Shimmick Corp

On May 20, 2024 (the “Closing Date”), the Company entered into the Share Issuance Agreement as part of a series of transactions (the “Transactions”) with AECOM, a Delaware corporation, and Berkshire Hathaway Specialty Insurance Company (“BHSI”). A summary of the Transactions is included below. For more information, see the Company’s Current Report on Form 8-K filed May 20, 2024 (the “Form 8-K”).

Share Issuance

In connection with the Mutual Release (as defined below), the Company entered into the Share Issuance Agreement, pursuant to which the Company agreed to issue an aggregate 7,745,000 shares of Common Stock (the “Shares”). 5,144,622 of the Shares (the “Initial Shares”), which represented approximately 19.99% of the Company’s outstanding common stock immediately prior to the issuance, were issued on the Closing Date. Issuance of the remaining 2,600,378 Shares (the “Additional Shares”) is subject to approval by the Company’s stockholders, pursuant to Nasdaq listing requirements. Subject to stockholder approval of the proposal at this Special Meeting, the Company will approve the issuance of the Additional Shares and will promptly issue the Additional Shares to AECOM. The offer and sale of the Initial Shares were, and the offer and sale of the Additional Shares will be, made in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

Revolving Credit Facility

On the Closing Date, the Company, as guarantor, and its wholly-owned subsidiaries as borrowers (“Borrowers”), Alter Domus (US) LLC, as agent, and AECOM and BHSI as lenders, entered into a revolving credit facility (the “Credit Agreement”). The Credit Agreement provides borrowing capacity up to $60 million. The obligations under the Credit Agreement bear interest at a per annum rate equal to one month Term SOFR (as defined in the Credit Agreement), subject to a 1.00% floor, plus 3.50%. Interest on any outstanding amounts drawn under the Credit Agreement will be payable, in kind or in cash at the election of the Company, on the last day of each month and upon prepayment.

The Credit Agreement replaced the BHSI Financing Agreement (defined below). The Company expects to use the proceeds from the Credit Agreement for general corporate purposes. The Credit Agreement matures on May 20, 2029 (the “Maturity Date”), and the Borrowers may borrow, repay and reborrow amounts under the Credit Agreement until the Maturity Date.

Obligations of the Borrowers under the Credit Agreement are guaranteed by the Company, and secured by a lien on substantially all assets of the Company and the Borrowers.

The Credit Agreement contains customary affirmative and negative covenants for a transaction of this type, including covenants that limit liens, asset sales and investments, in each case subject to negotiated exceptions and baskets. In addition, the Credit Agreement contains a maximum leverage ratio covenant that will be tested starting in the third quarter of fiscal year 2025. The Credit Agreement also contains representations and warranties and event of default provisions customary for a transaction of this type.

Side Letter

In connection with the Transactions, the Company and AECOM entered into a side letter to the Credit Agreement, dated as of the Closing Date (the “Side Letter”). The Side Letter provides, among other things, (i) that the Company establish a special committee of independent directors (the “Special Committee”) to oversee certain matters, including the budget and use of funds under the Credit Agreement, material and non-ordinary course asset sales and other transactions and certain compensation matters (ii) for the appointment of a chief transformation officer, (iii) that the Company and AECOM execute mutual releases and dismissals of certain pending litigation, and (iv) certain agreements relating to AECOM’s registration rights under the Share Issuance Agreement.

Mutual Release

In connection with the entry into the Credit Agreement and Side Letter, on the Closing Date, the Company and AECOM entered into a Settlement Agreement and Mutual Release pursuant to which, among other things, the Company and its subsidiaries released AECOM from all claims that have or could have been asserted against the Company and its subsidiaries, including claims or defenses asserted or which could have been asserted under the Purchase and Sale Agreement, dated December 9, 2020, between AECOM, URS Holdings, Inc. and the Company (as successor in interest to SCC Group LLC (the “PSA”). In return, AECOM released the Company and its subsidiaries from certain claims under the PSA, specifically those related to or arising in respect to: (a) the Golden Gate Bridge Project and the Gerald Desmond Bridge Project, under the claim sharing provisions contained in Sections 2.13(a)(i) and (a)(ii) of the PSA, respectively; (b) any Earn-Out Payment arising solely under Section 2.11 of the PSA and (c) the Chickamauga Lock Project arising under the claim sharing provisions of that certain Working Capital Settlement Agreement, dated as of January 31, 2022, by and among SCC Group LLC, AECOM and URS Holdings, Inc.

In connection with the Mutual Release, AECOM shall jointly file, or caused to be filed, a request for dismissal of the AECOM v. SCCI National Holdings, Inc., et al., Delaware Chancery Court C.A. No. 2022-0727-MTZ, in its entirety, with prejudice.