 (Dz.U. 1996, No. 54, item 245, as amended); 3.1.5 payment to the Buyer's account at BRE Bank, of the First Part of Purchase Price and refraining, until the Closing Date inclusive, from issuing any instructions with respect to such amount except for the ability to issue instructions to transfer relevant amounts (the aggregate of which shall not be greater than the First Part of Purchase Price) to the bank accounts 16 designated in the Representation with Instructions relating to the First Part of Purchase Price; 3.1.6 the Buyer procuring that the Seller is released from the PKO BP's Security Interests by: (i) obtaining the Notice of Waiver of PKO BP's Security Interest which waiver may contain a terminating condition consisting of Buyer's failure to purchase the Shares, or (ii) delivery to the Seller of an irrevocable and payable on first demand bank guarantee for an amount corresponding to the amount which PKO BP may demand from the Seller in relation to enforcement of PKO BP's rights under the PKO BP's Security Interests, or (iii) any other form of security provided by the Buyer in agreement with the Seller; or (iv) full and complete repayment of Company debts which have been secured by the PKO BP Security Interests; and the Buyer procuring that the Seller is released from the BRE Bank's Security Interests by: (i) obtaining the Notice of Waiver of BRE Bank's Security Interest which waiver may contain a terminating condition consisting of Buyer's failure to purchase the Shares, or (ii) delivery to the Seller of an irrevocable and payable on first demand bank guarantee for an amount corresponding to the amount which BRE Bank may demand from the Seller in relation to enforcement of BRE Bank's rights under the BRE Bank's Security Interests, or (iii) any other form security provided by the Buyer in agreement with the Seller; or (iv) full and complete repayment of Company debts which have been secured by the BRE Bank Security Interests; 3.1.7 the Buyer procuring that the Seller is released from the WFOae's Security Interests by either (i) procuring a Notice of Waiver of WFOae's Security Interests, which waiver may contain a terminating condition consisting of Buyer's failure to purchase the Shares or (ii) delivering to the Seller an irrevocable, payable on first demand bank guarantee for the amount corresponding to the amount which WFOae's may demand from the Seller in relation to enforcement of WFOae's rights under the WFOae's Security Interests, or (iii) any other form security provided by the Buyer in agreement with the Seller; or (iv) full and complete repayment of Company debts which have been secured by the WFOae Security Interests; 3.1.8 the Seller procuring expiry of all encumbrances on the Shares no later than on the Closing Date; 3.1.9 making an accurate Settlement and Cooperation Agreements' Settlement; 3.1.10 confirmation, through relevant certificates issued by a tax office and the social insurance office (ZUS) appropriate for the Seller that the Seller has no outstanding tax liabilities or liabilities with respect to social and health insurance premiums or any other premiums, payables and public dues on the Closing Date; 3.1.11 there being no Material Adverse Change; 17 3.1.12 due performance of the Seller's covenants referred to in Article 4 (except for 4.14, 4.16, 4.17, 4.18, 4.21) within the period between the Execution Date and the Closing Date. 3.2 Parties Cooperation with Regards to Satisfaction of the Conditions to Purchase. The Parties covenant to take all legal and factual actions which may be reasonably required for all the Conditions to Purchase to be satisfied on as soon as possible basis. Furthermore, the Parties covenant to notify each other of satisfaction of the specific Conditions to Purchase immediately upon such satisfaction, however not later than within seven (7) days of becoming aware of satisfaction of a relevant Condition to Purchase. The notice of satisfaction of a relevant Condition to Purchase should be accompanied by a copy of respective document evidencing satisfaction of the Condition to Purchase, provided that such document is required to be issued in relation to satisfaction of the Condition to Purchase. 3.3 Conditional Decision of the UOKiK President. In the event that in the decision on consent for concentration consisting of Buyer's purchase of the Shares the UOKiK President imposes certain additional obligations on the Buyer, the Buyer may, at its own discretion, either (i) covenant to perform the additional obligations specified in such decision; or (ii) withdraw from the Agreement. The Buyer covenants to advise the Seller of its decision within fourteen (14) days from the date of delivery of the UOKiK President's conditional consent referred to in this clause. 3.4 Waiver of Conditions to Purchase. The Parties jointly represent that except for the Conditions to Purchase referred to in Article 3.1.3 and 3.1.4: (i) the Buyer shall have the right to waive, at any time, all or any of the Conditions to Purchase provided in Article 3.1.2 and in Articles 3.1.8 through 3.1.12; and (ii) the Seller shall have the right to waive, at any time, all or any of the Conditions to Purchase provided in Article 3.1.1 and in Articles 3.1.5 through 3.1.7. If a waiver is granted, the Party granting such waiver shall deliver to the other Party written representation on waiver of all or the relevant Conditions to Purchase. Unless the Parties jointly decide otherwise, the consequence of any such waiver will be that a relevant Condition to Purchase will be deemed satisfied on the date designated in the representation of the Party granting the waiver which, however, cannot occur earlier than on the 7th (seventh) and no later than on the 14th (fourteenth) day from the date of dispatching the waiver to the other Party. ARTICLE 4 INTERIM PERIOD 4.1 Operation of Business by Entities of the Company Group. Except as contemplated by this Agreement or with the prior written consent of the Buyer or the Buyer's representative, during the period starting from the Execution Date and until the Closing, the Seller covenants to procure that the Seller's Representative cooperates with the Buyer's Representative and the Buyer so that the entities of the Company Group conduct their respective businesses and operations according to the entities of the Company Group' ordinary and usual course of business and use all best efforts to (i) preserve intact the entities of the Company Group' properties, assets and business operations, (ii) take reasonable action to keep available the services of executive and employees of each of the entities of the Company Group, (iii) maintain satisfactory relationships with customers, suppliers, distributors and 18 others having commercially beneficial business relationships with the entities of the Company Group. The Seller shall cause the Seller's Representative to cooperate with the Buyer's Representative so that none of the entities of the Company Group, take any of the following actions from the Execution Date until the Closing, without the prior written consent of the Buyer's Representative or the Buyer: 4.1.1 issue, sell, pledge, transfer, or propose the issuance, sale, pledge or transfer, of shares in the share capital of any class in entities of the Company Group, or securities convertible into any such shares, or any rights, warrants or options to acquire any such shares or other securities convertible into shares in the entities from the Company Group; 4.1.2 redeem, purchase or otherwise acquire any outstanding shares of the share capital of any entity of the Company Group; 4.1.3 effect any recapitalization, share split or like change in the share capital of any entity of the Company Group; 4.1.4 create or modify any privileges or preferences with respect to any shares in the entities of the Company Group's share capital; 4.1.5 acquire shares in any joint stock company, limited liability company or enter into any partnership agreement, merger agreement or effect a transformation of a corporate form of any entity of the Company Group or enter into any other agreements having similar effects; 4.1.6 except as required for the transactions contemplated by this Agreement, propose or adopt any amendment to the articles of association or statute of any entity of the Company Group; 4.1.7 sell, transfer, pledge or otherwise dispose of any of its shares, material property, assets or enterprise, or an organized part of enterprise, or pledge, mortgage or otherwise encumber any of its shares, material property, assets or enterprise, or an organized part of enterprise of any entity of the Company Group; 4.1.8 enter into, amend, modify, cancel or breach any agreement or unilateral commitment or take any other action providing for payment or in-kind performance with a value exceeding PLN 1,000,000 (one million) or an equivalent of this sum in other currency, or enter into, amend, modify, cancel or breach any contracts or agreements or unilateral commitments or take any series of other actions in connection with the same transaction or related transactions or with the same person or affiliates of such person providing in aggregate for payment or in-kind performance with a value exceeding PLN 1,000,000 (one million) or an equivalent of this sum in other currency; 4.1.9 enter into, amend, cancel or breach any agreements outside the ordinary course of business by any of the entities of the Company Group relating in particular to gas and energy supply, and sale or purchase of certain 19 products, in particular electrodes, rolled products, supply of refractory products, bearings, steel scrap, granulated aluminum products and aluminum wire rods; 4.1.10 enter into any contract or agreement or unilateral commitment which restrains, restricts, limits or impedes the ability of any entity of the Company Group to compete with or conduct any business or line of business in any geographic area; 4.1.11 except as contemplated herein, assume any unilateral commitments with regards to the Seller or entities of the Seller's Group nor enter into, amend, cancel or breach any agreement with the Seller or any such entities; 4.1.12 declare or pay any dividend or other distribution in respect to any capitals of any of the entities of the Company Group; 4.1.13 take any action resulting in assuming any unilateral commitment having the effect of increased indebtedness of the entities of the Company Group nor enter into, amend, cancel or breach any credit facility or loan agreement; 4.1.14 except for those commitments involving capital expenditures disclosed in Schedule 20 attached hereto, enter into any unilateral commitment or agreement or series of unilateral commitments or agreements involving capital expenditures (or commitments) exceeding PLN 500,000 (five hundred thousand) or an equivalent of such sum in other currency; 4.1.15 enter into any agreement with any individual for employment or the provision of services to any of the entities of the Company Group for an amount in excess of PLN 100,000 (one hundred thousand) per year or an equivalent of such sum in other currency, or amend, cancel or breach the terms of employment of any executive (particularly a management board member) whose remuneration is greater than PLN 60,000 (sixty thousand) per year or the equivalent of such sum in other currency (a "KEY EMPLOYEE"), or otherwise increase the compensation or benefits payable to any Key Employee or member of supervisory board of any of the entities of the Company Group; this clause shall not apply to the individuals or additional competencies granted to those individuals as referred to in Schedule No. 21 to the Agreement; 4.1.16 enter into, amend, cancel or breach any collective labor agreement of any entity of the Company Group, 4.1.17 enter into any agreement resulting in acquiring by the Company of ownership or/and perpetual usufruct of any real estate or fraction of real estate, including the separate ownership of premises. 4.2 CONDUCT OF TAX AFFAIRS. The Seller shall cause the Seller's Representative to cooperate with the Buyer's Representative in order to provide the Buyer's Representative with access to all material communications with taxation authorities regarding the entities of the Company Group. 20 4.3 Delivery of Financial Statements and Reports. The Seller shall cause the Seller's Representative to cooperate with the Buyer's Representative in order to allow the Buyer's Representative access to, in particular, monthly financial statements presenting the results of operations and the balance sheet for each of the entities of the Company Group for each month not later than on the 30th (thirtieth) day of the following month after such statements are made. The Seller shall cause that from the Execution Date until the Closing Date, the Seller's Representative will cooperate with the Buyer's Representative in such a manner that the entities of the Company Group provide the Buyer's Representative with reports on sales, receivables, liabilities and reserves and minutes of meetings of respective supervisory boards and the management boards of the entities of the Company Group, for each month, not later that on the 15th (fifteenth) day of each month. 4.4 Litigation. The Seller shall cause that the Seller's Representative will cooperate with the Buyer's Representative so that the entities of the Company Group promptly inform the Buyer's Representative about any pending or threatened litigation, arbitration, mediation or administrative proceedings concerning the entities of the Company Group which could result in payment or in-kind performance by the entities of the Company Group with a value in excess of PLN 50,000 (fifty thousand) or the equivalent of such sum in other currency or any other litigation, arbitration, mediation of administrative proceedings that could have a material adverse change on the entities of the Company Group or their respective businesses. 4.5 Notifications to the Company Counterparties. If required by any agreements made by the Company, the Seller covenants to procure that the Seller's Representative will cooperate with the Buyer's Representative so that the Company, immediately after the Execution Date, would notify parties to such agreements of the Seller's intention to sell the Shares or request those parties to take a position as far as continuing to perform under such agreements in relation to the Seller's intention to sell and subsequently the Seller's sale of the Shares. 4.6 Notifications to the Company Group Counterparties, Excluding the Company. If required by any agreements made by entities of the Company Group, excluding the Company, the Seller covenants to procure that the Seller's Representative will cooperate with the Buyer's Representative so that such entities of the Company Group, immediately after the Execution Date, would notify parties to such agreements of the Seller's intention to sell the Shares or request those parties to take a position as far as continuing to perform under such agreements in relation to the Seller's intention to sell and subsequently the Seller's sale of the Shares. 4.7 Manner of Cooperation. The Parties resolve that: 4.7.1 in performance of the obligation to cooperate as referred to in Article 4.1, 4.2, 4.3, 4.4, 4.5, 4.6 and 4.8, 4.9 of the Agreement, the Seller's Representative, prior to taking any of the actions referred to in those Articles, shall obtain the consent of either the Buyer's Representative or the Buyer for performance of any such action; 4.7.2 should the Buyer's Representative find that the Seller's Representative does not cooperate, the Buyer's Representative shall immediately advise the 21 Seller of any such fact in writing by explaining the circumstances in the notice; the Seller's obligation to ensure cooperation shall be deemed satisfied if the Seller does procure the Seller's Representative to cooperate in a given matter within three (3) days, and if certain actions are required to be taken by the Company's supervisory board, within ten (10) days from the date of receipt of the Buyer's Representative's notice of no-cooperation; 4.7.3 if the Buyer's Representative did not advise the Seller of a lack of cooperation on the part of the Seller's Representative, the Seller's obligation to ensure cooperation in any given matter is deemed as satisfied. 4.8 Access to Company Information. During the period from the Execution Date to the Closing Date, the Seller shall not cause, directly or indirectly, that the Buyer's Representative or any other persons specifically designated by the Buyer in agreement with the Seller, are denied access to the books, records, facilities, properties, assets and other information related to operations of the Company. The Seller shall not cause, directly or indirectly, that the Buyer's Representative or other persons specifically designated by the Buyer in agreement with the Seller, are deprived of the possibility to demand and receive information from appropriate managers, directors, officers, employees and representatives of the Company such matters related to the transactions provided for herein. Furthermore, the Seller, at the Buyer's request, will provide the Buyer with information on activities of the Company's supervisory board. 4.9 Access to Information on the Company Group, Excluding the Company. During the period from the Execution Date to the Closing Date, the Seller shall not cause, directly or indirectly, that the Buyer's Representative is denied access to the books, records, facilities, properties, assets and other information related to operations of the entities of the Company Group, excluding information relating to the Company, with regards to which such access has been regulated in Article 4.8. The Seller shall not cause, directly or indirectly, that the Buyer's Representative is deprived of the possibility to demand and receive information from appropriate managers, directors, members of the supervisory board, officers, employees and representatives of the entities of the Company Group, excluding information relating to the Company, with regards to which such access has been regulated in Article 4.8, with regards to any matters related to the transactions provided for herein. 4.10 Settlement and Termination of Cooperation Agreements. Subject to Article 2.6, the Seller shall ensure that no later than on the Closing Date all the Cooperation Agreements are settled and terminated without any liability for any such termination or any other liabilities under such agreements or resulting from termination thereof against the Buyer or the Company. Standard form of termination of the agreements referred to in this Article is attached hereto as Schedule No. 22. 4.11 Actions of the Seller Acting as Company Shareholder. Unless otherwise provided by this Agreement, the Seller shall not, during the period starting from the Execution Date and until the Closing, exercise the rights enjoyed thereby due to 22 holding the ownership title to the Shares on the terms and conditions as provided by this Article. 4.11.1 During the period starting from the Execution Date and until the Closing, the Seller shall not, without the prior written consent of the Buyer: (a) sell, pledge, transfer, or propose the sale, pledge or transfer, of any Shares or securities convertible into any Company shares, or any rights, warrants or options to acquire any Company shares; (b) enter into a merger agreement with respect to the Company or effect a transformation of a corporate form of the Company or enter into any other agreements having similar effects; (c) unless the Buyer decides otherwise, vote "in favor" or "against" or abstain from vote with respect to the Shares at any Company's general meeting in relation to adoption of resolutions regarding the following matters: (i) review and approval of the Management Board's report on the Company's operations as well as the financial report for the previous financial year and approving the performance of duties by members of the Company authorities; (ii) distribution of profits or coverage of losses; (iii) change of the scope of Company's business; (iv) amendment of the Statue; (v) increase or decrease of the share capital or any other changes of the structure of the Company's share capital; (vi) redemption of Company shares; (vii) division or transformation of the Company or Company's merger with another company; (viii) dissolution or liquidation of the Company; (ix) issuance of bonds; (x) transfer or lease of the enterprise, creation of a right of usufruct thereon and purchase or sale of any real property or a share in a real property and a collection of tangible and intangible assets which could constitute a separate enterprise; (xi) dismissal or suspension of Company management board members in their duties; (xii) establishment of the number of member of Company's supervisory board as well as appointment or dismissal of the Company's supervisory board members; (xiii) increase or decrease of remuneration of supervisory board members; (xiv) creation or cancellation of any other capitals or special purpose funds of the Company; (xv) specification of the manner of use of Company's net profit; (xvi) purchase of Company's own shares; (xvii) mandatory buy out of shares owned by shareholders representing less than 5% of the Company's share capital; (xviii) any resolutions relating to claims for redress of injuries caused in the course of exercising management or supervision; (xix) exclusion or restriction of preemptive rights with respect to newly issued shares; (d) prior to the Closing Date, the Seller SHALL take all the factual and legal actions required to convene a general meeting of shareholders of the Company which will be held not earlier than seven (7) and not later that 15 (fifteen) business days after the Closing Date. The agenda for such shareholders' meeting shall include points relating 23 to: (i) changes in the Company's supervisory board; and (ii) amendments of the Statute with respect to eliminating restrictions regarding satisfaction of specific conditions by candidates for members of the Company's management board. 4.12 Company's Supervisory Board and Management Board. 4.12.1 Unless otherwise provided by this Agreement, the Seller shall take all actions necessary to ensure that between the Execution Date and the date on which the supervisory board members, excluding the supervisory board member appointed by the Company's general meeting from among the candidates designated by the State Treasury, are not effectively dismissed or do not effectively resign, the Company's supervisory board, without the prior written consent of the Buyer, which shall not be unreasonably withheld, shall not take any resolutions in the following matters: (i) any amendments to the supervisory board by-laws; (ii) approval of the Company's management board by-laws; (iii) entering into contracts of employment with members of the management board; (iv) establishment of principles and amount of remuneration for management board members; (v) appointment and dismissal of the president, individual members or the entire management board; (vi) suspension in their duties, due to important reasons, of the president and the specific members of the management board or the entire management board; (vii) delegating one or several members of the supervisory board for temporary performance of duties of a management board member, in case of suspension or dismissal of management board members or the entire management board or if the management board, due to other reasons, is unable to act; (viii) granting the management board consent for sale of fixed assets not related to the scope of Company's operations, having the value of more than one twentieth of the share capital; (ix) expressing consent for taking any credit facilities or loans, sale or purchase of any fixed assets having the value in excess of the PLN equivalent of EUR 300,000 (three hundred thousand); (x) consenting for extending any sureties (poreczenia) of a one time value of EUR 300,000 (three hundred thousand) or extending to a single entity sureties for a total of the equivalent of EUR 300,000 (three hundred thousand) in a single year; (xi) consenting for creation or accession to any commercial law companies within the scope not reserved for the general meeting; (xii) approval of any annual business and investment plans for the Company; (xiii) consenting for assumption of credit facilities, selling or acquiring fixed assets having the value greater than 1/10 of the Company's share capital; and (xiv) consenting for purchase or sale of any real property or a share in any real property. Furthermore, at the Buyer's written request made not earlier than on the date on which the Conditions to Purchase referred to in Article 3.1.3 and 3.1.4 have been satisfied, but not later than ten (10) days prior to the Closing Date, the Seller covenants to cause that the Company's supervisory board established the number of management board members at three (3) members and appointed the person designated by the Buyer to the Company's management board. The resolutions referred to in the preceding sentence may contain a condition precedent of 24 the Buyer's purchase of the Shares by December 15, 2003. The form of supervisory board resolution is attached as Schedule No. 23 hereto. 4.12.2 The Seller shall cause the resignation or dismissal of all members of the Company's supervisory board on or prior to the Closing Date, except for the Company's supervisory board member appointed by the Company's shareholders meeting from among the candidates designated by the State Treasury. The form of resignation of a Company supervisory board member is attached herewith as Schedule No. 24. 4.12.3 Prior to the Closing Date, the Seller shall take all necessary actions to ensure that after the Closing Date the Buyers' representatives will be able to hold the positions of members of the Company's management board, in particular, the Seller shall amend the by-laws of the Company's management board in order to remove all restrictions on qualifications for candidates for members of the Company's management board, except for the conditions defined in the Statute. 4.13 Release of Encumbrances. Prior to the Closing Date, the Seller shall take all actions necessary to release the existing pledges and all other encumbrances over the Shares, in such a manner as to enable the Buyer to purchase the Shares free of any pledges and encumbrances on the Closing Date. 4.14 Confidentiality. Prior to the Closing Date, the Buyer shall, except to the extent required by any laws in force, keep confidential, and shall use its reasonable best efforts to cause to be kept confidential by its affiliates, representatives and the Buyer's Representative, all information concerning the Seller or the entities of the Company Group disclosed by the Seller or its representatives to the Buyer or its representatives prior to the Execution Date or hereafter in connection with this Agreement or the consummation of the transactions contemplated hereby. None of such information shall be used in any manner other than in connection with the Parties' due performance of this Agreement and the transactions contemplated hereby. 4.15 Additional Documents. Subject to the terms and conditions set forth herein, each of the Parties agrees to take all actions in compliance with applicable laws and regulations to consummate and make effective as promptly as practicable the obligations under this Agreement. If at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, including, without limitation, the execution of additional instruments, the Parties shall take all such necessary action. 4.16 Consents and Approvals. The Parties each shall cooperate with one another and shall use all efforts to prepare all necessary documentation to effect promptly all necessary filings and to obtain all necessary permits and consents, or to confirm that the transactions contemplated by this Agreement are exempt from the obligation to get any such permits and consents. Each Party shall keep all other Parties apprised of the status of any inquiries made of such Party by any governmental authority, court or other public authority with respect to this Agreement. 25 4.17 Public Announcements. The Buyer and the Seller shall consult with each other and shall mutually agree in writing (the agreement of each such Party, in such respect, not to be unreasonably withheld) upon the content and timing of any press release or other public statements with respect to the transactions contemplated by this Agreement and shall not issue any such press release or make any such public statement prior to such consultation and agreement, except as may be required by applicable law; provided, however, that each of the Buyer and the Seller shall give prior notice to the other of the content and timing of any such press release or other public statement. 4.18 Information on Bankruptcy Petitions or Motions for Opening of Arrangement Proceedings. In the event of filing, or becoming aware of a third party filing a motion for declaration of bankruptcy or opening of arrangement proceedings of one of the Parties, the Party which filed such motion or became aware of a motion relating to it being filed, shall be obliged to immediately advise the other Party thereof in writing. 4.19 NOTICE OF CERTAIN CHANGES. From the Execution Date until the Closing Date, each of the Parties shall immediately notify the other Party in writing upon becoming aware of (i) the occurrence, or likely occurrence, of any Material Adverse Change or (ii) the occurrence of any other event that has, or is likely to have, the effect of rendering untrue any of the representations and warranties made by a Party or the Company in Article 6 or Article 7 hereof respectively. 4.20 EXCLUSIVITY. During the term of this Agreement, the Seller shall (i) discontinue all negotiations with any other person, and shall not enter into any new negotiations regarding the acquisition, transfer, encumbrance or redemption of any of the Company Shares or shares of any of the entities of the Company Group, other than as contemplated by this Agreement, (ii) subject to applicable laws, restrict access to any confidential information it may have with respect to the entities of the Company Group or to the members of the respective management boards of the entities of the Company Group, and (iii) notify the Buyer immediately upon receipt of any offers or solicitations from third parties regarding the potential encumbrance or redemption of the Shares. 4.21 Non-Solicitation. Beginning on the Execution Date and continuing through the date that is two (2) years following the Closing Date the Seller and each of the entities of the Seller's Group will not directly or indirectly, except by means of a general public solicitation addressed to non-specified addressees, take any action to terminate employment or any other relation pursuant to which any specific services are rendered to any entities of the Company Group, the Buyer or any of its subsidiaries by a person who is the employee or service provider of any of the entities of the Company Group, the Buyer or its subsidiaries. This clause shall not apply to service providers who are independent outside advisors or agents of the Buyer or its subsidiaries. ARTICLE 5 CLOSING 5.1 Within seven (7) business days of the date on which the last of the Conditions to Purchase referred to in Article 3.1.3 and 3.1.4 was satisfied the Parties will jointly 26 designate the Closing Date in writing, taking into account the necessity to satisfy other Conditions to Purchase. In case the Parties fail to agree on the Closing Date, the Closing Date shall be designated by the Seller, provided that it shall enjoy such right exclusively for three (3) days after the seven day period referred to above. Should the Seller fail to designate the Closing Date within the three day period, the right to designate the Closing Date shall be exclusively enjoyed by the Buyer. The Seller or, as the case may be, the Buyer, in performance of the right to individually designate the Closing Date, may designate the Closing Date on the date which occurs not earlier than on the first business day following 21 (twenty one) day period after the date on which the Buyer sent notice to the Seller that the last of the conditions referred to in Article 3.1.3 or 3.1.4, has been satisfied, however not later than within one month from the date of delivery of such notice to the Seller. The Closing shall take place in the presence of a notary (the "NOTARY") who will accept the documents specified in Article 5.2.3 and 5.2.5 below to keep in deposit, and will then perform the actions referred to in Article 5.2.4 and in Articles 5.2.6 through 5.2.8. The Closing may be participated by representatives of BRE Bank and PKO BP (the "BANK'S REPRESENTATIVES"). The Closing shall take place at the offices of Weil, Gotshal & Manges - Pawel Rymarz Sp. k., ul. Emilii Plater 53, 00-113 Warsaw, Poland, 20th floor of the Warsaw Financial Centre. 5.2 Each of the following events shall occur on the Closing Date, in the sequence as provided in this Article 5.2. 5.2.1 The Buyer will deliver or procure delivery of the following documents to the Seller: (a) a copy of the UOKiK President's consent for the concentration consisting of the Buyer's acquisition of the Shares or a representation that the statutory period for the issuance of such decision has lapsed, unless it has already delivered such copy of consent or such representation to the Seller prior to the Closing Date; (b) a copy of the permit of the Minister of Internal Affairs and Administration for the Buyer to purchase the Shares which constitute a majority stake in the Company's share capital, unless it has already delivered a copy of such consent to the Seller prior to the Closing Date; (c) confirmation of payment to the Buyer's bank account at BRE Bank of the First Part of Purchase Price and confirmation of BRE Bank that on the Closing Date those moneys were on such bank account; (d) other documents which have not been previously delivered and which the Buyer is obliged to deliver to the Seller no later than by Closing on the terms and conditions defined in the Agreement. 5.2.2 The Seller will or will cause delivery of the following documents to the Buyer: 27 (a) certificate issued by the Register of Pledges not earlier than on the date preceding the Closing Date, confirming that no pledges or other encumbrances on the Shares exist, except for the pledge on 8,260,717 (eight million, two hundred and sixty thousand, seven hundred and seventeen) Company shares out of the Shares which were pledged in favor of BRE Bank; (b) copy of an extract from the register of treasury pledges kept by tax offices appropriate to the Seller and a copy of an extract from the Central Register of Treasury Pledges evidencing that no pledges on the Shares exist, such documents being issued not earlier than on the day preceding the Closing Date; (c) evidence that the Company's shareholders meeting has been convened to perform the Seller's covenant as referred to in Article 4.11.1 subsection (d), unless such evidence has been delivered to the Buyer prior to the Closing Date; (d) Representation with Instructions Relating to the First Part of Purchase Price, unless such representation was delivered to the Buyer prior to the Closing Date; (e) documents confirming dismissal or resignation of all members of the Company supervisory board, except for the supervisory board member appointed by the Company's general meeting from among the candidates designated by the State Treasury; (f) duly filled out and signed by the Seller motions to the relevant register of pledges for the deletion of pledge on 8,260,717 (eight million, two hundred and sixty thousand, seven hundred and seventeen) shares from among the Shares or, if the pledge has not been entered in a relevant register, motions for withdrawal of the "motions for registration of pledge on such shares", unless such motions were delivered to the Buyer prior to the Closing Date; (g) evidence of termination of the Cooperation Agreements made between the Seller and the Company, as referred to in Article 4.10, unless such evidence was delivered to the Buyer prior to the Closing Date; (h) representation of the Company, signed by the Company (including by the Buyer's Representative) with regards to the accuracy of the Settlement and the Cooperation Agreements' Settlement, unless such documents were delivered to the Buyer prior to the Closing Date; (i) other documents which have not been previously delivered and which the Seller is obliged to deliver to the Buyer no later than by Closing on the terms and conditions defined in the Agreement, unless such documents were delivered to the Buyer prior to the Closing Date. 28 5.2.3 The Seller will or will cause delivery of the following documents to the Notary: (a) BRE Bank's representations on granting an unconditional consent for the sale of 8,260,717 (eight million, two hundred and sixty thousand, seven hundred and seventeen) shares from among the Shares in compliance with this Agreement; (b) BRE Bank's representations on unconditional waiver of the ordinary pledge on 9,954,359 (nine million, nine hundred and fifty-four thousand, three hundred and fifty-nine), including a registered pledge on 8,260,717 (eight million, two hundred and sixty thousand, seven hundred and seventeen) Company shares from among the Shares and BRE Bank's unconditional consent for deletion of the pledge from the relevant register, or, if the pledge had not been entered in a relevant register, consent for withdrawal of the motion for registration of the pledge in the relevant register of pledges; (c) power of attorney for litigation purposes to represent the Seller in any proceedings before court of proper jurisdiction in any matter for deletion of pledge or withdrawal of motion to register the pledge on Company shares, such power of attorney being granted by the Seller to persons designated by the Buyer no later than on the Closing Date, provided that the power of attorney contains the Seller's representation that the power of attorney will not be revoked until the date of deletion of the pledge or issuance by a relevant court of a decision on discontinuance of proceedings; (d) global certificates for the Shares, including a representation on transfer of the Shares to the Buyer; (e) confirmation evidencing payment of the Total Purchase Price, the final value of which will be established in accordance with the conditions specified in the Agreement; (f) representation addressed to the Company's management board of no objections against registration of the Buyer as shareholder in the Company's share register in relation to the Buyer's purchase of the Shares. 5.2.4 Upon receipt of the documents referred to in Article 5.2.3, the Notary will present those documents to the Buyer for it to accept their contents and confirm that they are complete. 5.2.5 The Buyer, following acceptance of the documents in accordance with Article 5.2.4, will or will cause delivery of the following documents to the Notary: (a) either Notice of Waiver of PKO BP Security Interest, including: (i) PKO BP's representation on waiver of the registered pledge on 1,714,114 (one million, seven hundred and fourteen thousand, and 29 one hundred and fourteen) shares of Aluminium Konin - Impexmetal S.A.; (ii) consent for deletion of the registered pledge on those shares from the relevant register; (iii) five blank promissory notes with the Seller's promissory note guarantee which were issued by the Company; provided that the only condition that the above referenced PKO BP's representation and consent may contain is the terminating condition of Buyer's failure to buy the Shares; or any other document agreed prior to the Closing Date between the Buyer and the Seller, in accordance with Articles 2.7.5 and 3.1.6, another document releasing the Seller of the liability resulting from creation of the PKO BP Security Interests; (b) either Notice of Waiver of WFOS's Security Interest or as agreed prior to the Closing Date between the Buyer and the Seller, in accordance with Articles 2.7.6 and 3.1.7, another document by which the Seller is released from liability resulting from creation of the WFOae's Security Interests; (c) either Notice of Waiver of BRE Bank Security Interest, containing a waiver of the registered pledge on 688,064 (six hundred and eighty-eight thousand, sixty-four) shares of Aluminium Konin Impexmetal S.A. and BRE Bank's consent for deletion of the pledge from the relevant register or, if the pledge was not entered in the relevant register, consent for withdrawal of the motion for registration of the pledge in the relevant register of pledges; provided that the only condition that the above referenced BRE Bank's representation and consent may contain is the terminating condition of Buyer's failure to buy the Shares; or any other document agreed prior to the Closing Date between the Buyer and the Seller in accordance with Articles 2.7.5 and 3.1.6, another document releasing the Seller of the liability resulting from creation the BRE Bank's Security Interests; (d) instructions of wire transfers accepted for execution by BRE Bank and evidencing that the First Part of Purchase Price has been made in accordance with the Representation with Instructions relating to the First Part of Purchase Price, and a document issued by BRE Bank with respect to confirmation that the accounts maintained by BRE Bank and indicated in the Representation with Instructions Relating to the First Part of Purchase Price have been credited with the First Part of Purchase Price; (e) a cashier's cheque (rozrachunkowy) payable upon presentation, certified by a reputable bank, operating in Poland or a document issued by BRE Bank evidencing that the Seller's account number 11401010-00-208713-PLNCURR01-66 has been credited with the sum of the Total Purchase Price less the Escrow Amount and the First Part of Purchase Price, and increased or decreased in the events as described in Articles 2.5 and 2.6; 30 (f) confirmation of collection of the Shares from the Seller, stating that the Shares were purchased in accordance with the terms and conditions of the Agreement. 5.2.6 The Notary, upon receipt of the documents referred to in Article 5.2.5 will present such documents to the Seller for it to accept their contents and confirm that they are complete. 5.2.7 Unless the Parties decide otherwise, the Notary will return to each Party all the documents it received from it, if the Notary finds that any of the Parties did not accept either the contents or did not confirm the completeness of the documents presented for its acceptance, or finds that he/she did not receive all the documents specified in Article 5.2.3 and in Article 5.2.5 until the close of business on the Closing Date. In the event that the Closing does not occur due to any of the reasons described above and the Parties do not decide otherwise, the Notary will return to the Parties the documents he/she received from them, and if the Notary received any specific documents from a Bank's Representative, the Notary shall return such documents directly to the Bank's Representative from which he/she has originally received them. 5.2.8 If both Parties accepted all the documents presented to them, the Notary will destroy the five blank promissory notes referred to in Article 5.2.5 (a) in the presence of the Parties and will release to the Seller all the other documents referred to in Article 5.2.5, while the documents referred to in Article 5.2.3 will be released to the Buyer. 5.2.9 The Parties will sign a notice addressed to the Company of the change of the dominating entity for the Company, in compliance with Article 6 of the Commercial Companies Code. 5.2.10 The Buyer and the Seller will take any and all actions to cause registration of the Buyer in the Company's share register as a new shareholder. ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE BUYER 6.1 Catalogue of Representations and Warranties. The Buyer hereby represents and warrants to the Seller that: 6.1.1 The Buyer is a company duly organized, existing and operating under the laws of the Swiss Confederation; 6.1.2 The Buyer has all the authorizations which are required by law to enter into the Agreement and to perform the specific obligations of the Buyer defined herein. The Agreement was properly entered into by the Buyer, it is binding and may be enforced against the Buyer in accordance with its terms. 31 6.1.3 Buyer's execution of the Agreement is not in breach of any laws binding the Buyer nor any agreements, commitments, decisions and orders binding the Buyer or such which apply to its assets. 6.1.4 Except as provided in Article 3.1.3 and 3.1.4 of the Agreement, the Buyer is not obliged to obtain any additional consents or permits or to make any additional notifications in relation to the execution or performance of this Agreement. Nevertheless, the Buyer represents that although there are no corporate requirements in this respect, it did obtain consent for execution of this Agreement from its parent company, Commercial Metals Company with its offices in Irving, Texas, USA, such consent conditioning execution of this Agreement on having negotiated, in the Buyer's management opinion, satisfactory conditions of this Agreement. The Buyer represents further that on the Execution Date it received, according to its knowledge, all documents and information which should be presented to the UOKiK President in relation to commencement of proceedings aimed at obtaining the permit of that authority for purchase of the Shares. 6.1.5 The persons signing the Agreement on behalf of the Buyer are duly authorized and empowered to execute the Agreement on behalf of the Buyer. 6.1.6 No court, arbitration or any other proceedings are pending against the Buyer before any court, administration body or government authority or a court of arbitration which could influence performance of any transactions contemplated hereby; 6.1.7 The Buyer has the required creditability to raising financing or has funds required to perform the financial obligations of the Buyer resulting from this Agreement. 6.1.8 The Buyer reviewed the condition of the Company's enterprise and conducted a due diligence of the Company in the period between March 3 - 6, 2003 and June 23 - 26, 2003. The Buyer conducted such due diligence and analysis of the Company's enterprise which it considered appropriate and necessary in relation to its decision to enter into the Agreement. The Buyer was able to access sources of information within the scope it thought necessary, particularly the employees (including the executives), books, records and files of the Company. 6.1.9 The Buyer represents that it reviewed: (i) the agreement of June 24, 2003 for construction works made between the Seller and Scrapena S.A.; (ii) the agreement of June 4, 2003 entered into between the Company and OSTRANA Internationale Handelsges.m.b.H with its registered seat in Vienna, Austria; (iii) the agreement of June 4, 2003 entered into between the Company and FLT - METALL HmbH with its registered seat in Dusseldorf, Germany; (iv) the Cooperation Agreements; and (v) other agreements between the entities of the Company Group and the Seller and entities of the Seller's Group which were binding on May 31, 2003. Furthermore, the Buyer represents that it reviewed the Know-How Agreement. Complete copies of such agreements referred to in this clause 32 and presented to the Buyer are attached hereto as Schedule No. 13 and Schedule No. 25. 6.1.10 In relation to execution and performance of the Cooperation Agreements and the Know-How Agreement, the Buyer, following the Closing Date, will not raise any indemnity claims against the Seller or members of the Company's management board and will cause that no such claims are raised by the Company. Should the Buyer or the Company raise any such claims, the Buyer will pay a contractual penalty to the Seller in the amount equal to the sum of the damages adjudged in this respect, interest and costs of proceedings incurred by the defendant. For avoidance of doubts, the Parties jointly agree that no obligation to pay the contractual penalty as referred to above shall be created if such claims are raised by a third party; or any shareholder other than the Buyer. 6.1.11 The Buyer reviewed Schedule No. 26 and is not aware of any information relating to the Company holding any other ownership titles or the rights of perpetual usufruct to any real property or a fractional part of a real property nor separate rights to premises other than those listed in Schedule No. 26. 6.1.12 Subject to Article 7.1.14 the Information provided in the Information Memorandum and all other information obtained by the Buyer for the purposes of execution of the Agreement, apart from the information contained in representations and warranties of the Seller included in Article 7 of the Agreement, may not be relied on in raising any claims against the Seller or any other persons acting on behalf of the Seller or the Company, and in particular any of their: representatives, advisors and consultants. 6.2 Validity of Representations and Warranties. All the representations and warranties of the Buyer made in this Article shall remain valid and up-to-date until the Closing Date and thereafter, unless a change or expiry thereof results from the terms and conditions hereof. ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF THE SELLER 7.1 Catalogue of Representations and Warranties. The Seller hereby represents and warrants to the Buyer that: 7.1.1 The Seller is a joint-stock company duly organized, existing and operating under the laws Poland; 7.1.2 The Seller has all the authorizations which are required by law to enter into the Agreement and to perform the specific obligations of the Seller defined herein. The Agreement was properly entered into by the Seller, it is binding and may be enforced against the Seller in accordance with its terms. 7.1.3 Seller's execution of the Agreement is not in breach of any laws binding the Seller nor any agreements, commitments, decisions and orders binding the Seller or such which apply to its assets. 33 7.1.4 Except as provided in Article 3.1.3, 3.1.4 and in Article 5.2.3 subsection (a), the Seller is not obliged to obtain any additional consents or permits or to make any additional notifications in relation to the execution or performance of this Agreement. The Seller represents further that on the Execution Date it delivered or caused delivery of, according to its knowledge, all documents and information which should be presented to the UOKiK President in relation to commencement of proceedings aimed at obtaining the permit of that authority for purchase of the Shares. 7.1.5 No court, arbitration or any other proceedings are pending against the Seller before any court, administration body or government authority or a court of arbitration which could influence performance of any transactions contemplated hereby; 7.1.6 All the Shares have been properly subscribed for or purchased and they are fully paid. 7.1.7 No offers of sale, preemptive rights, promises to sell or purchase or any other type of third party authorization or third party liability with respect to the Shares owned by the Seller exist, including any which would authorize anyone to demand an increase or redemption of share capital of the Company. 7.1.8 The Seller is the sole owner of its Shares and it does not have any other rights to any share in the Company's share capital. According to the best knowledge of the Seller, remaining shareholders of Company other than the Seller do not have any rights to a share in the Company's share capital, including any right to dividends, except for the rights as defined in the Statute. 7.1.9 There are no Company shareholders agreements which the Seller would be party to and, according to the Seller's knowledge, there are no other Company shareholders agreements between other shareholders of the Company. 7.1.10 Subject to the encumbrances disclosed in Schedule No. 27, the Company shares are free of any encumbrances consisting of any limited property rights or other commitment related rights created in favor of any third parties created directly or indirectly by an agreement, a unilateral representation of will or by operation of law. 7.1.11 Subject to the resolutions disclosed in Schedule No. 28 to the Agreement, such resolutions being subsequently revoked or otherwise becoming invalid, in the period since the Company has been transformed from a state enterprise into a joint stock company and until the Execution Date the General Meeting of Shareholders of the Company has not adopted any resolution on: (a) increase, decrease or change of capital structure of its share capital; orb 34 (b) issuance of securities or other instruments convertible to company Shares or authorizing to share Company profits or to exercise any corporate authority in the Company. 7.1.12 The Seller represents that apart from: (i) the agreement of June 24, 2003 for construction works made between the Seller and Scrapena S.A.; (ii) the agreement of June 4, 2003 entered into between the Company and OSTRANA Internationale Handelsges.m.b.H with its registered seat in Vienna, Austria; (iii) the agreement of June 4, 2003 entered into between the Company and FLT - METALL HmbH with its registered seat in Dusseldorf, Germany; (iv) the Cooperation Agreements; and (v) other agreements between the entities of the Company Group and the Seller or entities from the Seller's Group, which were in force as of May 31, 2003, the entities of the Company Group have not entered into any other agreements and have not performed any actions resulting in any payments or the need to satisfy any in-kind obligations in favor of the Seller or entities from the Seller's Group. Complete copies of the agreements referred to in this clause have been presented to the Buyer and are attached to this Agreement in Schedule No. 13 and in Schedule No. 25. 7.1.13 The Seller represents that it reviewed the Company's representation attached to this Agreement as Schedule No. 26 and that it is not aware of any information with regards to the Company having any other ownership titles or rights of perpetual usufruct to any real property or a fractional part of a real property or a separate right to premises, other than those disclosed in Schedule No. 26. 7.1.14 Subject to temporary concealment of certain information and documents relating to entities of the Company Group prior to 23 June, 2003 to which the Buyer has then obtained access within the scope it thought necessary, the Seller represents that: (a) it did not conceal from the Buyer or its advisors any information or documents relating to the entities of the Company Group for the disclosure of which the Buyer or its advisors applied, either in writing or electronically, to the Seller, its representatives, advisors, and, in particular to BRE Corporate Finance S.A. with its registered seat in Warsaw; (b) it did not take any actions aimed at concealing from the Buyer or its advisors by the entities of the Company Group, their representatives of any information or documents relating to the entities of the Company Group for the disclosure of which the Buyer or its advisors applied to the entities of the Company Group and their representatives; (c) it did not conceal from the Buyer or its advisors, any documents relating to any factual or legal actions taken or omitted by the entities of the Company Group which could be reasonably deemed as material for the operations of the Company Group and of which it was aware that they are not known to the Buyer and its advisors. 35 7.1.15 According to the Seller's knowledge, the entities of the Company Group, in the period between June 26, 2003 and the Execution Date, conducted their operations in the manner in which such operations were conducted in the past, and no events occurred in such period which would have a material adverse effect on the condition of such entities' enterprises. 7.1.16 The representations and warranties contained in this Agreement are the only representations and warranties made by or in the name of the Seller in relation to execution and performance of the Agreement. 7.2 Validity of Representations and Warranties. All the representations and warranties of the Seller made in this Article shall remain valid and up-to-date until the Closing Date and thereafter, unless a change or expiry thereof results from the terms and conditions hereof. ARTICLE 8 TERMS OF SELLER'S LIABILITY 8.1 Scope of Seller's Liability. The Seller's representations and warranties contained in Article 7 of the Agreement are the only representations and warranties made by the Seller to the Buyer in relation to execution and performance of this Agreement. For avoidance of doubt the Parties agree that the Buyer will not relay on any representations and warranties, expressed or implied, made by or on behalf of the Seller, other than the representations and warranties made by the Seller in this Agreement. 8.2 Exclusion of Liability. The Seller shall not be liable for breach of Seller's representations and warranties, if the Buyer's indemnity claim: 8.2.1 would not have existed in full or in part but for actions or omissions by the Company after the Closing Date, however not earlier than after Buyer's effective assumption of control over the Company's Management Board (for the purposes of this clause effective assumption of control over the Company's Management Board shall mean the appointment of such a number of Buyer's representatives to the Company's Management Board which will ensure it majority on the Management Board), or after the date on which such appointment would have been possible, but was not made due to circumstances for which the Buyer is liable; or 8.2.2 would not have existed in full or in part but for actions or omissions by the Company after the Execution Date, due to actions taken by the Seller or the Seller's Representative in relation to Seller's due performance of the obligations defined in Article 4 of the Agreement; 8.2.3 would not have existed in full or in part but for actions or omissions of the Buyer or the Buyer's Representative after the Execution Date; or 8.2.4 results from any event which has been previously presented to the Buyer by the Seller, any of its advisors or the Company, or an event of which the Buyer is aware in relation to its own due diligence of the Company made prior to the Execution Date. 36 8.3 Term of Liability. Except for any indemnity claims due to breach of representations and warranties referred to in Article 7.1.6, 7.1.8 first sentence and Article 7.1.13, the Seller shall not be liable for any claims for breach of any Seller's representations and warranties provided in the Agreement after 24 (twenty four) months from the Closing Date. ARTICLE 9 VALIDITY, RIGHT TO WITHDRAW 9.1 Failure to Satisfy Conditions to Purchase. Unless the Parties provide otherwise, in the event of failure to satisfy any of the Conditions to Purchase referred to in Article 3.1 by December 15, 2003 due to circumstances for which none of the Parties is liable, this Agreement shall be terminated and the Parties shall have no claims against each other resulting from termination of the Agreement. Furthermore, between the Execution Date and December 15, 2003, the Buyer shall, within seven (7) days from the date of becoming aware of occurrence of a Material Adverse Change, have the right to withdraw from the Agreement without designating any grace period (Buyer's representation on withdrawal due to occurrence of a Material Adverse Change should be made in writing with signatures of the Buyer's representatives certified by a notary). In the event of such termination this Agreement shall be terminated and the Parties shall have no claims against each other in this respect. 9.2 Failure to Satisfy Conditions Due to Action or Omission by the Parties. Failure to Perform Obligations. If (i) any of the Conditions to Purchase referred to in Article 3.1 are not satisfied due to circumstances for which the Buyer is liable or (ii) any of the Conditions to Purchase referred to in Article 3.1 are not satisfied due to circumstances for which the Seller is liable or (iii) in the event of non-performance or improper performance of the Buyer's obligations referred to in Article 2.7.2 through the end of 2.7.8; (iv) in the event of non-performance or improper performance of the Seller's obligations referred to in Article 2.8.2 through the end of 2.8.9 ("BREACH OF AGREEMENT") - the other Party may withdraw from the Agreement without designating any grace period and demand from the Party Breaching the Agreement payment of an amount equal to the Escrow Amount. If it is the Seller who is the withdrawing Party, it may demand to be paid the Escrow Amount from the Escrow Account. If it is the Buyer who is the withdrawing Party, it may demand payment in its favor of an amount equal to the Escrow Amount and demand release of the Seller's promissory note from the Deposit, such promissory note securing payment of the above amount. The contractual right of withdrawal referred to in this Article may be exercised on or before December 15, 2003. 9.2.1 The Seller shall have the right to withdraw from the Agreement and demand payment of the Escrow Amount also in the following circumstances: (a) Buyer's failure to notify, within seven (7) days of the Execution Date, of the intention to effect concentration in accordance with the requirements of the Protection of Competition and Consumers Act of December 15, 2000 (Dz.U. 2000, No. 122, item 1319, as amended); or 37 (b) Buyer's failure to file, within fourteen (14) days of the Execution Date, an application to the Minister of Internal Affairs and Administration for a permit for the Buyer to purchase the Shares in accordance with the requirements of the Acquisition of Real Estate by Foreigners Act of March 24, 1920 (Dz.U. 1996, No. 54, item 245, as amended), unless the failure to file the motion results from circumstances for which are beyond the Buyer's control. 9.2.2 For avoidance of doubt, the Parties jointly represent that the following shall not be considered failure to satisfy Conditions to Purchase due to circumstances for which a given Party is liable: (a) issuance by the UOKiK President of a decision prohibiting concentration or a conditional consent for concentration consisting of Buyer's purchase of the Shares, unless such decision, or a conditional decision was issued in result of circumstances for which the relevant Party is liable; or (b) issuance by the Minister of Internal Affairs and Administration of a decision denying consent for Buyer's purchase, on the basis of the Acquisition of Real Properties by Foreigners Act of March 24, 1920, unless such decision was issued in result of circumstances for which the relevant Party is liable; or (c) failure to perform the BRE Bank obligations referred to in the BRE Bank Agreement; or (d) occurrence of a Material Adverse Change; or (e) failure to satisfy any of the Conditions to Purchase defined in Article 3.1 due to one Party's failure to perform its obligations if performance thereof is directly conditional upon prior performance of obligations by the other Party and such obligation has not been performed. 9.3 Contractual Penalty due to Buyer's Delay. If the Buyer fails to pay the Escrow Amount to the Escrow Account within three (3) business days from the Date of Execution of this Agreement, however not earlier than within three (3) business days from the date of execution of the Escrow Agreement, the Seller shall be authorized to demand that the Buyer pays a contractual penalty of PLN 10,000,000 (ten million). ARTICLE 10 CONFIDENTIALITY 10.1 Confidential Information. The Parties mutually agree to treat as confidential: (i) any and all information and documents held by a given Party, its employees, representatives and advisors and relating to the entities of the Company Group, and (ii) the information relating to this Agreement (jointly referred to as ,,CONFIDENTIAL INFORMATION"). The Confidential Information shall include in particular any data, materials, technical and financial documentation and any documentation related to 38 conducted operations, all the ideas, inventions, trade secrets, designs, business plans and other written or oral information relating to the entities of the Company Group, including those relating to the principles of pricing and sales, products, clients and suppliers of the entities of the Company Group. 10.2 Disclosure of Confidential Information. The Parties agree that without the prior written consent of the other Party (i) they shall not copy, disseminate or disclose any Confidential Information to any persons other than the members of the Parties' authorities, their employees, advisors, banks and representatives which must have such information for the purposes of reviewing, evaluating or conducting negotiations in relation to the transaction to be entered between the Parties; (ii) they will not use the Confidential Information for any purposes other than provided under this Agreement. 10.3 Breach of Confidentiality Obligation. Should the terms of this Article be breached by any of the Parties, the Party in breach shall be obligated to pay to the other Party, a contractual penalty of PLN 500,000 (five hundred thousand) for any such event with no obligation to prove that in result of such breach it did incur damage. 10.4 Exclusions. The obligations relating to observing confidentiality as provided in the Agreement do not apply: 10.4.1 if application thereof would result in the inability of the Parties or their dominating entities of subsidiaries to disclose information required by applicable laws or by a court, an administrative authority or a stock exchange, and in particular in relation to the duty to disclose all the material events having the influence on legal and financial position, which the given Party, its dominating entity or subsidiary is obliged to disclose by operation of law or should disclose because of standard practice on any specific securities market ensuring transparency of the operations of the Party, its dominating entity or subsidiary as a public company; 10.4.2 with regards to publicly available information or information which were made public otherwise than in violation of the terms and conditions hereof. 10.5 New Undertakings. Should the Buyer commence any new market ventures competitive to the operations of the entities of the Company Group, conducted with due observance of fair competition, it shall not be considered as breach of the confidentiality clause contained in the Agreement. Except for (i) information which is generally accessible or disclosed to the public otherwise than in result of breach of this Agreement; (ii) other information which is not subject to confidentiality restrictions applying to the enterprise and protected by laws in force or (iii) information disclosed on the basis of Article 10.4.1; if the Closing does not occur, the Buyer covenants to: 10.5.1 destroy all Confidential Information in possession of the Buyer or its representatives and advisors, fixed on any tangible or intangible media, including those in the form of electronic entries, compilations of documents, correspondence, notes, etc.; and 39 10.5.2 refrain from using and procure that the Buyer's subsidiaries and affiliates (as defined in the Commercial Companies Code) will refrain from using any of the Confidential Information in any activities competitive to the Seller or the Company. 10.6 Term. The above obligation to maintain confidentiality shall be biding to: 10.6.1 the Buyer, with respect to Confidential Information defined in Article 10.1, subsection (i) until the Closing Date only; 10.6.2 the Seller, with respect to Confidential Information defined in Article 10.1, subsection (i) for a period of 5 (five) years from the Execution Date; 10.6.3 the Parties with respect to Confidential Information referred to in Article 10.1, subsection (ii) for the period of three (3) years from the Execution Date. ARTICLE 11 FINAL PROVISIONS 11.1 Notices. 11.1.1 Any and all notices, documents, information and other correspondence made in relation to this Agreement must be in writing (otherwise being null and void), in two language versions, English and Polish, and shall be deemed as properly served if delivered by hand, by courier or by registered letter, return receipt requested, to the following addresses for delivery: To the Seller: Impexmetal S.A. ul. L ucka 7/9, 00-842 Warsaw, Poland Tel.: +48 (22) 658 62 61 Fax: +48 (22) 039 120 542 e-mail: k.adamski@impexmetal.com.pl Att.: Krzysztof Adamski To the Buyer: Commercial Metals (International) AG Lindenstrasse 14 CH-6340 Baar Switzerland Tel.: +41 41 766 96 66 Fax: +41 41 766 96 96 e-mail: ZugSteel@commercialmetals.com Att.: Hanns Zollner, Ruedi Auf der Maur, Murray McClean 11.1.2 Each of the Parties covenants further to immediately advise the Parties of any change of address, otherwise correspondence sent to such Party to the last known address shall be deemed as effectively delivered. 11.1.3 Furthermore, each of the Parties covenants, respectively: 40 (a) the Seller, to deliver copies of all notices, documents and correspondence related to this Agreement which will be addressed to the Buyer, also for the attention of Pawel Rymarz/Dariusz Zych to: Weil, Gotshal & Manges - Pawel Rymarz Sp.k., ul. Emilii Plater 53, 00-113 Warsaw. The Parties jointly represent that deliveries of notices, documents and other correspondence to the Buyer shall have legal effects as of the date of such delivery to the Buyer, and delivery to Weil, Gotshal & Manges - Pawel Rymarz Sp.k. as referred to in this Article, shall be for information purposes only; (b) the Buyer, to deliver copies of all notices, documents and correspondence related to this Agreement which will be addressed to the Seller, also for the attention of Leszek Filipowicz/Roman Tulin, to: BRE Corporate Finance S.A., ul. Wspolna 47/49, 00-684 Warsaw. The Parties jointly represent that deliveries of notices, documents and other correspondence to the Seller shall have legal effects as of the date of such delivery to the Seller, and delivery to BRE Corporate Finance S.A as referred to in this Article, shall be for information purposes only. 11.2 Settlement of Disputes. Any and all disputes resulting from the Agreement or related to execution thereof shall be settled amicably through direct negotiations of the Parties within thirty (30) days from the date on which the Company advised the other Party of the intention to settle the dispute amicably. If no amicable solution is reached within the time specified above, the dispute shall be settled by the Court of Arbitration at the Polish Chamber of Commerce in Warsaw in accordance with the Rules of such Court valid on the date of the Parties' request for such Court to settle the dispute. 11.3 Assignment of Rights and Duties. 11.3.1 None of the Parties shall not be authorized to transfer any of its rights or duties resulting from this Agreement without the written consent of the other Party, otherwise being null and void. 11.3.2 If effective assignment of rights and obligations referred to in Article 11.3.1 above requires execution of any legal or factual actions, the Parties, following consenting to such assignment, hereby covenant to execute the required actions on as soon as possible basis. Furthermore, in case of execution of any such assignment the Party which assigned its rights and obligations under this Agreement shall remain jointly and severally liable for proper performance of this Agreement with the entity in favor of which such assignment was made. 11.4 Governing Law. This Agreement shall be governed by Polish law. 11.5 Costs. Unless otherwise provided by this Agreement, each of the Parties will cover its own costs and expenses related to execution and performance of this Agreement. 41 11.5.1 The fee of the Notary referred to in Article 5 shall be paid by the Parties in equal parts. 11.5.2 To avoid any doubt, the Seller represents that it none of the entities of the Company Group was or will be charged for any costs or expenses related to the preparation, negotiation, execution or performance of this Agreement or any other agreements referred to herein which are to be performance by the Seller. In particular, it applies to the costs of advice provided by BRE Corporate Finance S.A. with its registered seat in Warsaw, the law office Biuro Adwokackie BMK with its registered seat in Lodz and other advisors or consultants retained by the Seller in relation to the preparation of the tender procedure for the sale of the Shares. This representation does not apply to costs and expenses incurred by the Company within the scope in which it was necessary in relation to allow the due diligence of the Company by the Buyer and other entities participating in the tender procedure relating to the sale of Company Shares, organized by BRE Corporate Finance S.A. with its registered seat in Warsaw, as well as costs and expenses incurred by the Company in relation to the preparation and delivery of information and documents on behalf of the Seller and its advisors, in relation to such procedure. 11.5.3 The Parties jointly represent that the transfer tax due with respect to purchase of the Shares by the Buyer shall be borne by the Buyer. 11.6 Entire Agreement. This Agreement and the schedules thereto constitute the entire understanding between the Parties and they supersede all prior agreements and understandings between the Parties with regards thereto, unless otherwise provided by the Agreement. Should any of the clauses of the Agreement become invalid or unenforceable, it shall not influence the validity and enforceability of the other clauses. Should any of the clauses of the Agreement be found invalid the other clauses of the Agreement shall remain valid and effective, unless the circumstances indicate that without such invalid clauses the Agreement would not have been made. Furthermore, the Parties jointly agree that if due to circumstances for which none of the Parties is liable, any of the transactions contemplated by this Agreement become ineffective or invalid, the Parties will take all reasonable action to repeat such action. 11.7 Amendments. Any and all amendments to the Agreement must be in writing, otherwise being null and void. 11.8 Counterparts. The Agreement was signed in four (4) counterparts: (i) two in Polish and (ii) two in English, one language copy for each of the parties. In case of any discrepancies between the Polish and English version, the Polish version shall prevail. 42 For the Seller: For the Buyer: /s/Jerzy Kaminski /s/ Hanns Zollner - ----------------- ----------------- Jerzy Kaminski Hanns Zollner /s/ Krzysztof Adamski /s/ Ruedi Auf der Maur - --------------------- ---------------------- Krzysztof Adamski Ruedi Auf der Maur LIST OF SCHEDULES: Schedule No. 1 - List of Shares which are being sold by the Seller.; Schedule No. 2 - Extract form the Register of Commercial Registers Office of the the Zug Canton relating to the Buyer; Schedule No. 3 - Form of Representation with Instructions Relating to the First Part of the Purchase Price; Schedule No. 4 - Form of Waiver Notice of BRE Bank's Security Interest; Schedule No. 5 - Form of Waiver of PKO BP's Security Interest; Schedule No. 6 - Form of Waiver of the WFOS's Security Interest; Schedule No. 7 - Copy of the Agreement with BRE Bank; Schedule No. 8 - Extract form the Register of Entrepreneurs of the National Court Register relating to the Company; Schedule No. 9 - Extract form the Register of Entrepreneurs of the National Court Register relating to the Seller; Schedule No. 10 - Company's Statute with all amendments; Schedule No. 11 - Form of Deposit Agreement; Schedule No. 12 - Form of Escrow Agreement; Schedule No. 13 - Copies of the Cooperation Agreements (including know-how agreement); Schedule No. 14 - Form of the Notification of Settlement; Schedule No. 15 - Form of the Notification of the Settlement of the Cooperation Agreements; Schedule No. 16 - Form of the Seller's surety (Poreczenie) for the repayment of the Impex Debt Value or the Buyer's surety for the repayment of the HZ Debt Value, respectively; Schedule No. 17 - Form of surety (Poreczenie) of the Company's repayment of the Settlement Amount of the Cooperation Agreements; Schedule No. 18 - Form of the Seller's consent for the Buyer to apply to the relevant tax office for a certificate stating the Seller's outstanding tax liabilities pursuant to Article 306G of the Tax Ordinance; Schedule No. 19 - Form of the Seller's consent for the Buyer to apply to the relevant social insurance office (ZUS) for a certificate stating the Seller's outstanding liabilities with respect to social insurance premiums, health insurance premiums and other premiums, payables and public dues which ZUS is authorized to collect; Schedule No. 20 - List of capital expenditures; 43 Schedule No. 21 - Additional rights which may be granted to Company's key employees (excluded from restrictions resulting from Article 4.1.15 of the Agreement); Schedule No. 22 - Form of the termination of the Cooperation Agreements; Schedule No. 23 - Form of Supervisory Board resolutions; Schedule No. 24 - Form of resignation of the Company Supervisory Board Member; Schedule No. 25 - Copies of agreements between the entities of the Company Group and the Seller and entities of the Seller's Group which were binding on May 31, 2003; Schedule No. 26 - Representation of the Company containing the list of Company's real properties; Schedule No. 27 - List of encumbrances on the Shares; Schedule No. 28 - list of shareholders' meetings resolutions. 44 EX-31.1 4 d11831exv31w1.htm EX-31.1 CERTIFICATION OF PRESIDENT & CEO-SEC. 302

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Stanley A. Rabin, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Commercial Metals Company;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          (a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          (b)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          (c)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

          (a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

          (b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 14, 2004

/s/ Stanley A. Rabin

Stanley A. Rabin
Chairman of the Board, President and
Chief Executive Officer

EX-31.2 5 d11831exv31w2.htm EX-31.2 CERTIFICATION OF VP & CFO-SEC. 302

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, William B. Larson, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Commercial Metals Company;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          (a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          (b)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          (c)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

          (a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

          (b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 14, 2004

/s/ William B. Larson

William B. Larson
Vice President and Chief Financial Officer

EX-32.1 6 d11831exv32w1.htm EX-32.1 CERTIFICATION OF PRESIDENT & CEO-SEC. 906

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of Commercial Metals Company (the “Company”) on Form 10-Q for the period ended November 30, 2003 (the “Report”), I, Stanley A. Rabin, Chairman of the Board, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

     (1)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stanley A. Rabin

Stanley A. Rabin
Chairman of the Board, President
and Chief Executive Officer

Date: January 14, 2004

EX-32.2 7 d11831exv32w2.htm EX-32.2 CERTIFICATION OF VP & CFO-SEC. 906

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of Commercial Metals Company (the “Company”) on Form 10-Q for the period ended November 30, 2003 (the “Report”), I, William B. Larson, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

     (1)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William B. Larson

William B. Larson
Vice President and Chief Financial Officer

Date: January 14, 2004

-----END PRIVACY-ENHANCED MESSAGE-----

EX-2.1

                                                                     EXHIBIT 2.1

                             HUTA "ZAWIERCIE" S.A.
                            WITH ITS REGISTERED SEAT
                                  IN ZAWIERCIE

                            SHARE PURCHASE AGREEMENT

                           MADE ON THIS JULY 22, 2003

                                 BY AND BETWEEN

                                 IMPEXMETAL S.A.

                                       AND

                      COMMERCIAL METALS (INTERNATIONAL) AG



                            SHARE PURCHASE AGREEMENT
    RELATING TO HUTA "ZAWIERCIE" SPOLKA AKCYJNA WITH ITS REGISTERED SEAT IN
                                    ZAWIERCIE

This agreement, hereinafter referred to as the "AGREEMENT" is made on this July
22, 2003 in Warsaw, by and between:

IMPEXMETAL S.A. with its registered seat in Warsaw, 00-842 Warsaw, ul.
(pound)ucka 7/9, a joint stock company entered in the Register of Entrepreneurs
by the District Court for the Capital City of Warsaw, XIX Commercial Division of
the National Court Register, under number 0000003679, hereinafter referred to as
the "SELLER", represented by:

Jerzy Kaminski, President of the Management Board, and
Krzysztof Adamski, Member of the Management Board.

and

COMMERCIAL METALS (INTERNATIONAL) AG with its registered seat in Baar,
Switzerland, a company entered in the Principal Register kept by the Commercial
Registers Office of the Zug Canton, under number CH-170.3.010.397-2, hereinafter
referred to as the "BUYER", represented by:

Hanns Zollner, President,
Ruedi Auf der Maur, Managing Director.

The Seller and the Buyer shall hereinafter be jointly referred to as the
"PARTIES", and individually as a "PARTY".

                                    PREAMBLE

WHEREAS:

(A)      The Seller owns 9,954,359 (nine, nine hundred and fifty-four thousand,
         three hundred and fifty-nine) ordinary registered series A shares of
         PLN 10 (ten) par value per share, of Huta "Zawiercie" S.A. with its
         registered seat in Zawiercie.

(B)      The Seller intends to sell and the Buyer intends to buy the shares
         referred to in section (A) of the Preamble on the terms and conditions
         set forth herein;

(C)      As it is required to obtain relevant consents and permits to transfer
         the ownership title to the shares referred to in section (A) of the
         Preamble, to the Buyer, and it is required further for the Parties to
         cooperate with third parties in performance of the specific obligations
         referred to in the Agreement, the Parties express their determination
         to obtain all the relevant consents and permits and to perform all the
         obligations referred to in the Agreement on as soon as possible basis;

(D)      In anticipation of execution of this Agreement on July 22, 2003, the
         Seller procured that the supervisory board of Huta Zawiercie S.A.
         dismissed certain members of the management board of that company and
         appointed a person designated by the Buyer in their stead; furthermore,
         the Seller caused the supervisory board of Huta Zawiercie S.A. to limit
         the number of members of the management board to two only;

                                       2


NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

                                   ARTICLE 1
                                  DEFINITIONS

1.1      Unless the content or context of this Agreement require otherwise, all
         the capitalized terms used throughout this Agreement shall have the
         meanings assigned thereto below:

             SHARES                  means 9,954,359 (nine million, nine hundred
                                     fifty-four thousand, three hundred
                                     fifty-nine) ordinary registered series A
                                     shares of PLN 10 (ten) par value per share,
                                     of the Company with numbers as evidenced in
                                     the list attached hereto as Schedule No. 1,
                                     jointly constituting 71.1% of the Company's
                                     share capital and representing 71.1% of the
                                     voting power at Company's general meeting
                                     of shareholders;

             ESCROW BANK             means Bank Polska Kasa Opieki S.A. with its
                                     registered seat in Warsaw, a joint stock
                                     company entered in the Register of
                                     Entrepreneurs by the District Court for the
                                     Capital City of Warsaw, XIX Commercial
                                     Division of the National Court Register,
                                     under number 0000153588;

             BRE BANK                means BRE Bank S.A. with its registered
                                     seat in Warsaw, a joint stock company
                                     entered into the Register of Entrepreneurs
                                     by the District Court for the Capital City
                                     of Warsaw, XIX Commercial Division of the
                                     National Court Register under number
                                     0000025237;

             DEPOSIT                 means the deposit kept by the Escrow Bank
                                     pursuant to the Deposit Agreement;

             SETTLEMENT DATE         means the date occurring two (2) business
                                     days prior to the Closing Date, on which
                                     the Seller, on the terms and conditions set
                                     forth in Article 2.5 settles or procures
                                     settlement of all due and payable
                                     receivables of (i) the entities of the
                                     Company Group; and (ii) the Seller and the
                                     entities of the Seller's Group;

             COOPERATION             means the date occurring two (2) business
             AGREEMENTS'             days prior to the Closing Date on which the
             SETTLEMENT DATE         Seller, on the terms and conditions defined
                                     in Article 2.6, settles the Cooperation
                                     Agreements with the Company;

             CLOSING DATE            means the date on which the ownership title
                                     to the Shares will be transferred to the
                                     Buyer;

             EXECUTION DATE          the date of signing the Agreement by the
                                     Buyer and the Seller;

             COMPANY GROUP           means all or any, as the context requires,
                                     of the following companies: (i) Hutsprzet
                                     Sp. z o.o.; (ii) Elserw Sp. z o.o.;

                                       3


                                     (iii) Energomedia Sp. z o.o., (iv) Kolhut
                                     Sp. z o.o., (v) Centroz(3)om Katowice Sp. z
                                     o.o., (vi) Putex Sp. z o.o., (vii) HZ
                                     Format Sp. z o.o., (viii) HZ Service Sp. z
                                     o.o., (ix) Centrum Zawiercie Sp. z o.o.,
                                     (x) Scrapena S.A., (xi) Scrap-Service Sp. z
                                     o.o.; and (xii) the Company;

             SELLER'S GROUP          means all or, if the context so requires,
                                     any of the Seller's subsidiaries or
                                     affiliates, as defined in the Commercial
                                     Companies Code, excluding the entities of
                                     the Company Group;

             CONFIDENTIAL            means (i) any and all information and
             INFORMATION             documents in possession of any Party, its
                                     employees, representatives and advisors and
                                     relating to the entities from the Company
                                     Group; and (ii) information concerning this
                                     Agreement;

             MATERIAL ADVERSE        means:
             CHANGE                  (a) any change, except for any changes
                                     resulting from market conditions,
                                     particularly any changes resulting from the
                                     seasonal character of operations of the
                                     entities of the Company Group, whether or
                                     not foreseeable or known as of the
                                     Execution Date, excluding however, any
                                     changes known by the Buyer on the Execution
                                     Date, that, individually or in the
                                     aggregate with any such other changes,
                                     events or effects, is or could reasonably
                                     be expected to (whether or not such change,
                                     event or effect has, at the time in
                                     question, manifested itself in the
                                     financial statements of the entities of the
                                     Company Group) result in (i) a reduction of
                                     fixed assets by PLN 75,000,000 (seventy
                                     five million), (ii) an increase in
                                     liabilities by PLN 100,000,000 (one hundred
                                     million), or (iii) a reduction in company
                                     equity by PLN 40,000,000 (forty million),
                                     in each case, of the Company Group taken as
                                     a whole as compared to the standing of the
                                     Company Group as of May 31, 2003, or
                                     (b) any material casualty, or damage
                                     (whether or not covered by insurance) to
                                     any facility, property, or equipment in
                                     possession of the entities of the Company
                                     Group which results or is reasonably
                                     expected to result in non-planned stoppage
                                     of production with respect to melting and
                                     rolling of steel products by the Company
                                     for more than forty five (45) days.

             COMMERCIAL              means the act of September 15, 2000 - the
             COMPANIES CODE          Commercial Companies Code (Dz.U. No. 94,
                                     item 1037, as amended);

             BUYER                   means COMMERCIAL METALS (INTERNATIONAL) AG,
                                     with its registered seat in Baar,
                                     Switzerland, a company entered in the
                                     Principal Register kept by the

                                       4


                                     Commercial Registers Office of the Zug
                                     Canton, under number CH-170.3.010.397-2; a
                                     copy of an extract from the register of the
                                     Commercial Registers Office of the Zug
                                     Canton relating to the Buyer is attached as
                                     Schedule No. 2 to the Agreement;

             IMPEX DEBT VALUE        means the amount of outstanding debts of
                                     the Seller and the entities of the Seller's
                                     Group after a proper Settlement had been
                                     made, such amount not exceeding PLN
                                     1,000,000 (one million);

             HZ DEBT VALUE           means the amount of outstanding debts of
                                     the entities of the Company Group after a
                                     proper Settlement has been made, such
                                     amount not exceeding PLN 1,000,000 (one
                                     million);

             ESCROW AMOUNT           means PLN 20,000,000 (twenty million);

             MAXIMUM AMOUNT          means PLN 250,000 (two hundred and fifty
                                     thousand) increased by the goods and
                                     services tax (VAT) due thereon;

             DEDUCTIBLE              means the amount provided in the
                                     Cooperation Agreements' Settlement Notice
                                     and in the representation of the Company
                                     (approved by the Buyer's Representative),
                                     attached to the Cooperation Agreements'
                                     Settlement Notice;

             IMPEX DEBT              means the amount provided in the Settlement
             DEDUCTIBLE              Notice and in the representation of the
                                     Company (approved by the Buyer's
                                     Representative), such amount constituting
                                     the outstanding debts of the Seller and the
                                     entities of the Seller's Group, established
                                     after a proper Settlement had been made,
                                     and exceeding PLN 1,000,000 (one million);

             HZ DEBT INCREASE        means the amount provided in the Settlement
                                     Notice and in the representation of the
                                     Company (approved by the Buyer's
                                     Representative), such amount constituting
                                     the outstanding debts of the entities of
                                     the Company Group, established after a
                                     proper Settlement had been made, and
                                     exceeding PLN 1,000,000 (one million);

             SETTLEMENT AMOUNT       means the value of receivables which have
                                     not been settled, provided in the
                                     Settlement Notice and in the representation
                                     of the Company (approved by the Buyer's
                                     Representative) attached to the Settlement
                                     Notice;

             COOPERATION             means the value of receivables which have
             AGREEMENTS'             not been settled, provided in the
             SETTLEMENT AMOUNT       Cooperation Agreements' Settlement Notice
                                     and in the representation of the Company
                                     (approved by the Buyer's Representative),
                                     attached to the Notice of Cooperation
                                     Agreements'

                                       5


                                     Settlement;

             TOTAL PURCHASE PRICE    means the total price of purchase of the
                                     Shares, as defined in Article 2.2 of the
                                     Agreement, which may be increased or
                                     decreased in accordance with Article 2.5 or
                                     Article 2.6 hereof;

             INFORMATION             means the information memorandum relating
             MEMORANDUM              to the Company and prepared by BRE
                                     Corporate Finance S.A. with its registered
                                     seat in Warsaw;

             BREACH OF AGREEMENT     means any action or omission by a relevant
                                     Party, as referred to in Article 9.2
                                     hereof;

             NOTARY                  means a notary designated by the Buyer,
                                     acting as a person of public trust and
                                     performing actions referred to in the
                                     Notary's Office Law of February 14, 1991
                                     (unified text Dz.U. 2002, No. 42, item 369,
                                     as amended);

             TERM FOR MAXIMUM        means the term between May 31, 2003 and the
             AMOUNT                  Cooperation Agreements' Settlement Date;

             REPRESENTATION WITH     means the Seller's representation delivered
             INSTRUCTIONS RELATING   to the Buyer not later than one day prior
             TO THE FIRST PART OF    to the Closing Date, designating one or
             PURCHASE PRICE          several bank accounts to which the Buyer
                                     will transfer the First Part of Purchase
                                     Price; the form of Representation with
                                     Instructions Relating to the First Part of
                                     Purchase Price is attached as Schedule No.
                                     3 to the Agreement;

             NOTICE OF WAIVER OF     means a BRE Bank's representation,
             BRE BANK'S SECURITY     substantially in the form and content
             INTEREST                attached hereto as Schedule No. 4, or any
                                     other document issued by BRE Bank to
                                     confirm expiry of BRE Bank's Security
                                     Interest;

             NOTICE OF WAIVER OF     means a PKO BP's representation,
             PKO BP'S SECURITY       substantially in the form and content
             INTEREST                attached hereto as Schedule No. 5, or any
                                     other document issued by PKO BP to confirm
                                     expiry of PKO BP's Security Interest;

             NOTICE OF WAIVER OF     means a WFOS's representation,
             WFOS'S SECURITY         substantially in the form and content
             INTEREST                attached hereto as Schedule No. 6, or any
                                     other document issued by WFOS to confirm
                                     expiry of WFOS's Security Interest;

             FIRST PART OF PURCHASE  means the sum of: (i) PLN 40,000,000 (forty
             PRICE                   million) and (ii) total value of the
                                     Seller's liabilities as of the Closing Date
                                     established on the basis of the Impexmetal
                                     Credit Facility Agreements referred to in
                                     the BRE Bank Agreement, provided that the
                                     liability to repay the foreign exchange
                                     credit facility granted to the Seller in
                                     Euros shall be defined in PLN on the basis
                                     of the EUR buy rate used by BRE Bank on the
                                     date of defining the

                                       6


                                     First Part of Purchase Price, provided that
                                     such sum will not be greater than PLN
                                     120,000,000 (one hundred and twenty
                                     million);

             PKO BP                  means Powszechna Kasa Oszczednooeci Bank
                                     Polski S.A. with its registered seat in
                                     Warsaw, a joint stock company entered into
                                     the Register of Entrepreneurs by the
                                     District Court for the Capital City of
                                     Warsaw, XX Commercial Division of the
                                     National Court Register, under number
                                     0000026438;

             PLN                     means the Polish zloty - the legal tender
                                     in Poland;

             BRE BANK AGREEMENT      means the agreement between the Seller, the
                                     Buyer and BRE Bank which was made on the
                                     Execution Date and which comes into force
                                     after execution hereof; a copy of the BRE
                                     Bank Agreement is attached herewith as
                                     Schedule No. 7;

             UOKIK PRESIDENT         means the President of the Office for
                                     Protection of Competition and Consumers as
                                     referred to in the Protection of
                                     Competition and Consumers Act of December
                                     15, 2000 (Dz.U. No. 122, item 1319, as
                                     amended);

             BUYER'S REPRESENTATIVE  means Mr. Ludovit Gajdos, who was appointed
                                     on July 22, 2003, by the Company's
                                     supervisory board, to the Company's
                                     management board, or any other person who
                                     is appointed to the Company's management
                                     board in accordance with the Buyer's
                                     written request;

             SELLER'S                means Mr. Marek Rozga, or any other person
             REPRESENTATIVE          who, prior to the Execution Date or
                                     thereafter, is appointed to the Company's
                                     Management Board in result of Seller's
                                     direct or indirect actions, and who is not
                                     the Buyer's Representative;

             BANK'S                  means the representatives of BRE Bank and
             REPRESENTATIVES         of PKO BP who may take part in the Closing;

             SETTLEMENT              means an accurate settlement, on the terms
                                     and conditions defined in Article 2.5
                                     hereof, of due and payable receivables
                                     under agreements, trade orders and
                                     performance of any other actions (excluding
                                     Cooperation Agreements) of: (i) entities of
                                     the Company Group and (ii) the Seller and
                                     the entities of the Seller's Group;

             COOPERATION             means a settlement made on the terms and
             AGREEMENTS'             conditions defined in Article 2.6 hereof of
             SETTLEMENT              all due and payable Seller's receivables
                                     with respect to the Company, as provided in
                                     the Cooperation Agreements;

                                       7


             COMPANY                 means Huta "Zawiercie" S.A. with its
                                     registered seat in Zawiercie, 42-400
                                     Zawiercie, at ul. Pi(3)sudskiego No. 82, a
                                     joint stock company entered into the
                                     Register of Entrepreneurs by the District
                                     Court in Katowice, Commercial Division of
                                     the National Court Register under number
                                     0000017925; the share capital of the
                                     Company amounts to PLN 140,000,000 (one
                                     hundred forty million) and is divided into
                                     14,000,000 (fourteen million) ordinary
                                     registered series A shares of PLN 10 (ten)
                                     par value each; an up-to-date copy of an
                                     extract from the Register of Entrepreneurs
                                     of the National Court Register, relating to
                                     the Company, is attached hereto as Schedule
                                     No. 8;

             SELLER                  means IMPEXMETAL S.A. with its registered
                                     seat in Warsaw, 00-842 Warsaw,
                                     ul.L ucka 7/9, a joint stock company
                                     entered in the Register of Entrepreneurs by
                                     the District Court for the Capital City of
                                     Warsaw, XIX Commercial Division of the
                                     National Court Register, under number
                                     0000003679; an up-to-date copy of an
                                     extract from the Register of Entrepreneurs
                                     of the National Court Register, relating to
                                     the Seller, is attached hereto as Schedule
                                     No. 9;

             STATUTE                 means the Company statute as made on
                                     December 27, 1995, as later amended, an
                                     updated wording of which is attached as
                                     Schedule No. 10 hereto;

             PARTY                   means the Seller or the Buyer, depending on
                                     the context, and if used in plural shall
                                     mean both the Seller and the Buyer;

             AGREEMENT               means this agreement, including all
                                     schedules which shall constitute an
                                     integral part thereof;

             DEPOSIT AGREEMENT       means the deposit agreement made between
                                     the Parties and the Escrow Bank on the
                                     Execution Date; a form of Deposit Agreement
                                     is attached hereto as Schedule No. 11;

             ESCROW ACCOUNT          means the escrow account agreement made
             AGREEMENT               between the Parties and the Escrow Bank on
                                     the Execution Date; a form of Escrow
                                     Account Agreement is attached hereto as
                                     Schedule No. 12;

             KNOW-HOW                means the agreement made between the
             AGREEMENT               Company and the Seller on March 10, 1999
                                     (No. BNDF/118/03/99), subsequently amended
                                     by the following annexes: No. 1 of January
                                     10, 2002, No. 2 of November 29, 2002, No. 3
                                     of December 20, 2002, such agreement having
                                     been effectively terminated, and all the
                                     Seller's receivables under that agreement
                                     having been paid; a complete copy

                                       8


                                     of the Know-How Agreement is attached
                                     hereto together with the Cooperation
                                     Agreements as Schedule 13;

             COOPERATION             means all or, as the context may require,
             AGREEMENTS              each of the following agreements made
                                     between the Company and the Seller: (i)
                                     license agreement on the use of trade mark
                                     of April 29, 1998, amended by annex No.
                                     1/2003 of February 17, 2003 and annex No
                                     2/2003 of April 8, 2003, pursuant to which
                                     the Seller granted the Company a license
                                     for the logo, trade mark and the mixed
                                     logo-trade mark sign of Impexmetal; (ii)
                                     consulting services agreement made on
                                     February 3, 2003 pursuant to which the
                                     Seller renders strategic advice,
                                     operational advice, financial advice and
                                     public relations advice services; (iii) an
                                     agreement made on November 28, 2002
                                     pursuant to which the Company agreed to pay
                                     the Seller a fee for the security interests
                                     granted by the Seller for third party
                                     receivables against the Company; true and
                                     complete copies of the Cooperation
                                     Agreements (including the Know-How
                                     Agreement) are attached as Schedule No. 13
                                     hereto;

             CONDITIONS TO           mean all, or as the context requires any of
             PURCHASE                the conditions precedent and events listed
                                     in Article 3.1 hereof;

             WFOS                    means Wojewodzki Fundusz Ochrony
                                     aerodowiska i Gospodarki Wodnej (Voivodship
                                     Fund for Protection of the Environment and
                                     Water Management) in Katowice, 40-035
                                     Katowice, at ul. Plebiscytowa 19;

             BRE BANK'S SECURITY     means the security interests granted by the
             INTERESTS               Seller to BRE Bank in relation to the
                                     credit facility of PLN 10,000,000 (ten
                                     million) extended to the Company by the
                                     bank pursuant to the credit facility
                                     agreement No. 11/161/03/2/VV dated May 22,
                                     2003; those security interests include: (i)
                                     Seller's suretiship (poreczenie) for up to
                                     PLN 10,000,000 (ten million) in accordance
                                     with the guarantor's (poreczyciel)
                                     representation of May 21, 2003; (ii) an
                                     ordinary and a registered pledge on 688,064
                                     (six hundred and eighty-eight thousand,
                                     sixty-four) shares of Aluminium Konin -
                                     Impexmetal S.A. with its registered seat in
                                     Konin, pursuant to the pledge agreement of
                                     May 23, 2003 between the Seller and BRE
                                     Bank, provided that the ordinary pledge
                                     created on those shares shall expire once
                                     the registered pledge is entered into the
                                     register of pledges;

             PKO BP'S SECURITY       means the security interests granted by the
             INTERESTS               Seller to PKO BP, in relation to a credit
                                     facility of PLN 30,000,000 (thirty million)
                                     extended to the Company of by the bank
                                     pursuant to the agreement No.
                                     202-127/2/I/28/202 dated

                                       9


                                     November 29, 2002; those security interests
                                     include: (i) five blank promissory notes
                                     issued by the Company, paid for up to PLN
                                     6,000,000 (six million) each, with the
                                     Seller's guarantee (aval) on each such
                                     promissory note, (ii) registered pledge on
                                     1,714,114 (one million, seven hundred and
                                     fourteen thousand, one hundred fourteen)
                                     shares of Aluminium Konin - Impexmetal S.A.
                                     with its registered seat in Konin, entered
                                     in the registered of pledges on May 14,
                                     2003;

             WFOS'S SECURITY         means the security interests granted by the
             INTERESTS               Seller to WFOS in relation to a loan of PLN
                                     8,100,000 (eight million, one hundred
                                     thousand) extended to the Company pursuant
                                     to a loan agreement No. 243/2002/89/OA/od/P
                                     dated December 19, 2002; the security
                                     interest consists of a suretship
                                     (poreczenie) of repayment of the loan,
                                     granted by the Seller for up to the
                                     principal of PLN 2,430,000 (two million,
                                     four hundred and thirty thousand) including
                                     all interest accrued on such principal,
                                     costs and contractual penalties, under the
                                     guarantee agreement (umowa poreczenia) made
                                     between the Seller and WFOS on December 19,
                                     2002;

             CLOSING                 means Buyer's purchase of the Shares;

             SETTLEMENT NOTICE       means any Seller's written notification on
                                     the Settlement to which the Company's
                                     representation is attached (approved by the
                                     Buyer's Representative) confirming that an
                                     accurate Settlement has been made; form of
                                     Settlement Notice is attached hereto as
                                     Schedule No. 14.

             COOPERATION             means written notice to the Seller that the
             AGREEMENTS'             Cooperation Agreements' Settlement has been
             SETTLEMENT NOTICE       made, accompanied by Company's
                                     representation (approved by the Buyer's
                                     Representative) confirming the accuracy of
                                     the Cooperation Agreements' Settlement and
                                     defining, the Deductible, if any; form of
                                     Cooperation Agreements' Settlement Notice
                                     is attached hereto as Schedule No. 15.

                                    ARTICLE 2
              SHARE PURCHASE, ADDITIONAL OBLIGATIONS OF THE PARTIES

2.1      Share Purchase. On the terms and subject to the conditions set forth in
         the Agreement, the Seller covenants to sell and to deliver the Shares
         to the Buyer and the Buyer covenants to buy the Shares and pay the
         Total Purchase Price to the Seller on the Closing Date.

2.2      Purchase Price. Subject to Article 2.5 and Article 2.6. The purchase
         price per one Share shall be PLN 20.0917 (twenty and 917/1000), and the
         Total Purchase Price for all the Shares shall be PLN 200,000,000 (two
         hundred million).

                                       10


2.3      Escrow Account. On the Execution Date the Parties and the Escrow Bank
         will enter into the Escrow Account Agreement pursuant to which the
         Escrow Bank will open and maintain an Escrow Account for the benefit of
         the Buyer. For the purposes of securing performance of Buyer's
         obligations defined in Article 2.7.2 through the end of 2.7.8, within
         three (3) business days after the Execution Date, however not earlier
         than within three (3) days from the date of execution of the Escrow
         Agreement, the Buyer will pay the Escrow Amount to the Escrow Account.
         On the Closing Date the Escrow Amount shall be credited towards Buyer's
         payment of the Total Purchase Price. All interest on the Escrow Amount
         and other benefits earned on the Escrow Amount being deposited on the
         Escrow Account shall be enjoyed by the Buyer, regardless of which Party
         is actually paid the amount on such account in accordance with the
         Escrow Account Agreement. The costs of opening and keeping the Escrow
         Account shall be borne by the Buyer. The terms and conditions
         regulating withdrawal of the Escrow Amount from the Escrow Account as
         well as other terms and conditions of such agreement shall be set forth
         in detail in the Escrow Account Agreement.

2.4      Deposit Agreement. On the Execution Date the Parties and the Escrow
         Bank will enter into a Deposit Agreement pursuant to which the Escrow
         Bank will open and maintain the Deposit. For the purposes of securing
         payment to the Buyer of an amount equal to the Escrow Amount in case of
         Seller's failure to perform the obligations defined in Article 2.8.2
         through the end of 2.8.9, except, however, for the Seller's obligations
         referred to in Article 4.14, 4.16, 4.17, 4.18 and 4.21 which are
         referred to in Article 2.8.6, on the Execution Date the Seller will
         place a blank promissory note in the Deposit. The Seller's promissory
         note shall include the following information: (i) designation of the
         Buyer as the entity in favor of which or at the instructions of which
         the payment should be made; (ii) the date of issuance of the promissory
         note; (iii) the location where the promissory note was issued; (iv)
         signature of the Seller as the issuer of the promissory note. Should
         the promissory note be released to the Buyer in accordance with the
         Deposit Agreement, the Buyer shall be authorized to: (i) fill in the
         promissory note with a sum of not more than PLN 20,000,000 (twenty
         million) as the promissory note sum, provided that such amount may be
         increased by the stamp duty payable with respect to the promissory note
         including the promissory note sum as evidenced on such promissory note;
         (ii) specify the date of payment of the promissory note (provided that
         such promissory note payment date shall be a business day occurring
         seven calendar days from the date of Buyer's dispatch of a registered
         letter to the Seller to notify the Seller that the promissory note was
         filled out in accordance with this Agreement), (iii) designate the
         location of payment of the promissory note; (iv) present the promissory
         note filled in with the elements designated in this clause to the
         Seller for payment. The costs of opening and maintaining the Deposit
         shall be borne by the Buyer. The terms and conditions on which the
         promissory note will be released from the Deposit as well as other
         regulations will be specified in detail in the Deposit Agreement.

2.5      Settlement between the Seller and the Entities of the Seller's Group
         and the Entities from the Company Group. Two (2) business days prior to
         Closing Date ("SETTLEMENT DATE"), the Seller covenants, in agreement
         with the Buyer and the Buyer's Representative, to make all endeavors to
         settle, and with respect to the entities from the Seller's Group it
         covenants to make all the endeavors to procure

                                       11


         settlement of all mutual due and payable receivables of (i) the
         entities of the Company Group, and (ii) the Seller and the entities of
         the Seller's Group, such receivables resulting from any agreements
         (except for the Cooperation Agreements), trade orders or other deeds
         between the entities from the Company Group and the Seller or the
         entities from the Seller's Group ("SETTLEMENT"). On the date following
         the Settlement Date the Seller covenants to notify the Buyer in writing
         that the Settlement has been made ("SETTLEMENT NOTICE"), by including
         with the Settlement Notice the Company's representation (approved by
         the Buyer's Representative) confirming accurate, full and complete
         Settlement, and if no full and complete settlement of all matured
         receivables has been made, a representation of the Company (approved by
         the Buyer's Representative) and defining the total amount of matured
         receivables remaining to be settled ("SETTLEMENT AMOUNT").

         2.5.1    In the event that the Settlement Amount is not greater than
                  PLN 1,000,000 (one million), the Buyer or the Seller,
                  respectively, covenant to procure: (i) in the event that the
                  Settlement Amount constitutes the outstanding debts of the
                  Seller and the entities from the Seller's Group ("IMPEX DEBT
                  VALUE"), the Seller covenants to procure that the Impex Debt
                  Value is repaid within 5 (five ) business days after the
                  Closing Date; (ii) in the event that the Settlement Amount
                  constitutes the outstanding debts of the entities from the
                  Company Group ("HZ DEBT VALUE"), the Buyer covenants to
                  procure repayment of the HZ Debt Value within five (5)
                  business days after the Closing Date. For the purposes of
                  securing performance of the Seller's obligation to procure
                  repayment of the Impex Debt Value or the Buyer's obligation to
                  procure repayment of the HZ Debt Value, respectively, the
                  Seller or the Buyer, respectively, covenant that no later than
                  on the date preceding the Closing Date but no earlier than on
                  the date of accurate Settlement, they shall grant a surety
                  (poreczenie) of repayment of such debts. The form of the
                  surety referred to in the preceding sentence is attached
                  hereto as Schedule No. 16.

         2.5.2    In the event that the Settlement Amount is greater than PLN
                  1,000,000 (one million) and the Settlement Amount constitutes
                  outstanding debts of the Seller and the entities from the
                  Seller's Group ("IMPEX DEBT DEDUCTIBLE"), the Buyer shall
                  decrease the Total Purchase Price by the Impex Debt
                  Deductible. In the event that the Settlement Amount is greater
                  than PLN 1,000,000 (one million) and the Settlement Amount
                  constitutes outstanding debts of the entities from the Company
                  Group ("HZ DEBT INCREASE"), the Buyer will pay the Total
                  Purchase Price increased by the HZ Debt Increase. If, in
                  result of application of the above procedure, the Total
                  Purchase Price is decreased by the Impex Debt Deductible or
                  increased by the HZ Debt Increase, the Buyer or the Seller, as
                  the case may be, covenant to procure that the entities whose
                  matured receivables have not been settled within the scope of
                  the Settlement do not request repayment of debts thereunder
                  from (i) the Seller or the entities from the Seller's Group in
                  case of decrease of the Total Purchase Price by the Impex Debt
                  Deductible, or (ii) the entities from the Company Group in
                  case of increase of the Total Purchase Price by the HZ Debt
                  Increase.

                                       12


2.6      Cooperation Agreements' Settlement. Two (2) business days prior to the
         Closing Date ("COOPERATION AGREEMENTS' SETTLEMENT DATE") the Seller, in
         agreement with the Company, the Buyer's Representative and the Buyer,
         covenants to settle all the due and payable receivables of the Seller
         under the Cooperation Agreements ("COOPERATION AGREEMENTS'
         SETTLEMENT"). The Seller and the Company will make the Cooperation
         Agreements' Settlement on the basis of the terms and conditions defined
         in the Cooperation Agreements. On the date following the Cooperation
         Agreements' Settlement Date the Seller covenants to notify the Buyer in
         writing that the Cooperation Agreements' Settlement has been made
         ("COOPERATION AGREEMENTS' SETTLEMENT NOTICE"), by including with the
         Cooperation Agreements' Settlement Notice the Company's representation
         (approved by the Buyer's Representative) confirming accurate, full and
         complete Cooperation Agreements' Settlement and specifying the
         Deductible, as referred to below, or if no full and complete
         Cooperation Agreements' Settlement has been made, the Company's
         representation (approved by the Buyer's Representative) designating the
         total amount remaining to be settled ("COOPERATION AGREEMENTS'
         SETTLEMENT AMOUNT") and designating the Deductible, as referred to
         below. In the event that the Deductible is designated in the
         Cooperation Agreements' Settlement Notice and in the Seller's and the
         Company's representation attached to such notice, the Buyer shall
         decrease the Total Purchase Price by the Deductible. In the event that
         no full and complete Cooperation Agreements' Settlement has been made,
         the Buyer covenants to procure that the Company pays the Cooperation
         Agreements' Settlement Amount to the Seller within 5 (five) business
         days after the Closing Date. For the purposes of securing the
         obligation to procure the Buyer's repayment of the Cooperation
         Agreements' Settlement Amount no later than on the date preceding the
         Closing Date, but no earlier than after making the accurate Cooperation
         Agreements' Settlement, the Buyer covenants to grant a surety for
         repayment of such amount. The form of surety (poreczenie) referred to
         in the preceding sentence is attached as Schedule No. 17 hereto.

         2.6.1    Calculation of the Deductible. In the event that in the period
                  between May 31, 2003 and the Cooperation Agreements'
                  Settlement Date ("TERM FOR MAXIMUM AMOUNT") the Seller's
                  remuneration and receivables (including the costs incurred by
                  the Seller) under the consulting services agreement of
                  February 3, 2003, in any of the months within the Term of
                  Maximum Amount, exceed PLN 250,000 (two hundred and fifty
                  thousand) increased by the goods and services tax (VAT) due
                  thereon ("MAXIMUM AMOUNT"), the Seller shall be obliged to
                  provide in the Cooperation Agreements' Settlement Notice,
                  which shall be confirmed by the Company's representation
                  (approved by the Buyer's Representative), the total amount
                  paid to the Seller or the amount of Company's outstanding
                  debts in that respect, constituting the sum of the amounts
                  which exceed the Maximum Amount established for each of the
                  months in the Term for Maximum Amount ("DEDUCTIBLE"). In the
                  event that a Deductible exists, the Buyer shall decrease the
                  Total Purchase Price by the Deductible.

2.7      Additional Covenants of the Buyer. Subject to other terms and
         conditions of this Agreement which define the Buyer's covenants, the
         Buyer covenants, in particular:

                                       13


         2.7.1    to deposit the Escrow Amount in the Escrow Account within
                  three (3) business days of Execution Date, however not earlier
                  than within three (3) days from execution of the Escrow
                  Agreement;

         2.7.2    to duly perform Buyer's obligations as defined in the BRE Bank
                  Agreement;

         2.7.3    to procure approval by the Buyer's Representative of the
                  accuracy of the Settlement and the Cooperation Agreements'
                  Settlement;

         2.7.4    to pay to the Buyer's account at BRE Bank, the First Part of
                  Purchase Price no later than on the day preceding the Closing
                  Date, however not earlier than within three (3) days from
                  receipt of Seller's and BRE Bank's notice on the final
                  definition of the First Part of Purchase Price; and refrain
                  from, until the Closing Date inclusive, issuing any
                  instructions with regards to such amounts, except for giving
                  instructions of transfer of specific amounts (which, in
                  aggregate, do not exceed the First Part of Purchase Price) to
                  the bank accounts designated in the Representation with
                  Instructions Relating to the First Part of Purchase Price;

         2.7.5    to procure, no later than on the Closing Date, Seller's
                  release from the PKO BP Security Interests and the BRE Bank
                  Security Interests, which release cannot contain any other
                  conditions other than the terminating condition constituting
                  the Buyer's failure to buy the Shares; no later than three (3)
                  business days prior to the Closing Date the Buyer shall
                  deliver to the Seller either documents or draft documents
                  relating to execution of this obligation; the contents of the
                  documents and draft documents delivered to the Seller within
                  such time should correspond to the contents of the documents
                  which will be presented to the Seller on the Closing Date;

         2.7.6    to procure, no later than on the Closing Date, Seller's
                  release from the WFOae's Security Interests, which waiver
                  cannot contain any conditions other than the terminating
                  condition of Buyer's failure to buy the Shares, no later than
                  three (3) business days prior to the Closing Date the Buyer
                  shall deliver to the Seller either documents or draft
                  documents relating to execution of this obligation; the
                  contents of the documents and draft documents delivered to the
                  Seller within such time should correspond to the contents of
                  the documents which will be presented to the Seller on the
                  Closing Date;

         2.7.7    to collect the share certificates for the Shares;

         2.7.8    to pay the Total Purchase Price for the Shares.

2.8      Additional Covenants of the Seller. Subject to other terms and
         conditions of this Agreement which define the Seller's covenants, the
         Seller covenants, in particular:

         2.8.1    to deliver, on the Execution Date, however not earlier than on
                  the date of execution of the Deposit Agreement, the Seller's
                  blank promissory note to the Deposit maintained by the Escrow
                  Bank;

                                       14


         2.8.2    to duly perform the Seller's obligations as defined in the BRE
                  Bank Agreement and, in particular, to define, in agreement
                  with BRE Bank, no later than within five (5) business days
                  prior to the Closing Date, the amount of the First Part of
                  Purchase Price and to advise the Buyer that the First Part of
                  Purchase Price has been defined no later than four (4)
                  business days prior to the Closing Date;

         2.8.3    to procure that until the date on which it will be possible to
                  hold a Company's general meeting at which the Buyer would be
                  able to exercise voting rights attached to the Shares, neither
                  the general meeting nor the supervisory board of the Company,
                  unless the Buyer decides otherwise, shall dismiss or suspend
                  the Buyer's representative in his/her duties as a Company's
                  management board member; in the event that the Seller finds
                  that the Buyer's Representative acts to the detriment of the
                  Company or that, in relation to performing duties related to
                  acting as member of the Company's management board, he/she
                  performs other illegal actions, the Buyer shall not deny its
                  consent for the Buyer's Representative's dismissal without
                  justified reasons; in case of Buyer's Representative dismissal
                  regardless of the Buyer's consent of once such consent has
                  been given, the Seller shall procure that the dismissed
                  Buyer's Representative is replaced by another person
                  designated by the Buyer to serve on the Company's management
                  board so that at the time of Buyer's Representative's
                  dismissal another person designated by the Buyer would be
                  effectively appointed in his/her stead;

         2.8.4    to procure that the Company's management board, in the period
                  between the Execution Date and the Closing Date, shall consist
                  of two members, including the Buyer's Representative, unless
                  the Buyer decides otherwise;

         2.8.5    to procure, no later than on the Closing Date, expiry of all
                  encumbrances on the Shares, subject to Buyer's proper
                  performance of the BRE Bank Agreement;

         2.8.6    to make an accurate Settlement and the Cooperation Agreements'
                  Settlement as well as terminate the Cooperation Agreements and
                  duly perform other obligations of the Seller as referred to in
                  Article 4 of the Agreement;

         2.8.7    to grant Seller's consent, in the form as required by law, for
                  the Buyer to apply to the relevant tax office, acting on the
                  basis of Article 306g of Tax Ordinance, for a certificate
                  stating any outstanding tax liabilities of the Seller, such
                  consent being granted on such date that will allow to receive
                  the certificate within three (3) days prior to the Closing
                  Date; such consent will be granted to the Buyer within five
                  (5) days from the date of Seller's receipt of the Buyer's
                  request, provided that the Buyer will make the request for the
                  consent no later than on the second business day after
                  satisfaction of the Conditions to Purchase as referred to in
                  Article 3.1.3 and 3.1.4; form of Seller's consent referred to
                  in this Article is attached hereto as Schedule No. 18;

                                       15


         2.8.8    to grant Seller's consent, in the form as required by law, for
                  the Buyer to apply to the relevant social insurance office
                  (ZUS) for a certificate evidencing the Seller's outstanding
                  liabilities with respect to social or health insurance
                  premiums or any other premiums, payables and public duties
                  which are collected by social insurance offices, such consent
                  being granted within the time allowing to receive the
                  certificate within three (3) days prior to the Closing Date;
                  the above consent will be granted to the Buyer within five (5)
                  days from the date of Seller's receipt of the Buyer's request,
                  provided that the Buyer will make the request for the consent
                  no later than on the second business day after satisfaction of
                  the Conditions to Purchase as referred to in Article 3.1.3 and
                  3.1.4; form of Seller's consent referred to in this Article is
                  attached hereto as Schedule No. 19;

         2.8.9    to deliver to the Buyer the share certificates for the Shares
                  on the Closing Date.

                                   ARTICLE 3
                      CONDITIONS TO BUYER'S SHARE PURCHASE

3.1      Catalogue of Conditions to Purchase. Subject to Article 3.4 the
         obligations referred to in Article 2.1 shall be performed after the
         occurrence of all the events, performance of obligations and
         satisfaction of all the conditions precedent referred to in this
         Article (the events, performance of obligations and conditions
         precedent defined in this Article shall hereinafter be jointly referred
         to as the "CONDITIONS TO PURCHASE"). The transfer of the ownership
         title to the Shares to the Buyer shall occur after all the following
         Conditions to Purchase have been satisfied:

         3.1.1    on the Execution Date, execution of the Escrow Account
                  Agreement and the Buyer's payment of Escrow Amount to the
                  Escrow Account;

         3.1.2    on the Execution Date, execution of the Deposit Agreement and
                  delivery of the Seller's blank promissory note to the Deposit
                  kept by the Escrow Bank;

         3.1.3    receipt of UOKiK President's decision with unconditional
                  consent for concentration as defined in the Protection of
                  Competition and Consumers Act of December 15, 2000 (Dz.U.
                  2000, No. 122, item 1319, as amended), consisting of the
                  Buyer's acquisition of the Shares, or after the statutory
                  period for such decision to be issued has lapsed;

         3.1.4    receipt of a permit of the Minister of Internal Affairs and
                  Administration for Buyer's purchase of the Shares which
                  constitute a majority stake in the Company's share capital, as
                  required by the Acquisition of Real Estate by Foreigners Act
                  of March 24, 1920 (Dz.U. 1996, No. 54, item 245, as amended);

         3.1.5    payment to the Buyer's account at BRE Bank, of the First Part
                  of Purchase Price and refraining, until the Closing Date
                  inclusive, from issuing any instructions with respect to such
                  amount except for the ability to issue instructions to
                  transfer relevant amounts (the aggregate of which shall not be
                  greater than the First Part of Purchase Price) to the bank
                  accounts

                                       16


                  designated in the Representation with Instructions relating to
                  the First Part of Purchase Price;

         3.1.6    the Buyer procuring that the Seller is released from the PKO
                  BP's Security Interests by: (i) obtaining the Notice of Waiver
                  of PKO BP's Security Interest which waiver may contain a
                  terminating condition consisting of Buyer's failure to
                  purchase the Shares, or (ii) delivery to the Seller of an
                  irrevocable and payable on first demand bank guarantee for an
                  amount corresponding to the amount which PKO BP may demand
                  from the Seller in relation to enforcement of PKO BP's rights
                  under the PKO BP's Security Interests, or (iii) any other form
                  of security provided by the Buyer in agreement with the
                  Seller; or (iv) full and complete repayment of Company debts
                  which have been secured by the PKO BP Security Interests; and
                  the Buyer procuring that the Seller is released from the BRE
                  Bank's Security Interests by: (i) obtaining the Notice of
                  Waiver of BRE Bank's Security Interest which waiver may
                  contain a terminating condition consisting of Buyer's failure
                  to purchase the Shares, or (ii) delivery to the Seller of an
                  irrevocable and payable on first demand bank guarantee for an
                  amount corresponding to the amount which BRE Bank may demand
                  from the Seller in relation to enforcement of BRE Bank's
                  rights under the BRE Bank's Security Interests, or (iii) any
                  other form security provided by the Buyer in agreement with
                  the Seller; or (iv) full and complete repayment of Company
                  debts which have been secured by the BRE Bank Security
                  Interests;

         3.1.7    the Buyer procuring that the Seller is released from the
                  WFOae's Security Interests by either (i) procuring a Notice of
                  Waiver of WFOae's Security Interests, which waiver may contain
                  a terminating condition consisting of Buyer's failure to
                  purchase the Shares or (ii) delivering to the Seller an
                  irrevocable, payable on first demand bank guarantee for the
                  amount corresponding to the amount which WFOae's may demand
                  from the Seller in relation to enforcement of WFOae's rights
                  under the WFOae's Security Interests, or (iii) any other form
                  security provided by the Buyer in agreement with the Seller;
                  or (iv) full and complete repayment of Company debts which
                  have been secured by the WFOae Security Interests;

         3.1.8    the Seller procuring expiry of all encumbrances on the Shares
                  no later than on the Closing Date;

         3.1.9    making an accurate Settlement and Cooperation Agreements'
                  Settlement;

         3.1.10   confirmation, through relevant certificates issued by a tax
                  office and the social insurance office (ZUS) appropriate for
                  the Seller that the Seller has no outstanding tax liabilities
                  or liabilities with respect to social and health insurance
                  premiums or any other premiums, payables and public dues on
                  the Closing Date;

         3.1.11   there being no Material Adverse Change;

                                       17


         3.1.12   due performance of the Seller's covenants referred to in
                  Article 4 (except for 4.14, 4.16, 4.17, 4.18, 4.21) within the
                  period between the Execution Date and the Closing Date.

3.2      Parties Cooperation with Regards to Satisfaction of the Conditions to
         Purchase. The Parties covenant to take all legal and factual actions
         which may be reasonably required for all the Conditions to Purchase to
         be satisfied on as soon as possible basis. Furthermore, the Parties
         covenant to notify each other of satisfaction of the specific
         Conditions to Purchase immediately upon such satisfaction, however not
         later than within seven (7) days of becoming aware of satisfaction of a
         relevant Condition to Purchase. The notice of satisfaction of a
         relevant Condition to Purchase should be accompanied by a copy of
         respective document evidencing satisfaction of the Condition to
         Purchase, provided that such document is required to be issued in
         relation to satisfaction of the Condition to Purchase.

3.3      Conditional Decision of the UOKiK President. In the event that in the
         decision on consent for concentration consisting of Buyer's purchase of
         the Shares the UOKiK President imposes certain additional obligations
         on the Buyer, the Buyer may, at its own discretion, either (i) covenant
         to perform the additional obligations specified in such decision; or
         (ii) withdraw from the Agreement. The Buyer covenants to advise the
         Seller of its decision within fourteen (14) days from the date of
         delivery of the UOKiK President's conditional consent referred to in
         this clause.

3.4      Waiver of Conditions to Purchase. The Parties jointly represent that
         except for the Conditions to Purchase referred to in Article 3.1.3 and
         3.1.4: (i) the Buyer shall have the right to waive, at any time, all or
         any of the Conditions to Purchase provided in Article 3.1.2 and in
         Articles 3.1.8 through 3.1.12; and (ii) the Seller shall have the right
         to waive, at any time, all or any of the Conditions to Purchase
         provided in Article 3.1.1 and in Articles 3.1.5 through 3.1.7. If a
         waiver is granted, the Party granting such waiver shall deliver to the
         other Party written representation on waiver of all or the relevant
         Conditions to Purchase. Unless the Parties jointly decide otherwise,
         the consequence of any such waiver will be that a relevant Condition to
         Purchase will be deemed satisfied on the date designated in the
         representation of the Party granting the waiver which, however, cannot
         occur earlier than on the 7th (seventh) and no later than on the 14th
         (fourteenth) day from the date of dispatching the waiver to the other
         Party.

                                    ARTICLE 4
                                 INTERIM PERIOD

4.1      Operation of Business by Entities of the Company Group. Except as
         contemplated by this Agreement or with the prior written consent of the
         Buyer or the Buyer's representative, during the period starting from
         the Execution Date and until the Closing, the Seller covenants to
         procure that the Seller's Representative cooperates with the Buyer's
         Representative and the Buyer so that the entities of the Company Group
         conduct their respective businesses and operations according to the
         entities of the Company Group' ordinary and usual course of business
         and use all best efforts to (i) preserve intact the entities of the
         Company Group' properties, assets and business operations, (ii) take
         reasonable action to keep available the services of executive and
         employees of each of the entities of the Company Group, (iii) maintain
         satisfactory relationships with customers, suppliers, distributors and

                                       18


         others having commercially beneficial business relationships with the
         entities of the Company Group. The Seller shall cause the Seller's
         Representative to cooperate with the Buyer's Representative so that
         none of the entities of the Company Group, take any of the following
         actions from the Execution Date until the Closing, without the prior
         written consent of the Buyer's Representative or the Buyer:

         4.1.1    issue, sell, pledge, transfer, or propose the issuance, sale,
                  pledge or transfer, of shares in the share capital of any
                  class in entities of the Company Group, or securities
                  convertible into any such shares, or any rights, warrants or
                  options to acquire any such shares or other securities
                  convertible into shares in the entities from the Company
                  Group;

         4.1.2    redeem, purchase or otherwise acquire any outstanding shares
                  of the share capital of any entity of the Company Group;

         4.1.3    effect any recapitalization, share split or like change in the
                  share capital of any entity of the Company Group;

         4.1.4    create or modify any privileges or preferences with respect to
                  any shares in the entities of the Company Group's share
                  capital;

         4.1.5    acquire shares in any joint stock company, limited liability
                  company or enter into any partnership agreement, merger
                  agreement or effect a transformation of a corporate form of
                  any entity of the Company Group or enter into any other
                  agreements having similar effects;

         4.1.6    except as required for the transactions contemplated by this
                  Agreement, propose or adopt any amendment to the articles of
                  association or statute of any entity of the Company Group;

         4.1.7    sell, transfer, pledge or otherwise dispose of any of its
                  shares, material property, assets or enterprise, or an
                  organized part of enterprise, or pledge, mortgage or otherwise
                  encumber any of its shares, material property, assets or
                  enterprise, or an organized part of enterprise of any entity
                  of the Company Group;

         4.1.8    enter into, amend, modify, cancel or breach any agreement or
                  unilateral commitment or take any other action providing for
                  payment or in-kind performance with a value exceeding PLN
                  1,000,000 (one million) or an equivalent of this sum in other
                  currency, or enter into, amend, modify, cancel or breach any
                  contracts or agreements or unilateral commitments or take any
                  series of other actions in connection with the same
                  transaction or related transactions or with the same person or
                  affiliates of such person providing in aggregate for payment
                  or in-kind performance with a value exceeding PLN 1,000,000
                  (one million) or an equivalent of this sum in other currency;

         4.1.9    enter into, amend, cancel or breach any agreements outside the
                  ordinary course of business by any of the entities of the
                  Company Group relating in particular to gas and energy supply,
                  and sale or purchase of certain

                                       19


                  products, in particular electrodes, rolled products, supply of
                  refractory products, bearings, steel scrap, granulated
                  aluminum products and aluminum wire rods;

         4.1.10   enter into any contract or agreement or unilateral commitment
                  which restrains, restricts, limits or impedes the ability of
                  any entity of the Company Group to compete with or conduct any
                  business or line of business in any geographic area;

         4.1.11   except as contemplated herein, assume any unilateral
                  commitments with regards to the Seller or entities of the
                  Seller's Group nor enter into, amend, cancel or breach any
                  agreement with the Seller or any such entities;

         4.1.12   declare or pay any dividend or other distribution in respect
                  to any capitals of any of the entities of the Company Group;

         4.1.13   take any action resulting in assuming any unilateral
                  commitment having the effect of increased indebtedness of the
                  entities of the Company Group nor enter into, amend, cancel or
                  breach any credit facility or loan agreement;

         4.1.14   except for those commitments involving capital expenditures
                  disclosed in Schedule 20 attached hereto, enter into any
                  unilateral commitment or agreement or series of unilateral
                  commitments or agreements involving capital expenditures (or
                  commitments) exceeding PLN 500,000 (five hundred thousand) or
                  an equivalent of such sum in other currency;

         4.1.15   enter into any agreement with any individual for employment or
                  the provision of services to any of the entities of the
                  Company Group for an amount in excess of PLN 100,000 (one
                  hundred thousand) per year or an equivalent of such sum in
                  other currency, or amend, cancel or breach the terms of
                  employment of any executive (particularly a management board
                  member) whose remuneration is greater than PLN 60,000 (sixty
                  thousand) per year or the equivalent of such sum in other
                  currency (a "KEY EMPLOYEE"), or otherwise increase the
                  compensation or benefits payable to any Key Employee or member
                  of supervisory board of any of the entities of the Company
                  Group; this clause shall not apply to the individuals or
                  additional competencies granted to those individuals as
                  referred to in Schedule No. 21 to the Agreement;

         4.1.16   enter into, amend, cancel or breach any collective labor
                  agreement of any entity of the Company Group,

         4.1.17   enter into any agreement resulting in acquiring by the Company
                  of ownership or/and perpetual usufruct of any real estate or
                  fraction of real estate, including the separate ownership of
                  premises.

4.2      CONDUCT OF TAX AFFAIRS. The Seller shall cause the Seller's
         Representative to cooperate with the Buyer's Representative in order to
         provide the Buyer's Representative with access to all material
         communications with taxation authorities regarding the entities of the
         Company Group.

                                       20


4.3      Delivery of Financial Statements and Reports. The Seller shall cause
         the Seller's Representative to cooperate with the Buyer's
         Representative in order to allow the Buyer's Representative access to,
         in particular, monthly financial statements presenting the results of
         operations and the balance sheet for each of the entities of the
         Company Group for each month not later than on the 30th (thirtieth) day
         of the following month after such statements are made. The Seller shall
         cause that from the Execution Date until the Closing Date, the Seller's
         Representative will cooperate with the Buyer's Representative in such a
         manner that the entities of the Company Group provide the Buyer's
         Representative with reports on sales, receivables, liabilities and
         reserves and minutes of meetings of respective supervisory boards and
         the management boards of the entities of the Company Group, for each
         month, not later that on the 15th (fifteenth) day of each month.

4.4      Litigation. The Seller shall cause that the Seller's Representative
         will cooperate with the Buyer's Representative so that the entities of
         the Company Group promptly inform the Buyer's Representative about any
         pending or threatened litigation, arbitration, mediation or
         administrative proceedings concerning the entities of the Company Group
         which could result in payment or in-kind performance by the entities of
         the Company Group with a value in excess of PLN 50,000 (fifty thousand)
         or the equivalent of such sum in other currency or any other
         litigation, arbitration, mediation of administrative proceedings that
         could have a material adverse change on the entities of the Company
         Group or their respective businesses.

4.5      Notifications to the Company Counterparties. If required by any
         agreements made by the Company, the Seller covenants to procure that
         the Seller's Representative will cooperate with the Buyer's
         Representative so that the Company, immediately after the Execution
         Date, would notify parties to such agreements of the Seller's intention
         to sell the Shares or request those parties to take a position as far
         as continuing to perform under such agreements in relation to the
         Seller's intention to sell and subsequently the Seller's sale of the
         Shares.

4.6      Notifications to the Company Group Counterparties, Excluding the
         Company. If required by any agreements made by entities of the Company
         Group, excluding the Company, the Seller covenants to procure that the
         Seller's Representative will cooperate with the Buyer's Representative
         so that such entities of the Company Group, immediately after the
         Execution Date, would notify parties to such agreements of the Seller's
         intention to sell the Shares or request those parties to take a
         position as far as continuing to perform under such agreements in
         relation to the Seller's intention to sell and subsequently the
         Seller's sale of the Shares.

4.7      Manner of Cooperation.  The Parties resolve that:

         4.7.1    in performance of the obligation to cooperate as referred to
                  in Article 4.1, 4.2, 4.3, 4.4, 4.5, 4.6 and 4.8, 4.9 of the
                  Agreement, the Seller's Representative, prior to taking any of
                  the actions referred to in those Articles, shall obtain the
                  consent of either the Buyer's Representative or the Buyer for
                  performance of any such action;

         4.7.2    should the Buyer's Representative find that the Seller's
                  Representative does not cooperate, the Buyer's Representative
                  shall immediately advise the

                                       21


                  Seller of any such fact in writing by explaining the
                  circumstances in the notice; the Seller's obligation to ensure
                  cooperation shall be deemed satisfied if the Seller does
                  procure the Seller's Representative to cooperate in a given
                  matter within three (3) days, and if certain actions are
                  required to be taken by the Company's supervisory board,
                  within ten (10) days from the date of receipt of the Buyer's
                  Representative's notice of no-cooperation;

         4.7.3    if the Buyer's Representative did not advise the Seller of a
                  lack of cooperation on the part of the Seller's
                  Representative, the Seller's obligation to ensure cooperation
                  in any given matter is deemed as satisfied.

4.8      Access to Company Information. During the period from the Execution
         Date to the Closing Date, the Seller shall not cause, directly or
         indirectly, that the Buyer's Representative or any other persons
         specifically designated by the Buyer in agreement with the Seller, are
         denied access to the books, records, facilities, properties, assets and
         other information related to operations of the Company. The Seller
         shall not cause, directly or indirectly, that the Buyer's
         Representative or other persons specifically designated by the Buyer in
         agreement with the Seller, are deprived of the possibility to demand
         and receive information from appropriate managers, directors, officers,
         employees and representatives of the Company such matters related to
         the transactions provided for herein. Furthermore, the Seller, at the
         Buyer's request, will provide the Buyer with information on activities
         of the Company's supervisory board.

4.9      Access to Information on the Company Group, Excluding the Company.
         During the period from the Execution Date to the Closing Date, the
         Seller shall not cause, directly or indirectly, that the Buyer's
         Representative is denied access to the books, records, facilities,
         properties, assets and other information related to operations of the
         entities of the Company Group, excluding information relating to the
         Company, with regards to which such access has been regulated in
         Article 4.8. The Seller shall not cause, directly or indirectly, that
         the Buyer's Representative is deprived of the possibility to demand and
         receive information from appropriate managers, directors, members of
         the supervisory board, officers, employees and representatives of the
         entities of the Company Group, excluding information relating to the
         Company, with regards to which such access has been regulated in
         Article 4.8, with regards to any matters related to the transactions
         provided for herein.

4.10     Settlement and Termination of Cooperation Agreements. Subject to
         Article 2.6, the Seller shall ensure that no later than on the Closing
         Date all the Cooperation Agreements are settled and terminated without
         any liability for any such termination or any other liabilities under
         such agreements or resulting from termination thereof against the Buyer
         or the Company. Standard form of termination of the agreements referred
         to in this Article is attached hereto as Schedule No. 22.

4.11     Actions of the Seller Acting as Company Shareholder. Unless otherwise
         provided by this Agreement, the Seller shall not, during the period
         starting from the Execution Date and until the Closing, exercise the
         rights enjoyed thereby due to

                                       22


         holding the ownership title to the Shares on the terms and conditions
         as provided by this Article.

         4.11.1   During the period starting from the Execution Date and until
                  the Closing, the Seller shall not, without the prior written
                  consent of the Buyer:

                  (a)      sell, pledge, transfer, or propose the sale, pledge
                           or transfer, of any Shares or securities convertible
                           into any Company shares, or any rights, warrants or
                           options to acquire any Company shares;

                  (b)      enter into a merger agreement with respect to the
                           Company or effect a transformation of a corporate
                           form of the Company or enter into any other
                           agreements having similar effects;

                  (c)      unless the Buyer decides otherwise, vote "in favor"
                           or "against" or abstain from vote with respect to the
                           Shares at any Company's general meeting in relation
                           to adoption of resolutions regarding the following
                           matters: (i) review and approval of the Management
                           Board's report on the Company's operations as well as
                           the financial report for the previous financial year
                           and approving the performance of duties by members of
                           the Company authorities; (ii) distribution of profits
                           or coverage of losses; (iii) change of the scope of
                           Company's business; (iv) amendment of the Statue; (v)
                           increase or decrease of the share capital or any
                           other changes of the structure of the Company's share
                           capital; (vi) redemption of Company shares; (vii)
                           division or transformation of the Company or
                           Company's merger with another company; (viii)
                           dissolution or liquidation of the Company; (ix)
                           issuance of bonds; (x) transfer or lease of the
                           enterprise, creation of a right of usufruct thereon
                           and purchase or sale of any real property or a share
                           in a real property and a collection of tangible and
                           intangible assets which could constitute a separate
                           enterprise; (xi) dismissal or suspension of Company
                           management board members in their duties; (xii)
                           establishment of the number of member of Company's
                           supervisory board as well as appointment or dismissal
                           of the Company's supervisory board members; (xiii)
                           increase or decrease of remuneration of supervisory
                           board members; (xiv) creation or cancellation of any
                           other capitals or special purpose funds of the
                           Company; (xv) specification of the manner of use of
                           Company's net profit; (xvi) purchase of Company's own
                           shares; (xvii) mandatory buy out of shares owned by
                           shareholders representing less than 5% of the
                           Company's share capital; (xviii) any resolutions
                           relating to claims for redress of injuries caused in
                           the course of exercising management or supervision;
                           (xix) exclusion or restriction of preemptive rights
                           with respect to newly issued shares;

                  (d)      prior to the Closing Date, the Seller SHALL take all
                           the factual and legal actions required to convene a
                           general meeting of shareholders of the Company which
                           will be held not earlier than seven (7) and not later
                           that 15 (fifteen) business days after the Closing
                           Date. The agenda for such shareholders' meeting shall
                           include points relating

                                       23


                           to: (i) changes in the Company's supervisory board;
                           and (ii) amendments of the Statute with respect to
                           eliminating restrictions regarding satisfaction of
                           specific conditions by candidates for members of the
                           Company's management board.

4.12     Company's Supervisory Board and Management Board.

         4.12.1   Unless otherwise provided by this Agreement, the Seller shall
                  take all actions necessary to ensure that between the
                  Execution Date and the date on which the supervisory board
                  members, excluding the supervisory board member appointed by
                  the Company's general meeting from among the candidates
                  designated by the State Treasury, are not effectively
                  dismissed or do not effectively resign, the Company's
                  supervisory board, without the prior written consent of the
                  Buyer, which shall not be unreasonably withheld, shall not
                  take any resolutions in the following matters: (i) any
                  amendments to the supervisory board by-laws; (ii) approval of
                  the Company's management board by-laws; (iii) entering into
                  contracts of employment with members of the management board;
                  (iv) establishment of principles and amount of remuneration
                  for management board members; (v) appointment and dismissal of
                  the president, individual members or the entire management
                  board; (vi) suspension in their duties, due to important
                  reasons, of the president and the specific members of the
                  management board or the entire management board; (vii)
                  delegating one or several members of the supervisory board for
                  temporary performance of duties of a management board member,
                  in case of suspension or dismissal of management board members
                  or the entire management board or if the management board, due
                  to other reasons, is unable to act; (viii) granting the
                  management board consent for sale of fixed assets not related
                  to the scope of Company's operations, having the value of more
                  than one twentieth of the share capital; (ix) expressing
                  consent for taking any credit facilities or loans, sale or
                  purchase of any fixed assets having the value in excess of the
                  PLN equivalent of EUR 300,000 (three hundred thousand); (x)
                  consenting for extending any sureties (poreczenia) of a one
                  time value of EUR 300,000 (three hundred thousand) or
                  extending to a single entity sureties for a total of the
                  equivalent of EUR 300,000 (three hundred thousand) in a single
                  year; (xi) consenting for creation or accession to any
                  commercial law companies within the scope not reserved for the
                  general meeting; (xii) approval of any annual business and
                  investment plans for the Company; (xiii) consenting for
                  assumption of credit facilities, selling or acquiring fixed
                  assets having the value greater than 1/10 of the Company's
                  share capital; and (xiv) consenting for purchase or sale of
                  any real property or a share in any real property.
                  Furthermore, at the Buyer's written request made not earlier
                  than on the date on which the Conditions to Purchase referred
                  to in Article 3.1.3 and 3.1.4 have been satisfied, but not
                  later than ten (10) days prior to the Closing Date, the Seller
                  covenants to cause that the Company's supervisory board
                  established the number of management board members at three
                  (3) members and appointed the person designated by the Buyer
                  to the Company's management board. The resolutions referred to
                  in the preceding sentence may contain a condition precedent of

                                       24



                  the Buyer's purchase of the Shares by December 15, 2003. The
                  form of supervisory board resolution is attached as Schedule
                  No. 23 hereto.

         4.12.2   The Seller shall cause the resignation or dismissal of all
                  members of the Company's supervisory board on or prior to the
                  Closing Date, except for the Company's supervisory board
                  member appointed by the Company's shareholders meeting from
                  among the candidates designated by the State Treasury. The
                  form of resignation of a Company supervisory board member is
                  attached herewith as Schedule No. 24.

         4.12.3   Prior to the Closing Date, the Seller shall take all necessary
                  actions to ensure that after the Closing Date the Buyers'
                  representatives will be able to hold the positions of members
                  of the Company's management board, in particular, the Seller
                  shall amend the by-laws of the Company's management board in
                  order to remove all restrictions on qualifications for
                  candidates for members of the Company's management board,
                  except for the conditions defined in the Statute.

4.13     Release of Encumbrances. Prior to the Closing Date, the Seller shall
         take all actions necessary to release the existing pledges and all
         other encumbrances over the Shares, in such a manner as to enable the
         Buyer to purchase the Shares free of any pledges and encumbrances on
         the Closing Date.

4.14     Confidentiality. Prior to the Closing Date, the Buyer shall, except to
         the extent required by any laws in force, keep confidential, and shall
         use its reasonable best efforts to cause to be kept confidential by its
         affiliates, representatives and the Buyer's Representative, all
         information concerning the Seller or the entities of the Company Group
         disclosed by the Seller or its representatives to the Buyer or its
         representatives prior to the Execution Date or hereafter in connection
         with this Agreement or the consummation of the transactions
         contemplated hereby. None of such information shall be used in any
         manner other than in connection with the Parties' due performance of
         this Agreement and the transactions contemplated hereby.

4.15     Additional Documents. Subject to the terms and conditions set forth
         herein, each of the Parties agrees to take all actions in compliance
         with applicable laws and regulations to consummate and make effective
         as promptly as practicable the obligations under this Agreement. If at
         any time after the Closing Date any further action is necessary or
         desirable to carry out the purposes of this Agreement, including,
         without limitation, the execution of additional instruments, the
         Parties shall take all such necessary action.

4.16     Consents and Approvals. The Parties each shall cooperate with one
         another and shall use all efforts to prepare all necessary
         documentation to effect promptly all necessary filings and to obtain
         all necessary permits and consents, or to confirm that the transactions
         contemplated by this Agreement are exempt from the obligation to get
         any such permits and consents. Each Party shall keep all other Parties
         apprised of the status of any inquiries made of such Party by any
         governmental authority, court or other public authority with respect to
         this Agreement.

                                       25



4.17     Public Announcements. The Buyer and the Seller shall consult with each
         other and shall mutually agree in writing (the agreement of each such
         Party, in such respect, not to be unreasonably withheld) upon the
         content and timing of any press release or other public statements with
         respect to the transactions contemplated by this Agreement and shall
         not issue any such press release or make any such public statement
         prior to such consultation and agreement, except as may be required by
         applicable law; provided, however, that each of the Buyer and the
         Seller shall give prior notice to the other of the content and timing
         of any such press release or other public statement.

4.18     Information on Bankruptcy Petitions or Motions for Opening of
         Arrangement Proceedings. In the event of filing, or becoming aware of a
         third party filing a motion for declaration of bankruptcy or opening of
         arrangement proceedings of one of the Parties, the Party which filed
         such motion or became aware of a motion relating to it being filed,
         shall be obliged to immediately advise the other Party thereof in
         writing.

4.19     NOTICE OF CERTAIN CHANGES. From the Execution Date until the Closing
         Date, each of the Parties shall immediately notify the other Party in
         writing upon becoming aware of (i) the occurrence, or likely
         occurrence, of any Material Adverse Change or (ii) the occurrence of
         any other event that has, or is likely to have, the effect of rendering
         untrue any of the representations and warranties made by a Party or the
         Company in Article 6 or Article 7 hereof respectively.

4.20     EXCLUSIVITY. During the term of this Agreement, the Seller shall (i)
         discontinue all negotiations with any other person, and shall not enter
         into any new negotiations regarding the acquisition, transfer,
         encumbrance or redemption of any of the Company Shares or shares of any
         of the entities of the Company Group, other than as contemplated by
         this Agreement, (ii) subject to applicable laws, restrict access to any
         confidential information it may have with respect to the entities of
         the Company Group or to the members of the respective management boards
         of the entities of the Company Group, and (iii) notify the Buyer
         immediately upon receipt of any offers or solicitations from third
         parties regarding the potential encumbrance or redemption of the
         Shares.

4.21     Non-Solicitation. Beginning on the Execution Date and continuing
         through the date that is two (2) years following the Closing Date the
         Seller and each of the entities of the Seller's Group will not directly
         or indirectly, except by means of a general public solicitation
         addressed to non-specified addressees, take any action to terminate
         employment or any other relation pursuant to which any specific
         services are rendered to any entities of the Company Group, the Buyer
         or any of its subsidiaries by a person who is the employee or service
         provider of any of the entities of the Company Group, the Buyer or its
         subsidiaries. This clause shall not apply to service providers who are
         independent outside advisors or agents of the Buyer or its
         subsidiaries.

                                    ARTICLE 5
                                     CLOSING

5.1      Within seven (7) business days of the date on which the last of the
         Conditions to Purchase referred to in Article 3.1.3 and 3.1.4 was
         satisfied the Parties will jointly

                                       26



         designate the Closing Date in writing, taking into account the
         necessity to satisfy other Conditions to Purchase. In case the Parties
         fail to agree on the Closing Date, the Closing Date shall be designated
         by the Seller, provided that it shall enjoy such right exclusively for
         three (3) days after the seven day period referred to above. Should the
         Seller fail to designate the Closing Date within the three day period,
         the right to designate the Closing Date shall be exclusively enjoyed by
         the Buyer. The Seller or, as the case may be, the Buyer, in performance
         of the right to individually designate the Closing Date, may designate
         the Closing Date on the date which occurs not earlier than on the first
         business day following 21 (twenty one) day period after the date on
         which the Buyer sent notice to the Seller that the last of the
         conditions referred to in Article 3.1.3 or 3.1.4, has been satisfied,
         however not later than within one month from the date of delivery of
         such notice to the Seller. The Closing shall take place in the presence
         of a notary (the "NOTARY") who will accept the documents specified in
         Article 5.2.3 and 5.2.5 below to keep in deposit, and will then perform
         the actions referred to in Article 5.2.4 and in Articles 5.2.6 through
         5.2.8. The Closing may be participated by representatives of BRE Bank
         and PKO BP (the "BANK'S REPRESENTATIVES"). The Closing shall take place
         at the offices of Weil, Gotshal & Manges - Pawel Rymarz Sp. k., ul.
         Emilii Plater 53, 00-113 Warsaw, Poland, 20th floor of the Warsaw
         Financial Centre.

5.2      Each of the following events shall occur on the Closing Date, in the
         sequence as provided in this Article 5.2.

         5.2.1    The Buyer will deliver or procure delivery of the following
                  documents to the Seller:

                  (a)      a copy of the UOKiK President's consent for the
                           concentration consisting of the Buyer's acquisition
                           of the Shares or a representation that the statutory
                           period for the issuance of such decision has lapsed,
                           unless it has already delivered such copy of consent
                           or such representation to the Seller prior to the
                           Closing Date;

                  (b)      a copy of the permit of the Minister of Internal
                           Affairs and Administration for the Buyer to purchase
                           the Shares which constitute a majority stake in the
                           Company's share capital, unless it has already
                           delivered a copy of such consent to the Seller prior
                           to the Closing Date;

                  (c)      confirmation of payment to the Buyer's bank account
                           at BRE Bank of the First Part of Purchase Price and
                           confirmation of BRE Bank that on the Closing Date
                           those moneys were on such bank account;

                  (d)      other documents which have not been previously
                           delivered and which the Buyer is obliged to deliver
                           to the Seller no later than by Closing on the terms
                           and conditions defined in the Agreement.

         5.2.2    The Seller will or will cause delivery of the following
                  documents to the Buyer:

                                       27



                  (a)      certificate issued by the Register of Pledges not
                           earlier than on the date preceding the Closing Date,
                           confirming that no pledges or other encumbrances on
                           the Shares exist, except for the pledge on 8,260,717
                           (eight million, two hundred and sixty thousand, seven
                           hundred and seventeen) Company shares out of the
                           Shares which were pledged in favor of BRE Bank;

                  (b)      copy of an extract from the register of treasury
                           pledges kept by tax offices appropriate to the Seller
                           and a copy of an extract from the Central Register of
                           Treasury Pledges evidencing that no pledges on the
                           Shares exist, such documents being issued not earlier
                           than on the day preceding the Closing Date;

                  (c)      evidence that the Company's shareholders meeting has
                           been convened to perform the Seller's covenant as
                           referred to in Article 4.11.1 subsection (d), unless
                           such evidence has been delivered to the Buyer prior
                           to the Closing Date;

                  (d)      Representation with Instructions Relating to the
                           First Part of Purchase Price, unless such
                           representation was delivered to the Buyer prior to
                           the Closing Date;

                  (e)      documents confirming dismissal or resignation of all
                           members of the Company supervisory board, except for
                           the supervisory board member appointed by the
                           Company's general meeting from among the candidates
                           designated by the State Treasury;

                  (f)      duly filled out and signed by the Seller motions to
                           the relevant register of pledges for the deletion of
                           pledge on 8,260,717 (eight million, two hundred and
                           sixty thousand, seven hundred and seventeen) shares
                           from among the Shares or, if the pledge has not been
                           entered in a relevant register, motions for
                           withdrawal of the "motions for registration of pledge
                           on such shares", unless such motions were delivered
                           to the Buyer prior to the Closing Date;

                  (g)      evidence of termination of the Cooperation Agreements
                           made between the Seller and the Company, as referred
                           to in Article 4.10, unless such evidence was
                           delivered to the Buyer prior to the Closing Date;

                  (h)      representation of the Company, signed by the Company
                           (including by the Buyer's Representative) with
                           regards to the accuracy of the Settlement and the
                           Cooperation Agreements' Settlement, unless such
                           documents were delivered to the Buyer prior to the
                           Closing Date;

                  (i)      other documents which have not been previously
                           delivered and which the Seller is obliged to deliver
                           to the Buyer no later than by Closing on the terms
                           and conditions defined in the Agreement, unless such
                           documents were delivered to the Buyer prior to the
                           Closing Date.

                                       28



         5.2.3    The Seller will or will cause delivery of the following
                  documents to the Notary:

                  (a)      BRE Bank's representations on granting an
                           unconditional consent for the sale of 8,260,717
                           (eight million, two hundred and sixty thousand, seven
                           hundred and seventeen) shares from among the Shares
                           in compliance with this Agreement;

                  (b)      BRE Bank's representations on unconditional waiver of
                           the ordinary pledge on 9,954,359 (nine million, nine
                           hundred and fifty-four thousand, three hundred and
                           fifty-nine), including a registered pledge on
                           8,260,717 (eight million, two hundred and sixty
                           thousand, seven hundred and seventeen) Company shares
                           from among the Shares and BRE Bank's unconditional
                           consent for deletion of the pledge from the relevant
                           register, or, if the pledge had not been entered in a
                           relevant register, consent for withdrawal of the
                           motion for registration of the pledge in the relevant
                           register of pledges;

                  (c)      power of attorney for litigation purposes to
                           represent the Seller in any proceedings before court
                           of proper jurisdiction in any matter for deletion of
                           pledge or withdrawal of motion to register the pledge
                           on Company shares, such power of attorney being
                           granted by the Seller to persons designated by the
                           Buyer no later than on the Closing Date, provided
                           that the power of attorney contains the Seller's
                           representation that the power of attorney will not be
                           revoked until the date of deletion of the pledge or
                           issuance by a relevant court of a decision on
                           discontinuance of proceedings;

                  (d)      global certificates for the Shares, including a
                           representation on transfer of the Shares to the
                           Buyer;

                  (e)      confirmation evidencing payment of the Total Purchase
                           Price, the final value of which will be established
                           in accordance with the conditions specified in the
                           Agreement;

                  (f)      representation addressed to the Company's management
                           board of no objections against registration of the
                           Buyer as shareholder in the Company's share register
                           in relation to the Buyer's purchase of the Shares.

         5.2.4    Upon receipt of the documents referred to in Article 5.2.3,
                  the Notary will present those documents to the Buyer for it to
                  accept their contents and confirm that they are complete.

         5.2.5    The Buyer, following acceptance of the documents in accordance
                  with Article 5.2.4, will or will cause delivery of the
                  following documents to the Notary:

                  (a)      either Notice of Waiver of PKO BP Security Interest,
                           including: (i) PKO BP's representation on waiver of
                           the registered pledge on 1,714,114 (one million,
                           seven hundred and fourteen thousand, and

                                       29



                           one hundred and fourteen) shares of Aluminium Konin -
                           Impexmetal S.A.; (ii) consent for deletion of the
                           registered pledge on those shares from the relevant
                           register; (iii) five blank promissory notes with the
                           Seller's promissory note guarantee which were issued
                           by the Company; provided that the only condition that
                           the above referenced PKO BP's representation and
                           consent may contain is the terminating condition of
                           Buyer's failure to buy the Shares; or any other
                           document agreed prior to the Closing Date between the
                           Buyer and the Seller, in accordance with Articles
                           2.7.5 and 3.1.6, another document releasing the
                           Seller of the liability resulting from creation of
                           the PKO BP Security Interests;

                  (b)      either Notice of Waiver of WFOS's Security Interest
                           or as agreed prior to the Closing Date between the
                           Buyer and the Seller, in accordance with Articles
                           2.7.6 and 3.1.7, another document by which the Seller
                           is released from liability resulting from creation of
                           the WFOae's Security Interests;

                  (c)      either Notice of Waiver of BRE Bank Security
                           Interest, containing a waiver of the registered
                           pledge on 688,064 (six hundred and eighty-eight
                           thousand, sixty-four) shares of Aluminium Konin
                           Impexmetal S.A. and BRE Bank's consent for deletion
                           of the pledge from the relevant register or, if the
                           pledge was not entered in the relevant register,
                           consent for withdrawal of the motion for registration
                           of the pledge in the relevant register of pledges;
                           provided that the only condition that the above
                           referenced BRE Bank's representation and consent may
                           contain is the terminating condition of Buyer's
                           failure to buy the Shares; or any other document
                           agreed prior to the Closing Date between the Buyer
                           and the Seller in accordance with Articles 2.7.5 and
                           3.1.6, another document releasing the Seller of the
                           liability resulting from creation the BRE Bank's
                           Security Interests;

                  (d)      instructions of wire transfers accepted for execution
                           by BRE Bank and evidencing that the First Part of
                           Purchase Price has been made in accordance with the
                           Representation with Instructions relating to the
                           First Part of Purchase Price, and a document issued
                           by BRE Bank with respect to confirmation that the
                           accounts maintained by BRE Bank and indicated in the
                           Representation with Instructions Relating to the
                           First Part of Purchase Price have been credited with
                           the First Part of Purchase Price;

                  (e)      a cashier's cheque (rozrachunkowy) payable upon
                           presentation, certified by a reputable bank,
                           operating in Poland or a document issued by BRE Bank
                           evidencing that the Seller's account number
                           11401010-00-208713-PLNCURR01-66 has been credited
                           with the sum of the Total Purchase Price less the
                           Escrow Amount and the First Part of Purchase Price,
                           and increased or decreased in the events as described
                           in Articles 2.5 and 2.6;

                                       30



                  (f)      confirmation of collection of the Shares from the
                           Seller, stating that the Shares were purchased in
                           accordance with the terms and conditions of the
                           Agreement.

         5.2.6    The Notary, upon receipt of the documents referred to in
                  Article 5.2.5 will present such documents to the Seller for it
                  to accept their contents and confirm that they are complete.

         5.2.7    Unless the Parties decide otherwise, the Notary will return to
                  each Party all the documents it received from it, if the
                  Notary finds that any of the Parties did not accept either the
                  contents or did not confirm the completeness of the documents
                  presented for its acceptance, or finds that he/she did not
                  receive all the documents specified in Article 5.2.3 and in
                  Article 5.2.5 until the close of business on the Closing Date.
                  In the event that the Closing does not occur due to any of the
                  reasons described above and the Parties do not decide
                  otherwise, the Notary will return to the Parties the documents
                  he/she received from them, and if the Notary received any
                  specific documents from a Bank's Representative, the Notary
                  shall return such documents directly to the Bank's
                  Representative from which he/she has originally received them.

         5.2.8    If both Parties accepted all the documents presented to them,
                  the Notary will destroy the five blank promissory notes
                  referred to in Article 5.2.5 (a) in the presence of the
                  Parties and will release to the Seller all the other documents
                  referred to in Article 5.2.5, while the documents referred to
                  in Article 5.2.3 will be released to the Buyer.

         5.2.9    The Parties will sign a notice addressed to the Company of the
                  change of the dominating entity for the Company, in compliance
                  with Article 6 of the Commercial Companies Code.

         5.2.10   The Buyer and the Seller will take any and all actions to
                  cause registration of the Buyer in the Company's share
                  register as a new shareholder.

                                    ARTICLE 6
                   REPRESENTATIONS AND WARRANTIES OF THE BUYER

6.1      Catalogue of Representations and Warranties. The Buyer hereby
         represents and warrants to the Seller that:

         6.1.1    The Buyer is a company duly organized, existing and operating
                  under the laws of the Swiss Confederation;

         6.1.2    The Buyer has all the authorizations which are required by law
                  to enter into the Agreement and to perform the specific
                  obligations of the Buyer defined herein. The Agreement was
                  properly entered into by the Buyer, it is binding and may be
                  enforced against the Buyer in accordance with its terms.

                                       31



         6.1.3    Buyer's execution of the Agreement is not in breach of any
                  laws binding the Buyer nor any agreements, commitments,
                  decisions and orders binding the Buyer or such which apply to
                  its assets.

         6.1.4    Except as provided in Article 3.1.3 and 3.1.4 of the
                  Agreement, the Buyer is not obliged to obtain any additional
                  consents or permits or to make any additional notifications in
                  relation to the execution or performance of this Agreement.
                  Nevertheless, the Buyer represents that although there are no
                  corporate requirements in this respect, it did obtain consent
                  for execution of this Agreement from its parent company,
                  Commercial Metals Company with its offices in Irving, Texas,
                  USA, such consent conditioning execution of this Agreement on
                  having negotiated, in the Buyer's management opinion,
                  satisfactory conditions of this Agreement. The Buyer
                  represents further that on the Execution Date it received,
                  according to its knowledge, all documents and information
                  which should be presented to the UOKiK President in relation
                  to commencement of proceedings aimed at obtaining the permit
                  of that authority for purchase of the Shares.

         6.1.5    The persons signing the Agreement on behalf of the Buyer are
                  duly authorized and empowered to execute the Agreement on
                  behalf of the Buyer.

         6.1.6    No court, arbitration or any other proceedings are pending
                  against the Buyer before any court, administration body or
                  government authority or a court of arbitration which could
                  influence performance of any transactions contemplated hereby;

         6.1.7    The Buyer has the required creditability to raising financing
                  or has funds required to perform the financial obligations of
                  the Buyer resulting from this Agreement.

         6.1.8    The Buyer reviewed the condition of the Company's enterprise
                  and conducted a due diligence of the Company in the period
                  between March 3 - 6, 2003 and June 23 - 26, 2003. The Buyer
                  conducted such due diligence and analysis of the Company's
                  enterprise which it considered appropriate and necessary in
                  relation to its decision to enter into the Agreement. The
                  Buyer was able to access sources of information within the
                  scope it thought necessary, particularly the employees
                  (including the executives), books, records and files of the
                  Company.

         6.1.9    The Buyer represents that it reviewed: (i) the agreement of
                  June 24, 2003 for construction works made between the Seller
                  and Scrapena S.A.; (ii) the agreement of June 4, 2003 entered
                  into between the Company and OSTRANA Internationale
                  Handelsges.m.b.H with its registered seat in Vienna, Austria;
                  (iii) the agreement of June 4, 2003 entered into between the
                  Company and FLT - METALL HmbH with its registered seat in
                  Dusseldorf, Germany; (iv) the Cooperation Agreements; and (v)
                  other agreements between the entities of the Company Group and
                  the Seller and entities of the Seller's Group which were
                  binding on May 31, 2003. Furthermore, the Buyer represents
                  that it reviewed the Know-How Agreement. Complete copies of
                  such agreements referred to in this clause

                                       32



                  and presented to the Buyer are attached hereto as Schedule No.
                  13 and Schedule No. 25.

         6.1.10   In relation to execution and performance of the Cooperation
                  Agreements and the Know-How Agreement, the Buyer, following
                  the Closing Date, will not raise any indemnity claims against
                  the Seller or members of the Company's management board and
                  will cause that no such claims are raised by the Company.
                  Should the Buyer or the Company raise any such claims, the
                  Buyer will pay a contractual penalty to the Seller in the
                  amount equal to the sum of the damages adjudged in this
                  respect, interest and costs of proceedings incurred by the
                  defendant. For avoidance of doubts, the Parties jointly agree
                  that no obligation to pay the contractual penalty as referred
                  to above shall be created if such claims are raised by a third
                  party; or any shareholder other than the Buyer.

         6.1.11   The Buyer reviewed Schedule No. 26 and is not aware of any
                  information relating to the Company holding any other
                  ownership titles or the rights of perpetual usufruct to any
                  real property or a fractional part of a real property nor
                  separate rights to premises other than those listed in
                  Schedule No. 26.

         6.1.12   Subject to Article 7.1.14 the Information provided in the
                  Information Memorandum and all other information obtained by
                  the Buyer for the purposes of execution of the Agreement,
                  apart from the information contained in representations and
                  warranties of the Seller included in Article 7 of the
                  Agreement, may not be relied on in raising any claims against
                  the Seller or any other persons acting on behalf of the Seller
                  or the Company, and in particular any of their:
                  representatives, advisors and consultants.

6.2      Validity of Representations and Warranties. All the representations and
         warranties of the Buyer made in this Article shall remain valid and
         up-to-date until the Closing Date and thereafter, unless a change or
         expiry thereof results from the terms and conditions hereof.

                                    ARTICLE 7
                  REPRESENTATIONS AND WARRANTIES OF THE SELLER

7.1      Catalogue of Representations and Warranties. The Seller hereby
         represents and warrants to the Buyer that:

         7.1.1    The Seller is a joint-stock company duly organized, existing
                  and operating under the laws Poland;

         7.1.2    The Seller has all the authorizations which are required by
                  law to enter into the Agreement and to perform the specific
                  obligations of the Seller defined herein. The Agreement was
                  properly entered into by the Seller, it is binding and may be
                  enforced against the Seller in accordance with its terms.

         7.1.3    Seller's execution of the Agreement is not in breach of any
                  laws binding the Seller nor any agreements, commitments,
                  decisions and orders binding the Seller or such which apply to
                  its assets.

                                       33



         7.1.4    Except as provided in Article 3.1.3, 3.1.4 and in Article
                  5.2.3 subsection (a), the Seller is not obliged to obtain any
                  additional consents or permits or to make any additional
                  notifications in relation to the execution or performance of
                  this Agreement. The Seller represents further that on the
                  Execution Date it delivered or caused delivery of, according
                  to its knowledge, all documents and information which should
                  be presented to the UOKiK President in relation to
                  commencement of proceedings aimed at obtaining the permit of
                  that authority for purchase of the Shares.

         7.1.5    No court, arbitration or any other proceedings are pending
                  against the Seller before any court, administration body or
                  government authority or a court of arbitration which could
                  influence performance of any transactions contemplated hereby;

         7.1.6    All the Shares have been properly subscribed for or purchased
                  and they are fully paid.

         7.1.7    No offers of sale, preemptive rights, promises to sell or
                  purchase or any other type of third party authorization or
                  third party liability with respect to the Shares owned by the
                  Seller exist, including any which would authorize anyone to
                  demand an increase or redemption of share capital of the
                  Company.

         7.1.8    The Seller is the sole owner of its Shares and it does not
                  have any other rights to any share in the Company's share
                  capital. According to the best knowledge of the Seller,
                  remaining shareholders of Company other than the Seller do not
                  have any rights to a share in the Company's share capital,
                  including any right to dividends, except for the rights as
                  defined in the Statute.

         7.1.9    There are no Company shareholders agreements which the Seller
                  would be party to and, according to the Seller's knowledge,
                  there are no other Company shareholders agreements between
                  other shareholders of the Company.

         7.1.10   Subject to the encumbrances disclosed in Schedule No. 27, the
                  Company shares are free of any encumbrances consisting of any
                  limited property rights or other commitment related rights
                  created in favor of any third parties created directly or
                  indirectly by an agreement, a unilateral representation of
                  will or by operation of law.

         7.1.11   Subject to the resolutions disclosed in Schedule No. 28 to the
                  Agreement, such resolutions being subsequently revoked or
                  otherwise becoming invalid, in the period since the Company
                  has been transformed from a state enterprise into a joint
                  stock company and until the Execution Date the General Meeting
                  of Shareholders of the Company has not adopted any resolution
                  on:

                  (a)      increase, decrease or change of capital structure of
                           its share capital; orb

                                       34



                  (b)      issuance of securities or other instruments
                           convertible to company Shares or authorizing to share
                           Company profits or to exercise any corporate
                           authority in the Company.

         7.1.12   The Seller represents that apart from: (i) the agreement of
                  June 24, 2003 for construction works made between the Seller
                  and Scrapena S.A.; (ii) the agreement of June 4, 2003 entered
                  into between the Company and OSTRANA Internationale
                  Handelsges.m.b.H with its registered seat in Vienna, Austria;
                  (iii) the agreement of June 4, 2003 entered into between the
                  Company and FLT - METALL HmbH with its registered seat in
                  Dusseldorf, Germany; (iv) the Cooperation Agreements; and (v)
                  other agreements between the entities of the Company Group and
                  the Seller or entities from the Seller's Group, which were in
                  force as of May 31, 2003, the entities of the Company Group
                  have not entered into any other agreements and have not
                  performed any actions resulting in any payments or the need to
                  satisfy any in-kind obligations in favor of the Seller or
                  entities from the Seller's Group. Complete copies of the
                  agreements referred to in this clause have been presented to
                  the Buyer and are attached to this Agreement in Schedule No.
                  13 and in Schedule No. 25.

         7.1.13   The Seller represents that it reviewed the Company's
                  representation attached to this Agreement as Schedule No. 26
                  and that it is not aware of any information with regards to
                  the Company having any other ownership titles or rights of
                  perpetual usufruct to any real property or a fractional part
                  of a real property or a separate right to premises, other than
                  those disclosed in Schedule No. 26.

         7.1.14   Subject to temporary concealment of certain information and
                  documents relating to entities of the Company Group prior to
                  23 June, 2003 to which the Buyer has then obtained access
                  within the scope it thought necessary, the Seller represents
                  that:

                  (a)      it did not conceal from the Buyer or its advisors any
                           information or documents relating to the entities of
                           the Company Group for the disclosure of which the
                           Buyer or its advisors applied, either in writing or
                           electronically, to the Seller, its representatives,
                           advisors, and, in particular to BRE Corporate Finance
                           S.A. with its registered seat in Warsaw;

                  (b)      it did not take any actions aimed at concealing from
                           the Buyer or its advisors by the entities of the
                           Company Group, their representatives of any
                           information or documents relating to the entities of
                           the Company Group for the disclosure of which the
                           Buyer or its advisors applied to the entities of the
                           Company Group and their representatives;

                  (c)      it did not conceal from the Buyer or its advisors,
                           any documents relating to any factual or legal
                           actions taken or omitted by the entities of the
                           Company Group which could be reasonably deemed as
                           material for the operations of the Company Group and
                           of which it was aware that they are not known to the
                           Buyer and its advisors.

                                       35



         7.1.15   According to the Seller's knowledge, the entities of the
                  Company Group, in the period between June 26, 2003 and the
                  Execution Date, conducted their operations in the manner in
                  which such operations were conducted in the past, and no
                  events occurred in such period which would have a material
                  adverse effect on the condition of such entities' enterprises.

         7.1.16   The representations and warranties contained in this Agreement
                  are the only representations and warranties made by or in the
                  name of the Seller in relation to execution and performance of
                  the Agreement.

7.2      Validity of Representations and Warranties. All the representations and
         warranties of the Seller made in this Article shall remain valid and
         up-to-date until the Closing Date and thereafter, unless a change or
         expiry thereof results from the terms and conditions hereof.

                                    ARTICLE 8
                           TERMS OF SELLER'S LIABILITY

8.1      Scope of Seller's Liability. The Seller's representations and
         warranties contained in Article 7 of the Agreement are the only
         representations and warranties made by the Seller to the Buyer in
         relation to execution and performance of this Agreement. For avoidance
         of doubt the Parties agree that the Buyer will not relay on any
         representations and warranties, expressed or implied, made by or on
         behalf of the Seller, other than the representations and warranties
         made by the Seller in this Agreement.

8.2      Exclusion of Liability. The Seller shall not be liable for breach of
         Seller's representations and warranties, if the Buyer's indemnity
         claim:

         8.2.1    would not have existed in full or in part but for actions or
                  omissions by the Company after the Closing Date, however not
                  earlier than after Buyer's effective assumption of control
                  over the Company's Management Board (for the purposes of this
                  clause effective assumption of control over the Company's
                  Management Board shall mean the appointment of such a number
                  of Buyer's representatives to the Company's Management Board
                  which will ensure it majority on the Management Board), or
                  after the date on which such appointment would have been
                  possible, but was not made due to circumstances for which the
                  Buyer is liable; or

         8.2.2    would not have existed in full or in part but for actions or
                  omissions by the Company after the Execution Date, due to
                  actions taken by the Seller or the Seller's Representative in
                  relation to Seller's due performance of the obligations
                  defined in Article 4 of the Agreement;

         8.2.3    would not have existed in full or in part but for actions or
                  omissions of the Buyer or the Buyer's Representative after the
                  Execution Date; or

         8.2.4    results from any event which has been previously presented to
                  the Buyer by the Seller, any of its advisors or the Company,
                  or an event of which the Buyer is aware in relation to its own
                  due diligence of the Company made prior to the Execution Date.

                                       36



8.3      Term of Liability. Except for any indemnity claims due to breach of
         representations and warranties referred to in Article 7.1.6, 7.1.8
         first sentence and Article 7.1.13, the Seller shall not be liable for
         any claims for breach of any Seller's representations and warranties
         provided in the Agreement after 24 (twenty four) months from the
         Closing Date.

                                    ARTICLE 9
                           VALIDITY, RIGHT TO WITHDRAW

9.1      Failure to Satisfy Conditions to Purchase. Unless the Parties provide
         otherwise, in the event of failure to satisfy any of the Conditions to
         Purchase referred to in Article 3.1 by December 15, 2003 due to
         circumstances for which none of the Parties is liable, this Agreement
         shall be terminated and the Parties shall have no claims against each
         other resulting from termination of the Agreement. Furthermore, between
         the Execution Date and December 15, 2003, the Buyer shall, within seven
         (7) days from the date of becoming aware of occurrence of a Material
         Adverse Change, have the right to withdraw from the Agreement without
         designating any grace period (Buyer's representation on withdrawal due
         to occurrence of a Material Adverse Change should be made in writing
         with signatures of the Buyer's representatives certified by a notary).
         In the event of such termination this Agreement shall be terminated and
         the Parties shall have no claims against each other in this respect.

9.2      Failure to Satisfy Conditions Due to Action or Omission by the Parties.
         Failure to Perform Obligations. If (i) any of the Conditions to
         Purchase referred to in Article 3.1 are not satisfied due to
         circumstances for which the Buyer is liable or (ii) any of the
         Conditions to Purchase referred to in Article 3.1 are not satisfied due
         to circumstances for which the Seller is liable or (iii) in the event
         of non-performance or improper performance of the Buyer's obligations
         referred to in Article 2.7.2 through the end of 2.7.8; (iv) in the
         event of non-performance or improper performance of the Seller's
         obligations referred to in Article 2.8.2 through the end of 2.8.9
         ("BREACH OF AGREEMENT") - the other Party may withdraw from the
         Agreement without designating any grace period and demand from the
         Party Breaching the Agreement payment of an amount equal to the Escrow
         Amount. If it is the Seller who is the withdrawing Party, it may demand
         to be paid the Escrow Amount from the Escrow Account. If it is the
         Buyer who is the withdrawing Party, it may demand payment in its favor
         of an amount equal to the Escrow Amount and demand release of the
         Seller's promissory note from the Deposit, such promissory note
         securing payment of the above amount. The contractual right of
         withdrawal referred to in this Article may be exercised on or before
         December 15, 2003.

         9.2.1    The Seller shall have the right to withdraw from the Agreement
                  and demand payment of the Escrow Amount also in the following
                  circumstances:

                  (a)      Buyer's failure to notify, within seven (7) days of
                           the Execution Date, of the intention to effect
                           concentration in accordance with the requirements of
                           the Protection of Competition and Consumers Act of
                           December 15, 2000 (Dz.U. 2000, No. 122, item 1319, as
                           amended); or

                                       37


                  (b)      Buyer's failure to file, within fourteen (14) days of
                           the Execution Date, an application to the Minister of
                           Internal Affairs and Administration for a permit for
                           the Buyer to purchase the Shares in accordance with
                           the requirements of the Acquisition of Real Estate by
                           Foreigners Act of March 24, 1920 (Dz.U. 1996, No. 54,
                           item 245, as amended), unless the failure to file the
                           motion results from circumstances for which are
                           beyond the Buyer's control.

         9.2.2    For avoidance of doubt, the Parties jointly represent that the
                  following shall not be considered failure to satisfy
                  Conditions to Purchase due to circumstances for which a given
                  Party is liable:

                  (a)      issuance by the UOKiK President of a decision
                           prohibiting concentration or a conditional consent
                           for concentration consisting of Buyer's purchase of
                           the Shares, unless such decision, or a conditional
                           decision was issued in result of circumstances for
                           which the relevant Party is liable; or

                  (b)      issuance by the Minister of Internal Affairs and
                           Administration of a decision denying consent for
                           Buyer's purchase, on the basis of the Acquisition of
                           Real Properties by Foreigners Act of March 24, 1920,
                           unless such decision was issued in result of
                           circumstances for which the relevant Party is liable;
                           or

                  (c)      failure to perform the BRE Bank obligations referred
                           to in the BRE Bank Agreement; or

                  (d)      occurrence of a Material Adverse Change; or

                  (e)      failure to satisfy any of the Conditions to Purchase
                           defined in Article 3.1 due to one Party's failure to
                           perform its obligations if performance thereof is
                           directly conditional upon prior performance of
                           obligations by the other Party and such obligation
                           has not been performed.

9.3      Contractual Penalty due to Buyer's Delay. If the Buyer fails to pay the
         Escrow Amount to the Escrow Account within three (3) business days from
         the Date of Execution of this Agreement, however not earlier than
         within three (3) business days from the date of execution of the Escrow
         Agreement, the Seller shall be authorized to demand that the Buyer pays
         a contractual penalty of PLN 10,000,000 (ten million).

                                   ARTICLE 10
                                 CONFIDENTIALITY

10.1     Confidential Information. The Parties mutually agree to treat as
         confidential: (i) any and all information and documents held by a given
         Party, its employees, representatives and advisors and relating to the
         entities of the Company Group, and (ii) the information relating to
         this Agreement (jointly referred to as ,,CONFIDENTIAL INFORMATION").
         The Confidential Information shall include in particular any data,
         materials, technical and financial documentation and any documentation
         related to

                                       38



         conducted operations, all the ideas, inventions, trade secrets,
         designs, business plans and other written or oral information relating
         to the entities of the Company Group, including those relating to the
         principles of pricing and sales, products, clients and suppliers of the
         entities of the Company Group.

10.2     Disclosure of Confidential Information. The Parties agree that without
         the prior written consent of the other Party (i) they shall not copy,
         disseminate or disclose any Confidential Information to any persons
         other than the members of the Parties' authorities, their employees,
         advisors, banks and representatives which must have such information
         for the purposes of reviewing, evaluating or conducting negotiations in
         relation to the transaction to be entered between the Parties; (ii)
         they will not use the Confidential Information for any purposes other
         than provided under this Agreement.

10.3     Breach of Confidentiality Obligation. Should the terms of this Article
         be breached by any of the Parties, the Party in breach shall be
         obligated to pay to the other Party, a contractual penalty of PLN
         500,000 (five hundred thousand) for any such event with no obligation
         to prove that in result of such breach it did incur damage.

10.4     Exclusions. The obligations relating to observing confidentiality as
         provided in the Agreement do not apply:

         10.4.1   if application thereof would result in the inability of the
                  Parties or their dominating entities of subsidiaries to
                  disclose information required by applicable laws or by a
                  court, an administrative authority or a stock exchange, and in
                  particular in relation to the duty to disclose all the
                  material events having the influence on legal and financial
                  position, which the given Party, its dominating entity or
                  subsidiary is obliged to disclose by operation of law or
                  should disclose because of standard practice on any specific
                  securities market ensuring transparency of the operations of
                  the Party, its dominating entity or subsidiary as a public
                  company;

         10.4.2   with regards to publicly available information or information
                  which were made public otherwise than in violation of the
                  terms and conditions hereof.

10.5     New Undertakings. Should the Buyer commence any new market ventures
         competitive to the operations of the entities of the Company Group,
         conducted with due observance of fair competition, it shall not be
         considered as breach of the confidentiality clause contained in the
         Agreement. Except for (i) information which is generally accessible or
         disclosed to the public otherwise than in result of breach of this
         Agreement; (ii) other information which is not subject to
         confidentiality restrictions applying to the enterprise and protected
         by laws in force or (iii) information disclosed on the basis of Article
         10.4.1; if the Closing does not occur, the Buyer covenants to:

         10.5.1   destroy all Confidential Information in possession of the
                  Buyer or its representatives and advisors, fixed on any
                  tangible or intangible media, including those in the form of
                  electronic entries, compilations of documents, correspondence,
                  notes, etc.; and

                                       39



         10.5.2   refrain from using and procure that the Buyer's subsidiaries
                  and affiliates (as defined in the Commercial Companies Code)
                  will refrain from using any of the Confidential Information in
                  any activities competitive to the Seller or the Company.

10.6     Term. The above obligation to maintain confidentiality shall be biding
         to:

         10.6.1   the Buyer, with respect to Confidential Information defined in
                  Article 10.1, subsection (i) until the Closing Date only;

         10.6.2   the Seller, with respect to Confidential Information defined
                  in Article 10.1, subsection (i) for a period of 5 (five) years
                  from the Execution Date;

         10.6.3   the Parties with respect to Confidential Information referred
                  to in Article 10.1, subsection (ii) for the period of three
                  (3) years from the Execution Date.

                                   ARTICLE 11
                                FINAL PROVISIONS

11.1     Notices.

         11.1.1   Any and all notices, documents, information and other
                  correspondence made in relation to this Agreement must be in
                  writing (otherwise being null and void), in two language
                  versions, English and Polish, and shall be deemed as properly
                  served if delivered by hand, by courier or by registered
                  letter, return receipt requested, to the following addresses
                  for delivery:

                  To the Seller:

                  Impexmetal S.A.
                  ul. L ucka 7/9, 00-842 Warsaw, Poland
                  Tel.: +48 (22) 658 62 61
                  Fax: +48 (22) 039 120 542
                  e-mail: k.adamski@impexmetal.com.pl
                  Att.: Krzysztof Adamski

                  To the Buyer:

                  Commercial Metals (International) AG
                  Lindenstrasse 14
                  CH-6340 Baar
                  Switzerland
                  Tel.: +41 41 766 96 66
                  Fax: +41 41 766 96 96
                  e-mail: ZugSteel@commercialmetals.com
                  Att.: Hanns Zollner, Ruedi Auf der Maur, Murray McClean

         11.1.2   Each of the Parties covenants further to immediately advise
                  the Parties of any change of address, otherwise correspondence
                  sent to such Party to the last known address shall be deemed
                  as effectively delivered.

         11.1.3   Furthermore, each of the Parties covenants, respectively:

                                       40



                  (a)      the Seller, to deliver copies of all notices,
                           documents and correspondence related to this
                           Agreement which will be addressed to the Buyer, also
                           for the attention of Pawel Rymarz/Dariusz Zych to:
                           Weil, Gotshal & Manges - Pawel Rymarz Sp.k., ul.
                           Emilii Plater 53, 00-113 Warsaw. The Parties jointly
                           represent that deliveries of notices, documents and
                           other correspondence to the Buyer shall have legal
                           effects as of the date of such delivery to the Buyer,
                           and delivery to Weil, Gotshal & Manges - Pawel
                           Rymarz Sp.k. as referred to in this Article, shall be
                           for information purposes only;

                  (b)      the Buyer, to deliver copies of all notices,
                           documents and correspondence related to this
                           Agreement which will be addressed to the Seller, also
                           for the attention of Leszek Filipowicz/Roman Tulin,
                           to: BRE Corporate Finance S.A., ul. Wspolna 47/49,
                           00-684 Warsaw. The Parties jointly represent that
                           deliveries of notices, documents and other
                           correspondence to the Seller shall have legal effects
                           as of the date of such delivery to the Seller, and
                           delivery to BRE Corporate Finance S.A as referred to
                           in this Article, shall be for information purposes
                           only.

11.2     Settlement of Disputes. Any and all disputes resulting from the
         Agreement or related to execution thereof shall be settled amicably
         through direct negotiations of the Parties within thirty (30) days from
         the date on which the Company advised the other Party of the intention
         to settle the dispute amicably. If no amicable solution is reached
         within the time specified above, the dispute shall be settled by the
         Court of Arbitration at the Polish Chamber of Commerce in Warsaw in
         accordance with the Rules of such Court valid on the date of the
         Parties' request for such Court to settle the dispute.

11.3     Assignment of Rights and Duties.

         11.3.1   None of the Parties shall not be authorized to transfer any of
                  its rights or duties resulting from this Agreement without the
                  written consent of the other Party, otherwise being null and
                  void.

         11.3.2   If effective assignment of rights and obligations referred to
                  in Article 11.3.1 above requires execution of any legal or
                  factual actions, the Parties, following consenting to such
                  assignment, hereby covenant to execute the required actions on
                  as soon as possible basis. Furthermore, in case of execution
                  of any such assignment the Party which assigned its rights and
                  obligations under this Agreement shall remain jointly and
                  severally liable for proper performance of this Agreement with
                  the entity in favor of which such assignment was made.

11.4     Governing Law. This Agreement shall be governed by Polish law.

11.5     Costs. Unless otherwise provided by this Agreement, each of the Parties
         will cover its own costs and expenses related to execution and
         performance of this Agreement.

                                       41



         11.5.1   The fee of the Notary referred to in Article 5 shall be paid
                  by the Parties in equal parts.

         11.5.2   To avoid any doubt, the Seller represents that it none of the
                  entities of the Company Group was or will be charged for any
                  costs or expenses related to the preparation, negotiation,
                  execution or performance of this Agreement or any other
                  agreements referred to herein which are to be performance by
                  the Seller. In particular, it applies to the costs of advice
                  provided by BRE Corporate Finance S.A. with its registered
                  seat in Warsaw, the law office Biuro Adwokackie BMK with its
                  registered seat in Lodz and other advisors or consultants
                  retained by the Seller in relation to the preparation of the
                  tender procedure for the sale of the Shares. This
                  representation does not apply to costs and expenses incurred
                  by the Company within the scope in which it was necessary in
                  relation to allow the due diligence of the Company by the
                  Buyer and other entities participating in the tender procedure
                  relating to the sale of Company Shares, organized by BRE
                  Corporate Finance S.A. with its registered seat in Warsaw, as
                  well as costs and expenses incurred by the Company in relation
                  to the preparation and delivery of information and documents
                  on behalf of the Seller and its advisors, in relation to such
                  procedure.

         11.5.3   The Parties jointly represent that the transfer tax due with
                  respect to purchase of the Shares by the Buyer shall be borne
                  by the Buyer.

11.6     Entire Agreement. This Agreement and the schedules thereto constitute
         the entire understanding between the Parties and they supersede all
         prior agreements and understandings between the Parties with regards
         thereto, unless otherwise provided by the Agreement. Should any of the
         clauses of the Agreement become invalid or unenforceable, it shall not
         influence the validity and enforceability of the other clauses. Should
         any of the clauses of the Agreement be found invalid the other clauses
         of the Agreement shall remain valid and effective, unless the
         circumstances indicate that without such invalid clauses the Agreement
         would not have been made. Furthermore, the Parties jointly agree that
         if due to circumstances for which none of the Parties is liable, any of
         the transactions contemplated by this Agreement become ineffective or
         invalid, the Parties will take all reasonable action to repeat such
         action.

11.7     Amendments. Any and all amendments to the Agreement must be in writing,
         otherwise being null and void.

11.8     Counterparts. The Agreement was signed in four (4) counterparts: (i)
         two in Polish and (ii) two in English, one language copy for each of
         the parties. In case of any discrepancies between the Polish and
         English version, the Polish version shall prevail.

                                       42



For the Seller:                                        For the Buyer:

/s/Jerzy Kaminski                                      /s/ Hanns Zollner
- -----------------                                      -----------------
Jerzy Kaminski                                         Hanns Zollner

/s/ Krzysztof Adamski                                  /s/ Ruedi Auf der Maur
- ---------------------                                  ----------------------
Krzysztof Adamski                                      Ruedi Auf der Maur

LIST OF SCHEDULES:

Schedule No. 1  -        List of Shares which are being sold by the Seller.;

Schedule No. 2  -        Extract form the Register of Commercial Registers
                         Office of the the Zug Canton relating to the Buyer;

Schedule No. 3  -        Form of Representation with Instructions Relating to
                         the First Part of the Purchase Price;

Schedule No. 4  -        Form of Waiver Notice of BRE Bank's Security Interest;

Schedule No. 5  -        Form of Waiver of PKO BP's Security Interest;

Schedule No. 6  -        Form of Waiver of the WFOS's Security Interest;

Schedule No. 7  -        Copy of the Agreement with BRE Bank;

Schedule No. 8  -        Extract form the Register of Entrepreneurs of the
                         National Court Register relating to the Company;

Schedule No. 9  -        Extract form the Register of Entrepreneurs of the
                         National Court Register relating to the Seller;

Schedule No. 10 -        Company's Statute with all amendments;

Schedule No. 11 -        Form of Deposit Agreement;

Schedule No. 12 -        Form of Escrow Agreement;

Schedule No. 13 -        Copies of the Cooperation Agreements (including
                         know-how agreement);

Schedule No. 14 -        Form of the Notification of Settlement;

Schedule No. 15 -        Form of the Notification of the Settlement of the
                         Cooperation Agreements;

Schedule No. 16 -        Form of the Seller's surety (Poreczenie) for the
                         repayment of the Impex Debt Value or the Buyer's surety
                         for the repayment of the HZ Debt Value, respectively;

Schedule No. 17 -        Form of surety (Poreczenie) of the Company's repayment
                         of the Settlement Amount of the Cooperation Agreements;

Schedule No. 18 -        Form of the Seller's consent for the Buyer to apply to
                         the relevant tax office for a certificate stating the
                         Seller's outstanding tax liabilities pursuant to
                         Article 306G of the Tax Ordinance;

Schedule No. 19 -        Form of the Seller's consent for the Buyer to apply to
                         the relevant social insurance office (ZUS) for a
                         certificate stating the Seller's outstanding
                         liabilities with respect to social insurance premiums,
                         health insurance premiums and other premiums, payables
                         and public dues which ZUS is authorized to collect;

Schedule No. 20 -        List of capital expenditures;

                                       43



Schedule No. 21 -        Additional rights which may be granted to Company's key
                         employees (excluded from restrictions resulting from
                         Article 4.1.15 of the Agreement);

Schedule No. 22 -        Form of the termination of the Cooperation Agreements;

Schedule No. 23 -        Form of Supervisory Board resolutions;

Schedule No. 24 -        Form of resignation of the Company Supervisory Board
                         Member;

Schedule No. 25 -        Copies of agreements between the entities of the
                         Company Group and the Seller and entities of the
                         Seller's Group which were binding on May 31, 2003;

Schedule No. 26 -        Representation of the Company containing the list of
                         Company's real properties;

Schedule No. 27 -        List of encumbrances on the Shares;

Schedule No. 28 -        list of shareholders' meetings resolutions.

                                       44

EX-31.1

exv31w1

EX-31.2

exv31w2

EX-32.1

exv32w1

EX-32.2

exv32w2