EXHIBIT 4.3
METALS USA, INC.
$200,000,000
8 5/8% SENIOR SUBORDINATED NOTES DUE 2008
PURCHASE AGREEMENT
February 6, 1998
BT ALEX. XXXXX INCORPORATED
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
NATIONSBANC XXXXXXXXXX SECURITIES LLC
c/o BT Alex. Xxxxx Incorporated
One Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Metals USA, Inc. (the "COMPANY"), a Delaware corporation, and the
Guarantors (as defined) hereby confirm their agreement with you (collectively,
the "INITIAL Purchasers"), as set forth below.
1. THE SECURITIES. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchasers
$200,000,000 aggregate principal amount of the Company's 8 5/8% Senior
Subordinated Notes due 2008 (the "NOTES"). The Notes will be guaranteed
(collectively, the "GUARANTEES") on a senior subordinated basis by each of the
Company's Subsidiaries listed on the signature pages hereof (collectively, and
together with any subsidiary that in the future executes a supplemental
indenture pursuant to which such subsidiary agrees to guarantee the Notes, the
"GUARANTORS"). The Notes and the Guarantees are collectively referred to herein
as the "SECURITIES." The Securities are to be issued under an indenture (the
"INDENTURE") dated as of February 11, 1998 by and among the Company, the
Guarantors and U.S. Trust Company of California, N.A., as trustee (the
"TRUSTEE").
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum dated January 22, 1998 (the
"PRELIMINARY MEMORANDUM") and a final offering memorandum dated February 6, 1998
(the "FINAL MEMORANDUM," the Preliminary Memorandum and the Final Memorandum
each herein being referred to as a "MEMORANDUM") setting forth or including a
description of the terms of the Securities, the terms of the offering of the
Securities, a description of the Company and any material developments relating
to the Company occurring after the date of the most recent historical financial
statements included therein.
The Company understands that the Initial Purchasers propose to
make an offering of the Notes only on the terms and in the manner set forth in
the Final Memorandum and Section 8 hereof as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered to persons in the
United States whom the Initial Purchasers reasonably believe to be qualified
institutional buyers ("QUALIFIED INSTITUTIONAL BUYERS" or "QIBS") as defined in
Rule 144A under the Act (as defined), as such rule may be amended from time to
time ("RULE 144A") and outside the United States to certain persons in reliance
on Regulation S under the Securities Act of 1933, as amended (the "ACT").
The Initial Purchasers and their direct and indirect transferees
of the Securities will be entitled to the benefits of a Registration Rights
Agreement (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company
and the Guarantors have agreed, among other things, to file a registration
statement (the "REGISTRATION STATEMENT") with the Securities and Exchange
Commission (the "COMMISSION") registering the Exchange Notes (as defined in the
Registration Rights Agreement) under the Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company and
each of the Guarantors, subject to the limit on maximum liability contained in
the Guarantees, jointly and severally, represent and warrant to and agree with
the Initial Purchasers that:
(a) Neither the Final Memorandum nor any amendment or supplement
thereto as of the date thereof and at all times subsequent thereto up to
the Closing Date (as defined in Section 3 below) contained or contains
any untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this Section 2(a)
do not apply to statements or omissions made in reliance upon and in
conformity with information relating to the Initial Purchasers furnished
to the Company in writing by the Initial Purchasers expressly for use in
the Preliminary Memorandum, the Final Memorandum or any amendment or
supplement thereto.
(b) As of the Closing Date, the Company will have the authorized,
issued and outstanding capitalization set forth under the heading
"Capitalization" in the Final Memorandum; all of the outstanding shares
of capital stock of the Company and each of Affiliated Metals Company,
Cornerstone Aluminum Company, Inc., Cornerstone Building Products, Inc.,
Cornerstone Metals Corporation, Cornerstone Patio Concepts, L.L.C.,
Federal Bronze Alloys Inc., Xxxxxx Titanium, Ltd., Independent Metals
Co., Inc., Interstate Steel Supply Company, Interstate Steel Supply
Company of Maryland, Interstate Steel Supply Company of Pittsburgh,
Interstate Steel Processing Company, Xxxxxxxx Steel Company, Inc., Xxxxx
Metal Servicenters, Inc., Metals USA Finance Corp., Metals USA Service
Corporation, MUSA GP, Inc., MUSA LP, Inc., Queensboro Steel Corporation,
X.X. Fabricating Inc., Royal Aluminum, Inc., Southern Alloy of America,
Inc., Steel Service Systems, Inc., Texas Aluminum Industries, Inc.,
Uni-Steel, Inc., Xxxxx Steel, Inc. and Xxxxxxxx Steel & Supply Co., Inc.
(collectively the "SUBSIDIARIES") have been, and as of the Closing Date
will be, duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights; all of the outstanding shares of capital stock of the
Subsidiaries will be free and clear of all liens, encumbrances, equities
and claims or restrictions on transferability (other than those created
pursuant to the Credit Agreement (as defined) and those imposed by the
Act and the securities or "Blue Sky" laws of certain jurisdictions) or
voting; except as set forth in the Final Memorandum, there are no (i)
options, warrants or other rights to purchase; (ii) agreements or other
obligations to issue or (iii) other rights to convert any obligation
into, or exchange any securities for, shares of capital stock of or
ownership interests in the Company or any of the Subsidiaries
outstanding. Except for the Company's direct and indirect interests in
the Subsidiaries and in other wholly owned subsidiaries, the Company
does not own, directly or indirectly, any shares of capital stock or any
other equity or long-term debt securities or have any equity interest in
any firm, partnership, joint venture or other entity other than as
described in the Final Memorandum, except securities of publicly traded
companies which in the aggregate are not material.
(c) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its
properties and conduct its business as described in the Final
Memorandum. Each of the Subsidiaries has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority to
own or lease its properties and conduct its business as described in the
Final Memorandum. As of the date hereof, the Company has no significant
subsidiaries within the meaning of Regulation S-X promulgated under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), other
than the Subsidiaries. The Company and each of the Subsidiaries are duly
qualified to transact business in all jurisdictions in which the conduct
of their respective businesses requires such qualification, except where
the failure to be so qualified would not have a material adverse effect
on the business and operations of the Company and the Subsidiaries taken
as a whole (any such event, a "MATERIAL ADVERSE EFFECT").
(d) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform each of
its obligations under the Notes, the Exchange Notes, the Private
Exchange Notes (each as defined in the Registration Rights Agreement and
the Indenture) and the Guarantees. The Notes, when issued, will be in
the form contemplated by the Indenture. The Notes, the Exchange Notes
and the Private Exchange Notes have each been duly and validly
authorized by the Company and, when executed by the Company and
authenticated by the Trustee in accordance with the provisions of the
Indenture and, in the case of the Notes, when delivered to and paid for
by the Initial Purchasers in accordance with the terms of this
Agreement, will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company
(assuming the due authorization, execution and delivery of the Indenture
by the Trustee and the due authorization and delivery of the Notes by
the Trustee in accordance with the Indenture), entitled to the benefits
of the Indenture, and enforceable against the Company in accordance with
its terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of equity and
the discretion of the court before which any proceeding therefor may be
brought (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(e) The Guarantees have been duly and validly authorized by each
Guarantor, and when executed and delivered by such Guarantor, will
constitute the valid and legally binding obligations of such Guarantor,
entitled to the benefits of the Indenture, enforceable against each of
them in accordance with its terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
(f) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Indenture. The Indenture meets the requirements
for qualification under the Trust Indenture Act of 1939, as amended (the
"TIA"). The Indenture has been duly and validly authorized by each of
the Company and the Guarantors and, when executed and delivered in
accordance with its terms (assuming the due authorization, execution and
delivery by the Trustee), will have been duly executed and delivered and
will constitute a valid and legally binding agreement of each of the
Company and the Guarantors, enforceable against each of them in
accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
(g) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Registration Rights Agreement. The Registration
Rights Agreement has been duly and validly authorized by each of the
Company and the Guarantors and, when executed and delivered by the
Company and each of the Guarantors (assuming due authorization,
execution and delivery by the other parties thereto), will have been
duly executed and delivered and will constitute a valid and legally
binding agreement of each of the Company and the Guarantors, enforceable
against each of them in accordance with its terms, except that (A) the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding in equity or at law) and (B)
any rights to indemnity or contribution thereunder may be limited by
federal and state securities laws and public policy considerations.
(h) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated under this Agreement. This Agreement and the consummation
by the Company and the Guarantors of the transactions contemplated under
this Agreement have been duly and validly authorized by each of the
Company and the Guarantors. This Agreement has been duly executed and
delivered by each of the Company and the Guarantors.
(i) No consent, approval, authorization or order of any court or
governmental agency or body, or third party is required for the
performance of this Agreement by the Company and the Guarantors or the
consummation by them of the other transactions contemplated hereby,
except such (i) as have been obtained or made, (ii) as would not have a
Material Adverse Effect, (iii) as would not materially adversely affect
the validity of this Agreement, the Notes, the Indenture or the
Registration Rights Agreement, and (iv) such as may be required under
state securities or "Blue Sky" laws in connection with the purchase and
resale of the Securities by the Initial Purchasers and except with
respect to the registration of the Exchange Notes and Private Exchange
Notes, if applicable, pursuant to the Registration Rights Agreement and
the qualification of the Indenture under the TIA. Neither the Company
nor any of the Subsidiaries is, or with the giving of notice or lapse of
time or both, will be, in violation of or in default under its
certificate of incorporation (or similar organizational document) or
bylaws or under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it, or any
of its properties, is bound and which default would have a Material
Adverse Effect.
(j) The execution, delivery and performance by the Company and
the Guarantors of this Agreement, the Indenture, the Notes, the
Guarantees, the Exchange Notes, the Private Exchange Notes, the
Registration Rights Agreement, the consummation of the transactions
herein contemplated and the fulfillment of the terms hereof will not
conflict with or result in a material breach of any of the terms or
provisions of, or constitute a material default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or any of the Subsidiaries is a party, or of the certificate of
incorporation (or similar organizational document) or bylaws of the
Company or any of the Subsidiaries or any order, rule or regulation
applicable to the Company or any of the Subsidiaries of any court or,
assuming compliance with all applicable state securities or blue sky
laws, of any regulatory body or administrative agency or other
governmental body having jurisdiction.
(k) Each of the Indenture, the Notes, the Exchange Notes, the
Guarantees and the Registration Rights Agreement conforms in all
material respects to the description thereof in the Final Memorandum.
(l) All of the financial statements of the Company and the
separate financial statements of the Subsidiaries, in each case together
with related notes and schedules, as set forth in the Final Memorandum,
present fairly in all material respects the financial position and the
results of operations and cash flows of the Company and of each of the
Subsidiaries, respectively, at the indicated dates and for the indicated
periods. Such financial statements and related schedules have been
prepared in accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, except as
disclosed therein, and all adjustments necessary for a fair presentation
of results for such periods have been made. The summary historical and
pro forma financial and statistical data included in the Final
Memorandum present fairly the information shown therein and such data
have been compiled on a basis consistent with the financial statements
presented therein and the books and records of the Company and the
Subsidiaries, as applicable.
(m) Xxxxxx Xxxxxxxx LLP, Xxxxx & Xxxxx LLP, Rubin, Brown,
Gornstein & Co. LLP, McGladrey & Xxxxxx, LLP, Klein, Bogakos, and
Xxxxxxxxx, CPA's, Inc. and Meaden & Xxxxx, Ltd., who have certified
certain of the financial statements as part of the Final Memorandum, are
independent public accountants as required by the Act and the rules and
regulations promulgated thereunder.
(n) (i) The pro forma financial statements (including the notes
thereto) included in the Final Memorandum (A) comply as to form in all
material respects with the applicable requirements of Regulation S-X
promulgated under Exchange Act and (B) have been properly computed on
the bases described therein, and (ii) the assumptions used in the
preparation of the pro forma financial statements included in the Final
Memorandum are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred
to therein.
(o) Except as set forth in the Final Memorandum, there is not
pending or, to the best knowledge of the Company, threatened any action,
suit, proceeding, inquiry or investigation to which the Company or any
of the Guarantors is a party, or to which any of its properties or
assets are subject, before or brought by any court, arbitrator or
governmental agency or body, which, if determined adversely to the
Company or any such Subsidiary, would, individually or in the aggregate,
have a Material Adverse Effect, or which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale
of the Securities to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum.
(p) The Company and each of the Subsidiaries hold all material
licenses, certificates and permits from governmental authorities which
are necessary to the conduct of their businesses; and neither the
Company nor any of the Subsidiaries has infringed any patents, patent
rights, trade names, trademarks or copyrights, which infringement is
material to the business of the Company or such Subsidiary. The Company
knows of no material infringement by others of patents, patent rights,
trade names, trademarks or copyrights owned by or licensed to the
Company or any of the Subsidiaries.
(q) Since the respective dates as of which information is given
in the Final Memorandum, as it may be amended or supplemented, there has
not been any material adverse change or any development involving a
prospective material adverse change in or affecting the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise), or prospects of the Company and the
Subsidiaries, taken as a whole, whether or not occurring in the ordinary
course of business, and there has not been any material transaction
entered into or any material transaction that is probable of being
entered into by the Company or the Subsidiaries, other than transactions
in the ordinary course of business and changes and transactions
described in the Final Memorandum, as it may be amended or supplemented.
Neither the Company nor any of the Subsidiaries has (i) any material
contingent obligations which are not disclosed in the Company's or such
Subsidiary's financial statements, as applicable, included in the Final
Memorandum, or (ii) declared or paid any dividend or made any
distribution on any shares of its capital stock or redeemed, purchased
or otherwise acquired or agreed to redeem, purchase or otherwise acquire
any shares of its capital stock, except for the put options to the
Company pursuant to the Employee Stock Ownership Plan of Xxxxxxxx Steel
Company, Inc. dated August 1, 1972, as amended.
(r) Each of the Company and the Subsidiaries has filed all
federal, state, local and foreign income tax returns which have been
required to be filed and have paid all taxes indicated by said returns
and all assessments received by it or any of them to the extent that
such taxes have become due and are not being contested in good faith.
All tax liabilities have been adequately provided for in the financial
statements of the Company and the Subsidiaries, as applicable.
(s) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company
believes to be reliable and accurate.
(t) Neither the Company nor any of the Subsidiaries nor any agent
acting on its behalf has taken or will take any action that might cause
this Agreement or the sale of the Securities to violate Regulation G, T,
U or X of the Board of Governors of the Federal Reserve System, in each
case as in effect, or as the same may hereafter be in effect, on the
Closing Date.
(u) Each of the Company and the Subsidiaries has good title to
all personal property described in the Final Memorandum as being owned
by it, good and valid title to all real property described in the Final
Memorandum as being owned by it and good and valid title to the
leasehold estates in the real and personal property described in the
Final Memorandum as being leased by it free and clear of all liens,
charges, encumbrances or restrictions, except as described in the Final
Memorandum or to the extent the failure to have such title or the
existence of such liens, charges, encumbrances or restrictions would
not, individually or in the aggregate, have a Material Adverse Effect.
All leases, contracts and agreements to which the Company or any
Subsidiary is a party or by which the Company or such Subsidiary is
bound (i) are valid and enforceable against the Company or such
Subsidiary, (ii) to the knowledge of the Company, are valid and
enforceable against the other party or parties thereto and (iii) are in
full force and effect with only such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect.
(v) There are no legal or governmental proceedings involving or
affecting the Company, any of the Subsidiaries or any of their
respective properties or assets which would be required to be described
in a prospectus pursuant to the Act that are not described in the Final
Memorandum, nor are there any material contracts or other documents
which would be required to be described in a prospectus pursuant to the
Act that are not described in the Final Memorandum.
(w) Except as described in the Final Memorandum or as would not,
individually or in the aggregate, have a Material Adverse Effect, (A)
each of the Company and the Subsidiaries is in compliance with and not
subject to liability under applicable Environmental Laws, (B) each of
the Company and the Subsidiaries has and is in compliance with all
declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all
courts and other tribunals presently required or necessary to own or
lease, as the case may be, and to operate its properties and to carry on
its business as set forth in the Final Memorandum and required under any
applicable Environmental Laws and each of them is in full force and
effect, (C) there is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the
knowledge of the Company, threatened against the Company or any
Subsidiary under any Environmental Law, (D) no lien, charge, encumbrance
or restriction has been recorded under any Environmental Law with
respect to any assets, facility or property owned, operated, leased or
controlled by the Company or any Subsidiary, (E) neither the Company nor
any Subsidiary has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
or any comparable state law and (F) no property or facility of the
Company or any Subsidiary is (i) listed or proposed for listing on the
National Priorities List under CERCLA or (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability
Information System List promulgated pursuant to CERCLA, or on any
comparable list maintained by any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, laws relating to (i) emissions,
discharges, releases or threatened releases of hazardous materials, into
the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of hazardous materials, and
(iii) underground and aboveground storage tanks, and related piping, and
emissions, discharges, releases or threatened releases therefrom.
(x) There is no strike, labor dispute, slowdown or work stoppage
with the employees of the Company or the Subsidiaries which is pending
or, to the knowledge of the Company, threatened, which would have a
Material Adverse Effect.
(y) The Company and each of the Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies engaged in
similar industries.
(z) The Company and each of the Subsidiaries are in compliance in
all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to
any "pension plan" (as defined in ERISA) for which the Company or any of
the Subsidiaries would have any liability; neither the Company nor any
of the Subsidiaries has incurred nor expects to incur liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal
from, any "pension plan," or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "CODE"); and each "pension
plan" for which the Company or any of the Subsidiaries would have any
liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification
(aa) The Company and each of the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(bb) Neither the Company nor any Subsidiary will be an
"investment company" or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended, and the rules and regulations
thereunder.
(cc) Except as set forth in the Registration Rights Agreement, no
holder of securities of the Company (other than the Registrable Notes
(as defined in the Registration Rights Agreement)) will be entitled to
have such securities registered under the registration statements
required to be filed by the Company pursuant to the Registration Rights
Agreement other than as expressly permitted thereby.
(dd) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable
value of the assets of the Company and the Subsidiaries, on a
consolidated basis, will exceed the sum of its consolidated stated
liabilities and identified contingent liabilities (after giving effect,
in the case of each of the Guarantors, to the limitations contained in
each Guarantee); neither the Company nor any of the Subsidiaries is, or
will be after giving effect to the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby, (a) left with unreasonably small capital with which to carry on
its business as it is proposed to be conducted, (b) unable to pay its
debts (contingent or otherwise) as they mature or (c) otherwise
insolvent.
(ee) Neither the Company nor any of the Subsidiaries nor any of
its respective Affiliates (as defined in Rule 501(b) of Regulation D
under the Act) has directly, or through any agent (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of any
"security" (as defined in the Act) which is or could be integrated with
the sale of the Securities in a manner that would require the
registration under the Act of the Securities or (ii) engaged in any form
of general solicitation or general advertising (as those terms are used
in Regulation D under the Act) in connection with the offering of the
Securities or in any manner involving a public offering within the
meaning of Section 4(2) of the Act.
(ff) Assuming the accuracy of the representations and
warranties of the Initial Purchasers in Section 8 hereof, it is not
necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchasers in the manner contemplated by this
Agreement to register any of the Securities under the Act or to qualify
the Indenture under the TIA.
(gg) No securities of the Company are of the same class
(within the meaning of Rule 144A under the Act) as the Securities and
listed on a national securities exchange registered under Section 6 of
the Exchange Act, or quoted in a U.S. automated inter-dealer quotation
system.
(hh) Neither the Company nor any Subsidiary has taken, nor will
take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation
of the price of the Securities.
(ii) Neither the Company nor any of the Subsidiaries, nor any of
their respective Affiliates (as defined in Rule 501(b) of Regulation D
under the Act) or any person acting on any of its behalf (other than the
Initial Purchasers as to which the Company and the Subsidiaries make no
representation) has engaged in any directed selling efforts (as that
term is defined in Regulation S under the Act ("REGULATION S")) with
respect to the Securities; the Company and its respective Affiliates and
any person acting on any of its behalf (other than the Initial
Purchasers as to which the Company and the Subsidiaries make no
representation) have complied with the offering restrictions requirement
of Regulation S.
(jj) Xxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxx and
Xxxxx Xxxxxx are the only officers or directors of the Subsidiaries that
own more than 1% of the Common Stock of the Company.
Any certificate signed by any officer of the Company or any
Subsidiary and delivered to any Initial Purchasers or to counsel for the Initial
Purchasers shall be deemed a joint and several representation and warranty by
the Company and each of the Subsidiaries to each of the Initial Purchasers as to
the matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company and the
Guarantors agree to issue and sell to the Initial Purchasers, and the Initial
Purchasers agree to purchase the Securities, at 97.25% of their principal
amount.
One or more certificates in global form for the Securities that
the Initial Purchasers have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchasers request upon notice to the Company at least 48 hours prior to
the Closing Date, shall be delivered by or on behalf of the Company to the
Initial Purchasers, against payment by or on behalf of the Initial Purchasers at
the purchase price therefor by wire transfer of immediately available funds
payable to such account or account as the Company shall specify prior to the
Closing Date, or by such means as the parties hereto shall agree prior to the
Closing Date. Such delivery of and payment for the Securities shall be made at
the offices of Xxxxxxxxx & Xxxxxxxxx, LLP, Houston, Texas, at 10:00 A.M., New
York time, on February 11, 1998, or at such other place, time or date as the
Initial Purchasers and the Company may agree upon, such time and date of
delivery against payment being herein referred to as the "CLOSING DATE." The
Company will make such certificate or certificates for the Securities available
for checking and packaging by the Initial Purchasers at the offices of BT Alex.
Xxxxx Incorporated in New York, New York or such other place as the Initial
Purchasers may designate, at least 24 hours prior to the Closing Date.
4. OFFERING BY THE INITIAL PURCHASERS. The Initial Purchasers
propose to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum as soon as practicable after this Agreement is
entered into and as in the sole judgment of the Initial Purchasers is advisable.
5. COVENANTS OF THE COMPANY. The Company and the Guarantors
covenant and agree with the Initial Purchasers that:
(a) The Company will not amend or supplement the Final Memorandum
or any amendment or supplement thereto of which the Initial Purchasers
and counsel to the Initial Purchasers shall not previously have been
advised and furnished a copy for a reasonable period of time prior to
the proposed amendment or supplement and as to which the Initial
Purchasers shall not have given their consent, which consent shall not
be unreasonably withheld. The Company will promptly, upon the reasonable
request of the Initial Purchasers or counsel for the Initial Purchasers,
make any amendments or supplements to the Preliminary Memorandum or the
Final Memorandum that may be necessary or advisable in connection with
the resale of the Securities by the Initial Purchasers.
(b) The Company and the Guarantors will cooperate with the
Initial Purchasers in arranging for the qualification of the Securities
for offering and sale under the securities or "Blue Sky" laws of such
jurisdictions as the Initial Purchasers may designate and will continue
such qualification in effect for as long as may be necessary to complete
the resale of the Securities by the Initial Purchasers; PROVIDED,
HOWEVER, that in connection therewith the Company shall not be required
to qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction or subject the Company to any tax
in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the distribution
by the Initial Purchasers of the Notes or the Private Exchange Notes,
any event occurs or information becomes known as a result of which the
Final Memorandum as then amended or supplemented would include an untrue
statement of a material fact, or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Final Memorandum in
order to comply with applicable law, the Company will promptly notify
the Initial Purchasers thereof and will prepare, at the Company's
expense, an amendment to the Final Memorandum that corrects such
statement or omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of
the Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably request.
(e) The Company will apply the net proceeds from the sale of the
Securities substantially as set forth under "Use of Proceeds" in the
Final Memorandum.
(f) For so long as any Securities remain outstanding, the Company
will furnish to the Initial Purchasers copies of all reports and other
communications (financial or otherwise) furnished by the Company to the
Trustee or the holders of the Securities and, as soon as available,
copies of any reports or financial statements furnished to or filed by
the Company with the Commission or any national securities exchange on
which any class of securities of the Company may be listed.
(g) Prior to the Closing Date, the Company will furnish to the
Initial Purchasers, as soon as they have been prepared by or are
available to the Company, a copy of any unaudited interim consolidated
financial statements of the Company for any period subsequent to the
period covered by its most recent financial statements appearing in the
Final Memorandum.
(h) None of the Company, the Guarantors nor any of its respective
affiliates will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any "security" (as defined in the Act)
that could be integrated with the sale of the Securities in a manner
that would require the registration under the Act of the Securities.
(i) Neither the Company nor any Guarantor will, nor will the
Company permit any of the Subsidiaries to, engage in any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the
Securities or in any manner involving a public offering within the
meaning of Section 4(2) of the Act.
(j) For so long as any of the Securities remain outstanding, the
Company will make available, upon request, to any holder of such
Securities and any prospective purchaser thereof the information
specified in Rule 144A(d)(4) under the Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(k) Each of the Company and the Guarantors will use its best
efforts to (i) permit the Securities to be designated PORTAL securities
in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. (the "NASD") relating to trading
in the Private Offerings, Resales and Trading through Automated Linkages
market (the "PORTAL MARKET") and (ii) permit the Securities to be
eligible for clearance and settlement through The Depository Trust
Company.
(l) In connection with any Notes offered and sold in an offshore
transaction (as defined in Regulation S), the Company will not register
any transfer of such Notes not made in accordance with the provisions of
Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Notes in the form of
definitive securities.
6. EXPENSES. The Company agrees to pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 10 hereof, including all costs and expenses
incident to: (i) the printing, word processing or other production of documents
with respect to such transactions, including any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendments or
supplements thereto, and any "Blue Sky" memoranda, (ii) all arrangements
relating to the delivery to the Initial Purchasers of copies of the foregoing
documents, (iii) the fees and disbursements of the counsel, the accountants and
any other experts or advisors retained by the Company, (iv) the preparation
(including printing), issuance and delivery to the Initial Purchasers of any
certificates evidencing the Securities, (v) the qualification of the Securities
under state securities and "Blue Sky" laws, including filing fees and reasonable
fees and disbursements of counsel for the Initial Purchasers relating thereto,
(vi) the expenses of the Company in connection with any meetings with
prospective investors in the Securities, (vii) the fees and expenses of the
Trustee, including fees and expenses of its counsel, (viii) all expenses and
listing fees incurred in connection with the application for quotation of the
Securities on the PORTAL Market and (ix) any fees charged by investment rating
agencies for the rating of the Securities. If the issuance and sale of the
Securities provided for herein is not consummated because any condition to the
obligation of the Initial Purchasers set forth in Section 7 hereof is not
satisfied, because this Agreement is terminated pursuant to Section 10 hereof or
because of any failure, refusal or inability on the part of the Company or any
Guarantor to perform all obligations and satisfy all conditions on its part to
be performed or satisfied hereunder (other than solely by reason of a default by
the Initial Purchasers of its obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), the Company will promptly
reimburse the Initial Purchasers upon demand for all reasonable out-of-pocket
expenses (including fees, disbursements and charges of Xxxxxx & Xxxxxxx, counsel
for the Initial Purchasers) that shall have been reasonably incurred by the
Initial Purchasers in connection with the proposed purchase and sale of the
Securities.
7. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
obligation of the Initial Purchasers to purchase and pay for the Securities
shall, in their sole discretion, be subject to the satisfaction or waiver of the
following conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and addressed to the
Initial Purchasers, of Xxxxxxxxx & Xxxxxxxxx L.L.P., counsel for the
Company, in form and substance satisfactory to counsel for the Initial
Purchasers, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own or
lease its properties and conduct its business as described in the
Final Memorandum; the Company is duly qualified to transact
business in each of the jurisdictions set forth on a schedule to
such opinion.
(ii) The Company has authorized capital stock as set forth
under the caption "Capitalization" in the Final Memorandum; all
of the outstanding shares of capital stock of the Subsidiaries
are owned, directly or indirectly, by the Company, free and clear
of all liens, encumbrances, equities and claims or restrictions
on transferability (other than those imposed by the Act and the
securities or "Blue Sky" laws of certain jurisdictions) or
voting, except as set forth in the Final Memorandum.
(iii) Except as described in or contemplated by the Final
Memorandum, to the knowledge of such counsel, there are no
outstanding securities of the Company convertible or exchangeable
into or evidencing the right to purchase or subscribe for any
shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its
capital stock or any securities convertible or exchangeable into
or evidencing the right to purchase or subscribe for any shares
of such stock. Except as described in the Final Memorandum or in
the Registration Rights Agreement, to the knowledge of such
counsel, no holder of any securities of the Company or any other
person has the right, contractual or otherwise, which has not
been satisfied or effectively waived, to have any securities of
the Company included in a registration statement pursuant to the
Registration Rights Agreement or the right, as a result of the
filing of a registration statement pursuant to the Registration
Rights Agreement, to require registration under the Act of any
securities of the Company.
(iv) Each of the Company and the Guarantors has all
requisite corporate power and authority to execute, deliver and
perform its obligations under the Indenture and, with respect to
the Guarantors, the Guarantees; the Indenture is in sufficient
form for qualification under the TIA; the Indenture has been duly
and validly authorized, executed and delivered by each of the
Company and the Guarantors, and (assuming the due authorization,
execution and delivery thereof by the Trustee) constitutes the
valid and legally binding agreement of the Company and each of
the Guarantors, enforceable against each of them in accordance
with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which
any proceeding therefor may be brought (regardless of whether
such enforcement is considered in a proceeding in equity or at
law).
(v) The Notes are in the form contemplated by the
Indenture. The Notes have each been duly and validly authorized,
executed and delivered by the Company and, when paid for by the
Initial Purchasers in accordance with the terms of the Purchase
Agreement (assuming the due authorization, execution and delivery
of the Indenture by the Trustee and due authentication and
delivery of the Notes by the Trustee in accordance with the
Indenture), will constitute the valid and legally binding
obligations of the Company, entitled to the benefits of the
Indenture, and enforceable against the Company in accordance with
its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which
any proceeding therefor may be brought (regardless of whether
such enforcement is considered in a proceeding in equity or at
law).
(vi) The Guarantees are in the form contemplated by the
Indenture. The Guarantees have been duly and validly authorized,
executed and delivered by each Guarantor and (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee and due authentication and delivery of the Notes by the
Trustee in accordance with the Indenture) constitute the valid
and legally binding obligations of each Guarantor, entitled to
the benefits of the Indenture, enforceable against each of them
in accordance with its terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought (regardless
of whether such enforcement is considered in a proceeding in
equity or at law).
(vii) The Exchange Notes, the Private Exchange Notes and
the Guarantees to be endorsed on them have been duly and validly
authorized by the Company and each of the Guarantors, as the case
may be, and when the Exchange Notes and the Private Exchange
Notes have been duly executed and delivered by the Company and
the Guarantees have been duly executed and delivered by the
Guarantors, each in accordance with the terms of the Registration
Rights Agreement and the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee and due authentication and delivery of the Exchange Notes
and the Private Exchange Notes by the Trustee in accordance with
the Indenture), will constitute the valid and legally binding
obligations of the Company and the Guarantors, respectively,
entitled to the benefits of the Indenture, and enforceable
against the Company and the Guarantors, respectively, in
accordance with their terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought (regardless
of whether such enforcement is considered in a proceeding in
equity or at law).
(viii) Each of the Company and the Guarantors has all
requisite corporate power and authority to execute, deliver and
perform its obligations under the Registration Rights Agreement;
the Registration Rights Agreement has been duly and validly
authorized, executed and delivered by the Company and the
Guarantors, and (assuming due authorization, execution and
delivery thereof by the Initial Purchasers) constitutes the valid
and legally binding agreement of the Company and the Guarantors
enforceable against each of them in accordance with its terms,
except that (A) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which
any proceeding therefor may be brought (regardless of whether
such enforcement is considered in a proceeding in equity or at
law) and (B) any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public
policy considerations.
(ix) Each of the Company and the Guarantors has all
requisite corporate power and authority to execute, deliver and
perform its obligations under the Purchase Agreement and to
consummate the transactions contemplated hereby; the Purchase
Agreement and the consummation by the Company and the Guarantors
of the transactions contemplated under the Purchase Agreement
have been duly and validly authorized by the Company and the
Guarantors. The Purchase Agreement has been duly executed and
delivered by each of the Company and the Guarantors.
(x) The statements under the captions
"Business--Government Regulation and Environmental Matters,"
"Business--Risk Management, Insurance and Litigation,"
"Management--Directors' Compensation," "Management--Executive
Compensation; Employment Agreements; Covenants-Not-to-Compete,"
"Management--1997 Long-Term Incentive Plan," "Management--1997
Non-Employee Directors' Stock Plan," "Certain Transactions,"
"Description of Capital Stock" and "Description of Certain
Indebtedness" in the Final Memorandum, insofar as such statements
constitute a summary of documents referred to therein or matters
of law, are accurate summaries and fairly present in all material
respects the information called for with respect to such
documents and matters.
(xi) To the knowledge of such counsel, no legal or
governmental proceedings are pending or, to the knowledge of such
counsel, threatened to which the Company or any Guarantor is a
party or to which the property or assets of the Company or any
Guarantor is subject which would be required under the Act to be
described in a registration statement or in a prospectus and are
not described in the Final Memorandum, or which seek to restrain,
enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of the Notes to be sold hereunder or the
consummation of the other transactions described in the Final
Memorandum.
(xii) To the knowledge of such counsel, the Company is not
in violation of its certificate of incorporation or bylaws,
except for any such breach, default, violation or event which
would not, individually or in the aggregate, have a Material
Adverse Effect.
(xiii) The execution, delivery and performance of this
Agreement, the Indenture, the Registration Rights Agreement, the
consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale of the
Notes to the Initial Purchasers) do not and will not conflict
with or result in a breach of any of the terms or provisions of,
or constitute a default under (i) the certificate of
incorporation or bylaws of the Company, (ii) in any respect
material to the Company and the Subsidiaries, taken as a whole,
any agreement or instrument known to such counsel to which the
Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries may be bound, or (iii)
(assuming compliance with all applicable state securities or
"Blue Sky" laws and assuming the accuracy of the representations
and warranties of the Initial Purchasers in Section 8 hereof) any
statute, judgment, decree, order, rule or regulation known to
such counsel to be applicable to the Company or any Guarantor and
to transactions of the type contemplated by the Final Memorandum,
except for any such conflict, breach or violation which would
not, individually or in the aggregate, have a Material Adverse
Effect.
(xiv) To the knowledge of such counsel, no consent,
approval, authorization or order of any governmental authority is
required for the issuance and sale by the Company of the Notes to
the Initial Purchasers or the other transactions contemplated in
this Agreement, except (i) in connection with the registration
under the Act of the Notes, and the Private Exchange Notes, if
applicable, pursuant to the Registration Rights Agreement, (ii)
the qualification of the Indenture under the TIA in connection
with the issuance of the Exchange Notes, or (iii) such consents,
approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits (x) as have been obtained
and made, (y) as may be required under state securities or "Blue
Sky" laws, as to which such counsel need express no opinion, or
(z) as would not, if not obtained, have a Material Adverse
Effect.
(xv) The Company is not, nor immediately after the sale of
the Notes to be sold hereunder and the application of the
proceeds from such sale (as described in the Final Memorandum
under the caption "Use of Proceeds") will be, an "investment
company" as such term is defined in the Investment Company Act of
1940, as amended.
(xvi) No registration under the Act of the Notes is
required in connection with the sale of the Notes to the Initial
Purchasers as contemplated by this Agreement and the Final
Memorandum or in connection with the initial resale of the Notes
by the Initial Purchasers in accordance with Section 8 of this
Agreement, and prior to the commencement of the Exchange Offer
(as defined in the Registration Rights Agreement) or the
effectiveness of the Shelf Registration Statement (as defined in
the Registration Rights Agreement), the Indenture is not required
to be qualified under the TIA, in each case assuming (i) that the
purchasers who buy such Notes in the initial resale thereof are
QIBs, or are outside the United States and sold in reliance on
Regulation S under the Act, (ii) the accuracy of the Initial
Purchasers' representations in Section 8 and those of the Company
contained in this Agreement regarding the absence of a general
solicitation in connection with the sale of such Notes to the
Initial Purchasers and the initial resale thereof, (iii) the due
performance by the Initial Purchasers of the agreements set forth
in Section 8 hereof and the offering and transfer procedures set
forth in the Final Memorandum, and (iv) the accuracy of the
representations made by each Accredited Investor who purchases
Notes in the initial resale as set forth in the Final Memorandum.
(xvii) Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution
or delivery of the Notes will violate Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System.
At the time the foregoing opinion is delivered, such counsel
shall additionally state that it has participated in conferences with
officers and other representatives of the Company, representatives of
the independent public accountants for the Company, representatives of
the Initial Purchasers and counsel for the Initial Purchasers, at which
conferences the contents of the Final Memorandum and related matters
were discussed, and, although it has not independently verified and is
not passing upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Final
Memorandum (except to the extent specified in subsection 7(a)(x)), no
facts have come to its attention which lead it to believe that the Final
Memorandum, on the date thereof or at the Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
contained therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such firm need
express no opinion with respect to the financial statements and related
notes thereto and the other financial, statistical and accounting data
included in the Final Memorandum). With respect to such statement of
belief, Xxxxxxxxx & Xxxxxxxxx L.L.P. may state that their belief is
based upon the procedures set forth therein, but is without independent
check and verification. The opinion of such counsel described in this
Section shall be rendered to the Initial Purchasers at the request of
the Company and shall so state therein.
In rendering such opinion, Xxxxxxxxx & Xxxxxxxxx L.L.P. may
provide that its opinion is limited to matters governed by the laws of
Texas and New York and the General Corporation law of the State of
Delaware, and the Federal securities laws of the United States and may
rely on counsel to one or more of the Subsidiaries with respect to
matters related to the Subsidiaries, provided that, in lieu of such
reliance, Xxxxxxxxx & Xxxxxxxxx L.L.P. may provide separate opinions of
such counsel so long as such opinions are addressed to the Initial
Purchasers, and further provided that, in each case, Xxxxxxxxx &
Xxxxxxxxx L.L.P. shall state that they believe that they and the Initial
Purchasers are justified in relying on such other counsel.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with
the provisions of this Agreement at the Closing Date.
(b) The Initial Purchasers shall have received an opinion, dated
the Closing Date, of Xxxxxx & Xxxxxxx, counsel for the Initial
Purchasers, with respect to certain legal matters relating to this
Agreement, and such other related matters as the Initial Purchasers may
reasonably require. In rendering such opinion, Xxxxxx & Xxxxxxx shall
have received and may rely upon such certificates and other documents
and information as they may reasonably request to pass upon such
matters.
(c) The Initial Purchasers shall have received from, on the date
hereof and the Closing Date, letters dated the date hereof and the
Closing Date, in form and substance satisfactory to the Initial
Purchasers, of Xxxxxx Xxxxxxxx LLP, Xxxxx & Xxxxx LLP, Rubin, Brown,
Gornstein & Co. LLP, McGladrey & Xxxxxx, LLP, Klein, Bogakos, and
Xxxxxxxxx, CPA's, Inc. and Meaden & Xxxxx, Ltd. confirming that they are
independent public accountants within the meaning of the Act and the
applicable published rules and regulations thereunder and stating that,
in their opinion, the financial statements and schedules of the Company
and the Subsidiaries examined by them and included in the Final
Memorandum comply in form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Initial
Purchasers with respect to such financial statements and certain
financial and statistical information contained in the Final Memorandum.
(d) The representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if made on and as of
the Closing Date; each of the Company and the Guarantors shall have
performed in all material respects all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date; and, except as set forth in
the Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof) subsequent to the date of the most recent
financial statements in such Final Memorandum, there shall have been no
event or development that, individually or in the aggregate, has or
would be reasonably likely to have a Material Adverse Effect.
(e) The issuance and sale of the Securities pursuant to this
Agreement shall not be enjoined (temporarily or permanently) and no
restraining order or other injunctive order shall have been issued or
any action, suit or proceeding shall have been commenced with respect to
this Agreement before any court or governmental authority.
(f) The Initial Purchasers shall have received certificates,
dated the Closing Date, signed on behalf of the Company by its Executive
Vice President and its Secretary to the effect that:
(i) The representations and warranties of the Company and
the Guarantors in this Agreement are true and correct in all
material respects as if made on and as of the Closing Date, and
each of the Company and the Guarantors has performed in all
material respects all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof or since
the date of the most recent financial statements in the Final
Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), no event or events have occurred, no
information has become known nor does any condition exist that,
individually or in the aggregate, would have a Material Adverse
Effect; and
(iii) The sale of the Securities hereunder has not been
enjoined (temporarily or permanently).
(g) On the Closing Date, the Initial Purchasers shall have
received the Registration Rights Agreement executed by the Company and
the Guarantors and such agreement shall be in full force and effect at
all times from and after the Closing Date.
(h) The Indenture shall have been duly executed and delivered by
the Company and the Trustee, and the Notes and the Guarantees shall have
been duly executed by the Company and the Guarantors, respectively, and
the Notes shall have been duly authenticated by the Trustee.
(i) The Initial Purchasers shall have received a true and correct
copy of the Company's Amended and Restated Credit Agreement, dated as of
February 11, 1998 (the "CREDIT AGREEMENT"), and there shall have been no
material amendments, alterations, modifications or waivers of any
provisions of the Credit Agreement, and there exists as of the date
hereof and on and as of the Closing Date (after giving effect to the
transactions contemplated by this Agreement and the application of the
proceeds received by the Company from the sale of the Notes) no
condition that would constitute a Default or an Event of Default (each
as defined in the Credit Agreement) under the Credit Agreement.
(j) On or before the Closing Date, the Initial Purchasers and
counsel for the Initial Purchasers shall have received such further
documents, certificates and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Company as they
shall have heretofore reasonably requested from the Company and the
Guarantors.
All such documents, opinions, certificates and schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel for the Initial Purchasers. The Company shall
furnish to the Initial Purchasers such conformed copies of such documents,
opinions, certificates and schedules or instruments in such quantities as the
Initial Purchasers shall reasonably request.
8. OFFERING OF SECURITIES; RESTRICTIONS ON TRANSFER. The Initial
Purchasers represent and warrant that they are QIBs. Each of the Initial
Purchasers agrees with the Company that (i) it has not and will not solicit
offers for, or offer or sell, the Securities by any form of general solicitation
or general advertising (as those terms are used in Regulation D under the Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Act; and (ii) it has and will solicit offers for the Securities only
from, and will offer the Securities only to (A) in the case of offers inside the
United States, persons whom the Initial Purchasers reasonably believe to be QIBs
or, if any such person is buying for one or more institutional accounts for
which such person is acting as fiduciary or agent, only when such person has
represented to the Initial Purchasers that each such account is a QIB, to whom
notice has been given that such sale or delivery is being made in reliance on
Rule 144A, and, in each case, in transactions under Rule 144A, deliver to the
Trustee a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Notes (the form of which letter
can be obtained from such Trustee) and (B) in the case of offers outside the
United States, to persons other than U.S. persons ("FOREIGN PURCHASER," which
term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); PROVIDED, HOWEVER, that in the case of this clause (B), in
purchasing such Securities such persons are deemed to have represented and
agreed as provided under the caption "Transfer Restrictions" contained in the
Final Memorandum.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Guarantors, jointly and severally, agree
to indemnify and hold harmless each Initial Purchaser and each person,
if any, who controls any Initial Purchaser within the meaning of the
Act, against any losses, claims, damages or liabilities to which such
Initial Purchaser or any such controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of
or are based upon (i) any untrue statement or alleged untrue statement
of any material fact contained in any Memorandum or any amendment or
supplement thereto or any application or other document, or any
amendment or supplement thereto, executed by the Company or any
Guarantor or based upon written information furnished by or on behalf of
the Company or any Guarantor filed in any jurisdiction in order to
qualify the Securities under the securities or "Blue Sky" laws thereof
or filed with any securities association or securities exchange (each,
an "APPLICATION"), or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and will reimburse each
Initial Purchaser and each such controlling person upon demand for any
legal or other expenses reasonably incurred by such Initial Purchaser or
such controlling person in connection with investigating or defending
any such loss, claim, damage or liability, action or proceeding or in
responding to a subpoena or governmental inquiry related to the offering
of the Securities, whether or not such Initial Purchaser or controlling
person is a party to any action or proceeding; PROVIDED, HOWEVER, that
the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged
omission made in any Memorandum or any such amendment or supplement, in
reliance upon and in conformity with written information furnished to
the Company by or through the Initial Purchasers specifically for use in
the preparation thereof. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
(b) Each Initial Purchaser severally and not jointly will
indemnify and hold harmless the Company and the Guarantors, their
respective affiliates, directors, officers, agents, representatives and
employees and each person, if any, who controls the Company and the
Guarantors within the meaning of the Act against any losses, claims,
damages or liabilities to which the Company or any Guarantor or any such
affiliate, director, officer, agent, representative, employee, or
controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact
contained in any Memorandum or any amendment or supplement thereto, or
any Application, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse any legal
or other expenses reasonably incurred by the Company or any Guarantor or
any such affiliate, director, officer, agent, representative, employee
or controlling person in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding; provided,
however, that each Initial Purchaser will be liable in each case to the
extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in any
Memorandum or such amendment or supplement, or any Application, in
reliance upon and in conformity with written information furnished to
the Company by or through the Initial Purchasers specifically for use in
the preparation thereof. This indemnity agreement will be in addition to
any liability which such Initial Purchaser may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to this Section 9, such person
(the "INDEMNIFIED PARTY") shall promptly notify the person against whom
such indemnity may be sought (the "INDEMNIFYING party") in writing. No
indemnification provided for in Section 9(a) or (b) shall be available
to any party who shall fail to give notice as provided in this Section
9(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially
prejudiced by the failure to give such notice, but the failure to give
such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for
contribution or otherwise than on account of the provisions of Section
9(a) or (b). In case any such proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party and shall
pay as incurred the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as
incurred (or within 30 days of presentation) the fees and expenses of
the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them or (iii) the indemnifying
party shall have failed to assume the defense and employ counsel
acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you in
the case of parties indemnified pursuant to Section 9(a) and by the
Company in the case of parties indemnified pursuant to Section 9(b). The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
In addition, the indemnifying party will not, without the prior written
consent of the indemnified party, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action or
proceeding of which indemnification may be sought hereunder (whether or
not any indemnified party is an actual or potential party to such claim,
action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party
under Section 9(a) or (b) above (other than by reason of the exceptions
provided in such paragraphs) in respect of any losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial
Purchasers on the other from the offering of the Securities. If,
however, the allocation provided by the immediately preceding sentence
is not permitted by applicable law then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and
the Initial Purchasers on the other in connection with the statements,
omissions or breaches of representations and warranties which resulted
in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the Initial Purchasers on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bears to the total
underwriting discounts and commissions received by the Initial
Purchasers. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company on the one hand or
the Initial Purchasers on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be
just and equitable if contributions pursuant to this Section 9(d) were
determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this Section 9(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
above in this Section 9(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Initial
Purchaser shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Notes purchased
by such Initial Purchaser and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations in
this Section 9(d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(e) In any proceeding relating to any Memorandum or any
supplement or amendment thereto, or any Application, each party against
whom contribution may be sought under this Section 9 hereby consents to
the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be
served upon him or it by any other contributing party and consents to
the service of such process and agrees that any other contributing party
may join him or it as an additional defendant in any such proceeding in
which such other contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or
contribution under this Section 9 shall be paid by the indemnifying
party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred. The indemnity and contribution
agreements contained in this Section 9 and the representations and
warranties of the Company set forth in this Agreement shall remain
operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, the Guarantors, any
of its officers or directors, the Initial Purchasers or any controlling
person referred to in this Section, (ii) delivery of and payment for the
Securities, and (iii) any termination of this Agreement. A successor to
any Initial Purchaser, or to the Company, its directors or officers, or
any person controlling the Company, shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in
this Section 9.
10. TERMINATION.
(a) This Agreement may be terminated in the sole discretion of
the Initial Purchasers by notice to the Company given prior to the
Closing Date in the event that the Company or any of the Guarantors
shall have failed, refused or been unable to perform, in all material
respects, all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder at or prior thereto or, if at or prior
to the Closing Date:
(i) either (x) the Company or any Guarantor shall have
sustained any loss or interference with respect to its businesses
or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any
strike, labor dispute, slow down or work stoppage or any legal or
governmental proceeding, which loss or interference, in the
reasonable judgment of the Initial Purchasers, has had or has a
Material Adverse Effect, or (y) there shall have been, in the
reasonable judgment of the Initial Purchasers, any event or
development that, individually or in the aggregate, has or could
be reasonably likely to have a Material Adverse Effect (including
without limitation a change in control of the Company), except in
each case as described in the Final Memorandum (exclusive of any
amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National
Market shall have been suspended or maximum or minimum prices
shall have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation
of hostilities between the United States and any foreign power,
or (B) an outbreak or escalation of any other insurrection or
armed conflict involving the United States or any other national
or international calamity or emergency or (C) any material change
in the financial markets of the United States that, in the case
of (A), (B) or (C) above and in the sole judgment of the Initial
Purchasers, makes it impracticable or inadvisable to proceed with
the offering or the delivery of the Securities as contemplated by
the Final Memorandum; or
(v) any securities of the Company shall have been
downgraded or placed on any "watch list" for possible downgrading
by any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 10
shall be without liability of any party to any other party except as
provided in Section 9(f) hereof.
11. INFORMATION SUPPLIED BY THE INITIAL PURCHASERS. The
statements set forth in the last paragraph of the cover page and the first,
second, third, fifth, sixth and seventh paragraphs of the section entitled
"Private Placement" constitute the only information furnished by the Initial
Purchasers to the Company for the purposes of Sections 2(a) and 9 hereof.
12. NOTICES. All communications hereunder shall be in writing
and, if sent to the Initial Purchasers, shall be mailed or delivered or
telecopied and confirmed in writing to BT Alex. Xxxxx Incorporated, One Bankers
Trust Plaza, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate
Finance Department, and if sent to the Company or the Guarantors, shall be
mailed, delivered or telecopied and confirmed in writing to the Company at:
Metals USA, Inc., Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attention:
Xxxxxx X. Xxxxxx, Chief Executive Officer, with copies to Bracewell & Xxxxxxxxx
L.L.P., South Tower Pennzoil Place, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx 00000-0000, Attention: Xxxxxxx X. Xxxxxxxxx, Esq. and Xxxx X. Xxxxxxx,
General Counsel, Metals USA, Inc., Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000.
13. SUCCESSORS. This Agreement shall inure to the benefit of and
be binding upon the Initial Purchasers, the Company, the Guarantors and their
respective successors, assigns and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the Initial Purchasers, the Company, the Guarantors and
their respective successors, assigns and legal representatives and for the
benefit of no other person except that (i) the indemnities of the Company and
the Guarantors contained in Section 9 of this Agreement shall also be for the
benefit of the affiliates, directors, officers, agents, representatives and
employees of the Initial Purchasers and any person or persons who control the
Initial Purchasers within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act and (ii) the indemnities of the Initial Purchasers contained in
Section 9 of this Agreement shall also be for the benefit of the affiliates,
directors, officers, agents, representatives and employees of the Company and
the Guarantors and any person or persons who control the Company or any
Guarantor within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of any of the Securities from the Initial Purchasers
will be deemed a successor because of such purchase.
14. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAW.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(signature page follows)
S-2
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Company,
the Guarantors and the Initial Purchasers.
Very truly yours,
THE COMPANY:
METALS USA, INC.
By: /s/ J. XXXXXXX XXXXXXX
Name: J. Xxxxxxx Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
THE GUARANTORS:
AFFILIATED METALS COMPANY, CORNERSTONE
ALUMINUM COMPANY, INC., CORNERSTONE BUILDING
PRODUCTS, INC., CORNERSTONE METALS
CORPORATION, CORNERSTONE PATIO CONCEPTS,
L.L.C., FEDERAL BRONZE ALLOYS INC., XXXXXX
TITANIUM, LTD., INDEPENDENT METALS CO.,
INC., INTERSTATE STEEL SUPPLY COMPANY,
INTERSTATE STEEL SUPPLY COMPANY OF MARYLAND,
INTERSTATE STEEL SUPPLY COMPANY OF
PITTSBURGH, INTERSTATE STEEL PROCESSING
COMPANY, XXXXXXXX STEEL COMPANY, INC., XXXXX
METAL SERVICENTERS, INC., METALS USA FINANCE
CORP., METALS USA SERVICE CORPORATION, MUSA
GP, INC., MUSA LP, INC., QUEENSBORO STEEL
CORPORATION, X.X. FABRICATING INC., ROYAL
ALUMINUM, INC., SOUTHERN ALLOY OF AMERICA,
INC., STEEL SERVICE SYSTEMS, INC., TEXAS
ALUMINUM INDUSTRIES, INC., UNI-STEEL, INC.,
XXXXX STEEL, INC. AND XXXXXXXX STEEL &
SUPPLY CO., INC., as guarantors
By: /s/ J. XXXXXXX XXXXXXX
Name: J. Xxxxxxx Xxxxxxx
Title: Vice President and Director
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
BT ALEX. XXXXX INCORPORATED
By: /s/ XXXXXXX X. XXXXXXXXX
Name: Xxxxxxx X. Xxxxxxxxx
Title: Managing Director
BEAR, XXXXXXX & CO., INC.
By: /s/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: Senior Managing Director
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES
CORPORATION
By: /s/ XXXXX X. XXXXXXX
Name: Xxxxx X. Xxxxxxx
Title: Managing Director
NATIONSBANC XXXXXXXXXX SECURITIES LLC
By: /s/ XXXXXX X. XXXXXXXXXXXX
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Managing Director
